SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) orss. 240.14a-12
CBES BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[ ] No fee required.
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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CBES BANCORP, INC.
1001 N. Jesse James Road
Excelsior Springs, Missouri 64024
October 28, 2002
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
CBES Bancorp, Inc. ("CBES"), to be held at the primary location of Community
Bank of Excelsior Springs, a Savings Bank, located at 1001 North Jesse James
Road, Excelsior Springs, Missouri, on December 12, 2002, commencing at 9:00
a.m., local time.
At this important meeting, stockholders will be asked to consider and vote
upon a proposal to approve a merger agreement under which, among other things,
CBES would enter into a merger resulting in it becoming a wholly-owned
subsidiary of NASB Financial, Inc. ("NASB"). If this merger is completed, you
will receive a cash payment of $17.50 for each share of CBES common stock that
you own, subject to adjustment in certain circumstances (unless you are a
dissenting stockholder who properly demands and perfects your appraisal rights).
On September 5, 2002, the day prior to the date we announced the merger, the
closing price of CBES common stock on the NASDAQ was $13.50 per share. During
the 52-week period immediately preceding that date, CBES common stock traded
within a range having a low price of $12.00 per share and a high price of $15.00
per share.
If the merger becomes effective, you will no longer own any common stock
or have any ownership interest in CBES, nor will you receive as a result of the
merger any capital stock of NASB or its subsidiaries. In the merger, the
exchange of your shares of CBES common stock for cash generally will cause you
to recognize income for federal income tax purposes and, possibly, state and
local tax purposes. You should consult your personal tax advisor for a full
understanding of the tax consequences of the merger to you.
Your board of directors has carefully reviewed and considered the terms
and conditions of the proposed merger and has received an opinion of its
financial advisor, Hovde Financial LLC ("Hovde"), that the consideration to be
received by CBES stockholders in the merger is fair from a financial point of
view. THE BOARD OF DIRECTORS OF CBES HAS CONCLUDED THAT THE MERGER IS IN THE
BEST INTERESTS OF CBES AND ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT
AND RECOMMENDS THAT THE STOCKHOLDERS APPROVE AND ADOPT SUCH AGREEMENT.
At the special meeting, you will be asked to approve and adopt the merger
agreement. A majority of the outstanding shares of common stock entitled to vote
thereon must vote for the approval and adoption of the merger agreement for the
merger agreement to be approved by stockholders. If the merger agreement is so
approved, and all other conditions described in the merger agreement have been
satisfied or waived, the merger is expected to become effective in the fourth
quarter of 2002.
This proxy statement provides you with detailed information about the
proposed merger and provides the complete merger agreement as Appendix A. A copy
of the opinion of Hovde, which sets forth the assumptions made, matters
considered and limitations on the review undertaken by Hovde, is provided as
Appendix B. Please read the enclosed materials carefully.
Your board of directors joins with me in inviting you to attend the
meeting. REGARDLESS OF THE NUMBER OF SHARES YOU OWN OR WHETHER YOU PLAN TO
ATTEND THE MEETING IN PERSON, WE URGE YOU TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING. A prepaid return envelope is provided for this
purpose. You may revoke your proxy at any time before it is exercised and it
will not be used if you attend the meeting and choose to vote in person. If the
merger is consummated, you will receive instructions for
surrendering your common stock certificates and a letter of transmittal to be
used for this purpose. You should not submit your stock certificates until then.
Sincerely,
/s/ Paul L. Thomas
Paul L. Thomas
Chief Executive Officer
CBES BANCORP, INC.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(816) 630-6711
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 12, 2002
A special meeting of stockholders of CBES Bancorp, Inc. ("CBES") will be
held at the primary location of Community Bank of Excelsior Springs, a Savings
Bank, located at 1001 North Jesse James Road, Excelsior Springs, Missouri, at
9:00 a.m., local time, on December 12, 2002, and thereafter as it may from time
to time be adjourned, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of September 5, 2002, by and
among NASB Financial, Inc., NASB Acquisition Subsidiary, Inc.
("Acquisition Sub") and CBES, pursuant to which Acquisition Sub will
merge with and into CBES and each of the outstanding shares of CBES
common stock (other than shares held by CBES as treasury stock and
shares held by dissenting stockholders who have properly demanded and
perfected their appraisal rights) will be converted into the right to
receive $17.50 in cash, subject to adjustment in certain
circumstances, as more fully described in the accompanying proxy
statement.
The above matter is more fully described in the accompanying proxy
statement, to which a copy of the Agreement and Plan of Merger is
attached as Appendix A.
2. To transact such other business as properly may come before the
meeting and any adjournment thereof.
You are entitled to notice of and to vote at the meeting if you owned CBES
common stock at the close of business on the October 15, 2002 record date.
Stockholders of CBES who dissent from the proposed merger and otherwise
comply with the requirements of the General Corporation Law of the State of
Delaware have the right to seek appraisal of their shares. See "Dissenters'
Appraisal Rights" in the proxy statement for a description of the procedures
required to be followed to seek appraisal.
By Order of the Board of Directors
/s/ Paul L. Thomas
Paul L. Thomas
Chairman
Excelsior Springs, Missouri
October 28, 2002
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YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU INTEND TO BE
PRESENT AT THE MEETING. SENDING IN YOUR PROXY NOW WILL NOT INTERFERE WITH YOUR
RIGHTS TO ATTEND THE MEETING OR TO VOTE YOUR SHARES PERSONALLY AT THE MEETING IF
YOU WISH TO DO SO.
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CBES BANCORP, INC.
Principal Executive Offices:
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(816) 630-6711
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SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 12, 2002
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PROXY STATEMENT
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TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER..............................1
SUMMARY......................................................................5
THE COMPANIES..............................................................5
THE MEETING................................................................5
THE MERGER.................................................................6
THE MERGER AGREEMENT.......................................................8
INTRODUCTION................................................................11
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING...........................11
VOTING RIGHTS.............................................................11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..............13
BACKGROUND OF THE MERGER....................................................15
MARKET PRICE AND DIVIDEND DATA FOR CBES COMMON STOCK........................17
THE MERGER AGREEMENT........................................................18
GENERAL...................................................................18
RECOMMENDATION OF THE BOARD OF DIRECTORS..................................18
REASONS FOR THE MERGER....................................................18
OPINION OF CBES'S FINANCIAL ADVISOR.......................................19
WHEN THE MERGER WILL BE COMPLETED.........................................24
PAYMENT FOR CBES SHARES...................................................24
SURRENDER OF STOCK CERTIFICATES...........................................25
REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT....................25
CONDITIONS TO THE MERGER..................................................26
CONDUCT OF BUSINESS PENDING THE MERGER....................................26
COVENANTS OF THE PARTIES..................................................29
Agreement Not to Solicit Other Offers...................................29
Employee Matters........................................................29
Indemnification of Directors and Officers...............................30
Certain Other Covenants.................................................30
TERMINATION OF THE MERGER AGREEMENT.......................................31
EXPENSES AND TERMINATION FEE..............................................31
CHANGES IN TERMS OF THE MERGER AGREEMENT..................................32
REGULATORY APPROVALS......................................................32
ACCOUNTING TREATMENT......................................................32
FEDERAL INCOME TAX CONSEQUENCES...........................................32
INTERESTS OF CERTAIN PERSONS IN THE MERGER..................................33
STOCK OWNERSHIP...........................................................33
STOCK OPTION PLAN.........................................................33
DIRECTOR EMERITUS AGREEMENTS..............................................34
SALARY CONTINUATION AGREEMENTS............................................35
CHANGE OF CONTROL AGREEMENTS..............................................35
SEVERANCE PLAN............................................................35
OFFICER RETENTION BONUS AGREEMENTS........................................36
INDEMNIFICATION OF DIRECTORS AND OFFICERS.................................36
DISSENTERS' APPRAISAL RIGHTS................................................36
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STOCKHOLDER PROPOSALS.......................................................39
WHERE YOU CAN FIND MORE INFORMATION.........................................39
APPENDIX A--AGREEMENT AND PLAN OF MERGER....................................A-1
APPENDIX B--OPINION OF HOVDE FINANCIAL LLC..................................B-1
APPENDIX C--SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW.............C-1
APPENDIX D--PROXY...........................................................D-1
APPENDIX E--LETTER TO ESOP PARTICIPANTS.....................................E-1
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QUESTIONS AND ANSWERS ABOUT THE PROPOSED MERGER
Q: WHY IS CBES PROPOSING TO MERGE?
A: Your board of directors believes that the proposed merger would allow
stockholders of CBES to realize greater value for their shares of
common stock than they could obtain if CBES followed its existing
business plan, or pursued other alternative strategies to maximize
stockholder value. CBES and NASB share a commitment to community
banking, which emphasizes responsiveness to local markets and the
delivery of personalized services. We believe that the proposed merger
will provide customers and the local communities served by CBES and
NASB access to a wider variety of quality products and services while
continuing to receive the high level of personal service they have come
to expect.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The special meeting is to be held at the primary location of Community
Bank of Excelsior Springs, a Savings Bank, located at 1001 North Jesse
James Road, Excelsior Springs, Missouri on December 12, 2002, commencing
at 9:00 a.m., local time.
Q: WHAT WILL I RECEIVE FOR MY SHARES OF CBES COMMON STOCK?
A: You will receive $17.50 in cash for each share of CBES common stock that
you own at the time of the merger, which amount could be subject to
adjustment as explained below. See the discussion under the caption
"Payment For CBES Shares" beginning at page 24 for more information.
Q: IS THE AMOUNT OF CASH TO BE RECEIVED FOR EACH SHARE OF COMMON STOCK
FAIR?
A: Hovde Financial LLC, the Financial Advisor to CBES in the merger, has
delivered a written opinion to CBES's board of directors that the merger
consideration to be paid to CBES stockholders is fair from a financial
point of view. See the discussion under the caption "Opinion of CBES's
Financial Advisor" beginning at page 19 for more information.
Q: CAN THE AMOUNT OF CASH THAT CBES STOCKHOLDERS RECEIVE IN THE MERGER
CHANGE ?
A: The per share cash consideration to be received by CBES stockholders in
the merger will be subject to adjustment if the adjusted stockholders'
equity of CBES as of the close of business on the last business day
immediately prior to the effective time of the merger is less than
$13,900,000, but equal to or greater than $13,500,000, in which event
the per share cash consideration will be reduced to $17.05 per share.
Moreover, if the adjusted stockholders' equity of CBES is less than
$13,500,000, NASB may elect to terminate the merger agreement or to
consummate the merger at $17.05 per share. See the discussion under
the caption "Payment for CBES Shares" beginning at page 24 for more
information.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO CBES STOCKHOLDERS?
A: For United States federal income tax purposes, and perhaps for state and
local tax purposes, your exchange of shares of common stock for cash
generally will cause you to recognize a gain or loss measured by the
difference between the cash you receive in the merger and your tax basis
in the shares of common stock. See the discussion under the caption
"Federal Income Tax Consequences" beginning at page 32 for more
information.
The tax consequences of the merger to you will depend on your own
situation. You should consult with your tax advisors for a full
understanding of the tax consequences of the merger to you.
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Q: WHAT CAN I DO IF I AM NOT SATISFIED WITH THE PAYMENT I AM TO RECEIVE
FOR MY SHARES?
A: Under Delaware law, if you are not satisfied with the amount you are to
receive in the merger, you are legally entitled to have the value of
your shares judicially determined and to receive payment based on that
valuation. To exercise your dissenters' appraisal rights, you must
deliver a written objection to the merger to CBES at or before the
meeting and must not vote in favor of the merger. Objections to the
merger should be addressed to CBES at 1001 North Jesse James Road,
Excelsior Springs, Missouri 64024, Attention: Corporate Secretary. If
you do not follow exactly the procedures specified under Delaware law,
you will lose your dissenters' appraisal rights. A copy of the
dissenters' appraisal rights provisions of Delaware law is provided as
Appendix C to this proxy statement. See the discussion under the
caption "Dissenters' Appraisal Rights" beginning at page 36 for more
information.
Q. WILL CBES BE ABLE TO PAY DIVIDENDS BEFORE THE COMPLETION OF THE MERGER?
A. No. Under the merger agreement, CBES is not permitted to pay normal
quarterly cash dividends during the period from the September 5, 2002
date of the merger agreement until the date that the merger becomes
effective.
Q. HOW WILL MANAGEMENT BENEFIT FROM THE MERGER?
A. Officers and directors of CBES who have stock options and restricted
stock awards under CBES's benefit plans will receive payments for their
awards based upon the merger price per share. Any unvested stock
options automatically will be deemed to be vested and will be converted
at the effective time of the merger into the right to receive cash
equal to the difference between the merger price per share and the
exercise price per share of the options. Under Community Bank's
severance plan and agreements, all full-time salaried and full-time
hourly employees of Community Bank will be entitled to the payment of
severance benefits if such persons are terminated without cause within
a specified period before and after the effective time of the merger or
such persons voluntarily leave during that period due to certain
changes in their employment conditions or compensation. In addition,
Paul L. Thomas, the Chairman of the Board and CEO of CBES, and certain
key officers, have entered into agreements with Community Bank wherein
they shall receive a bonus if they choose to continue their employment
with Community Bank through the effective time of the merger.
Community Bank has entered into salary continuation agreements with
Dennis D. Hartman, the President of Community Bank, Margaret E.
Teegarden, the Savings Department Manager of Community Bank and James
V. Alderson, Loan Officer of Community Bank, that entitle each
individual to a lump sum payment equal to the amount of benefits
accrued if any such person is terminated or resigns within 12 months of
the effective time of a change in control. Community Bank has also
entered into change of control agreements with Mr. Hartman and Ms.
Teegarden which provide for a lump sum payment if, within 12 months of
the effective time of a change in control, either is terminated without
cause or resigns due to a material change in his or her duties,
compensation or certain other aspects of his or her employment
arrangement. Finally, NASB has agreed to indemnify the officers and
directors of CBES and Community Bank for a period of six years from
liability and expenses arising out of matters existing or occurring at
or prior to the consummation of the merger and to pay up to $50,000 of
the premium required to extend the director and officer insurance
coverage beyond the closing date of the merger. See the discussion
under the caption "Interests of Certain Persons in the Merger"
beginning at page 33 for more information.
Q. WHAT DO I NEED TO DO NOW?
A. After you have carefully read this proxy statement, indicate on your proxy
card how you want your shares of common stock to be voted. Then sign, date
and mail your proxy card in the
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enclosed prepaid return envelope as soon as possible. This will enable
your shares to be represented and voted at the special meeting.
Q. WHAT IF I DON'T VOTE OR ABSTAIN FROM VOTING?
A. If you do not return your proxy card or vote in person at the special
meeting, your failure to vote or abstention from voting will have the
effect of a vote against the merger. The merger agreement must be approved
by a majority of the outstanding shares of common stock entitled to vote
at the meeting. See the discussion under the caption "Voting Rights -
Required Vote" on page 12 for more information.
Q. IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A. No. Your broker will not be able to vote your shares of common stock
without instructions from you. You should instruct your broker how you
wish to vote your shares, following the directions your broker provides.
Q WHAT IF I FAIL TO INSTRUCT MY BROKER?
A. If you fail to instruct your broker to vote your shares held in street
name, your broker's inability to vote your shares will be the equivalent
of voting against the merger.
Q. AFTER SENDING IN MY PROXY, CAN I ATTEND THE SPECIAL MEETING AND VOTE MY
SHARES IN PERSON?
A. Yes. You are invited to attend the special meeting. If you are a
stockholder of record, you are entitled to revoke your proxy and vote
in person at the meeting if you wish to do so. If a broker holds your
shares in street name, then you are not the stockholder of record and
you must ask your broker how you can vote in person at the meeting.
Q. CAN I CHANGE MY VOTE AFTER SENDING IN MY PROXY?
A. Yes. If you have not voted through your broker, there are three ways
you can change your vote after you have sent in your proxy card.
* First, you may send a written notice to the Corporate Secretary of CBES
before your common stock has been voted at the special meeting stating
that you are revoking your proxy.
* Second, you may complete a new proxy card and provide it to the
Corporate Secretary of CBES before your common stock has been voted at
the meeting. Any earlier proxy will be revoked automatically.
* Third, you may attend the meeting, revoke your proxy at the meeting and
vote in person. Simply attending the meeting without voting will not
revoke your proxy. If you have instructed your broker to vote your
shares, you must follow the directions of your broker to change your
vote.
Q. SHOULD I SEND IN MY SHARE CERTIFICATES NOW?
A. No. You should not send in your common stock certificates at this
time. Instructions for exchanging common stock certificates will be
sent to you after the merger has been completed.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: CBES hopes to complete the merger in the fourth quarter of 2002. The
merger cannot occur unless CBES stockholders approve the merger by a
majority of the outstanding shares of common
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stock and all federal regulatory approvals are received. See the
discussion under the caption "Conditions to the Merger" beginning at page
26 for more information.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the merger, you should contact:
Paul L. Thomas, CEO, or Dennis D. Hartman, President
Telephone: (816) 630-6711
CBES Bancorp, Inc.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
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SUMMARY
This summary highlights key aspects concerning the merger information in
this proxy statement. It does not contain all of the information that may be
important to you. To fully understand the merger, we urge you to carefully read
the entire proxy statement and the other documents we have referred you to,
including the merger agreement attached to the proxy statement as Appendix A. We
encourage you to read the merger agreement because it is the legal document that
governs the merger.
THE COMPANIES
NASB Financial, Inc. NASB, a Missouri corporation, is
12498 South 71 Highway headquartered in Grandview,
Grandview, Missouri 64030 Missouri and is the parent of
Attention: Keith B. Cox, President North American Savings Bank,
(816) 765-2200 F.S.B. At June 30, 2002 NASB had
consolidated assets of $932
million and stockholders' equity
of $104 million.
NASB Acquisition Subsidiary, Inc. Acquisition Sub, a Missouri
12498 South 71 Highway corporation, was formed by NASB to
Grandview, Missouri 64030 consummate the transactions
Attention: Keith B. Cox, President contemplated in the merger
(816) 765-2200 agreement.
CBES Bancorp, Inc. CBES, a Delaware corporation, is
1001 North Jesse James Road headquartered in Excelsior
Excelsior Springs, Missouri 64024 Springs, Missouri and is the
Attention: Paul L. Thomas, CEO parent of Community Bank of
(816) 630-6711 Excelsior Springs, a Savings
Bank. CBES was organized in 1996 by
Community Bank for the purpose of acquiring
all of the outstanding common stock of
Community Bank in connection with the
conversion of Community Bank from mutual to
stock form, which was completed on
September 27, 1996. At June 30, 2002, CBES
had consolidated assets of $113 million and
stockholders' equity of $14 million.
THE SPECIAL MEETING
Place, Date and Time (page 11) The meeting will be held on
December 12, 2002, at the primary
location of Community Bank located
at 1001 North Jesse James Road,
Excelsior Springs, Missouri,
commencing at 9:00 a.m., local
time.
Purpose of the Meeting (page 11) At the meeting, you will be asked to:
o approve and adopt the merger
agreement with NASB; and
o transact any other business
that may properly come before
the meeting.
Who Can Vote at the Meeting (page You can vote at the meeting of stockholders
11) if you owned CBES common stock at the close
of business on October 15, 2002. You will
be able to cast one vote for each share of
CBES common
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stock you owned at that time.
As of October 15, 2002, there were 875,805
shares of common stock outstanding.
What Vote is Required for Approval The merger agreement will be approved
of the Merger Agreement (page 12) and adopted if the holders of at least
a majority of the outstanding shares of
CBES common stock vote for it. You can vote
your shares by completing and mailing the
enclosed proxy card or by attending the
meeting and voting in person. Your failure
to vote, either by not returning the
enclosed proxy or by checking the "abstain"
box, will have the same effect as a vote
against the merger agreement.
THE MERGER
Overview of the Transaction (page We propose a merger in which
18) Acquisition Sub will merge with
and into CBES. As a result of this
transaction, Acquisition Sub will cease to
exist and CBES will become a wholly-owned
subsidiary of NASB.
What You Will Receive for Your As a CBES stockholder at the
Shares of Common Stock (page 24) effective time of the merger, each
of your shares of CBES common stock will
automatically be converted into the right
to receive $17.50 in cash, subject to
adjustment under certain circumstances.
After the merger is effective, you will
have to surrender your CBES stock
certificates to receive this cash payment.
NASB, or its exchange agent, will send you
written instructions for surrendering your
certificates after the merger. DO NOT SEND
YOUR STOCK CERTIFICATES AT THIS TIME.
CBES common stock is quoted on the NASDAQ
National Market SM under the symbol "CBES".
On September 5, 2002, which is the day the
last trade occurred before we announced the
merger, CBES common stock closed at $13.50
per share.
Taxable Transaction for CBES For federal income tax, and
Stockholders (page 32) possibly state and local tax,
purposes, your exchange of shares of common
stock for cash generally will cause you to
recognize a gain or loss measured by the
difference between the cash you receive in
the merger and your tax basis in the shares
of common stock. The tax consequences of
the merger to you will depend on your own
situation. You should consult with your tax
advisors for a full understanding of the
tax consequences of the merger to you.
6
Our Financial Advisor Believes the Hovde Financial LLC has delivered
Merger Consideration is Fair to Our a written opinion to the CBES
Stockholders (page 19) board of directors that the merger
consideration is fair to CBES stockholders
from a financial point of view. We have
provided a summary of Hovde's opinion on
pages 19 through 24 and have attached the
opinion letter as Appendix B to the proxy
statement. You should read Hovde's opinion
completely, along with the summary of the
opinion set forth in the proxy statement,
to understand the assumptions made,
procedures followed, matters considered and
limitations on the review undertaken by
Hovde in providing its opinion.
Recommendation to Stockholders THE CBES BOARD OF DIRECTORS
(page 18) BELIEVES THAT THE MERGER IS IN
YOUR BEST INTERESTS AND RECOMMENDS
THAT YOU VOTE "FOR" THE ADOPTION
OF THE MERGER AGREEMENT.
For a discussion of the circumstances
leading up to the merger and the factors
considered by CBES's board of directors in
approving the merger agreement, please see
the discussion under the caption
"Background of the Merger" beginning on
page 15.
You Have Dissenter's Rights of CBES stockholders have dissenters'
Appraisal in the Merger (page 36) rights of appraisal under Delaware
law. This means that if you are not
satisfied with the amount you are to
receive in the merger, you are entitled to
have the value of your shares independently
determined by the Delaware Court of
Chancery and to receive payment based on
that valuation. If you want to exercise
your dissenter's rights, you must carefully
follow the procedures described at pages 36
through 39 of this proxy statement and
Appendix C.
Interests of Directors and Officers Some of our directors and officers
in the Merger that May Differ From have interests in the merger that
Yours (page 33) are different from, or are in
addition to, their interests as
stockholders of CBES. Our board of
directors knew about these interests and
considered them when they approved the
merger. These include:
o the cancellation and conversion of all
outstanding options to purchase CBES
common stock, whether or not vested or
exercisable, into the right to receive
cash equal to the value of the per share
merger consideration minus the exercise
price for each option;
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o the payment of lump sum severance
benefits under (i) the Community Bank
Severance Plan and (ii) separate
agreements between Community Bank,
Dennis Hartman and Margaret Teegarden,
if either of them is terminated without
cause within a specified period after
the effective time of the merger or
voluntarily leaves during that period
due to certain changes in employment
conditions or compensation;
o the acceleration of retirement
payments under Community Bank's
director emeritus agreements;
o the acceleration of payments
under Community Bank's salary
continuation agreements with
Dennis D. Hartman, President,
Margaret E. Teegarden, Savings
Department Manager and James V.
Alderson, Loan Officer;
o the payment of bonuses to Paul L.
Thomas, CEO, and Ron Hill, CFO, and to
certain key officers who voluntarily
continue their employment with Community
Bank through the effective time of the
merger; and
o provisions in the merger agreement
relating to indemnification of directors
and officers of CBES for events
occurring at or before the merger.
Regulatory Approvals Needed to We cannot complete the merger
Complete the Merger (page 32). unless it is approved by the
Office of Thrift Supervision. All of the
required applications or waiver requests
have been filed with this regulatory
authority. As of the date of this proxy
statement, the required OTS approval has
not been obtained. While we do not know of
any reason why we or NASB will not be able
to obtain the necessary OTS approval in a
timely manner, we cannot be certain when or
if it will be obtained.
THE MERGER AGREEMENT
Conditions to Completing the Merger The completion of the merger depends on a
(page 26) number of conditions being met. In addition
to the parties complying with the merger
agreement, these conditions include:
o approval of the merger
agreement by CBES stockholders;
o approval of the merger by
regulatory authorities;
8
o the absence of any order, decree,
ruling, injunction or legal restraint
blocking the merger or of government
proceedings trying to block the merger;
and
o the absence of any law or
regulation that makes the
merger illegal.
Where the law permits, CBES or NASB could
decide to complete the merger even though
one or more of these conditions has not
been met. We cannot be certain when or if
the conditions to the merger will be
satisfied or waived, or that the merger
will be completed.
Terminating the Merger Agreement We and NASB can agree at any time
(page 31) not to complete the merger, even
if the stockholders of CBES have approved
it. Also, CBES or NASB can decide, without
the consent of the other, to terminate the
merger agreement if:
o the stockholders of CBES do not
approve the merger agreement;
o a required regulatory approval
is denied or a governmental
authority blocks the merger;
o we do not complete the merger
by January 31, 2003; or
o the other party makes a
misrepresentation, breaches a warranty
or fails to fulfill a covenant that
would have a material adverse effect on
the party seeking to terminate the
merger agreement.
CBES may terminate the merger agreement if
our board of directors determines that it
must accept a superior offer from a third
party in the exercise of its fiduciary
duties.
NASB may elect to terminate the merger
agreement if the adjusted stockholders'
equity of CBES at the close of business on
the last business day prior to the
effective time of the merger is less than
$13,500,000, or to consummate the merger at
$17.05 per share. In addition, NASB may
terminate the merger agreement if a Phase I
and Phase II environmental assessment of
the property on which Community Bank's
primary banking facility is located in
Excelsior Springs, Missouri results in a
determination that environmental clean-up
costs on such property would exceed
$500,000.
Termination Fees (page 31) If CBES terminates the merger
agreement in order to accept a
superior offer and, within six
months, CBES or Community Bank
enters into a definitive
acquisition agreement with a third
party, then
9
CBES will be required to pay to NASB a
termination fee of $250,000.
We May Amend the Terms of the We can agree with NASB to amend
Merger (page 32) the merger agreement. However,
after CBES stockholders approve the merger
agreement, no amendment may be made that
would violate applicable law or would
reduce or change the consideration to be
received by the stockholders in the merger.
10
INTRODUCTION
This proxy statement is furnished to the stockholders of CBES Bancorp,
Inc., a Delaware corporation ("CBES"), in connection with the solicitation of
proxies by the board of directors of CBES (the "board") for use at the special
meeting of stockholders of CBES to be held on December 12, 2002, commencing at
9:00 a.m., local time, at the primary location of Community Bank of Excelsior
Springs, a Savings Bank, located at 1001 North Jesse James Road, Excelsior
Springs, Missouri (the "special meeting"). This proxy statement, the notice and
the accompanying form of proxy were first mailed to the stockholders of CBES on
October 28, 2002.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the special meeting, stockholders will be asked to consider and vote
upon the approval and adoption of an agreement and plan of merger dated as of
September 5, 2002, by and among NASB Financial, Inc. ("NASB"), NASB Acquisition
Subsidiary, Inc. ("Acquisition Sub"), and CBES (the "merger agreement"). A copy
of the merger agreement is attached hereto as Appendix A.
The merger agreement provides for the merger of Acquisition Sub, a newly
formed wholly-owned subsidiary of NASB, with and into CBES (the "merger"), and
for CBES to continue as the surviving corporation in the merger under the same
name. As a result of the merger, each outstanding share of CBES common stock,
par value $.01 per share ("common stock") (other than shares held by CBES as
treasury stock and shares held by dissenting stockholders who perfect their
statutory appraisal rights), will be converted into the right to receive $17.50
in cash per share, subject to adjustment in certain circumstances.
The board knows of no other matters which will be presented for
consideration at the special meeting. If any other matters are properly
presented at the meeting, the accompanying proxies confer upon the persons named
in the proxies discretionary authority to vote upon such matters, to the extent
permitted under the applicable rules of the Securities and Exchange Commission.
This would include a motion to adjourn or postpone the special meeting in order
to solicit additional proxies. However, no proxy voted against the proposal to
approve the merger agreement will be voted in favor of an adjournment or
postponement to solicit additional votes in favor of the merger agreement.
VOTING RIGHTS
General
Stockholders of record of common stock as of the close of business on the
record date, October 15, 2002, are entitled to notice of and to vote at the
special meeting. At the close of business on the record date, there were issued
and outstanding 875,805 shares of common stock. Each share of common stock has
one vote.
Voting by Proxy
When a proxy in the accompanying form is properly executed and returned,
the shares represented by the proxy will be voted at the special meeting in the
manner specified by the stockholder. If no instructions are specified, authority
will be granted to vote such shares FOR the approval and adoption of the merger
agreement. Unless otherwise indicated on the proxy, discretionary authority will
also be granted to the persons named in the proxy to vote the shares represented
by the proxy with respect to procedural matters and other matters that may
properly come before the meeting.
If you are a beneficial owner of shares held by a broker, bank or other
nominee (commonly referred to as being held in "street name"), you will receive
instructions from your broker or bank that you must follow in order to have your
shares voted by your nominee. Your broker or bank may allow you to deliver your
voting instructions via the telephone or the Internet. If you hold your shares
in street name and
11
want to vote in person at the special meeting, you will have to get a proxy from
the broker, bank or other nominee holding your shares, which proxy grants you
the right to vote such shares.
Participants in the Employee Stock Ownership Plan
If you participate in the Community Bank Employee Stock Ownership Plan,
the enclosed proxy card represents a voting instruction to the trustee of the
plan as to the number of shares in your plan account. Each participant in the
plan may direct the trustee as to the manner in which shares of common stock
allocated to the participant's plan account are to be voted. Unallocated shares
of common stock held by the plan and allocated shares for which no voting
instructions are received will be voted by the trustee in the same proportion as
shares for which the trustee has received voting instructions, subject to the
trustee's exercise of his fiduciary obligations.
Quorum; Abstention/Broker Non-Votes
The presence in person or by proxy of the holders of one-third of the
outstanding shares of common stock will constitute a quorum for the transaction
of business at the special meeting. If a quorum is not present at the special
meeting, the meeting may be adjourned until such time as a quorum is obtained.
If you attend the meeting in person or by proxy, your shares will be counted for
purposes of determining whether there is a quorum, even if you abstain from
voting. Broker non-votes will also be counted for purposes of determining the
existence of a quorum. A broker non-vote occurs when a broker, bank or other
nominee holding shares for a beneficial owner presents a valid proxy, but does
not vote on a particular proposal because the nominee has not received voting
instructions from the beneficial owner and does not have discretionary voting
power with respect to the matter being voted upon.
Required Vote
The approval and adoption of the merger agreement will require the
affirmative vote of the holders of at least a majority of the outstanding shares
of common stock entitled to vote thereon. Thus, failure to return a properly
executed proxy card or to vote in person will have the same effect as a vote
against the merger agreement. Abstentions from voting and broker non-votes
(failure to give your broker voting instructions if your shares are held in
street name) will also have the same effect as a vote against the merger
agreement.
The stockholders present at the special meeting in person or by proxy may,
by a majority vote, vote to adjourn the meeting in the absence of a quorum, or
to adjourn the meeting even if a quorum is present. If a quorum is not present,
or if less than a majority of the outstanding shares are present and voting in
favor of the approval and adoption of the merger agreement, it is expected that
the meeting with be adjourned to allow additional time to solicit proxies.
Revocation of Proxies
A stockholder may revoke his or her proxy at any time before it is voted
by giving the Secretary of CBES written notice of revocation bearing a later
date than the proxy, by submitting a later-dated proxy, or by revoking the proxy
and voting in person at the special meeting. Attendance at the special meeting
will not in and of itself constitute a revocation of a proxy. Any written notice
revoking a proxy should be sent to the Corporate Secretary of CBES at 1001 North
Jesse James Road, Excelsior Springs, Missouri 64024.
Solicitation of Proxies
The costs of soliciting proxies will be borne by CBES. Proxies may be
solicited by certain of CBES's directors, officers and regular employees,
without additional compensation, in person or by telephone, email or facsimile.
CBES will request brokers and nominees who hold shares of common stock in their
names to furnish proxy materials to beneficial owners of common stock and will
reimburse such
12
brokers and nominees for their reasonable expenses incurred in forwarding
solicitation materials to such beneficial owners.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as of October 15, 2002, with
respect to persons known by CBES to be the beneficial owners of more than 5% of
the outstanding CBES common stock. A person may be considered to own any shares
of common stock over which he or she has, directly or indirectly, sole or shared
voting or investing power.
Number of Percent of Shares
Shares Beneficial Beneficially Owned
Name and Address Owned(1) Outstanding(1)
- ---------------- -------- --------------
Community Bank of Excelsior 65,649 7.50%
Springs, a Savings Bank, Employee
Stock Ownership Plan
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(2)
David H. Hancock 82,100 9.37%
12498 South 71 Highway
Grandview, Missouri 64030(3)
First Financial Fund, Inc. 86,600 9.89%
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey 07102-7503(4)
Wellington Management LLP
75 State Street
Boston, Massachusetts 02109(4)
Keith E. Doss 45,242 5.17%
P.O. Box 137
Kearney, Missouri 64060(5)
Investors of America Limited 55,900 6.38%
Partnership
135 North Meramac
Clayton, Missouri 63017(6)
All directors and executive 166,014 17.57%
officers as a group
(10 persons) (7)
- -----------------------------
(1) Beneficial ownership is determined in accordance with the rules of the SEC
which generally attribute beneficial ownership of securities to persons
who possess sole or shared voting power and/or investment power with
respect to those securities. Unless otherwise indicated, the persons
identified in this table have sole voting and investment power with
respect to all shares shown as beneficially owned by them.
(2) The amount reported represents shares held by the Community Bank Employee
Stock Ownership Plan, 42,539 of which have been allocated to accounts of
participants. Participants in the plan are entitled to instruct the
trustee as to the voting of shares allocated to their accounts under the
plan. Unallocated shares held in the plan's suspense account are voted by
the trustee in the same proportion as allocated shares voted by
participants.
(3) As reported on a Schedule 13D/A dated September 17, 2002, filed with the
SEC. Mr. Hancock has advised CBES that as of October 9, 2002, he is the
owner of 4,276,801 shares of the outstanding common stock of NASB. Of the
4,276,801 shares owned by Mr. Hancock, 272,068
13
shares are owned by Mr. Hancock's wife, as to which Mr. Hancock disclaims
beneficial ownership and their inclusion in this report shall not be
deemed as an admission that Mr. Hancock is the beneficial owner of such
shares for purposes of Section 16 of the Securities and Exchange Act of
1934, as amended, or for any other purpose.
(4) As reported on a Schedule 13G/A dated February 12, 2002, filed with the
SEC by First Financial Fund, Inc. As reported on a Schedule 13G/A dated
February 12, 2002, filed with the SEC by Wellington Management Company,
LLP ("Wellington"), Wellington also beneficially owns said 86,600 shares
of CBES common stock. This Schedule 13G/A discloses that First Financial
Fund, Inc. is a client of Wellington.
(5) As reported on a Schedule 13D dated January 8, 2001, filed with the
SEC.
(6) As reported on a Schedule 13G/A dated February 8, 2002, filed with
the SEC.
(7) The amount reported includes shares held directly, as well as
shares held jointly with family members, shares held in retirement
accounts, and shares held in a fiduciary capacity or by certain family
members, with respect to which shares the group members may be deemed to
have sole or shared voting and/or investment power. The amount reported
includes options to purchase 69,011 shares of common stock granted to
directors and executive officers of CBES under CBES's 1997 Stock Option
and Incentive Plan, which options are exercisable within 60 days of
October 15, 2002.
The following table provides information as of October 15, 2002 with
respect to shares of CBES common stock beneficially owned by:
o each director of CBES,
o the chief executive officer of CBES and each executive officer or
who made in excess of $100,000 (salary and bonus), in each case,
during the fiscal year ended June 30, 2002, and
o all directors and executive officers of CBES as a group.
Percent of
Number of Common Stock
Name/Title Shares Owned(1) Outstanding(1)
- ---------- --------------- --------------
Robert L. Lalumondier, Director(2) 7,355 *
Cecil E. Lamb, Director(3) 13,674 1.55%
Paul L. Thomas, Director Chairman of 30,651 3.42%
the Board and Chief Executive
Officer(4)
Dennis D. Hartman, Director and 20,152 2.28%
President of Community Bank of
Excelsior Springs(5)
Rodney G. Rounkles, Director(6) 14,420 1.64%
Richard N. Cox, Director (7) 21,960 2.49%
Robert E. McCrorey, Director(8) 32,563 3.70%
All directors and executive officers
as a group (ten persons) (9) 166,014 17.57%
- -----------------------------
* Less than one percent.
(1) Unless otherwise indicated, the persons identified in this table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them. Percentage ownership calculations are based on
875,805 shares of common stock outstanding and the number of shares
14
issuable to such persons upon the exercise of stock options exercisable
within 60 days of October 15, 2002.
(2) The amount includes 1,820 shares owned jointly by Mr. Lalumondier and his
wife and 5,125 shares issuable upon the exercise of options granted under
the CBES 1997 Stock Option and Incentive Plan.
(3) The amount includes 2,392 shares held in an IRA owned by Mr. Lamb, 4,840
shares owned jointly by Mr. Lamb and his wife, 1,317 shares held in an IRA
owned by Mr. Lamb's wife, as to which he disclaims beneficial ownership,
and 5,125 shares issuable upon the exercise of options granted under the
CBES 1997 Stock Option and Incentive Plan.
(4) The amount includes 19,300 shares issuable upon the exercise of options
granted under the CBES 1997 Stock Option and Incentive Plan.
(5) The amount includes 3,890 shares owned by Mr. Hartman in the Community
Bank ESOP, as to which he has sole voting power only, 100 shares owned by
Mr. Hartman's parents, as to which he disclaims beneficial ownership, and
9,737 shares issuable upon the exercise of options granted under the CBES
1997 Stock Option and Incentive Plan.
(6) The amount includes 820 shares owned jointly by Mr. Rounkles and his wife,
565 shares held in an IRA owned by Mr. Rounkles wife, as to which he
disclaims beneficial ownership, and 5,125 shares issuable upon the
exercise of options granted under the CBES 1997 Stock Option and Incentive
Plan.
(7) The amount includes 2,400 shares owned by a corporation controlled by Mr.
Cox and 5,125 shares issuable upon the exercise of options granted under
the CBES 1997 Stock Option and Incentive Plan.
(8) The amount includes 10,000 shares owned by a corporation controlled by Mr.
McCrorey, 1,980 shares held in an IRA owned by Mr. McCrorey, 10,000 shares
owned directly by Mr. McCrorey's wife, as to which he disclaims beneficial
ownership, 2,630 shares owned jointly by Mr. McCrorey and his wife and
5,125 shares issuable upon the exercise of options granted under the CBES
1997 Stock Option and Incentive Plan.
(9) The amount reported includes shares held directly, as well as shares held
jointly with family members, shares held in retirement accounts, and
shares held in a fiduciary capacity or by certain family members, with
respect to which shares the group members may be deemed to have sole or
shared voting and/or investment power. The ten group members consist of
the seven persons identified in this table and three other executive
officers of CBES. The amount reported includes 69,011 shares issuable to
directors and executive officers of CBES upon the exercise of options
granted under our 1997 Stock Option and Incentive Plan.
BACKGROUND OF THE MERGER
CBES is the holding company for Community Bank of Excelsior Springs, a
Savings Bank ("Community Bank"). CBES was organized by Community Bank for the
purpose of acquiring all of the capital stock of Community Bank in connection
with the conversion of Community Bank from mutual to stock form, which was
completed on September 27, 1996. The only significant assets of CBES are the
capital stock of Community Bank and CBES's loan to the Community Bank Employee
Stock Ownership Plan. Community Bank is a community-oriented financial
institution offering selected financial services, through its main office in
Excelsior Springs, Missouri, and its branch office in Liberty, Missouri, to
customers located in Clay and Ray Counties and to a lesser extent in surrounding
counties in Missouri. Community Bank attracts deposits from the general public
and has historically used such deposits primarily to originate one-to-four
family residential mortgage loans, construction and land loans for single-family
residential properties and consumer loans consisting principally of loans
secured by automobiles. Community Bank has also been an active participant in
the secondary market, originating residential mortgage loans for sale. At June
30, 2002, CBES had consolidated total assets of $112.9 million, deposits of
$87.8 million, and total stockholders' equity of $14.2 million.
Since the inception of CBES, the board has monitored the rapid pace of
consolidation in the financial services industry. An indication of interest from
NASB led the board to consider whether it would be in the best interests of CBES
and its stockholders to explore CBES's strategic alternatives,
15
including the possibility of a business combination with another financial
institution. On August 9, 2001, as part of its regular review of CBES's
strategic alternatives, the board charged management with the initial
responsibility of seeking the assistance of a financial advisor to CBES. At four
separate meetings of the board held during September and October 2001, the board
heard presentations from four financial advisory firms. On October 23, 2001, the
board selected Hovde Financial LLC ("Hovde") to provide CBES consulting and
strategic planning advice.
On January 3, 2002, the board met with representatives of Hovde to review
and evaluate the strategic alternatives available to CBES. The board, after
careful review of the alternatives, determined that CBES's efforts should be
initially focused on either a business combination with an equal size or larger
financial institution or an acquisition of another financial institution, and
authorized Hovde to pursue the possibility of a strategic business combination
for CBES. As part of this process, the board authorized Hovde to prepare a list
of appropriate financial institutions to be contacted to obtain expressions of
interest in a possible business combination with CBES.
On March 12, 2002, the board reviewed forms of a confidentiality and
standstill agreement and confidential descriptive memorandum of CBES to be
provided to prospective strategic merger partners. The board also reviewed a
list of financial institutions to be contacted. On March 12, 2002, the board
approved the confidentiality and standstill agreement, the confidential
descriptive memorandum and the list of institutions to be contacted. The board
further authorized Hovde to proceed to contact and negotiate with potential
strategic merger partners on behalf of CBES.
Hovde approached 49 financial institutions that it and CBES considered to
be potential merger partners. Several of those companies, including NASB,
expressed an interest in a possible business combination with CBES. After
further discussions with Hovde and the providing of additional information
regarding CBES, five of the companies stated a price range at which they would
be interested in acquiring CBES, subject to their satisfactory completion of due
diligence reviews of CBES's operations. The board voted to invite four of the
companies to perform due diligence reviews of CBES. Between June 17 and June 20,
2002, the four financial institutions completed such due diligence reviews of
CBES. Two of the parties withdrew after completing their reviews. On June 25,
2002, Hovde submitted final proposal instructions to the two parties that had
indicated their desire to make final proposals. Hovde's representatives held
discussions with each of the interested institutions for the purpose of refining
their offers and ascertaining whether a transaction with CBES would be possible.
Evidence of the financial ability of one of the parties to complete a
transaction with CBES was also requested by Hovde.
At a meeting of the board on July 12, 2002, Hovde reviewed with the board
the process that had been conducted to identify and contact potential merger
partners and the results of the discussions with the interested parties. Hovde
reviewed with the board in detail the two offers which it had received and the
financial information which had been obtained from the bidders. The board
concluded that the offer of NASB was more attractive, as the other party had not
provided satisfactory evidence of financing and NASB appeared to be in a
financial position to complete the transaction. NASB is headquartered in
Grandview, Missouri, and is the parent corporation of North American Savings
Bank, F.S.B., a federally chartered savings and loan association ("North
American"). At June 30, 2002, NASB had consolidated assets of $932 million, net
loans receivable of $850 million and stockholders' equity of $104 million.
At the July 12 board meeting, Stinson Morrison Hecker LLP, as legal
counsel for CBES, reviewed with the board its fiduciary duties to stockholders.
Hovde also presented and discussed with the board its financial analyses of the
purchase price offered by NASB and stated it would be prepared to deliver, upon
the execution of a definitive merger agreement, a written opinion to the board
that the merger consideration offered by NASB was fair, from a financial point
of view, to the stockholders of CBES. After considering the terms of the
proposal and the presentation by Hovde, the board determined that pursuing a
transaction with NASB on the terms proposed would be in the best interests of
CBES and its stockholders. The board then authorized its representatives to
enter into discussions with NASB for the purpose of negotiating a definitive
merger agreement.
Following the July 12 board meeting, CBES's legal counsel and legal
counsel for NASB entered into discussions to negotiate the terms of the merger
agreement. Over the next few weeks, representatives
16
of CBES also conducted a limited due diligence review of NASB and North
American. During this period, the parties worked to further refine the pricing
of the transaction. The progress of these negotiations was periodically reported
to the members of the CBES board by a negotiating committee.
A draft of the merger agreement that was substantially in the form of the
final agreement was provided to the board prior to a meeting on September 3,
2002. At the September 3 meeting, the CBES negotiating committee reviewed in
detail with the board the contents of the proposed merger agreement.
Representatives of Hovde presented by conference telephone their detailed
financial analyses of the proposed transaction. Hovde reported that in its
opinion the merger consideration was fair, from a financial point of view, to
CBES stockholders and delivered to the board a letter to this effect, dated
September 3, 2002.
Upon conclusion of the foregoing review and discussions, a vote was taken
and the board, by a vote of five directors in favor and two directors opposed,
concluding that the merger agreement should be approved and authorizing Paul L.
Thomas to execute the merger agreement and related documents on behalf of CBES.
Richard N. Cox and C.E. Lamb voted against the approval of the merger agreement.
MARKET PRICE AND DIVIDEND DATA FOR CBES COMMON STOCK
CBES common stock is quoted on the National Market System of the NASDAQ
Stock Market under the symbol "CBES". The following table shows the high and low
sales prices per share for CBES common stock as reported on the NASDAQ National
Market SM and the cash dividends declared by CBES for the periods indicated.
CBES Common Stock
High Low Dividends
-----------------------------------
Fiscal 2001
Quarter ended September 30, 2000 12.75 9.00 .08
Quarter ended December 31, 2000 10.88 8.08 .08
Quarter ended March 31, 2001 12.44 8.52 .08
Quarter ended June 30, 2001 13.10 10.91 .08
Fiscal 2002
Quarter ended September 30, 2001 14.75 12.50 .08
Quarter ended December 31, 2001 14.79 13.18 .08
Quarter ended March 31, 2002 13.80 12.00 .08
Quarter ended June 30, 2002 15.00 13.07 .08
Fiscal 2003
Quarter ending September 30, 2002 18.78 13.40 None
Quarter ending December 31, 2002 17.95 17.26 None
(through October 15, 2002)
As of September 20, 2002, there were approximately 200 holders of record
of CBES common stock. This number does not reflect the number of persons or
entities who may hold their common stock in nominee or "street name" through
brokerage firms.
17
THE MERGER AGREEMENT
GENERAL
All references to and summaries of the merger agreement contained herein
are qualified in their entirety by reference to the text of the merger
agreement, which is attached hereto as Appendix A.
The merger agreement provides that, subject to the approval thereof by the
stockholders of CBES and the satisfaction of certain other conditions,
Acquisition Sub, a wholly-owned subsidiary of NASB, will be merged with and into
CBES, with CBES being the surviving corporation and thereby becoming
wholly-owned by NASB. Acquisition Sub was formed by NASB solely for the purposes
of carrying out the merger and has no business or significant assets. At the
effective time of the merger, the separate existence of Acquisition Sub will
cease.
At the effective time of the merger, each outstanding share of common
stock of CBES (other than shares held by CBES as treasury stock and shares held
by dissenting stockholders who perfect their statutory appraisal rights) will be
converted into the right to receive $17.50 in cash per share, subject to
adjustment in certain circumstances. See "Payment For CBES Shares" below.
Notwithstanding the foregoing, appraisal rights will be available for shares of
any dissenting stockholder who complies with the provisions of the General
Corporation Law of the State of Delaware regarding appraisal rights. See "Rights
of Dissenting Stockholders" below. Except for the foregoing rights, after the
merger present holders of common stock of CBES will possess no interest in the
stock or other rights as stockholders of CBES.
The merger agreement provides that the officers and directors of CBES
shall resign at the effective time of the merger and that NASB shall appoint new
officers and directors of CBES. The directors and certain designated officers of
Community Bank immediately prior to the merger are also required to resign at
the effective time of the merger.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE CBES BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT THE CBES STOCKHOLDERS APPROVE AND ADOPT SUCH AGREEMENT.
REASONS FOR THE MERGER
The board has determined that the merger and the merger agreement are
advisable and are fair to, and in the best interests of, CBES and its
stockholders. In reaching this determination, the board considered a number of
factors, including the following:
o The board's knowledge of CBES's and Community Bank's consolidated
business operations, management, operating results, earnings,
financial condition and prospects.
o Information concerning NASB's and North American's consolidated
business operations, management, operating results, earnings,
financial condition and prospects, as a separate group and as combined
with CBES.
o The oral and written financial analyses presented by Hovde, as the
financial advisor to CBES, and the opinion of Hovde that the merger
consideration is fair, from a financial point of view, to CBES
stockholders. (See "Opinion of CBES's Financial Advisor" below).
o The fact that the proposed merger will provide CBES stockholders with
the opportunity to receive $17.50 in cash per share, as adjusted in
certain circumstances, which represents a premium over the prices at
which the CBES common stock has recently traded. On September 5, 2002,
the last trading date prior to the public announcement that CBES and
NASB had entered into a merger agreement, the closing price of CBES
common stock was $13.50 per share.
18
o The historical trading prices for CBES common stock. (See "Market
Price and Dividend Data for CBES Common Stock" above.)
o The board's assessment that Hovde had made diligent efforts to solicit
prospective merger partners for CBES and the board's conclusion that
the merger transaction proposed by NASB was superior to the other
transactions available to CBES and its stockholders.
o The results of CBES's due diligence investigations of NASB, including
the board's assessment of the financial ability of NASB to pay the
merger consideration and the likelihood of the merger with NASB being
approved by regulatory authorities.
o The terms of the merger agreement, including the taxable nature of the
cash consideration to be paid to CBES stockholders.
o The current and prospective economic, competitive and regulatory
environment facing CBES, NASB and the financial services industry.
o CBES's strategic alternatives to the merger, including the alternative
of continuing to operate CBES as an independent financial institution.
The foregoing discussion of the information and factors considered by the board
is not intended to be exhaustive. In reaching its determination to approve and
recommend the merger to stockholders, the board did not quantify or assign
relative weights to any of the foregoing factors. In addition, individual
directors gave different weights to different factors, as evidenced by the vote
of two directors against approval of the merger agreement.
OPINION OF CBES'S FINANCIAL ADVISOR
Hovde Financial LLC has acted as financial advisor to CBES in connection
with the proposed merger. CBES selected Hovde based on its experience and
expertise in the investment-banking business.
Hovde has delivered to the CBES board its opinion that, based upon and
subject to the various considerations set forth in its written opinion dated
September 3, 2002, the merger consideration is fair from a financial point of
view to the holders of CBES common stock as of such date. In requesting Hovde's
advice and opinion, no limitations were imposed by CBES upon Hovde with respect
to the investigations made or procedures to be followed by it in rendering its
opinion.
THE FULL TEXT OF THE OPINION OF HOVDE, DATED SEPTEMBER 3, 2002, WHICH
DESCRIBES THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO AS APPENDIX B. CBES
STOCKHOLDERS SHOULD READ THIS OPINION IN ITS ENTIRETY. HOVDE'S OPINION IS
DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE MERGER
CONSIDERATION, AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY CBES STOCKHOLDER
AS TO HOW THE STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING. THE SUMMARY OF THE
OPINION OF HOVDE SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE FULL TEXT OF THE OPINION.
Hovde, as part of its investment banking business, is continually engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive bidding, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Hovde is familiar with
CBES, having acted as its financial advisor in connection with, and having
participated in the negotiations leading to, the merger agreement. In the course
of its daily trading activities, investment funds controlled by an affiliate (as
such term is defined in Regulation 12G-2 promulgated under the Securities
Exchange Act of 1934, as amended) of Hovde and their affiliates may from time to
time effect transactions and hold securities of CBES and NASB. As of the date of
its opinion, Hovde-affiliated entities owned no shares of either company.
Hovde will receive a fee contingent upon the completion of the merger for
services rendered in connection with advising CBES regarding the merger,
including the fairness opinion and financial advisory services provided to CBES.
As of the date of this proxy statement, such fee would have been approximately
$200,000 and Hovde has received $50,000 of such fee to date.
19
The following is a summary of the analyses performed by Hovde in
connection with its fairness opinion. Certain of these analyses were presented
to the CBES board by Hovde on September 3, 2002. The summary set forth below
does not purport to be a complete description of either the analyses performed
by Hovde in rendering its opinion or the presentation made by Hovde to the
board, but it does summarize all of the material analyses performed and
presented by Hovde.
The preparation of a fairness opinion involves various determinations as
to the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances. In arriving at its
opinion, Hovde did not attribute any particular weight to any analysis and
factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Hovde may have given
various analyses more or less weight than other analyses. Accordingly, Hovde
believes that its analyses and the following summary must be considered as a
whole and that selecting portions of its analyses, without considering all
factors and analyses, could create an incomplete view of the process underlying
the analyses set forth in its report to the CBES board and its fairness opinion.
In performing its analyses, Hovde made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of CBES and NASB. The analyses
performed by Hovde are not necessarily indicative of actual value or actual
future results, which may be significantly more or less favorable than suggested
by such analyses. Such analyses were prepared solely as part of Hovde's analysis
of the fairness of the merger consideration, from a financial point of view, to
the CBES stockholders. The analyses do not purport to be an appraisal or to
reflect the prices at which a company might actually be sold or the prices at
which any securities may trade at the present time or at any time in the future.
Hovde's opinion does not address the relative merits of the merger as compared
to any other business combination in which CBES might engage. In addition, as
described above, Hovde's opinion to the board was one of many factors taken into
consideration by the board in making its determination to approve the merger
agreement.
During the course of Hovde's engagement and for the purposes of the
opinion set forth herein, Hovde:
o reviewed the merger agreement;
o reviewed certain historical publicly available business and financial
information concerning NASB and CBES;
o reviewed certain internal financial statements and other financial
and operating data concerning NASB and CBES;
o analyzed certain financial projections prepared by the management of
CBES;
o reviewed historical market prices and trading volumes for CBES common
stock;
o reviewed the terms of recent merger and acquisition transactions, to
the extent publicly available, involving thrift and thrift holding
companies that Hovde considered relevant;
o analyzed the pro forma impact of the merger on the combined company's
earnings per share, consolidated capitalization and financial ratios;
and
o performed such other analyses and considered such other factors as
Hovde deemed appropriate.
In rendering its opinion, Hovde assumed, without independent verification,
the accuracy and completeness of the financial and other information and
representations contained in the materials provided to it by NASB and CBES and
in the discussions with NASB's and CBES's management. In that regard, Hovde
assumed that the financial forecasts, including without limitation the
projections regarding under-performing and non-performing assets and net
charge-offs, have been reasonably prepared on a basis reflecting the best
currently available information and judgments and estimates of NASB and CBES,
and that such forecasts will be realized in the amounts and at the times
contemplated thereby. Hovde is not an expert in the evaluation of loan and lease
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto and assumed that such allowances for NASB and CBES are in
the aggregate adequate to cover such losses. Hovde was not retained to and did
not conduct a physical
20
inspection of any of the properties or facilities of NASB or CBES. In addition,
it did not review individual credit files and did not make an independent
evaluation or appraisal of the assets and liabilities of NASB, and CBES and was
not furnished with any such evaluation or appraisal.
Transaction Multiple Analysis. Hovde compared merger consideration to the
book value of CBES common stock, tangible book value, adjusted core 6.5%
capital, 2003 and 2004 estimated GAAP earnings per share (EPS), assets,
deposits, and tangible book value to core deposits premium. Assuming merger
consideration per share of $17.50, Hovde observed that the implied transaction
multiples to CBES were as follows:
Merger consideration to book value 108.8%
Merger consideration to tangible book value 108.8%
Merger consideration to adjusted 6.5% core capital 115.7%
Merger consideration to 2003 FY estimated GAAP EPS 65.7x
Merger consideration to 2004 FY estimated GAAP EPS 38.0x
Merger consideration to assets 13.7%
Merger consideration to deposits 17.6%
Premium over tangible book value to core deposits 1.6%
Premium to Market Analysis Based on CBES Historical Trading Values. Hovde
reviewed the merger consideration premium to CBES common stock prices during
different periods ending August 14, 2002 (the last day actual trades took place
in CBES common stock prior to September 3, 2002) using the 5-day, 10-day,
20-day, 30-day, 45-day, 60-day and 90-day average closing price of CBES common
stock on days where trades were executed. Hovde observed that the merger
consideration premium to CBES common stock average closing prices over these
periods were as follows:
CBES Merger Consideration
Average Premium to Average
Closing Price Closing Price
------------- --------------------
Last trading day $13.75 27.27%
Last 5 Trading Days $13.77 27.09%
Last 10 Trading Days $13.81 26.70%
Last 20 Trading Days $14.01 24.89%
Last 30 Trading Days $13.94 25.57%
Last 45 Trading Days $13.75 27.31%
Last 60 Trading Days $13.65 28.25%
Last 90 Trading Days $13.43 30.33%
Stock Trading History Analysis. Hovde reviewed the history of the reported
trading prices and volume of CBES common stock and the relationship between the
movements in the prices of CBES common stock to movements in certain stock
indices, including the Standard & Poor 500 Index, the Russell 2000 Financial
Services Index, and the NASDAQ Bank and Thrift Index. Hovde noted that during
the one year period ended September 3, 2002, CBES common stock underperformed
the Russell 2000 Financial Services Index and the NASDAQ Bank and Thrift Index,
and outperformed the Standard & Poor 500 Index, as reflected below:
21
Beginning Index Ending Index
Value on Value on
September 3, 2001 September 3, 2002
----------------- -----------------
CBES 100.00% 91.53%
NASDAQ Bank and Thrift Index 100.00% 110.38%
Russell 2000 Financial Services Index 100.00% 103.21%
S&P 500 Index 100.00% 77.46%
Hovde also noted that during the three year period ended September 3,
2002, CBES common stock underperformed the Russell 2000 Financial Services Index
and the NASDAQ Bank and Thrift Index, and outperformed the Standard & Poor 500
Index, as reflected below.
Beginning Index Ending Index
Value on Value on
September 3, 1999 September 3, 2002
----------------- -----------------
CBES 100.00% 84.38%
NASDAQ Bank and Thrift Index 100.00% 131.99%
Russell 2000 Financial Services Index 100.00% 120.97%
S&P 500 Index 100.00% 64.69%
Analysis of Selected Mergers. Hovde reviewed comparable mergers involving
thrifts and thrift holding companies headquartered in Missouri announced since
January 1, 1999, in which the seller's assets were between $100 million and $300
million. This Missouri merger group consisted of the following four
transactions:
- ---------------------------------------------------------------------------
Buyer Seller
- ---------------------------------------------------------------------------
DFC Acquisition Corp., MO Hardin Bancorp, Inc., MO
- ---------------------------------------------------------------------------
DFC Acquisition Corp., MO Cameron Financial Corp., MO
- ---------------------------------------------------------------------------
Central Bancompany, MO Fulton Bancorp, Inc., MO
- ---------------------------------------------------------------------------
Citizens Bancshares Co., MO MBLA Financial Corp., MO
- ---------------------------------------------------------------------------
Hovde also reviewed comparable mergers involving thrifts and thrift
holding companies headquartered in the Midwest announced since January 1, 1998,
in which the seller's assets were between $50 million and $500 million and
seller's non-performing assets-to-assets were in excess of 50 basis points. This
Midwest Non-Performer merger group consisted of the following seven
transactions:
- ---------------------------------------------------------------------------
Buyer Seller
- ---------------------------------------------------------------------------
Robertson Holding Co., TN Cumberland Mountain Bancshares, KY
- ---------------------------------------------------------------------------
CKF Bancorp Inc., KY First Lancaster Bancshares, KY
- ---------------------------------------------------------------------------
First Busey Corp., IL Eagle BancGroup Inc., IL
- ---------------------------------------------------------------------------
Central Bancompany, MO Fulton Bancorp, Inc., MO
- ---------------------------------------------------------------------------
Citizens Bancshares Co., MO MBLA Financial Corp., MO
- ---------------------------------------------------------------------------
FBOP Corp., IL Calumet Bancorp Inc., IL
- ---------------------------------------------------------------------------
Blue River Bancshares Inc., IN Shelby County Bancorp, IN
- ---------------------------------------------------------------------------
Hovde calculated the medians, averages, high and lows for the following
relevant transaction ratios in the Missouri merger group and the Midwest
Non-Performer merger group: the multiple of the offer value to the acquired
company's earnings per share for the 12 months preceding the announcement date
of the transaction; the multiple of the offer value to the acquired company's
book value per share and tangible book value per share; and the tangible book
value premium to core deposits, each as of the announcement date of
22
the transaction. Hovde compared these multiples with the corresponding multiples
for the merger, based on merger consideration per share of $17.50. The results
of this analysis are as follows:
Offer Value to
---------------------------------------
12 months Ratio of
Tangible
Tangible Preceding Book Value
Book Value Book Value Earnings Premium to Core
Per Share Per Share Per Share Deposits
(x) (x) (x) (%)
------------ ------------ ----------- ----------------
CBES 1.09 1.09 Negative 1.6
EPS
Missouri merger group median 1.15 1.15 17.6 4.0
Missouri merger group average 1.14 1.14 19.1 4.7
Missouri merger group low 1.00 1.00 12.1 0.8
Missouri merger group high 1.25 1.25 29.0 9.9
Midwest Non-Performer merger group median 1.15 1.15 23.5 5.3
Midwest Non-Performer merger group average 1.20 1.20 22.4 5.2
Midwest Non-Performer merger group low 1.06 1.06 11.5 1.1
Midwest Non-Performer merger group high 1.41 1.41 30.3 9.9
Hovde noted that because CBES had a negative earnings stream for the 12
months ended June 30, 2002, the multiple of the offer value to CBES's earnings
per share for the 12 months preceding June 30, 2002, would be not be meaningful.
Of the four transactions in the Missouri merger group and the seven transactions
in the Midwest Non-Performer merger group, only Cumberland Mountain Bancshares
in Kentucky had a negative earnings stream for the 12 months preceding
announcement of its merger and therefore was similarly not meaningful.
Discounted Cash Flow Analysis. Hovde estimated the discounted present
value of the CBES common stock by using estimated 2003-2007 cash earnings of
$234.5 thousand, $405.3 thousand, $552.8 thousand, $718.3 thousand and $862.6
thousand, respectively, and 2003-2005 dividends per share of $0.32, 2006
dividends per share of $0.36 and 2007 dividends per share of $0.40. In arriving
at the terminal value of CBES's estimated earnings stream at the end of 2007,
Hovde assumed a terminal value multiple at a range of 12.5, 15.0, 17.5, 20.0 and
22.5 times earnings. The terminal value was then discounted, along with yearly
cash flows for 2003 through 2007, using a range of discount rates of 10.0%,
11.0%, 12.0%, 13.0% and 14.0% to arrive at the present value for CBES common
stock. These rates and values were chosen to reflect different assumptions
regarding the required rates of return of holders or prospective buyers of CBES
common stock. This analysis and its underlying assumptions yielded a range of
values for CBES common stock of approximately $7.67 to $15.00 per share. Hovde
noted that the merger consideration per share of $17.50 is in excess of all
values generated in this analysis.
Marked-to-Market Analysis. Hovde calculated a liquidation value of CBES
based on estimated value of its component assets and liabilities. For purposes
of this analysis, Hovde assumed an aggregate value equal to common stockholders'
equity of CBES at June 30, 2002, as adjusted to reflect an estimated range of
values for transaction costs, premiums paid to retire existing borrowings,
deposit premiums, marked-to-market adjustments on the loan and investment
portfolios, appraisals of fixed assets, intangibles writedowns and contingent
liabilities. This analysis imputed a per share value of $14.30, which was lower
than the merger consideration per share of $17.50.
Based upon the foregoing analyses and other investigations and assumptions
set forth in its opinion, without giving specific weightings to any one factor
or comparison, Hovde determined that the merger consideration was fair from a
financial point of view to the CBES stockholders.
23
No material relationship has previously existed between Hovde and CBES or
NASB, or between Hovde and the affiliates of either CBES or NASB, and no future
material relationship is presently contemplated.
WHEN THE MERGER WILL BE COMPLETED
If the merger agreement is approved by the stockholders of CBES, the
closing of the merger will take place not more than 15 days after the
satisfaction or waiver of all of the conditions to the merger contained in the
merger agreement, unless NASB and CBES agree to another date. On the date of the
closing, a Certificate of Merger will be filed with the Secretary of State of
Delaware and Articles of Merger will be filed with the Secretary of State of
Missouri. The merger will become effective at the time stated in the Certificate
and Articles of Merger (the "effective time" of the merger).
CBES expects to complete the merger in the fourth quarter of 2002.
However, CBES cannot guarantee when or if the required approvals will be
obtained. Furthermore, either party may terminate the merger agreement if the
merger has not been completed on or before January 31, 2003, unless failure to
complete the merger by that time is due to the breach of any representation,
warranty or covenant by the party seeking to terminate the merger agreement.
PAYMENT FOR CBES SHARES
Unless you are a dissenting stockholder who properly demands and perfects
your appraisal rights, upon the effective time of the merger your shares of CBES
common stock will be converted into the right to receive a cash payment of
$17.50 per share. Upon the effective time of the merger, you will no longer own
any common stock or have any interest in CBES, nor will you receive any stock of
NASB as a result of the merger.
The $17.50 per share cash payment that you are to receive in the merger is
subject to adjustment based upon the level of CBES's adjusted stockholders'
equity as of the close of business on the last day immediately prior to the
effective time of the merger. If CBES's adjusted stockholders' equity
immediately prior to the effective time is more than $13,900,000, there will be
no adjustment in the $17.50 per share cash merger consideration. If CBES's
adjusted stockholders' equity immediately prior to the effective time is less
than $13,900,000 but equal to or greater than $13,500,000, the cash merger
consideration will be reduced to $17.05 per share. If CBES's adjusted
stockholders' equity is less than $13,500,000 immediately prior to the effective
time, NASB has the right to terminate the merger agreement or to close the
merger for cash merger consideration of $17.05 per share. CBES's stockholders'
equity at June 30, 2002 was $14,172,000.
"Adjusted stockholders' equity" for purposes of the foregoing adjustments
to the merger consideration is defined in the merger agreement to exclude (i)
all professional fees related to the merger, including but not limited to legal,
investment banking and accounting fees, (ii) all severance payments from CBES or
Community Bank to employees terminated prior to the effective time, including
but not limited to cash severance payments and reimbursements for welfare
benefits pursuant to the Community Bank Severance Plan, payments of bonuses and
welfare benefits pursuant to the terms of Employee Bonus Agreements between
Community Bank and certain of its officers, and payment of accrued paid time off
and extended leave as required by the Community Bank Employee Manual, (iii) all
fair market value accounting adjustments required by Statement of Financial
Accounting Standards No. 115 after June 30, 2002, (iv) if Community Bank's
allowance for loan and lease losses ("ALLL") exceeds the amount required by
applicable statutes and regulations, any subsequent writedowns of loans and
other real estate owned treated by Community Bank as a reduction to its ALLL
instead of as a reduction to its income or stockholders' equity, to the extent
allowed by GAAP and the Office of Thrift Supervision ("OTS"), (v) all reductions
in the value of Community Bank loans requested by NASB, and (vi) the value of
all assets, leasehold improvements and expenses relating to the closing of
Community Bank's Liberty, Missouri branch.
24
SURRENDER OF STOCK CERTIFICATES
CBES STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES REPRESENTING
CBES COMMON STOCK AT THIS TIME.
Within five business days after the effective time of the merger, NASB or
an exchange agent designated by it will mail to each stockholder a form of
transmittal letter with instructions on how to surrender certificates previously
representing shares of CBES common stock for the cash merger consideration.
When you mail your completed letter of transmittal and your CBES stock
certificates in accordance with the accompanying instructions, you may elect
either to have the amount of cash that you are entitled to receive (i) deposited
in a specified account at a financial institution of your choice or (ii) paid by
a check mailed to you. The stock certificates which you surrender will be
cancelled. You will not be entitled to receive interest on any cash to be paid
as merger consideration.
In the event of a transfer of ownership of shares of common stock that has
not been registered on the stock transfer records of CBES, NASB may deposit the
cash merger consideration for such shares in an account at a financial
institution of a stockholder's choice, or may issue a check for the cash merger
consideration to the stockholder who holds such shares of common stock, if the
certificate representing such shares is presented with documents that are
sufficient in the reasonable discretion of NASB or its exchange agent:
o to evidence and effect such transfer, and
o to evidence that all applicable stock transfer taxes have been paid.
If your CBES stock certificates have been lost, stolen or destroyed, you
will have to prove that you owned these certificates, and that they were lost,
stolen or destroyed, before you will be entitled to receive payment of any
merger consideration for such certificates. NASB or the exchange agent will send
you instructions on how to provide proof of ownership. You may be required to
make an affidavit and to post a bond in an amount sufficient to protect NASB
against claims related to your lost stock certificates.
After the effective time of the merger, there will be no further transfers
of CBES common stock. Stock certificates presented for transfer after the
effective time of the merger will be canceled and exchanged for the cash merger
consideration.
If NASB retains an exchange agent, any cash merger consideration and the
proceeds of any investments thereon that remain unclaimed by stockholders 12
months after the effective time of the merger will be repaid by the exchange
agent to NASB. Stockholders who have not complied with the exchange procedures
prior to 12 months after the merger may only look to NASB for payment of the
cash merger consideration they are entitled to receive in exchange for their
shares of common stock and such payments will not include any interest.
Each outstanding and unexercised option for the purchase of common stock
held by officers and employees under the CBES 1997 Stock Option and Incentive
Plan, whether or not it is vested, will be converted to a right to receive a
cash payment equal to the number of shares of common stock subject to the option
multiplied by the difference between $17.50 per share of common stock (as
adjusted) and the exercise price per share of the option. See "Stock Option
Plan" below.
REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT
Each of NASB, Acquisition Sub and CBES have made certain customary
representations and warranties to each other relating to their businesses in the
merger agreement. For information on these representations and warranties,
please refer to Article III of the merger agreement attached as Appendix A. The
representations and warranties must be true as of the date of the merger
agreement and as of the closing date of the merger. No representation or
warranty will be deemed to be untrue or incorrect and no party will be deemed to
have breached a representation or warranty unless there would likely exist a
25
material adverse effect. "Material adverse effect" is defined in the merger
agreement to mean an effect which is material and adverse to the business,
financial condition or results of operations of either party. The following,
however, are not considered in determining if there has been a material adverse
effect: (i) changes in laws, rules or regulations in GAAP or regulatory
accounting requirements or interpretations thereof; (ii) changes to economic
conditions affecting financial institutions generally; (iii) fees associated
with the merger; or (iv) changes to the merger agreement requested by NASB. See
"Conditions to the Merger" below.
CONDITIONS TO THE MERGER
The obligations of NASB and CBES to complete the merger are conditioned on
the following:
o approval of the merger agreement by CBES stockholders;
o receipt of all required regulatory approvals, consents and waivers
without any materially adverse conditions;
o no party to the merger being subject to any order, decree, ruling or
injunction that prohibits consummating the merger, no governmental
entity having instituted any proceeding for the purpose of blocking
the merger, and the absence of any statute, rule or regulation that
prohibits or restricts completion of the merger;
o no litigation, claim, action, suit or other legal or administrative
proceeding challenging the merger shall be pending against any party
or any subsidiaries, directors or officers of any party which NASB's
counsel believes would result in NASB paying damages and litigation
costs that would not be reimbursed by insurance or if NASB will have
to indemnify a person or persons in excess of $250,000 as a result
of such litigation, claim, action, suit or other legal or adminis-
trative proceeding; and
o the other party having performed in all material respects its obliga-
tions under the merger agreement, the other party's representations
and warranties being true and correct as of the date of the merger
agreement and as of the closing date.
The obligations of NASB to complete the merger are conditioned on CBES
having adjusted stockholders' equity of not less than $13,500,000. The
obligations of CBES to complete the merger also are conditioned on NASB having
sufficient cash to pay the aggregate merger consideration. NASB has advised that
the cash needed for the payment of the aggregate merger consideration will be
obtained from available cash on hand and from cash dividends provided by its
savings banking subsidiary. As a part of its due diligence investigations of
NASB, CBES reviewed the audited financial statements of NASB and, based on the
amount and nature of NASB's consolidated assets and stockholders' equity and
NASB's historical annual earnings, CBES made a favorable assessment as to NASB's
ability to pay the aggregate merger consideration.
We cannot guarantee that all of the conditions to the merger will be
satisfied or waived by the party permitted to do so. If the merger is not
completed on or before January 31, 2002, either party may terminate the merger
agreement by a vote of a majority of its board of directors.
Conduct of Business Pending the Merger
NASB and CBES have each agreed that, until the completion of the merger,
each of them will, and will cause its subsidiaries to, use its commercially
reasonable efforts to:
o conduct its business in the regular, ordinary and usual course
consistent with past practice;
o maintain and preserve intact its business organization, properties,
leases, employees and advantageous business relationships and
retain the services of its officers and key employees;
26
o take no action which would adversely affect or delay the ability of
NASB or CBES to perform their respective covenants and agreements on
a timely basis under the merger agreement; and
o take no action which would adversely affect or delay any party's
ability to obtain any necessary approval, consent or waiver of any
governmental authority required for the transactions contemplated by
the merger agreement or which would reasonably be expected to result
in those approvals, consents or waivers containing any material
condition or restriction.
Further, except as otherwise provided in the merger agreement or as
permitted by NASB, until the completion of the merger CBES has agreed that
neither it nor its subsidiaries will:
o change its certificate of incorporation or bylaws;
o authorize, issue, deliver or sell any shares of its capital stock, or
securities or obligations convertible or exercisable for any shares
of its capital stock, other than shares issued upon the exercise of
outstanding stock options;
o issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement relating to its
authorized or issued capital stock, or change the terms of any of its
outstanding stock options or warrants;
o split, combine, reclassify or adjust any shares of its capital stock
or otherwise change its capitalization;
o make, declare or pay any cash or stock dividend or other distribution
on its capital stock;
o acquire or sell, transfer, assign, mortgage, encumber or otherwise
dispose of any of its material assets or cancel, release or assign
any indebtedness, other than in the ordinary course of business
consistent with past practice;
o increase the compensation or fringe benefits of any of its employees
or directors;
o pay bonuses to its employees or directors;
o pay any pension or retirement allowance not required by any existing
plan or agreement to any employees or directors;
o become a party to, amend or commit to fund or otherwise establish any
trust or account related to any employee benefit plan with or for the
benefit of any employee or director;
o voluntarily accelerate the vesting of any stock option or other
compensation or benefit;
o grant or award any stock option, or make any discretionary contribu-
tion to any employee benefit plan;
o hire any employee with annual total compensation in excess of $30,000
or enter into any employment contract with any employee;
o change its method of accounting, except as required by changes in
generally accepted accounting principles or as contemplated by the
merger agreement;
o commence any litigation other than in the ordinary course of busi-
ness;
o settle any claim against it for money damages in excess of $25,000 or
agree to material restrictions on its operations;
o acquire or agree to acquire any business or assets of another busi-
ness that would be material to it, except in satisfaction of debts
previously contracted;
o extend or renew loans, or advance additional sums to a borrower whose
loans, in whole or in part, have been classified or listed as special
mention by any regulatory authority or included on Community Bank's
watch list;
27
o make, renegotiate, renew, increase, extend, modify or purchase any
loan, lease, advance, credit enhancement or other extension of
credit, or make any such commitment, except in conformance with
existing lending practice in amounts not to exceed $100,000 if
secured by real estate or certificates of deposit held by Community
Bank, $25,000 if secured by collateral other than real estate or
certificates of deposit held by Community Bank, or $0 if unsecured,
with respect to any individual borrower or loans as to which CBES
has a binding obligation to make such loans as of the date of the
merger agreement;
o establish or commit to establish any new branch or other office
facilities or file any application to relocate or terminate the
operations of any banking office other than the Liberty, Missouri
branch, provided, however, that if Community Bank is unable to
obtain a six month extension of its lease for its Liberty,
Missouri branch office, it shall provide notice to its landlord
that it intends to terminate the lease and notify the OTS of its
intent to close the branch.
o make any investment either by purchase of securities, contributions
to capital, property transfers, or purchase of any property or
assets of any other individual or entity, other than investments for
its portfolio made in accordance with the merger agreement;
o make any investment in any debt security (including mortgage-backed
and mortgage-related securities) except for short-to intermediate-
term U.S. government and U.S. government agency securities, securi-
ties of the Federal Home Loan Bank or insured jumbo certificates of
deposit, or materially restructure or change its investment securi-
ties portfolio, through purchases, sales or otherwise;
o enter into, renew, amend or terminate any contract or agreement, or
make any change in any of its leases or contracts;
o incur any additional borrowings other than short-term (six months or
less) Federal Home Loan Bank borrowings and reverse repurchase agree-
ments consistent with past practice, or pledge any of its assets to
secure any borrowings other than in connection with such borrowings
and reverse repurchase agreement or as required pursuant to the terms
of borrowings of CBES or its subsidiaries in effect as of the date of
the merger agreement;
o make any capital expenditures in excess of $5,000 per expenditure,
other than pursuant to prior binding commitments and other than
expenditures necessary to maintain existing assets in good repair or
to make payment of necessary taxes;
o elect any new executive officer or director;
o accept any deposit from any person on terms materially more favorable
in any respect than those available to the general public in CBES's
market area, unless such deposit is accepted in accordance with a
safe and sound program or practice in existence at Community Bank
prior to the date of the merger agreement;
o establish or impose a schedule of service charges or fees which
applies charges substantially more or substantially less than similar
service charges and fees charged by other banks in CBES's market
areas;
o organize, capitalize, lend to or otherwise invest in any subsidiary;
o engage in any transaction that is not in the usual and ordinary
course of business and consistent with past practice;
o enter into any new line of business;
o take or omit to take any action that is intended or may reasonably be
expected to result in any of CBES's representations and warranties
set forth in the merger agreement being or becoming untrue in any
material respect or which would make any if such representations and
warranties untrue and incorrect in any material respect if made anew
after taking such action;
28
o make any equity investment or commitment to make such an investment
in real estate or in any real estate development project, other than
in connection with foreclosures, settlement in lieu of foreclosure or
troubled loan or debt restructuring in the ordinary course of busi-
ness consistent with prudent banking practices;
o make, increase or renew any loan or other extension of credit, or
commit to make, increase or renew any such loan or extension of
credit, to any director or officer of CBES or any of its subsid-
iaries, or any entity controlled, directly or indirectly, by any of
the foregoing; or
o agree to take or make any commitment to take any of the actions
listed above.
COVENANTS OF THE PARTIES
Agreement Not to Solicit Other Offers
The merger agreement prohibits CBES and Community Bank and their officers,
directors, employees, representatives, agents and affiliates from directly or
indirectly initiating, soliciting, knowingly encouraging or facilitating any
acquisition proposal with a third party, or entering into discussions with any
party in furtherance of such inquiries. An acquisition proposal includes the
following:
o any merger, consolidation, share exchange, business combination or
other similar transaction;
o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets of CBES or Community Bank,
taken as a whole, in a single transaction or series of transactions;
o any tender offer or exchange offer for 25% or more of the outstanding
shares of capital stock of CBES or the filing with the SEC of a
registration statement for that purpose; and
o any public announcement of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the foregoing.
Despite the foregoing agreement not to solicit other acquisition
proposals, the board of directors of CBES may under certain circumstances
furnish information to or enter into discussions or negotiations with anyone who
makes an unsolicited, written, bona fide acquisition proposal that is a
financially superior proposal to the NASB merger. A proposal of this nature is
one upon which CBES's board has concluded, after consulting with its financial
advisors and legal counsel, that action is necessary for the board to comply
within its fiduciary duties to stockholders. Before CBES enters into
negotiations with a third party regarding a superior proposal, it has to give
reasonable notice to NASB and must obtain from the third party an executed
confidentiality agreement.
The merger agreement requires the board to recommend that stockholders
approve and adopt the merger agreement, except to the extent legally required
for the discharge by the board of its fiduciary duties as advised by its
counsel. The merger agreement permits the board to withdraw or modify its
recommendation if an acquisition proposal is made and the board (i) has received
a written opinion from its financial advisor that such proposal may be superior
from a financial point-of-view to CBES stockholders and (ii) determines after
consultation with independent legal counsel that such action is necessary to
comply with its fiduciary duties to stockholders.
Employee Matters
Each person who is an employee of CBES or its subsidiaries as of the
effective time of the merger and whose employment is not specifically terminated
at or prior to closing will become an employee of the combined company or its
subsidiaries. Each of these continuing employees will be an employee at will.
All employees who continue as employees of the combined company after the
merger will be eligible to participate in NASB's benefit plans on the same basis
as a new employee of NASB. Service
29
with CBES or its subsidiaries will be treated as service with NASB for purposes
of satisfying any waiting periods, evidence of insurability requirements or the
application of any preexisting condition limitation with respect to any NASB
welfare benefit plan. Each continuing employee shall receive credit for service
with CBES or its subsidiaries for purposes of any employee benefit plans or
computing vacation pay benefits.
Prior to September 30, 2002, Community Bank made a contribution of
approximately $24,695 to Community Bank's Employee Stock Ownership Plan for the
fiscal year ended December 31, 2002 to provide the ESOP funds to meet the ESOP's
obligations on its loan from CBES, the proceeds of which were used by the ESOP
to purchase CBES stock at the inception of the ESOP. Community Bank will make no
other contributions to the ESOP. Any merger consideration received by the plan
that remains after this loan is repaid will be allocated to the accounts of the
plan participants as investment earnings. The plan then will be terminated and
distributions of benefits under the plan will be made to participants in
accordance with the provisions of the plan.
At its September 3, 2002 meeting, Community Bank's board adopted a
change-in-control severance plan. The plan entitles all salaried and hourly
employees, other than part-time employees or employees paid on a commission
basis, to a severance payment if the employee is terminated involuntarily, other
than for cause, (i) within six months after a change in control of Community
Bank or (ii) during the period of time commencing upon the date when the board
of directors authorizes management to negotiate the terms and conditions of a
definitive agreement with the intent of effecting a change in control and ending
on the date when a change of control occurs or the negotiations for a change in
control are terminated. An employee is also eligible to receive the severance
payment if he or she voluntarily leaves during either of the above periods due
to certain changes in his or her employment conditions or compensation. The plan
is not applicable to salaried employees who are covered by an agreement that
explicitly addresses compensation and benefits payable to them upon termination
of their employment. The amount of the payment under the plan would be equal to
(i) two weeks of base salary or hourly wages for employees who have been
employed by Community Bank for less than one year, (ii) one month of base salary
or four weeks of hourly wages for employees who have been employed by Community
Bank for more than one year but less than 11 years, or (iii) two months of base
salary or eight weeks of hourly wages for employees who have been employed by
Community Bank for 11 or more years. The transactions contemplated by the merger
agreement would constitute a change in control under the plan.
Indemnification of Directors and Officers
NASB has agreed to indemnify and hold harmless each director and officer
of CBES and Community Bank against liability and expenses arising out of matters
existing or occurring at or before the consummation of the merger to the extent
allowed under applicable law.
Certain Other Covenants
The merger agreement also contains other agreements relating to the
conduct of the parties before consummation of the merger, including the
following:
o After all required regulatory and stockholder approvals have been
received, and at the request of NASB, CBES will cause Community Bank
to revise its loan, litigation and real estate valuation policies and
practices, and investment and asset/liability management policies and
practices, to conform to those of North American. NASB must first
confirm that it is not aware of any fact that would prevent the
completion of the merger.
o CBES and Community Bank will give NASB reasonable access during normal
business hours to their properties, books, records and personnel and
furnish all information which NASB may reasonably request.
o NASB or Acquisition Sub, with the cooperation of CBES and Community
Bank, will submit all necessary filings and applications with any
governmental entity, the approval of which is required to complete the
merger and related transactions, and will obtain any
30
approval, consent or waiver of any third party that is required in
connection with the merger.
o NASB, Acquisition Sub and CBES will use all reasonable efforts to take
promptly all actions necessary, proper or advisable to consummate the
merger.
o NASB and CBES will consult with each other regarding any public
statement about the merger and any filing with any governmental entity
or with any national securities exchange.
o CBES will take all actions necessary to convene a meeting of its
stockholders to vote on the merger agreement. The CBES board will
recommend at the special stockholders' meeting that the stockholders
vote to approve the merger and will use its reasonable best efforts to
solicit stockholder approval, subject to the exceptions discussed
under "Covenants of the Parties - Agreement Not to Solicit Other
Officers" above.
o NASB and CBES each will notify the other of any contract defaults or
other events which would reasonably be likely to result in a material
adverse effect on it.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at or prior to the completion of
the merger, either before or after any requisite stockholder approval, by:
o the mutual consent of NASB and CBES in writing, if a majority of the
board of directors of each so determines;
o either party, if a majority of its board of directors so determines,
in the event of a failure of the stockholders of CBES to approve the
merger agreement;
o either party, if a required regulatory approval, consent or waiver is
denied or any governmental entity prohibits the merger or the other
transactions;
o either party, if a majority of its board of directors so determines,
in the event the merger is not consummated by January 31, 2003, unless
the failure to consummate by such time is due to a breach caused by
the party seeking to terminate;
o either party, if the other party makes a misrepresentation, breaches a
warranty or fails to fulfill a covenant that is not cured within a
specified time that would have a material adverse effect on the party
seeking to terminate;
o CBES, if its board of directors determines that it must accept a
superior offer from a third party in the exercise of its fiduciary
duties;
o NASB, if there shall have been a material adverse change in the
condition of CBES or Community Bank between the date of execution of
the merger agreement and the closing date and CBES fails to cure such
change within a specified time;
o NASB, if the adjusted stockholders' equity of CBES at the close of
business on the last day prior to the effective date of the merger is
less than $13,500,000; or
o NASB, if Phase I and Phase II environmental assessments of the
property on which the primary banking facility of Community Bank in
Excelsior Springs, Missouri is located determine that environmental
clean-up costs would exceed $500,000.
EXPENSES AND TERMINATION FEE
Each party will pay its own costs and expenses incurred in connection with
the merger.
If CBES terminates the merger agreement in order to accept a superior
offer from a third party and within six months CBES or Community Bank enters
into an agreement with that party to effect a merger,
31
consolidation, share exchange or similar transaction, CBES will be required to
pay to NASB a termination fee of $250,000.
CHANGES IN TERMS OF THE MERGER AGREEMENT
Before the completion of the merger, CBES may agree in writing to amend or
modify any provision of the merger agreement and any provision of the merger
agreement may be waived by the party benefited by the provision. However, after
the vote by the stockholders of CBES, no amendment or modification may be made
that would reduce the amount or change the kind of consideration to be received
by CBES stockholders under the terms of the merger, or contravene any provision
of applicable law or federal banking laws, rules and regulations.
REGULATORY APPROVALS
Completion of the merger is subject to prior regulatory approval. The
merger of Acquisition Sub with and into CBES is subject to the approval of the
OTS. NASB filed a merger application with the OTS on October 15, 2002. The
application is now pending and action on the application is expected to be
forthcoming at or about the time of the special meeting to vote on the merger.
We are not aware of any other regulatory approvals that are required for
completion of the merger. Should any other approvals be required, we presently
contemplate that we or NASB would seek those approvals. There can be no
assurance that approval of the OTS or any other approval, if required, will be
obtained.
The approval of any application merely implies the satisfaction of
regulatory criteria for approval, which does not include review of the merger
from the standpoint of the adequacy of the cash merger consideration to be paid
to CBES stockholders in exchange for their shares of CBES common stock.
Furthermore, regulatory approvals do not constitute an endorsement or
recommendation of the merger.
ACCOUNTING TREATMENT
NASB will account for the merger under the purchase method of accounting.
This means that NASB and CBES will be treated as one company as of the effective
time of the merger and that NASB will record the fair value of CBES's assets and
liabilities on its financial statements. NASB will record the excess of its
purchase price over the fair value of CBES's identifiable net assets as
goodwill.
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the merger to certain holders of CBES common stock. The
discussion is based upon the Internal Revenue Code (the "Code"), Treasury
Regulations, Internal Revenue Service rulings and judicial and administrative
decisions in effect as of the date of this proxy statement. This discussion
assumes that the common stock is generally held for investment. In addition,
this discussion does not address all of the tax consequences that may be
relevant to you in light of your particular circumstances or to CBES
stockholders subject to special rules, such as foreign persons, financial
institutions, tax-exempt organizations, dealers in securities or foreign
currencies, insurance companies or employees who acquired the stock pursuant to
the exercise of employee stock options or other compensation arrangements.
The receipt of cash for CBES common stock in connection with the merger
will be a taxable transaction for federal income tax purposes to stockholders
receiving such cash. You will recognize a gain or loss measured by the
difference between your tax basis for the common stock owned by you at the time
of the merger and the amount of cash you receive for your CBES shares. Your gain
or loss will be a capital gain or loss if the common stock is a capital asset to
you. Under present law, long-term capital gain recognized by an individual (gain
from the sale of a capital asset held for more than one year) generally will be
taxed at a maximum federal income tax rate of 20%.
The cash payments the holders of common stock will receive upon their
exchange of their common stock pursuant to the merger generally will be subject
to "backup withholding" for federal income tax purposes unless certain
requirements are met. Under federal law, the paying agent must withhold 31%
32
of the cash payments to holders of common stock to whom backup withholding
applies. The federal income tax withheld may be used by these persons to reduce
their federal income tax liability by the amount that is withheld. To avoid
backup withholding, a holder of common stock must provide the paying agent with
his or her taxpayer identification number and complete a form in which he or she
certifies that he or she has not been notified by the Internal Revenue Service
that he or she is subject to backup withholding as a result of a failure to
report interest and dividends. The taxpayer identification number of an
individual is his or her social security number.
Neither NASB nor CBES has requested or will request a ruling from the
Internal Revenue Service as to any of the tax effects to CBES stockholders of
the transactions discussed in this proxy statement and no opinion of counsel has
been or will be rendered to CBES stockholders with respect to any of the tax
effects of the merger to holders of common stock
The above summary of the material federal income tax consequences of the
merger is not intended as a substitute for careful tax planning on an individual
basis. In addition to the federal income tax consequences discussed above,
consummation of the merger may have significant state and local income tax
consequences that are not discussed in this proxy statement. Accordingly,
persons considering the merger are urged to consult their tax advisors with
specific reference to the effect of their own particular facts and circumstances
on the matters discussed in this proxy statement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some of CBES's directors and officers may have interests in the merger
that are in addition to, or different from, the interests of stockholders. The
CBES board was aware of these interests and considered them in approving the
merger agreement.
STOCK OWNERSHIP
The directors and executive officers of CBES, together with their
affiliates, beneficially owned a total of 166,014 shares of common stock
(representing 17.57% of all outstanding shares of the common stock) as of
October 15, 2002. The directors and executive officers will receive the same
consideration in the merger for their shares as the other CBES stockholders.
As reported on Schedule 13 G/A dated September 17, 2002, filed with the
SEC, David H. Hancock is a beneficial owner of 82,100 shares of common stock of
CBES, which constitutes 9.37% of the outstanding shares of CBES as of October
15, 2002. Mr. Hancock has advised CBES that he is the owner of 4,276,801 shares
of the common stock of NASB, which constitutes 50.79% of the outstanding shares
of NASB as of October 9, 2002. Included in this amount are 272,068 share of the
common stock of NASB owned by Mr. Hancock's wife, as to which he disclaims
beneficial ownership and their inclusion in this report shall not be deemed as
an admission the Mr. Hancock is the beneficial owner of such shares for purposes
of Section 16 of the Securities and Exchange Act of 1934, as amended, or for any
other purpose.
STOCK OPTION PLAN
The merger agreement provides that each option to purchase shares of
common stock pursuant to CBES's 1997 Stock Option and Incentive Plan that is
outstanding and unexercised on the effective time of the merger, whether or not
such option is then vested or exercisable, will automatically be deemed vested
and exercisable. Each such option will be converted on that date into the right
to receive in cash an amount equal to the difference between the per share
merger consideration (as adjusted) and the exercise price per share of the
option, multiplied by the number of shares of common stock subject to the
option. If the exercise price of any option is greater than the per share merger
consideration, such option will be cancelled without any payment being made for
it. As of October 15, 2002, the directors, the Chief Executive Officer and the
executive officers of CBES held options to purchase a total of 69,011 shares of
common stock. The following table reflects the number of vested and unvested
options, the weighted average exercise price of the options, and the amounts
payable to each director and named officer upon cancellation of their vested and
unvested options, based on the $17.50 per share merger consideration.
33
Amount
Weighted Amount Payable
Number of Number of Average Payable For For
Vested Unvested Exercise Vested Unvested
Name Options Options Price Options Options
---- --------- --------- -------- ----------- --------
Robert E. McCrorey, Director 5,125 None $19.25 None None
Richard N. Cox, Director 5,125 None $19.25 None None
Rodney G. Rounkles, Director 5,125 None $19.25 None None
Robert L. Lalumondier,
Director 5,125 None $19.25 None None
Cecil E. Lamb, Director 5,125 None $19.25 None None
Dennis D. Hartman, Director
and President 9,737 None $19.25 None None
Paul L. Thomas, Director
and Chief Executive Officer 19,300 None $12.87 $89,359 None
All directors and executive
officers as a group
(ten persons) 69,011 None $17.47 $89,359 None
DIRECTOR EMERITUS AGREEMENTS
In 1997 Community Bank established a policy of entering into director
emeritus agreements with its directors pursuant to which each director serving
at that time would be entitled upon retirement to an annual retirement benefit
based on the director's years of service on the Community Bank board of
directors, payable over a 120 month period. Upon termination following a change
in control of Community Bank, each director is entitled to a lump sum payment
equal to the amount of benefits accrued as of the last day of the calendar month
preceding the effective time. The agreements also provide for a death benefit
equal to the amount that would be paid to the director if he served continuously
until age 75 and retired on that date. The obligations are funded with life
insurance having a cash value of approximately $451,000, which is in excess of
the amount of the anticipated total liability to all active and retired
directors. The merger with NASB will constitute a change in control under the
director emeritus agreements. The following table sets forth the total payments
to be made to each current director under his director emeritus agreement,
assuming consummation of the merger occurs on December 13, 2002:
Total Director
Name Emeritus Payment
---- ----------------
Richard N. Cox $7,169
Robert L. Lalumondier $10,829
Cecil E. Lamb $34,417
Robert E. McCrorey $18,653
Rodney G. Rounkles $17,034
34
SALARY CONTINUATION AGREEMENTS
On February 21, 1995, Community Bank entered into salary continuation
agreements with Dennis D. Hartman, President, Margaret E. Teegarden, Savings
Department Manager and James V. Alderson, Loan Officer of Community Bank. Each
of these agreements entitles the executive to an annual retirement benefit based
on the position in which the executive is employed and the executive's years of
service to Community Bank, payable over a 180-month period. In the event the
executive is terminated or resigns following a change in control of Community
Bank, the executive is entitled to a lump sum payment equal to the amount of
benefits accrued at the time of termination or resignation. The agreements also
provide for a death benefit equal to the amount that would be paid to the
executive if he or she served continuously until age 65 and retired on that
date. The obligations are funded with life insurance having a cash value of
approximately $1.5 million, which is in excess of the amount of the anticipated
total liability to all of these executives. The merger with NASB will constitute
a change in control under the salary continuation agreements. The following
table sets forth the total payments to be made to each of these executives under
his or her salary continuation agreement if he or she is terminated or resigns
following the consummation of the merger assuming such consummation occurs on
December 13, 2002:
Total Salary
Name Continuation Payment
---- --------------------
Dennis D. Hartman $13,581
Margaret E. Teegarden $19,953
James V. Alderson $23,295
CHANGE OF CONTROL AGREEMENTS
On March 28, 1998, Community Bank entered into change in control severance
agreements with Dennis D. Hartman, President and Margaret E. Teegarden, Savings
Department Manager. Each of these agreements provides that in the event of a
change in control of Community Bank, the executive would be entitled to receive
a severance payment if, within 12 months after the closing date of change of
control of Community Bank, the executive is terminated without cause or there is
a material change in the executive's duties, compensation or certain other
aspects of the executive's employment arrangement resulting in his or her
resignation. The severance payment under both Mr. Hartman's and Ms. Teegarden's
agreements would be equal to 150% of their respective annual salaries during the
preceding calendar year, including bonuses and any other cash compensation paid
during that year. Following the consummation of the merger, assuming such
consummation occurs on December 13, 2002, if Mr. Hartman or Ms. Teegarden
becomes entitled to a severance payment under his or her severance agreement,
the total amount that the executive could receive under the agreement would be
approximately $132,072 and $77,660, respectively. To the extent that any such
payment would result in a "parachute payment" for purposes of Section 280G of
the Internal Revenue Code, the payment would be reduced by the amount necessary
to cause it not to be considered a parachute payment. The transactions
contemplated by the merger agreement would constitute a change in control of
Community Bank for purposes of these severance agreements.
SEVERANCE PLAN
At its September 3, 2002 meeting, Community Bank's board adopted a
change-in-control severance plan. The plan entitles all salaried and hourly
employees, other than part-time employees or employees paid on a commission
basis, to a severance payment if the employee is terminated involuntarily, other
than for cause, (i) within six months after a change in control of Community
Bank or (ii) during the period of time commencing upon the date when the board
of directors authorized management to negotiate the terms and conditions of a
definitive agreement with the intent of effecting a change in control and ending
on the date when a change of control occurs or the negotiations for a change in
control are terminated. An employee is also eligible to receive the severance
payment if he or she voluntarily leaves
35
during either of the above periods due to certain changes in his or her
employment conditions or compensation. The plan is not applicable to salaried
employees who are covered by an agreement that explicitly addresses compensation
and benefits payable to them upon termination of their employment. The amount of
the payment under the plan would be equal to (i) two weeks of base salary or
hourly wages for employees who have been employed by Community Bank for less
than one year, (ii) one month of base salary or four weeks of hourly wages for
employees who have been employed by Community Bank for more than one year but
less than 11 years or (iii) two months of base salary or eight weeks of hourly
wages for employees who have been employed by Community Bank for 11 or more
years. If a terminated employee elects COBRA benefits pursuant to Section 4980B
of the Code, Community Bank will reimburse the employee for payments made for
such benefits to the extent Community Bank would have paid to provide the same
coverage to the employee had he or she not been terminated. Such reimbursement
shall be made for the same period of time as that for which the employee is
eligible to receive severance payments. In consideration of receiving such
severance payments and reimbursement for COBRA benefit expenses, terminated
employees must agree not to solicit other employees to leave the employment of
Community Bank and to maintain the confidentiality of all confidential
information learned during the course of employment. The transactions
contemplated by the merger agreement would constitute a change in control under
the plan.
OFFICER RETENTION BONUS AGREEMENTS
In September 2002, Community Bank entered into a bonus agreements with
Paul L. Thomas, Chief Executive Officer, Ron Hill, Chief Financial Officer, and
certain other officers of Community Bank. Each agreement provides that if the
officer continues employment with Community Bank through the effective time of
the merger, the officer would be entitled to receive a bonus payment. If the
officer is terminated for cause prior to the effective time of the merger, the
officer would not be entitled to receive any portion of the bonus payment. If
Mr. Thomas and Mr. Hill continue their employment through the effective time of
the merger, they would be entitled to a bonus payment of $30,000 and $42,000,
respectively.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
NASB has agreed to indemnify and hold harmless each director and officer
of CBES and Community Bank for a period of six years after the merger from
liability and expenses arising out of matters existing or occurring at or prior
to the effective time of the merger, to the extent allowed under applicable law.
This indemnification would extend to liability arising out of the transactions
contemplated by the merger agreement. This includes advancing reasonable
indemnifiable expenses as they are incurred, provided the person receiving such
advances agrees to repay NASB if it is ultimately determined that such person is
not entitled to indemnification. In addition, NASB has agreed to pay up to
$50,000 of the premium required to extend CBES's director and officer liability
insurance coverage beyond the effective time of the merger for an additional
three years. This insurance policy reimburses the officers and directors of CBS
for liability and expenses arising out of matters existing or occurring at or
prior to the effective time of the merger if they are not indemnified by CBES.
In addition, the policy reimburses CBES for any money it pays to indemnify its
officers and directors, to the extent allowed under applicable law.
DISSENTERS' APPRAISAL RIGHTS
Under Delaware law, if you do not wish to accept the cash consideration
provided for in the merger agreement, you have the right to dissent from the
merger and to have an appraisal of the fair value of your shares conducted by
the Delaware Court of Chancery. CBES stockholders electing to exercise
dissenters' appraisal rights must comply with the provisions of Section 262 of
the Delaware General Corporation Law in order to perfect their rights. Strict
compliance with the statutory procedures is required. A copy of Section 262 is
attached to this proxy statement as Appendix C.
The following discussion is intended as a summary of the material
provisions of the Delaware statutory procedures required to be followed by a
CBES stockholder in order to dissent from the merger and perfect dissenters'
appraisal rights. This summary is not a complete statement of all applicable
36
requirements and is qualified in its entirety by reference to Section 262 of the
Delaware General Corporation Law, the full text of which appears in Appendix C.
Section 262 requires that stockholders be notified at least 20 days before
the date of the special meeting to vote on the merger for which dissenters'
appraisal rights will be available. A copy of Section 262 must be included with
that notice. This proxy statement constitutes CBES's notice to its stockholders
of the availability of dissenters' appraisal rights in connection with the
merger in compliance with the requirements of Section 262. If you wish to
consider exercising your dissenters' appraisal rights, you should carefully
review the text of Section 262 contained in Appendix C. If you do not timely and
properly comply with the requirements of Section 262, you will lose your rights
under Delaware law.
If you elect to demand appraisal of your shares of CBES common stock, you
must satisfy both of the following conditions:
1. You must deliver to CBES a written demand for appraisal of your
shares of common stock before the vote with respect to the merger is
taken. This written demand for appraisal must be in addition to and
separate from any proxy given by you or vote by you abstaining from
or voting against the merger. Voting against or failing to vote for
the merger by itself does not constitute a demand for appraisal
within the meaning of Section 262.
2. You must not vote in favor of the merger. An abstention or failure
to vote will satisfy this requirement, but a vote in favor of the
merger, by proxy or in person, will constitute a waiver of your
dissenters' appraisal rights in respect of the shares of common
stock so voted and will nullify any previously filed written demand
for appraisal.
If you fail to comply with either of these conditions and the merger
becomes effective, you will be entitled to receive the cash consideration for
your shares of common stock as provided for in the merger agreement and will
have no dissenters' appraisal rights with respect to your shares of CBES common
stock.
All demands for appraisal must reasonably inform CBES of the identity of
the stockholder and the intention of the stockholder to demand appraisal of his
or her shares of common stock. The demand should be executed by or on behalf of
the record holder of the shares of common stock and must be delivered to the
following address prior to the time that the vote on the merger is taken at the
special meeting:
Corporate Secretary
CBES Bancorp, Inc.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
To be effective, a demand for appraisal by a holder of common stock must
be made by or in the name of such registered stockholder, fully and correctly,
as the stockholder's name appears on his or her stock certificate(s) and cannot
be made by the beneficial owner if he or she does not also hold the shares of
record. In such cases, the beneficial holder must have the registered owner
submit the required demand in respect of his or her shares.
If shares of common stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of a demand for appraisal
should be made in that capacity. If the shares of common stock are owned of
record by more than one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or for all joint owners. An authorized agent,
including one for two or more joint owners, may execute the demand for appraisal
for a stockholder of record; however, the agent must identify the record owner
or owners and expressly disclose the fact that, in executing the demand, he or
she is acting as agent for the record owner. A record owner, such as a broker,
who holds shares of common stock as a nominee for others, may exercise his or
her right of appraisal with respect to the shares of common stock held for one
or more beneficial owners, while not exercising this right for other beneficial
owners. In that case, the written demand should state the number of shares of
common stock as to which
37
appraisal is sought. Where no number of shares of common stock is expressly
mentioned, the demand will be presumed to cover all shares of common stock held
in the name of such record owner.
If you hold your shares of common stock in a brokerage account or in other
nominee form and you wish to exercise appraisal rights, you should consult with
your broker or other nominee to determine the appropriate procedures for the
making of a demand for appraisal by such nominee. Similarly, if you participate
in the Community Bank Employee Stock Ownership Plan and you wish to exercise
appraisal rights, you should consult with the trustee of the Stock Ownership
Plan to determine the appropriate procedures for the making of a demand for
appraisal.
Section 262 provides that within ten days after the effective time of the
merger, NASB must give written notice that the merger has become effective to
each CBES stockholder who has properly filed a written demand for appraisal and
who did not vote in favor of the merger. Within 120 days after the effective
time of the merger, either NASB or any stockholder who has complied with the
requirements of Section 262 may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of the shares held by all
stockholders entitled to appraisal. NASB has advised us that it does not
presently intend to file such a petition in the event there are dissenting
stockholders and that it has no obligation to do so. Accordingly, your failure
to file such a petition within the period specified could nullify your previous
written demand for appraisal.
At any time within 60 days after the effective time of the merger, any
stockholder who has demanded an appraisal has the right to withdraw the demand
and to accept the cash payment specified by the merger agreement for his or her
shares of CBES common stock. If a petition for appraisal is duly filed by a
stockholder and a copy of the petition is delivered to NASB, NASB will be
obligated within 20 days after receiving service of a copy of the petition to
provide the Chancery Court with a duly verified list containing the names and
addresses of all stockholders who have demanded an appraisal of their shares of
common stock. After notice to dissenting stockholders, the Chancery Court is
empowered to conduct a hearing upon the petition, to determine those
stockholders who have complied with Section 262 and who have become entitled to
appraisal rights. The Chancery Court may require stockholders who have demanded
payment for their shares to submit their stock certificates to the Register in
Chancery for notation on the certificates of the pendency of the appraisal
proceedings. If any stockholder fails to comply with such a direction, the Court
may dismiss the proceedings as to such stockholder.
After determination of the stockholders entitled to appraisal of their
shares of CBES common stock, the Chancery Court will appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest. When the value is determined, the Chancery Court will direct the
payment of this fair value, with interest accrued during the pendency of the
proceeding if the Chancery Court so determines, to the stockholders entitled to
receive the same, upon surrender by such holders of the certificates
representing such shares.
In determining fair value, the Chancery Court is required to take into
account all relevant factors. You should be aware that the fair value of the
shares of common stock as determined under Section 262 could be more, the same,
or less than the value that you are entitled to receive pursuant to the merger
agreement.
Costs of the appraisal proceeding may be imposed upon NASB and the
stockholders participating in the appraisal proceeding by the Chancery Court, as
the Chancery Court deems equitable in the circumstances. Upon the application of
a stockholder, the Chancery Court may order all or a portion of the expenses
incurred by any stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts, to be charged pro rata against the value of all shares of
common stock entitled to appraisal.
After the effective time of the merger, any stockholder who demands
appraisal rights will not be entitled to vote shares of common stock subject to
such demand for any purpose or to receive payments of dividends or any other
distribution with respect to such shares of common stock, other than with
respect to payment as of a record date prior to the effective time of the
merger; however, if no petition for appraisal is filed within 120 days after the
effective time of the merger, or if such stockholder delivers a written
38
withdrawal of his or her demand for appraisal and an acceptance of the merger
within 60 days after the effective time of the merger, then the right of such
stockholder to appraisal will cease and such stockholder will be entitled to
receive the cash payment for shares of his or her common stock pursuant to the
merger agreement. Any withdrawal of a demand for appraisal made more than 60
days after the effective time of the merger may only be made with the written
approval of NASB and must, to be effective, be made within 120 days after the
effective time of the merger.
The requirements of Section 262 are technical and complex. CBES
stockholders who may wish to dissent from the merger and pursue appraisal rights
should consult their legal advisers.
STOCKHOLDER PROPOSALS
CBES will hold an annual meeting of stockholders only if the merger is not
approved at the special meeting to which this proxy statement pertains. If an
annual meeting is held, any CBES stockholder who intends to present a proposal
at the annual meeting must deliver the proposal to CBES at 1001 North Jesse
James Road, Excelsior Springs, Missouri 64024, Attention: Corporate Secretary,
by the applicable deadline below:
o If the stockholder proposal is intended for inclusion in CBES's proxy
materials for that meeting pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, CBES must receive the proposal a reasonable
period of time before CBES begins to print and mail its proxy
materials. Such proposal must also comply with the other requirements
of the proxy solicitation rules of the SEC.
o CBES's bylaws provide that in order for a stockholder to make
nominations for the election of directors or proposals for business to
be brought before the annual meeting, a stockholder generally must
deliver notice of such nominations and/or proposals to the Secretary
not less than 90 days prior to the date of the annual meeting, subject
to specified exceptions. The notice also must include the information
specified in the bylaws.
WHERE YOU CAN FIND MORE INFORMATION
CBES is subject to the informational requirements of the Securities
Exchange Act of 1934 and files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that CBES files, including CBES's Form
10-KSB for the fiscal year ended June 30, 2002, at the SEC's public reference
room located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the Commission located at 175 W. Jackson Boulevard,
Suite 1800, Chicago, Illinois 60604; and The Woolworth Building, 2333 Broadway,
New York, New York 10279. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The public filings
of CBES also are available to the public from commercial document retrieval
services and at the internet website maintained by the SEC at
"http://www.sec.gov."
39
CBES common stock is traded on the NASDAQ National Market SM under the
symbol "CBES." Documents filed by CBES can be inspected at the office of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
- ------------------------------------------------------------------------------
You should rely only on the information contained in this document to vote
your shares at the meeting. We have not authorized anyone to provide you with
information that is different from what is contained in this document. This
document is dated October 28, 2002. You should not assume that the information
contained in this document is accurate as of any date other than that date.
- ------------------------------------------------------------------------------
By Order of the Board of Directors
/s/ Paul L. Thomas
October 28, 2002 Paul L. Thomas, Chairman
40
APPENDIX A--AGREEMENT AND PLAN OF MERGER
A-1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
----------------------------
DATED AS OF SEPTEMBER 5, 2002
BY AND AMONG
NASB FINANCIAL, INC.,
NASB ACQUISITION SUBSIDIARY, INC.,
AND
CBES BANCORP, INC.
A-2
Table of Contents
ARTICLE I - The Merger.....................................................A-6
Section 1.1. Structure of the Merger..................................A-6
Section 1.2. Effect on Shares of CBES Common Stock....................A-6
Section 1.3. Exchange Procedures......................................A-7
Section 1.4. Stock Options; Restricted Stock..........................A-9
Section 1.5. Directors and Officers of CBES and Community Bank at
Effective Date..........................................A-10
Section 1.6. Articles of Incorporation and Bylaws of the Surviving
Corporation.............................................A-10
Section 1.7. Dissenters' Rights......................................A-10
ARTICLE II - Representations and Warranties...............................A-10
Section 2.1. Disclosure Letters......................................A-10
Section 2.2. Standards...............................................A-11
Section 2.3. Representations and Warranties of CBES..................A-11
Section 2.4. Representations and Warranties of NASB Holding and
Acquisition Sub.........................................A-26
ARTICLE III - Actions and Conduct Pending the Merger......................A-31
Section 3.1. Regulatory Application..................................A-31
Section 3.2. Conduct of CBES's Business Prior to the Effective Date..A-31
Section 3.3. Forbearance by CBES.....................................A-34
Section 3.4. Conduct of NASB Holding's and Acquisition Sub's
Businesses Prior to the Effective Date..................A-38
ARTICLE IV - Covenants....................................................A-38
Section 4.1. Acquisition Proposals....................................A-38
Section 4.2. Certain Policies and Actions of CBES.....................A-40
Section 4.3. Access and Information...................................A-40
Section 4.4. Certain Filings, Consents and Arrangements...............A-41
Section 4.5. Anti-takeover Provisions.................................A-41
Section 4.6. Additional Actions.......................................A-42
Section 4.7. Publicity................................................A-42
Section 4.8. Stockholders Meeting.....................................A-42
Section 4.9. Proxy Statement..........................................A-42
Section 4.10. Notification of Certain Matters..........................A-43
Section 4.11. Employees................................................A-43
Section 4.12. Indemnification..........................................A-45
Section 4.13. Phase I and Phase II Environmental Assessments of
Community Bank's Primary Banking Facility................A-47
A-3
ARTICLE V - Conditions to Consummation.....................................A-47
Section 5.1. Conditions to Each Party's Obligations...................A-47
Section 5.2. Conditions to the Obligations of NASB Holding............A-48
Section 5.3. Conditions to the Obligations of CBES....................A-48
ARTICLE VI - Data Processing...............................................A-49
Section 6.1. Sample Data..............................................A-49
Section 6.2. Information for Check Ordering...........................A-49
Section 6.3. Installation of Data Circuits............................A-50
ARTICLE VII - Termination..................................................A-50
Section 7.1. Termination..............................................A-50
Section 7.2. Termination Fee..........................................A-51
Section 7.3. Effect of Termination....................................A-51
ARTICLE VIII - Closing and Effective Date..................................A-52
Section 8.1. Effective Date...........................................A-52
Section 8.2. Deliveries at Closing....................................A-52
ARTICLE IX - Certain Other Matters.........................................A-52
Section 9.1. Certain Definitions; Interpretation......................A-52
Section 9.2. Survival.................................................A-53
Section 9.3. Waiver; Amendment........................................A-53
Section 9.4. Counterparts.............................................A-53
Section 9.5. Governing Law............................................A-53
Section 9.6. Expenses.................................................A-54
Section 9.7. Notices..................................................A-54
Section 9.8. Entire Agreement; etc....................................A-54
Section 9.9. Specific Performance.....................................A-55
Section 9.10. Successors and Assigns; Assignment.......................A-55
Exhibit A Acquisition Sub Articles of Incorporation
- ---------
A-4
AGREEMENT AND PLAN OF MERGER
----------------------------
This is an Agreement and Plan of Merger, dated as of the 5th day
of September, 2002 ("Agreement"), by and among NASB Financial, Inc., a
Missouri corporation ("NASB Holding"), NASB Acquisition Subsidiary, Inc., a
Missouri corporation ("Acquisition Sub"), and CBES Bancorp, Inc., a Delaware
corporation ("CBES")
RECITALS
--------
A. The Board of Directors of each of CBES, NASB Holding, and
Acquisition Sub (i) has determined that this Agreement and the business
combination and related transactions contemplated hereby are in the best
interests of NASB Holding and CBES, respectively, and in the best interests of
their respective stockholders and (ii) has approved, at meetings of each of such
Boards of Directors, this Agreement.
B. CBES is the beneficial owner of 100 shares of the outstanding
capital stock of Community Bank of Excelsior Springs, a Savings Bank, a
federally chartered savings bank with its principal office in Excelsior Springs,
Missouri ("Community Bank") which shares represent 100% of the outstanding
shares of capital stock of Community Bank.
C. Community Bank is the beneficial owner of 1,000 shares of the
outstanding capital stock of CBES Service Corporation ("Service Corporation"), a
Missouri corporation, which shares represent 100% of the outstanding shares of
capital stock of Service Corporation.
D. NASB Holding is the beneficial owner of 2,375,112 shares of the
outstanding common stock of North American Savings Bank, F.S.B., a federally
chartered savings bank with its principal office in Grandview, Missouri ("NASB
Bank"), which shares represent 100% of the outstanding shares of capital stock
of NASB Bank.
E. NASB Holding is the beneficial owner of 1,000 shares of the
outstanding common stock of Acquisition Sub, which shares represent 100% of the
outstanding shares of capital stock of Acquisition Sub.
F. NASB Holding, CBES and Acquisition Sub desire to make certain
representations, warranties and agreements in connection with the business
combination and related transactions provided for herein and to prescribe
various conditions to such transactions.
ACCORDINGLY, in consideration of the promises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
A-5
AGREEMENT
---------
ARTICLE I
---------
THE MERGER
----------
Section 1.1. Structure of the Merger. On the Effective Date (as defined in
Section 8.1 below), Acquisition Sub shall merge with and into CBES (the
"Merger"), the separate corporate existence of Acquisition Sub shall cease and
CBES shall survive and continue to as a corporation, pursuant to the provisions
of, and with the effect provided in the Delaware General Corporate Law (the
"DGCL") and The General and Business Corporation Law of Missouri (the "GBCLM").
The name of CBES, as the surviving corporation in the Merger, shall be CBES
Bancorp, Inc. From and after the Effective Date, CBES shall possess all of the
properties and rights and be subject to all of the liabilities and obligations
of CBES, all as more fully described in the DGCL and the GBCLM. NASB Holding may
at any time prior to the Effective Date change the method of effecting the
combination with CBES (including the provisions of this Article I) if and to the
extent it deems such change necessary, appropriate or desirable; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be issued pursuant to the Merger to holders of CBES Common
Stock (as defined in Section 1.2(a) hereof) as provided for in this Agreement or
(ii) materially impede or delay consummation of the transactions contemplated by
this Agreement.
Section 1.2. Effect on Shares of CBES Common Stock.
--------------------------------------
(a) On the Effective Date of the Merger, by virtue of the Merger,
automatically and without any action on the part of the holder thereof, each
share of common stock, par value .01 per share of CBES ("CBES Common Stock"),
that is issued and outstanding at the Effective Date, other than Excluded Shares
(as defined below) and including CBES Restricted Stock held pursuant to the CBES
Restricted Stock Plan (as defined in Section 1.4(b)), shall be cancelled and
cease to be outstanding and shall be converted into and become the right to
receive a cash payment equal to $17.50; provided, however, that such per share
amount shall be reduced if the Adjusted Stockholders' Equity (as defined in
Section 3.2(g) hereof) of CBES as of the close of business on the last business
day next prior to the Effective Date shall be equal or greater than $13,500,000
and less than $13,900,000, then the cash payment shall be equal to $17.05 per
share; and provided, further that if the Adjusted Stockholders' Equity is less
than $13,500,000, NASB Holding shall have the right to either (i) terminate this
Agreement pursuant to Section 7.1(g) hereof or (ii) consummate the Merger and
provide the holders of CBES Common Stock with a cash payment of $17.05 per share
(the "Merger Consideration"). After the Effective Date, no dividends or other
distributions made or payable by CBES shall accrued for the benefit of or be
payable with respect to, any CBES Common Stock.
(b) "Excluded Shares" shall consist of (i) shares of CBES Common Stock as
to which the respective holders thereof have properly demanded appraisal rights
and have not failed to perfect, have not effectively withdrawn and have not lost
their
A-6
rights to appraisal and payment pursuant to any applicable law providing for
dissenters' or appraisal rights (the "Dissenters' Shares") and (ii) shares held
by CBES as treasury stock. After the Effective Date, no dividends or other
distributions made or payable by CBES shall accrue for the benefit of or be
payable with respect to, any Dissenters' Shares, and no interest shall accrue
with respect to payments due to holders of Dissenters' Shares, unless such
accruals are required by the DGCL or the GBCLM.
(c) On the Effective Date, each Excluded Share, other than Dissenters'
Shares, shall be canceled and retired and shall cease to exist, and no exchange
or payment shall be made with respect thereto. In addition, no Dissenters'
Shares shall be converted into the Merger Consideration pursuant to this Section
1.2, but instead shall be treated in accordance with the procedures set forth in
Section 1.7 of this Agreement.
Section 1.3. Exchange Procedures.
-------------------
(a) NASB Holding shall mail appropriate transmittal materials ("Letter of
Transmittal") as soon as reasonably practicable after the Effective Date, and in
no event later than five (5) business days thereafter, to each holder of record
of CBES Common Stock as of the Effective Date. A Letter of Transmittal will be
deemed properly completed only if accompanied by certificates representing all
shares of CBES Common Stock to be converted thereby, except as provided in
Section 1.3(h) below.
(b) At and after the Effective Date, each certificate ("CBES Certificate")
representing shares of CBES Common Stock immediately prior to the Effective Date
(except as specifically set forth in Section 1.2) shall represent only the right
to receive cash in an amount equal to the product of the Merger Consideration
multiplied by the number of shares of CBES Common Stock previously represented
by the CBES Certificate.
(c) Prior to the Effective Date, NASB Holding may select a bank or trust
company acceptable to CBES, which shall act as exchange agent (the "Exchange
Agent") for the benefit of the holders of shares of CBES Common Stock, for
exchange in accordance with this Section 1.3. If NASB Holding elects not to
select such a bank or trust company as the Exchange Agent, then NASB Bank shall
be deemed to be the Exchange Agent for all purposes under this Agreement. At the
Effective Date, NASB Holding shall transfer to the Exchange Agent, or set aside
and hold in trust for the benefit of the stockholders of CBES if NASB Bank is
the Exchange Agent, sufficient funds to pay the Merger Consideration to all the
stockholders of CBES.
(d) The Letter of Transmittal (which shall be subject to the reasonable
approval of CBES and NASB Holding) shall (i) specify that delivery shall be
effected, and risk of loss and title to the CBES Certificates shall pass, only
upon delivery of the CBES Certificates to the Exchange Agent, (ii) specify that
the shares of CBES Common Stock have been canceled, that the consideration to be
paid for such shares shall be paid only upon delivery and surrender of such CBES
Certificates (except as provided in Section 1.3(h) below), and that neither
dividends nor interest shall accrue on the cash consideration payable after the
Effective Date of the Merger, (iii) be in a form and
A-7
contain any other provisions as NASB Holding may reasonably determine and (iv)
include instructions for use in effecting the surrender of the CBES Certificates
in exchange for the Merger Consideration. Upon the proper surrender of the CBES
Certificates to the Exchange Agent, together with a properly completed and duly
executed Letter of Transmittal, the holder of such CBES Certificates shall be
entitled to receive in exchange therefor, by transfer of immediately available
funds to such account at such financial institution as the holder shall direct,
or, at the holder's option, by check drawn on a commercial bank or a savings
bank having an office in the Kansas City metropolitan area, the amount of cash
that such CBES Certificates represent the right to receive pursuant to Section
1.3(b). CBES Certificates so surrendered shall forthwith be canceled. As soon as
practicable, but no later than the business day next following receipt of the
properly completed Letter of Transmittal and any necessary accompanying
documentation, the Exchange Agent shall distribute cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of CBES Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto. If there is a transfer of ownership of any shares
of CBES Common Stock not registered in the transfer records of CBES, the Merger
Consideration shall be issued to the transferee thereof if the CBES Certificates
representing such CBES Common Stock are presented to the Exchange Agent,
accompanied by all documents required, in the reasonable judgment of NASB
Holding and the Exchange Agent, (x) to evidence and effect such transfer and (y)
to evidence that any applicable stock transfer taxes have been paid.
(e) From and after the Effective Date, there shall be no transfers on the
stock transfer records of CBES of any shares of CBES Common Stock. If, after the
Effective Date, CBES Certificates are presented to NASB Holding, they shall be
exchanged for the Merger Consideration deliverable in respect thereof pursuant
to this Agreement in accordance with the procedures set forth in this Section
1.3.
(f) If NASB Bank is not acting as the Exchange Agent, any portion of the
aggregate amount of cash for the Merger Consideration, to be paid pursuant to
Section 1.2, or any proceeds from any investments thereof that remain unclaimed
by the stockholders of CBES for twelve months after the Effective Date shall be
repaid by the Exchange Agent to NASB Holding upon the written request of NASB
Holding. After such request is made, any stockholders of CBES who have not
theretofore complied with this Section 1.3 shall look only to NASB Holding for
the Merger Consideration deliverable in respect of each share of CBES Common
Stock such stockholder holds, as determined pursuant to Section 1.2 of this
Agreement, without any interest thereon. If outstanding CBES Certificates are
not surrendered prior to the date on which such payments would otherwise escheat
to or become the property of any governmental unit or agency, the unclaimed
items shall, to the extent permitted by any abandoned property, escheat or other
applicable laws, become the property of NASB Holding (and, to the extent not in
its possession, shall be paid over to it), free and clear of all claims or
interest of any person previously entitled to such claims. Notwithstanding the
foregoing, neither the Exchange Agent nor any party to this Agreement (or any
affiliate thereof) shall be
A-8
liable to any former holder of CBES Common Stock for any amount delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(g) NASB Holding and the Exchange Agent shall be entitled to rely upon
CBES's stock transfer books to establish the identity of those persons entitled
to receive the Merger Consideration, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any CBES Certificate, NASB Holding and the Exchange Agent shall
be entitled (i) deposit any Merger Consideration, represented thereby in escrow
with an independent third party and thereafter be relieved with respect to any
claims thereto, or (ii) to file a suit in interpleader against the competing
parties, deposit the Merger Consideration due with respect to the disputed CBES
Certificate with a court of competent jurisdiction, and thereafter be discharged
from any responsibility to the competing parties.
(h) If any CBES Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such CBES
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent, the posting by such person of a bond in such amount as the Exchange Agent
may direct as indemnity against any claim that may be made against it with
respect to such CBES Certificate, the Exchange Agent shall pay in exchange for
such lost, stolen or destroyed CBES Certificate the Merger Consideration
deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options; Restricted Stock.
--------------------------------
(a) At the Effective Date, each option to acquire shares of CBES Common
Stock (a "CBES Option"), whether or not then vested, granted pursuant to the
CBES's 1997 Stock Option and Incentive Plan (the "CBES Option Plan") that is
then outstanding and unexercised shall be deemed vested and exercisable, whether
or not then exercisable, and shall be canceled and terminated and in lieu
thereof the holders of such options shall be paid by CBES in cash (from funds
provided by NASB Holding) in an amount equal to the product of (i) the number of
shares of CBES Common Stock subject to such unexercised option at the Effective
Date and (ii) the amount by which the Merger Consideration per share exceeds the
exercise price per share of such option net of any cash which must be withheld
under federal and state income and employment tax requirements. In the event
that the exercise price of a CBES Option is greater than the Merger
Consideration, then at the Effective Date such CBES Option shall be canceled
without any payment made in exchange therefore. At the Effective Date, the CBES
Option Plan shall be deemed terminated.
(b) Inasmuch as at the Effective Date, all shares of restricted CBES
Common Stock (the "CBES Restricted Stock"), held under the CBES Recognition and
Retention Plan (the "CBES Restricted Stock Plan") are to be canceled, and in
respect of such shares to be paid the Merger Consideration in respect of such
shares to be paid to the holders thereof. At the Effective Date, the CBES
Restricted Stock Plan shall be deemed terminated.
A-9
Section 1.5. Directors and Officers of CBES and Community Bank at
Effective Date. The directors and officers of CBES, the directors of Community
Bank and designated officers of Community Bank shall resign effective as of the
Effective Date. Immediately thereafter, NASB Holding shall appoint new officers
and directors to CBES, each to hold office in accordance with the articles of
incorporation and bylaws of CBES until their respective successors are duly
elected or appointed and qualified. The new officers and directors of CBES shall
then appoint new officers and directors of Community Bank, each to hold office
in accordance with the articles of incorporation and bylaws of Community Bank
until their respective successors are duly elected or appointed and qualified.
Section 1.6. Articles of Incorporation and Bylaws of the Surviving
Corporation. The articles of incorporation (attached hereto as Exhibit A) and
bylaws of Acquisition Sub in effect immediately prior to the Effective Date
shall be the articles of incorporation and bylaws of the surviving corporation
from and after the Effective Date until amended as provided by law.
Section 1.7. Dissenters' Rights.
-------------------
(a) NASB Holding shall pay for any Dissenters' Shares in accordance with
applicable law providing for dissenters' or appraisal rights, and the holders
thereof shall not be entitled to receive any Merger Consideration; provided,
that if appraisal rights under applicable law with respect to any Dissenters'
Shares shall have been effectively withdrawn or lost, such shares will thereupon
cease to be treated as Dissenters' Shares and shall be converted into the right
to receive cash in an amount equal to the Merger Consideration multiplied by the
number of shares of CBES Common Stock previously represented thereby.
(b) CBES shall (i) give NASB Holding prompt written notice of the receipt
of any notice from a stockholder purporting to exercise any dissenters' rights,
(ii) not settle nor offer to settle any demand for payment without the prior
written consent of NASB Holding and (iii) not waive any failure to comply
strictly with any procedural requirements of applicable corporate statutes.
ARTICLE II
Representations and Warranties
------------------------------
Section 2.1. Disclosure Letters. Prior to the execution and delivery of
this Agreement, CBES and NASB Holding each shall have delivered to the other a
letter (each, its "Disclosure Letter") setting forth, among other things, facts,
circumstances and events the disclosure of which is required or appropriate in
relation to any or all of their respective representations and warranties (and
making specific reference to the section or subsection, as the case may be, of
this Agreement to which they relate); provided, that (a) no such fact,
circumstance or event is required to be set forth in the Disclosure Letter as an
exception to a representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under
A-10
the standards established by Section 2.2 and (b) the mere inclusion of a fact,
circumstance or event in a Disclosure Letter shall not be deemed an admission by
a party that such item represents a material exception or that such item is
reasonably likely to result in a Material Adverse Effect (as defined in Section
2.2(b)).
Section 2.2. Standards.
----------
(a) No representation or warranty of CBES Bank contained in Section 2.3,
and no representation or warranty of NASB Holding or Acquisition Sub contained
in Section 2.4, shall be deemed untrue or incorrect, and no party hereto shall
be deemed to have breached a representation or warranty, on account of the
existence of any fact, circumstance or event unless, as a direct or indirect
consequence of such fact, circumstance or event, individually or taken together
with all other facts, circumstances or events inconsistent with any paragraph of
Sections 2.3 or 2.4, as applicable, there is reasonably likely to exist a
Material Adverse Effect. CBES's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached as a
result of effects arising solely from actions taken pursuant to this Agreement
or in compliance with a written request of NASB Holding.
(b) As used in this Agreement, the term "Material Adverse Effect" means an
effect which is material and adverse to the business, financial condition or
results of operations of NASB Holding, Acquisition Sub, CBES, as the context may
dictate, and its Subsidiaries (as defined herein) taken as a whole; provided,
however, that any such effect resulting from any (i) changes in laws, rules or
regulations or GAAP or regulatory accounting requirements or interpretations
thereof that apply to either NASB Holding, Acquisition Sub, and CBES, as the
case may be, or to similarly situated financial and/or depository institutions,
(ii) changes in economic conditions affecting financial institutions generally,
including but not limited to, changes in the general level of market interest
rates, (iii) fees associated with the transactions contemplated by this
Agreement or (iv) changes to this Agreement requested by NASB Holding shall not
be considered in determining if a Material Adverse Effect has occurred.
(c) For purposes of this Agreement, "knowledge" shall mean, with respect
to a party hereto, best knowledge after a due inquiry of any of the CEO,
Chairman, Vice Chairman, President or CFO of that party.
Section 2.3. Representations and Warranties of CBES. Subject to Sections
2.1 and 2.2, CBES represents and warrants to NASB Holding and Acquisition Sub
that, except as disclosed in CBES's Disclosure Letter:
(a) Organization.
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(i) CBES is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is registered as a savings
and loan holding company under the HOLA. Community Bank is a stock savings
association duly organized, validly existing and in good standing under the laws
of the United States of America and is a wholly-owned Subsidiary (as defined
below) of CBES.
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Each Subsidiary of CBES other than Community Bank is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
Each of CBES and its Subsidiaries has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. As used in this Agreement, unless the context requires
otherwise, the term "Subsidiary" when used with respect to any party means any
corporation or other legal entity, which is consolidated with such party for
financial reporting purposes or which is controlled, directly or indirectly, by
such party through a sufficient number of shares or other evidence of ownership
of such corporation or other organization to have the power to elect a majority
of the board of directors or otherwise to control such corporation or other
organization.
(ii) CBES and each of its Subsidiaries has the requisite corporate
power and authority and is duly qualified to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary.
(iii) CBES's Disclosure Letter sets forth all of CBES's Subsidiaries
and all entities (whether corporations, partnerships or similar organizations),
including the corresponding percentage ownership, in which CBES owns, directly
or indirectly, 5% or more of the ownership interests as of the date of this
Agreement and indicates for each of CBES's Subsidiaries, as of such date, its
jurisdiction of organization and the jurisdiction(s) wherein it is qualified to
do business. All such Subsidiaries and ownership interests are in compliance
with all applicable laws, rules and regulations relating to direct investments
in equity ownership interests. CBES owns, either directly or indirectly, all of
the outstanding capital stock of each of its Subsidiaries. No Subsidiary of CBES
other than Community Bank is an "insured depository institution" as defined in
the Federal Deposit Insurance Act, as amended ("FDIA"), and the applicable
regulations thereunder. All of the shares of capital stock of CBES's
Subsidiaries are fully paid, nonassessable and not subject to any preemptive
rights and are owned by CBES or a Subsidiary of CBES free and clear of any
claims, liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no agreements or
understandings with respect to the voting or disposition of any such shares.
(iv) The deposits of Community Bank are insured by the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC")
to the extent provided in the FDIA.
(b) Capital Structure.
-----------------
(i) The authorized capital stock of CBES consists of 4,000,000 shares
of CBES Common Stock, par value $.01 per share, and 500,000 shares of preferred
stock, par value $.01 per share. As of the date of this Agreement (A) 1,031,851
shares of CBES Common Stock had been issued, of which 875,805 shares of CBES
Common Stock were issued and outstanding, (B) no shares of CBES preferred stock
were issued and outstanding, (C) no shares of CBES Common Stock were reserved
for
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issuance, except that 102,495 shares of CBES Common Stock were reserved for
issuance pursuant to the CBES Option Plan and 40,998 shares of CBES Common Stock
were reserved for issuance pursuant to the CBES Restricted Stock Plan, (D) no
shares of CBES preferred stock were held by CBES and (E) 156,046 shares of CBES
Common Stock were held by CBES in its treasury or by its Subsidiaries. The
authorized capital stock of Community Bank consists of 4,000,000 shares of
common stock, par value $.01 per share (the "Community Bank Common Stock"), and
500,000 shares of preferred stock. As of the date of this Agreement, 100 shares
of such common stock were outstanding, no shares of such preferred stock were
outstanding and all outstanding shares of such common stock were, and as of the
Effective Date will be, owned both legally and beneficially by CBES. The
authorized capital stock of Service Corporation consists of 30,000 shares of
common stock, par value $1.00 per share and no shares of preferred stock. As of
the date of this Agreement, 1,000 shares of such common stock were outstanding
and all outstanding shares of such common stock were, and as of the Effective
Date will be, owned both legally and beneficially by Community Bank. All
outstanding shares of capital stock of CBES, Community Bank and Service
Corporation are duly authorized and validly issued, fully paid and nonassessable
and not subject to any preemptive rights and, with respect to shares of CBES
held by CBES in its treasury or by its Subsidiaries and shares of Community Bank
and Service Corporation, are free and clear of all liens, claims, encumbrances
or restrictions (other than those imposed by applicable federal and state
securities laws) and there are no agreements or understandings with respect to
the voting or disposition of any such shares. CBES's Disclosure Letter sets
forth a complete and accurate list of all outstanding options to purchase CBES
Common Stock that have been granted pursuant to the CBES Option Plan, including
the names of the optionees, dates of grant, exercise prices, dates of vesting,
dates of termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness of CBES having
the right to vote on any matters on which stockholders may vote are issued or
outstanding.
(iii) As of the date of this Agreement, except for options granted
pursuant to the CBES Option Plan, neither CBES nor any of its Subsidiaries has
or is bound by any outstanding subscriptions, options, warrants, calls, rights,
convertible securities, commitments or agreements of any character obligating
CBES or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, any additional shares of capital stock of CBES or any
of its Subsidiaries or obligating CBES or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, convertible
security, commitment or agreement. As of the date hereof, there are no
outstanding contractual obligations of CBES or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of CBES or
any of its Subsidiaries.
(c) Authority. CBES has all requisite corporate power and authority to
enter into this Agreement, and, subject to approval of this Agreement by the
requisite vote of CBES's stockholders and receipt of all required regulatory or
governmental approvals, to consummate the transactions contemplated hereby. The
execution and
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delivery of this Agreement and, subject to the approval of this Agreement by
CBES's stockholders, the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary corporate actions on the part of
CBES. This Agreement has been duly and validly executed and delivered by CBES
and constitutes a valid and binding obligation of CBES, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity, whether applied in a court
of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of a
majority of the outstanding shares of CBES Common Stock entitled to vote on this
Agreement is the only vote of the stockholders of CBES required for approval of
this Agreement and the consummation of the Merger and the related transactions
contemplated hereby (the "Stockholders Approvals"). CBES has received the
written opinion of Hovde Financial LLC to the effect that, as of the date
hereof, the Merger Consideration to be received by CBES's stockholders is fair,
from a financial point of view, to such stockholders.
(e) No Violations; Consents. The execution, delivery and performance of
this Agreement by CBES does not, and the consummation of the transactions
contemplated hereby will not, constitute (i) assuming receipt of all Requisite
Regulatory Approvals (as defined in Section 2.4(d)) and requisite stockholder
approvals, a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license to
which CBES or any of its Subsidiaries (or any of their respective properties) is
subject, (ii) a breach or violation of, or a default under, the certificate of
incorporation or bylaws of CBES or the similar organizational documents of any
of its Subsidiaries or (iii) a breach or violation of, or a default under (or an
event which, with due notice or lapse of time or both, would constitute a
default under), or result in the termination of, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets of CBES or any
of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which CBES or any of its Subsidiaries is a party, or
to which any of their respective properties or assets may be subject. The
consummation by CBES of the transactions contemplated hereby will not require
any approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, or instrument, other than (x) the
approval of the holders of a majority of the outstanding shares of CBES Common
Stock entitled to vote thereon, (y) the consent of the Office of Thrift
Supervision ("OTS") and (z) such other required regulatory consents. As of the
date hereof, the executive officers of CBES know of no reason pertaining to CBES
why any of the approvals referred to in this Section 2.3(e) should not be
obtained without the imposition of any material condition or restriction
described in the last sentence of Section 5.1(b).
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(f) Reports and Financial Statements.
--------------------------------
(i) CBES and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file with
(a) the FDIC, (b) the OTS, (c) the National Association of Securities Dealers,
Inc. ("NASD"), (d) the Missouri Department of Insurance and (e) the Securities
and Exchange Commission ("SEC") (collectively, "CBES's Reports") and, to CBES's
knowledge have paid all fees and assessments due and payable in connection
therewith. As of their respective dates, none of CBES's Reports contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. All of CBES's
Reports filed with the SEC complied in all material respects with the applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the SEC promulgated thereunder.
(ii) Each of the financial statements of CBES included in CBES's
Reports complied as to form, as of their respective dates of filing with the
SEC, in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto and have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited financial statements, as permitted by the SEC). Each of
the consolidated statements of condition contained or incorporated by reference
in CBES's Reports (including in each case any related notes and schedules) and
each of the consolidated statements of operations, consolidated statements of
cash flows and consolidated statements of changes in stockholders' equity,
contained or incorporated by reference in CBES's Reports (including in each case
any related notes and schedules) fairly presented (a) the financial position of
the entity or entities to which it relates as of its date and (b) the results of
operations, stockholders' equity and cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements, to normal year-end
adjustments that are not material in amount or effect).
(g) Absence of Certain Changes or Events. Except as disclosed in CBES's
Reports filed on or prior to the date of this Agreement, since June 30, 2001,
(i) CBES and its Subsidiaries have not incurred any liability, except in the
ordinary course of their business consistent with past practice and except for
the engagement letter agreements with Hovde Financial LLC set forth in CBES's
Disclosure Letter, (ii) CBES and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such businesses
consistent with their past practices and (iii) there has not been any other
event, change or occurrence or continuance of any circumstance which has had, or
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect with respect to CBES and its Subsidiaries. To the knowledge of
CBES, there are no impending termination, expiration, or loss of contracts,
franchises, licenses, permits or other assets that, individually or in the
aggregate, are reasonably likely to have Material Adverse Effect on CBES.
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(h) Absence of Claims. No litigation, controversy, claim, action, suit or
other legal administrative or arbitration proceeding before any court,
governmental agency or arbitrator is pending against CBES or any of its
Subsidiaries and to the knowledge of CBES no such litigation, controversy,
claim, action, suit or proceeding has been threatened or asserted in either case
which is reasonably likely to have a Material Adverse Effect with respect to
CBES or its Subsidiaries, or the transactions contemplated by this Agreement, or
upon the ability of CBES to perform its obligations under this Agreement. To the
knowledge of CBES, there are no investigations, reviews or inquiries by any
court or governmental agency pending or threatened against CBES or any of its
Subsidiaries.
(i) Absence of Regulatory Actions. Except as set forth in CBES's Disclosure
Letter, neither CBES nor any of its Subsidiaries has been a party to any cease
and desist order, written agreement or memorandum of understanding with, or any
commitment letter or similar undertaking to, or has been subject to any action,
proceeding, order or directive by, or has been a recipient of any extraordinary
supervisory letter from any federal or state governmental authority charged with
the supervision or regulation of depository institutions or depository
institution holding companies or engaged in the insurance of bank and/or savings
and loan deposits (singularly a "Government Regulatory Agency;" collectively
"Government Regulatory Agencies"), or has adopted any board resolutions at the
request of any Government Regulatory Agency, or has been advised by any
Government Regulatory Agency that it is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such action,
proceeding, order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking.
(j) Taxes. All federal, state, local and foreign tax returns required to be
filed by or on behalf of CBES or any of its Subsidiaries have been timely filed
or requests for extensions have been timely filed and any such extension has
been a permitted automatic extension or has been granted and (in either case)
has not have expired, and all such filed returns are complete and accurate in
all material respects. All taxes shown on such returns, all taxes required to be
shown on returns for which extensions have been granted and all other taxes
required to be paid by CBES or any of its Subsidiaries have been paid in full or
adequate provision has been made for any such taxes, both current and deferred,
on CBES's balance sheet in accordance with GAAP. For purposes of this Section
2.3(j) and Section 2.4(i), the term "taxes" shall include all income, franchise,
gross receipts, real and personal property, real property transfer and gains,
wage and employment taxes. As of the date of this Agreement, to the knowledge of
CBES, there is no audit examination, deficiency assessment, tax investigation or
refund litigation, or any threat of the foregoing, with respect to any taxes of
CBES or any of its Subsidiaries, and, to the knowledge of CBES, no claim or
threat of claim has been made by any authority in a jurisdiction where CBES or
any of its Subsidiaries do not file tax returns that CBES or any such Subsidiary
is subject to taxation in that jurisdiction. All taxes, interest, additions and
penalties due with respect to completed and settled examinations or concluded
litigation relating to CBES or any of its Subsidiaries have been paid in full or
adequate provision has been made for any such taxes on CBES 's
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balance sheet in accordance with GAAP. CBES and its Subsidiaries have not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any material tax due that is currently in effect. CBES and each
of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and CBES and
each of its Subsidiaries has timely complied, in all material respects, with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the IRC and similar applicable state and local information
reporting requirements. Adequate provision for any taxes due or to become due
for CBES or any of its Subsidiaries for the period or periods reflected on
CBES's most recent financial statements has been made and is reflected on such
CBES financial statements. Deferred Taxes of CBES and its Subsidiaries have been
provided for in accordance with GAAP. To the knowledge of CBES, there is no item
of deferred taxable income which will become taxable due to the consummation of
the Merger that is reasonably likely to have a Material Adverse Effect on CBES
or its Subsidiaries, other than as disclosed in CBES's Disclosure Letter.
(k) Agreements.
----------
(i) Except (w) for arrangements made in the ordinary course of
business, (x) as set forth in CBES's Disclosure Letter, (y) as disclosed in
CBES's Reports filed on or prior to the date of this Agreement or (z) as
contemplated by this Agreement, CBES and its Subsidiaries are not bound by any
material contract (as defined in Item 601(b)(10) of Regulation S-K promulgated
by the SEC) to be performed after the date hereof that has not been filed with
or incorporated by reference to CBES's Reports. Except (1) as disclosed in
CBES's Disclosure Letter, (2) as disclosed in CBES's Reports filed on or prior
to the date of this Agreement or (3) as contemplated by this Agreement, neither
CBES nor any of its Subsidiaries is a party to an oral or written (A) consulting
agreement (including data processing and software programming contracts) not
terminable on 60 days' or less notice, (B) agreement with any present or former
director, officer or employee of CBES or any of its Subsidiaries the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving CBES or any of its Subsidiaries of the
nature contemplated by this Agreement, (C) agreement with respect to any
employee or director of CBES or any of its Subsidiaries providing any term of
employment or compensation guarantee extending for a period longer than 60 days,
(D) agreement or plan, including any stock option plan, phantom stock or stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting or payment of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement or (E) agreement containing covenants that limit the ability
of CBES or any of its Subsidiaries to compete in any line of business or with
any person, or that involve any restriction on the geographic area in which, or
method by which, CBES (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency). To the knowledge of CBES, each of the agreements and
other documents referenced in CBES's Disclosure Letter with respect to
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this Section 2.3(k)(i) is a valid, binding and enforceable obligation of the
parties sought to be bound thereby, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability to general principles of equity, whether applied in a court
of law or a court of equity.
(ii) Neither CBES nor any of its Subsidiaries is in default under (and
no event has occurred which, with due notice or lapse of time or both, would
constitute a default under) or is in violation of any provision of any note,
bond, indenture, mortgage, deed of trust, loan agreement, lease or other
agreement to which it is a party or by which it is bound or to which any of its
respective properties or assets is subject and, to the knowledge of CBES, no
other party to any such agreement (excluding any loan or extension of credit
made by CBES or any of its Subsidiaries) is in default in any respect
thereunder.
(iii) CBES and each of its Subsidiaries owns or possesses valid and
binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and neither CBES nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of CBES
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
(iv) CBES's Disclosure Letter contains a summary description of all
leases, commitments, contracts, licenses, maintenance agreements and other
agreements of CBES and its Subsidiaries involving a liability or obligation of
CBES in excess of $10,000 per annum, and a true and complete list of all letters
of credit, guarantees, indemnity agreements and all commitments to loan or
discount or issue a letter of credit which would aggregate in excess of $10,000
to any person, firm or corporation.
(l) Labor Matters. CBES and its Subsidiaries are in material compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and are not engaged in any
unfair labor practice. Neither CBES nor any of its Subsidiaries is or has ever
been a party to, or is or has ever been bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization with respect to its employees, nor is CBES or any of its
Subsidiaries the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel it or any such Subsidiary to bargain
with any labor organization as to wages and conditions of employment nor has any
such proceeding been threatened, nor is there any strike, other labor dispute or
organizational effort involving CBES or any of its Subsidiaries pending or
threatened.
(m) Employee Benefit Plans. CBES's Disclosure Letter contains a complete
and accurate list of all pension, retirement, stock option, stock purchase,
stock ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other benefit
plans, funds, contracts,
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agreements and arrangements, including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect to
any present or former directors, officers or other employees of CBES or any of
its Subsidiaries (hereinafter collectively referred to as the "CBES Employee
Plans"). All of the CBES Employee Plans comply in all material respects with all
applicable requirements of ERISA, the IRC and other applicable laws; with
respect to the CBES Employee Plans, no event has occurred that would subject
CBES or any of its Subsidiaries to a material liability under ERISA, the IRC or
any other applicable law; there has occurred no "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the IRC) which is likely to
result in the imposition of any material penalties or taxes under Section 502(i)
of ERISA or Section 4975 of the IRC upon CBES or any of its Subsidiaries; and
all required contributions to the CBES Employee Plans through the date hereof
have been made. Neither CBES nor any of its Subsidiaries has provided, or is
required to provide, security to any CBES pension plan or to any single-employer
plan of an ERISA Affiliate (as defined under Section 4001(b)(1) of ERISA or
Section 414 of the IRC) pursuant to Section 401(a)(29) of the IRC. Neither CBES,
its Subsidiaries, nor any ERISA Affiliate has contributed to any "multiemployer
plan," as defined in Section 3(37) of ERISA, on or after September 26, 1980.
Each CBES Employee Plan that is an "employee pension benefit plan" (as defined
in Section 3(2) of ERISA) and which is intended to be qualified under Section
401(a) of the IRC (a "CBES Qualified Plan") has received a favorable
determination letter from the Internal Revenue Service ("IRS"), and CBES and its
Subsidiaries are not aware of any circumstances likely to result in revocation
of any such favorable determination letter. There is no pending or threatened
litigation, administrative action or proceeding relating to any CBES Employee
Plan. There has been no announcement or commitment by CBES or any of its
Subsidiaries to amend any CBES Employee Plan, except for amendments required by
applicable law which do not materially increase the cost of such CBES Employee
Plan; and, except as specifically identified in CBES's Disclosure Letter, CBES
and its Subsidiaries do not have any obligations for post-retirement or
post-employment benefits under any CBES Employee Plan that cannot be amended or
terminated upon 60 days' notice or less without incurring any liability
thereunder, except for coverage required by Part 6 of Title I of ERISA or
Section 4980B of the IRC, or similar state laws, the cost of which is borne by
the insured individuals. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
payment or series of payments by CBES or any of its Subsidiaries to any person
which is an "excess parachute payment" (as defined in Section 280G of the IRC).
To the best knowledge of CBES, no breach of a fiduciary duty under ERISA Section
404 or Section 405 has occurred and with respect to which any outstanding
liability to any participant or any material excise tax or liability exists or
will exist as of the Effective Date with respect to any of the CBES Employee
Plans. Each of the CBES Employee Plans which is a group health plan within the
meaning of IRC Section 5000(b)(1) is in compliance with the continuation of
health care coverage requirements contained in IRC Section 4980B and ERISA
Section 601 et seq. A list of participants or beneficiaries who have elected
continuation coverage in accordance with such laws is provided in CBES's
Disclosure Letter. With respect to each
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CBES Employee Plan, CBES will supply to NASB Bank a true and correct copy of (A)
the annual report on the applicable form of the Form 5500 series filed with the
IRS for the three most recent plan years, if required to be filed, (B) such CBES
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other funding arrangement relating to such CBES Employee Plan,
including amendments thereto, (D) the most recent summary plan description and
summary of material modifications thereto for such CBES Employee Plan, if the
CBES Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial
report or valuation if such CBES Employee Plan is a CBES pension plan and any
subsequent changes to the actuarial assumptions contained therein, and (F) the
most recent determination letter issued by the IRS if such CBES Employee Plan is
a CBES Qualified Plan. With respect to Community Bank's ESOP, CBES will supply
NASB Bank a true and correct copy of (A) the latest financial statement of the
ESOP including a list of assets, (B) a schedule of stock purchases by the ESOP,
including seller, valuation and number of shares, (C) a schedule of participant
name and amount, and (E) a schedule of the most recent contribution allocation
including participant name, compensation and share of contribution.
(n) Title to Assets. CBES's Disclosure Letter contains a complete and
accurate list of all real property owned or leased by CBES or any of its
Subsidiaries, including all properties of CBES or any of its Subsidiaries
classified as "Real Estate Owned" or words of similar import (the "Real
Property"). To the knowledge of CBES, none of the buildings, structures or other
improvements located on the Real Property encroaches upon or over any adjoining
parcel or real estate or any easement or right-of-way. CBES and each of its
Subsidiaries have good and marketable title to their respective properties and
assets (including any intellectual property asset such as any trademark, service
mark, trade name or copyright) and property acquired in a judicial foreclosure
proceeding or by way of a deed in lieu of foreclosure or similar transfer
whether real or personal, tangible or intangible, reflected on the consolidated
financial statements of CBES as of June 30, 2001 or acquired after such date,
other than such items of personal property as have been disposed of in the
ordinary course of business since June 30, 2001, in each case free and clear of
any liens, security interests, encumbrances, mortgages, pledges, restrictions,
charges or rights or interests of others, except pledges to secure deposits and
other liens incurred in the ordinary course of business. Each lease pursuant to
which CBES or any of its Subsidiaries is lessee or lessor is valid and in full
force and effect and neither CBES nor any of its Subsidiaries, nor any other
party to any such lease is in default or in violation of any provisions of any
such lease. All material tangible properties of CBES and each of its
Subsidiaries are in a good state of maintenance and repair, conform with all
applicable ordinances, regulations and zoning laws and are considered by CBES to
be adequate for the current business of CBES and its Subsidiaries and
improvements on real property owned or leased by CBES are located wholly within
the boundaries of the property owned or leased by CBES or its Subsidiaries.
There are no unpaid charges, debts, liabilities, claims or obligations arising
from the construction, ownership or operation of the banking premises of
Community Bank which would give rise to any mechanics' liens against any such
real estate or any part thereof, or for which CBES or Community Bank would be
responsible, except for (i) liens imposed by law and incurred in the ordinary
course of business for obligations not
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yet due to carriers, warehousemen, laborers, materialmen and the like, but only
to the extent the obligation giving rise to the lien is included as a liability
on CBES's books and records and (ii) such minor encumbrances, if any, as do not
materially detract from the value of, or materially interfere with the present
use of, such properties, and which minor encumbrances do not render the title to
such property unmarketable.
(o) Compliance with Laws. CBES and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies (each, a "Governmental Entity")
that are required in order to permit it to carry on its business as it is
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the knowledge of
CBES, no suspension or cancellation of any of them is threatened. Since the date
of its incorporation, the corporate affairs of CBES have not been conducted in
violation in any material respect of any law, ordinance, regulation, order,
writ, rule, decree or approval of any Governmental Entity. Neither CBES nor any
of its Subsidiaries is in material violation of, is, to the knowledge of CBES,
under investigation with respect to any material violation of, or has been given
notice or been charged with any material violation of, any law, ordinance,
regulation, order, writ, rule, decree or condition to approval of any
Governmental Entity.
(p) Fees. Other than financial advisory services performed for CBES by
Hovde Financial LLC, neither CBES nor any of its Subsidiaries, nor any of their
respective officers, directors, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees, and no broker or finder has acted directly
or indirectly for CBES or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby. CBES has provided NASB Bank
with a true and correct copy of the contract between CBES and Hovde Financial
LLC.
(q) Environmental Matters. There is no suit, claim, action, demand,
executive or administrative order, directive, investigation or proceeding
pending or, to the knowledge of CBES, threatened before any court, Governmental
Entity or board or other forum against CBES or any of its Subsidiaries for
alleged noncompliance (including by any predecessor) with, or liability under,
any Environmental Law (as defined below) or relating to the presence of or
release into the environment of any Hazardous Material (as defined below),
whether or not occurring at or on a site owned, leased or operated by it or any
of its Subsidiaries. To CBES's knowledge, the properties currently owned or
operated by CBES or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Hazardous Material other than as permitted under applicable Environmental Law.
Neither CBES nor any of its Subsidiaries has received any notice, demand letter,
executive or administrative order, directive, request for information or other
communication (written or oral) from any federal, state, local or foreign
Governmental Entity or any third party indicating that it may be in violation
of, or liable under, any Environmental Law. To CBES's knowledge, there are no
underground storage tanks on, in or under any properties currently owned or
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operated by CBES or any of its Subsidiaries and no underground storage tanks
have been closed or removed from any properties currently owned or operated by
CBES or any of its Subsidiaries. To CBES's knowledge, during the period of
CBES's or any of its Subsidiaries' ownership or operation of any of their
respective current properties, there has been no contamination by or release of
Hazardous Materials in, on, under or affecting such properties. To CBES's
knowledge, prior to the period of CBES's or any of its Subsidiaries' ownership
or operation of any of their respective current properties, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
"Environmental Law" means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, directive, executive or administrative order,
judgment, decree, injunction, legal requirement or agreement with any
Governmental Entity relating to (A) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety as it relates to Hazardous Materials, or (B) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect. The term
Environmental Law includes all federal, state and local laws, rules, regulations
or requirements relating to the protection of the environment or health and
safety, including, without limitation, (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including, but not limited to,
the Hazardous and Solid Waste Amendments thereto and Subtitle I relating to
underground storage tanks), the Federal Solid Waste Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970 as it relates to
Hazardous Materials, the Federal Hazardous Substances Transportation Act, the
Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act,
the Endangered Species Act, the National Environmental Policy Act, the Rivers
and Harbors Appropriation Act or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Hazardous Material.
"Hazardous Material" means any substance (whether solid, liquid or
gas) which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Material includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste,
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industrial substance, oil or petroleum, or any derivative or by-product thereof,
radon, radioactive material, asbestos, asbestos-containing material, urea
formaldehyde foam insulation, lead and polychlorinated biphenyl.
(r) Loan Portfolio; Allowance; Asset Quality.
----------------------------------------
(i) With respect to each loan (including advances made pursuant to
letters of credit) owned by CBES or its Subsidiaries in whole or in part, to
CBES's knowledge (A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms, (B) the note and
the related security documents, copies of which are included in the loan files,
are true and correct copies of the documents they purport to be and have not
been suspended, amended, modified, canceled or otherwise changed except as
otherwise disclosed by documents in the applicable loan file and (C) CBES or one
of its Subsidiaries is the sole holder of legal and beneficial title to each
loan reflected in the consolidated financial statements of CBES except as
otherwise disclosed in the applicable loan file or on the books and records of
CBES and its Subsidiaries. To the knowledge of CBES (x) all notes, evidences of
indebtedness and agreements for the payment of money and all related documents,
instruments, papers and other agreements for the payment of money and all
related documents, instruments, papers and other security agreements of
Community Bank, applicable thereto, are bona fide, are genuine as to signatures
of all makers, endorsers, and guarantors, and were given for valid
consideration; (y) all collateral securing such indebtedness existed at the
disbursement of the funds which created the indebtedness; and (z) except as may
be disclosed in the books and records of Community Bank relating to its loans,
Community Bank has made no affirmative or negative oral or written commitments
which would materially impair the enforcement of any of Community Bank's loans.
(ii) The allowance for loan losses reflected in CBES's statement of
financial condition at June 30, 2002 (unaudited) was, and the allowance for loan
losses shown on the balance sheets in CBES's Reports for periods ending after
June 30, 2002 (unaudited) will be, in the opinion of management, adequate to
provide for losses inherent in CBES's loan portfolio.
(iii) CBES's Disclosure Letter sets forth a true and complete listing,
as of June 30, 2002, of (A) all loans, leases, advances, credit enhancements,
guarantees, other extensions of credit, commitments and interest-bearing assets
of CBES and its Subsidiaries (collectively, "Loans") that have been classified
(whether regulatory or internal) as "Special Mention," "Substandard,"
"Doubtful," "Loss" or words of similar import, listed by category, including the
amounts thereof; (B) Loans (1) that are contractually past due 90 days or more
in the payment of principal and/or interest, (2) that are on a non-accrual
status, (3) where the interest rate terms have been reduced and/or the maturity
dates have been extended subsequent to the agreement under which the Loan was
originally created due to concerns regarding the borrower's ability to pay in
accordance with such initial terms, or (4) where a specific reserve allocation
exists in connection therewith, listed by category, including the amounts
thereof; and (C) Loans with any director, executive officer or five percent or
greater stockholder of CBES or any
A-23
of its Subsidiaries or any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing, including the
amounts thereof. To the knowledge of CBES, neither CBES nor any of its
Subsidiaries is a party to any Loan that is in violation of any law, regulation
or rule of any Governmental Entity. Any asset of CBES or any of its Subsidiaries
that is classified as "Real Estate Owned" or words of similar import that is
included in any non-performing assets of CBES or any of its Subsidiaries is
listed in CBES's Disclosure Letter and is carried net of reserves at the lower
of cost or fair value, less estimated selling costs, based on current
independent appraisals or evaluations or current management appraisals or
evaluations; provided, however, that "current" shall mean within the past 12
months. -------- -------
(s) Anti-takeover Provisions Inapplicable. CBES and its Subsidiaries have
taken all actions required to exempt CBES, NASB Holding, NASB Bank, Acquisition
Sub, the Agreement and the Merger from any provisions of an anti-takeover nature
contained in their organizational documents, and the provisions of any federal
or state "anti-takeover," "fair price," "moratorium," "control share
acquisition" or similar laws or regulations.
(t) Charter Provisions. CBES and its Subsidiaries have taken all action so
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any person under the certificate of incorporation,
bylaws, or other governing instruments of CBES or any of its Subsidiaries or
restrict or impair the ability of NASB Bank or any of its Subsidiaries or
Affiliates to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of CBES or any of its Subsidaries that may be directly or
indirectly acquired or controlled by it.
(u) Material Interests of Certain Persons. No officer or director or 5%
stockholder of CBES, or any "associate" (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) of any such officer or director or
stockholder, has any material interest in any material contract or property
(real or personal), tangible or intangible, used in or pertaining to the
business of CBES or any of its Subsidiaries. CBES's Disclosure Letter describes
all transactions in which any current officer, or director, or Affiliate or
Subsidiary thereof, directly or indirectly, has borrowed from, loaned to,
supplied or provided goods or services to, purchased assets from, sold assets
to, or done business in any manner with CBES or Community Bank or is a party to
any agreement with CBES or Community Bank, and all transactions known to
management in which any current 5% stockholder or employee of CBES or Community
Bank, or any Affiliate or Subsidiary thereof, directly of indirectly, has
borrowed from, loaned to, supplied or provided goods or services to, purchased
assets from, sold assets to, or done business in any manner with CBES or
Community Bank or is a party to any agreement with CBES or Community Bank.
(v) Insurance. CBES's Disclosure Letter contains a complete list of all
insurance policies of CBES and its Subsidiaries presently in effect. In the
opinion of management, CBES and its Subsidiaries are presently insured for
amounts deemed reasonable by management against such risks as companies engaged
in a similar business
A-24
would, in accordance with good business practice, customarily be insured. All of
the insurance policies and bonds maintained by CBES and its Subsidiaries are in
full force and effect, CBES and its Subsidiaries are not in default thereunder
and all material claims thereunder have been filed in due and timely fashion.
CBES and its Subsidiaries have received no notice from any insurance carrier
that (i) any insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to any policies of
insurance will be substantially increased.
(w) Investment Securities; Derivatives.
----------------------------------
(i) Except for investments in Federal Home Loan Bank ("FHLB") Stock,
pledges to secure FHLB borrowings, pledges to secure deposits and reverse
repurchase agreements entered into in arms-length transactions pursuant to
normal commercial terms and conditions and entered into in the ordinary course
of business, and restrictions that exist for securities to be classified as
"held to maturity," none of the investments held by CBES or any of its
Subsidiaries as of the date of this Agreement is, or will be at Closing, subject
to any restriction (contractual or statutory) that would materially impair the
ability of the entity holding such investment freely to dispose of such
investment at any time.
(ii) Except (x) as set forth in CBES's Disclosure Letter, (y) as
disclosed in CBES's Reports filed on or prior to the date of this Agreement, or
(z) for adjustable-rate mortgage loans and adjustable-rate advances, neither
CBES nor any of its Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter equity, interest rate, foreign exchange or
other swap, forward, future, option, cap, floor or collar or any other contract
that is a derivative contract (including various combinations thereof) or owns
securities that (a) are referred to generically as "structured notes," "high
risk mortgage derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (b) are likely to have changes in value as a
result of interest or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange rate changes.
(x) Credit Card Issuing Agreement. Neither CBES nor Community bank has any
credit card agreement which would prevent NASB Bank from soliciting Community
Bank's customers to accept a credit card issued by or on behalf of NASB Bank or
an Affiliate of NASB Bank.
(y) Indemnification. Except (i) as provided in the certificate of
incorporation or bylaws of CBES and the similar governing documents of its
Subsidiaries, or (ii) as set forth in CBES's Disclosure Letter, neither CBES nor
any Subsidiary is a party to any indemnification agreement with any of its
present or former directors, officers, employees, agents or other persons who
serve or served in any other capacity with any other enterprise at the request
of CBES and, to the best knowledge of CBES, there are no claims for which any
such person would be entitled to indemnification under the articles of
incorporation or bylaws of CBES or the similar governing documents of any of its
Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
A-25
(z) Books and Records. The books and records of CBES and its Subsidiaries
on a consolidated basis have been, and are being, maintained in accordance with
applicable legal and accounting requirements and reflect in all material
respects the substance of events and transactions that should be included
therein.
(aa) Corporate Documents. Complete and correct copies of the certificate of
incorporation, bylaws and similar governing documents of CBES and each of CBES's
Subsidiaries, as in effect as of the date of this Agreement, have previously
been delivered to NASB Bank. The minute books of CBES and each of CBES's
Subsidiaries constitute a complete and correct record of all actions taken by
their respective boards of directors (and each committee thereof) and their
stockholders.
(bb) Community Reinvestment Act Compliance. Community Bank is in material
compliance with the applicable provisions of the Community Reinvestment Act, as
amended ("CRA"), and the regulations promulgated thereunder, and, as of its most
recent CRA examination, Community Bank has a CRA rating of "Satisfactory" or
better. To CBES's knowledge, there is no fact or circumstance or set of facts or
circumstances that would cause Community Bank to fail to comply with such
provisions or cause the CRA rating of Community Bank to fall below
"Satisfactory."
(cc) Undisclosed Liabilities. As of the date hereof, CBES and its
Subsidiaries have not incurred any debt, liability or obligation of any nature
whatsoever (whether accrued, contingent, absolute or otherwise and whether due
or to become due) except for (i) liabilities reflected on or reserved against in
the consolidated financial statements of CBES as of March 31, 2002, (ii)
liabilities incurred since June 30, 2002 in the ordinary course of business
consistent with past practice that, either alone or when combined with all
similar liabilities, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on CBES and its Subsidiaries, taken as a whole, and
(iii) liabilities incurred for legal, accounting, financial advising fees and
out-of-pocket expenses in connection with a proposed sale or merger of CBES.
Section 2.4. Representations and Warranties of NASB Holding and
Acquisition Sub. Subject to Sections 2.1 and 2.2, NASB Holding and Acquisition
Sub represent and warrant to CBES that:
(a) Organization.
------------
(i) NASB Holding is a corporation duly organized, validly existing and
in good standing under the laws of the State of Missouri and is registered as a
savings and loan holding company under the HOLA. NASB Bank is a stock savings
association duly organized, validly existing and in good standing under the laws
of the United States of America and is a wholly-owned Subsidiary of NASB
Holding. Acquisition Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Missouri. Each Subsidiary of
NASB Holding is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each
A-26
of NASB Holding and its Subsidiaries has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
(ii) NASB Holding, NASB Bank, Acquisition Sub and each of their
Subsidiaries have the requisite corporate power and authority and are duly
qualified to do business and are in good standing in each jurisdiction in which
the nature of their business or the ownership or leasing of their properties
makes such qualification necessary.
(b) Authority. NASB Holding and Acquisition Sub have all requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the requisite vote of the sole shareholder of
Acquisition Sub and the receipt of all required regulatory or governmental
approvals, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and, subject to the approval of this Agreement by
Acquisition Sub's sole shareholder, the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate actions
on the part of NASB Holding, and Acquisition Sub. This Agreement has been duly
and validly executed and delivered by NASB Holding and Acquisition Sub and
constitutes a valid and binding obligation of NASB Holding and Acquisition Sub,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
(c) Shareholder Approval. No approval of this Agreement by the shareholders
of NASB Holding is required for the consummation of the Merger and the related
transactions contemplated hereby. The affirmative vote of the sole shareholder
of Acquisition Sub is the only vote of the sole shareholder of Acquisition Sub
required for approval of this Agreement and the consummation of the Merger and
the related transactions contemplated hereby.
(d) No Violations; Consents. The execution, delivery and performance of
this Agreement by NASB Holding and Acquisition Sub do not, and the consummation
of the transactions contemplated hereby will not, constitute (i) assuming
receipt of all Requisite Regulatory Approvals, a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license to which NASB Holding, Acquisition Sub or any of
their respective Subsidiaries (or any of their respective properties) is
subject, (ii) a breach or violation of, or a default under, the articles of
incorporation or bylaws of NASB Holding or Acquisition Sub or the similar
organizational documents of any of their respective Subsidiaries or (iii) a
breach or violation of, or a default under (or an event which, with due notice
or lapse of time or both, would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of NASB Holding or Acquisition Sub or any
of their respective Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which NASB Holding or Acquisition Sub or
A-27
any of their respective Subsidiaries is a party, or to which any of their
respective properties or assets may be subject. The consummation by NASB Holding
and Acquisition Sub of the transactions contemplated hereby will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, or instrument, other than (w) the
approval of NASB Holding as the sole shareholder of Acquisition Sub, (x) the
approval of the OTS under the HOLA, (the "Requisite Regulatory Approvals"), and
(y) such approvals, consents or waivers as are required under the federal and
state securities or "blue sky" laws in connection with the transactions
contemplated by this Agreement. As of the date hereof, the executive officers of
NASB Holding and Acquisition Sub know of no reason pertaining to NASB Holding or
Acquisition Sub why any of the approvals referred to in this Section 2.4(d)
should not be obtained without undue delay or the imposition of any material
condition or restriction described in the last sentence of Section 5.1(b).
(e) Reports and Financial Statements.
--------------------------------
(i) NASB Holding and NASB Bank has timely filed all material reports
and financial statements, together, with any amendments required to be made with
respect thereto, that they were required to file with (a) the FDIC and (b) the
OTS (collectively, the "NASB's Reports") and, to NASB Holding's knowledge, NASB
Holding and NASB Bank have paid all taxes and assignments due and payable in
connection therewith. As of their respective dates, none of NASB's Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
(ii) Each of the financial statements of NASB Bank included in NASB's
Reports has been prepared in all material respects in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited financial
statements, as permitted by appropriate regulatory authorities). Each of the
consolidated statements of condition contained or incorporated by reference in
NASB's Reports (including in each case any related notes and schedules) fairly
presented (A) the financial position of the entity or entities to which it
relates as of its date and (B) the results of operations, shareholders' equity
and cash flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject in the case of unaudited
interim statements, to normal year-end adjustments that are not material in
amount or effect), in each case in accordance with GAAP, except as may be noted
therein.
(f) Absence of Certain Changes or Events. Except as disclosed in NASB's
Reports filed on or prior to the date of this Agreement, no event has occurred
or circumstances arisen which has had or might reasonably be expected to have a
Material Adverse Effect with respect to NASB Holding.
(g) Absence of Claims. No litigation, proceeding, controversy, claim,
action or suit or other legal, administrative or arbitration proceeding before
any court,
A-28
Governmental Entities or arbitrator is pending or has been threatened against
NASB Holding, NASB Bank, Acquisition Sub or any of their respective Subsidiaries
that would reasonably be expected to prevent or adversely affect or which seeks
to prohibit the consummation of the transactions contemplated by this Agreement
or which would have a Material Adverse Effect with respect to NASB Holding, NASB
Bank, Acquisition Sub or their respective Subsidiaries taken as a whole.
(h) Absence of Regulatory Actions. Neither NASB Holding, NASB Bank,
Acquisition Sub nor any of their respective Subsidiaries is a party to any cease
and desist order, written agreement or memorandum of understanding with, or any
commitment letter or similar written undertaking to, or is subject to any
action, proceeding, order or directive by, or is a recipient of any
extraordinary supervisory letter from any Government Regulatory Agency, or has
adopted any board resolutions at the request of any Government Regulatory
Agency, nor has it been advised by any Governmental Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
(i) Compliance with Laws. NASB Holding, NASB Bank, Acquisition Sub and
their respective Subsidiaries each have all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings, applications and
registrations with, all Governmental Entities that are required in order to
permit them to carry on their business as it is presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect, and to the best knowledge of NASB Holding, NASB Bank and
Acquisition Sub, no suspension or cancellation of any of them is threatened.
Since the date of its incorporation, the corporate affairs of NASB Holding, NASB
Bank and Acquisition Sub have not been conducted in violation in any material
respect of any law, ordinance, regulation, order, writ, rule, decree or approval
of any Governmental Entity. Neither NASB Holding, NASB Bank, Acquisition Sub nor
any of their respective Subsidiaries is in material violation of, is, to the
knowledge of NASB Holding or Acquisition Sub, under investigation with respect
to any material violation of, or has been given notice or been charged with any
material violation of, any law, ordinance, regulation, order, writ, rule, decree
or condition to approval of any Governmental Entity.
(j) Community Reinvestment Act Compliance. NASB Bank, and each Subsidiary
of NASB Holding that is an insured depository institution, is in material
compliance with the applicable provisions of CRA, and the regulations
promulgated thereunder, and, as of its most recent CRA examination, NASB Bank,
and each Subsidiary of NASB Holding that is an insured depository institution,
has a CRA rating of "Satisfactory" or better. To the knowledge of NASB Holding,
there is no fact or circumstance or set of facts or circumstances that would
cause NASB Bank, or any Subsidiary of NASB Holding that is an insured depository
institution, to fail to comply with such provisions or cause the CRA rating of
NASB Bank, or any Subsidiary of NASB Holding that is an insured depository
institution to fall below "Satisfactory." Neither NASB Holding, NASB Bank nor
Acquisition Sub has received notice of or has
A-29
knowledge of any planned or threatened objection by any community group to the
transactions contemplated hereby.
(k) Fees. Neither NASB Holding, NASB Bank, Acquisition Sub nor any of their
respective Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions or finder's fees,
and no broker or finder has acted directly or indirectly for NASB Holding, NASB
Bank or any of their respective Subsidiaries in connection with this Agreement
or the transactions contemplated hereby.
(l) Availability of Funds. No later than the Closing Date, NASB Holding
will have available sufficient cash or other liquid assets or financing pursuant
to binding arrangements or commitments which may be used to fund this
transaction. NASB Holding's ability to consummate the transactions contemplated
by this Agreement is not contingent on raising any equity capital, obtaining
specific financing thereof, consent of any lender or any other matter.
(m) Pro Forma Capital Requirements. NASB Bank is, and on a pro forma basis
giving effect for the transactions contemplated by this Agreement and any
financing/capital injection contemplated by NASB Bank will be (i) at least
"Adequately Capitalized," as defined for purposes of the FDIA and (ii) in
compliance with all capital requirements, standards and ratios required by each
state or federal regulator with jurisdiction over NASB Bank, including without
limitation, any such higher requirement, standard or ratio as shall apply to
institutions engaging in the acquisition of insured institution deposits, assets
or branches, and no such regulator is likely to, or has indicated that it will,
condition any of the regulatory approvals upon an additional increase in NASB
Bank's capital or compliance with any capital requirement
(n) Anti-Trust. NASB Holding has no knowledge that it will be required to
divest deposit liabilities, branches, loans or any business or line of business
as a condition to the receipt of any of the Regulatory Approvals.
ARTICLE III
Actions and Conduct Pending the Merger
--------------------------------------
Section 3.1. Regulatory Application. Within thirty (30) days of the date
of this Agreement, NASB Holding or Acquisition Sub will file applications with
OTS to merge Acquisition Sub with and into CBES.
Section 3.2. Conduct of CBES's Business Prior to the Effective Date.
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Date, CBES shall, and shall cause its
Subsidiaries to, use all reasonable efforts to (i) conduct its business in the
regular, ordinary and usual course consistent with past practice, (ii) maintain
and preserve intact its business organization, properties, leases, employees and
advantageous business relationships and retain the
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services of its officers and key employees, (iii) take no action which would
adversely affect or delay the ability of CBES or NASB Holding, NASB Bank or
Acquisition Sub to perform their respective covenants and agreements on a timely
basis under this Agreement, (iv) take no action which would adversely affect or
delay the ability of CBES, Community Bank, NASB Holding or Acquisition Sub to
obtain any necessary approvals, consents or waivers of any governmental
authority required for the transactions contemplated hereby or which would
reasonably be expected to result in any such approvals, consents or waivers
containing any material condition or restriction, (v) take no action that
results in or is reasonably likely to have a Material Adverse Effect on CBES or
Community Bank, (vi) maintain insurance in such amounts and against such risks
and losses as are customary for companies engaged in a similar business, (vii)
confer on a regular and frequent basis with one or more representatives of NASB
Holding to discuss, subject to applicable law, material operational matters and
the general status of the ongoing operations of CBES and its Subsidiaries,
(viii) promptly notify NASB Holding of any material change in its business,
properties, assets, condition (financial or otherwise) or results of operations,
and (ix) promptly provide NASB Holding with copies of all filings made by CBES
or any of its Subsidiaries with any state or federal court, administrative
agency, commission or other Governmental Entity in connection with this
Agreement and the transactions contemplated hereby. Without limiting the
foregoing covenants, unless the prior written consent of NASB Holding shall have
been obtained, and except as otherwise expressly contemplated in this Agreement,
CBES shall, and shall cause each of its Subsidiaries to:
(a) Board Observers. Permit, at any time after the execution of this
Agreement, two representatives of NASB Bank to attend CBES's and Community
Bank's board of directors' meetings and all Board committee meetings as
observers only and shall give NASB Bank notice of all such meetings concurrently
with the giving of notice to other directors and committee members; provided,
however, that such observers will not be entitled to attend the portions of any
meetings that relate to any deliberation of the transactions contemplated by
this Agreement or meetings with attorneys on other matters who recommend that
such observers not be present in order to preserve the attorney-client
privilege.
(b) Loan Policies. Reserve against, place on non-accrual, and charge off
loans and other assets as losses are recognized or future losses become
apparent, in accordance with Community Bank's past practices, which Community
Bank warrants and represents are in compliance in all material respects with all
applicable laws and regulations and have not been criticized in any past
examinations or audits, while maintaining a loan loss reserve of at least .75%
of total loans outstanding;
(c) Tax Returns. Prepare, execute and file, on or before the due date
thereof if prior to the Effective Date, all federal, state and local tax returns
required of CBES or Community Bank with respect to its operations for any period
ending before the Effective Date and will pay the appropriate tax. In addition,
prior to the Effective Date, CBES shall file, and shall cause each of its
Subsidiaries to file, all amended federal, state and local tax returns necessary
to carry back any tax losses incurred by CBES or any of
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its Subsidiaries to the extent permitted by law for the purpose of obtaining all
available tax refunds.
(d) Customer Notice. Assist NASB Holding in drafting and preparing for
mailing a notice, the form and content of which shall be established by mutual
agreement of NASB Holding and CBES, to all Community Bank's deposit and loan
customers, notifying them of the sale of CBES to NASB Holding. The notice shall
be mailed by NASB Holding after all Requisite Regulatory Approvals and
Stockholders Approvals have been obtained but no later than thirtieth day prior
to the date agreed upon by NASB Holding and CBES pursuant to Section 6.1 for the
data processing conversion.
(e) Copies of Reports. Furnish to NASB Holding, until the Effective Date,
true and complete copies of the following information within five days after
preparation or receipt:
(i) Monthly financial statements prepared with respect to CBES and
Community Bank;
(ii) Daily statements of Community Bank beginning on the date of the
final regulatory approval of the transactions contemplated by this Agreement and
continuing through the Effective Date;
(iii) Community Bank's Reports of Condition and Income to regulatory
authorities at the close of business of each calendar quarter;
(iv) Community Bank's internal watch and problem loan reports;
(v) Any and all board reports prepared for the use of Community Bank's
board of directors or any board committee (other than those portions of any
report which pertain to this Agreement or is privileged information);
(vi) Any reports submitted to Community Bank by independent certified
public accountants in connection with an examination of Community Bank's
financial statements;
(vii) Notice of all actions, suits, and proceedings before any court
or Governmental Entity, commission, board, bureau, agency, or instrumentality
affecting CBES or Community Bank;
(viii) Any notices or communications received from any savings and
loan regulatory body with respect to the affairs or operations of CBES or
Community Bank; and
(ix) Any additional information reasonably requested by NASB Holding
for completion of any applications for regulatory approval of the transactions
contemplated by this Agreement.
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(f) Liquidation Account. Cause Community Bank to establish and maintain on
its books a true and complete record of those deposit accounts, including names
of depositors, which would have liquidation rights by reason of the conversion
of Community Bank from mutual to stock form of organization.
(g) Adjusted Stockholders' Equity. Take all efforts necessary to reduce
expenses and maintain the Stockholders' Equity of CBES, consolidated with all of
its Subsidiaries, at the close of business on the day prior to the Effective
Date, at an amount equal to or greater than $13,900,000 after taking into
account the adjustments described below ("Adjusted Stockholders' Equity"). If
the Adjusted Stockholders' Equity is less than $13,900,000 but greater than or
equal to $13,500,000, the Merger Consideration shall be adjusted as provided for
in Section 1.2(a) hereof. If the Adjusted Stockholders' Equity is less than
$13,500,000, NASB Holding shall have the right to either (i) terminate the
Agreement pursuant to Section 7.1(g) hereof or (ii) consummate the Merger and
provide the holders of CBES Common Stock with a cash payment of $17.05 per
share. Such Adjusted Stockholders' Equity shall be determined according to GAAP
as it is applied to savings and loan associations and savings and loan
association holding companies and in a manner consistent with CBES's past
practices with the following adjustments:
(i) All professional fees related to the Merger, including but not
limited to legal fees, investment banking fees and accounting fees, shall not be
treated as a reduction to Stockholders' Equity;
(ii) All severance payments from CBES or Community Bank to employees
terminated prior to the Effective Date, including but not limited to cash
severance payments pursuant to the Community Bank Severance Plan, reimbursement
for Welfare Benefits (as defined in the Community Bank Severance Plan), payment
of bonuses and Welfare Benefits pursuant to the terms of Employee Bonus
Agreements entered into by Community Bank and certain key officers of Community
Bank, payment of accrued paid time off and extended leave as required by the
Community Bank Employee Manual dated January 2001, shall not be treated as a
reduction to Stockholders' Equity;
(iii) All market value adjustments required by Statement of Financial
Accounting Standards Number 115 after June 30, 2002, shall not be treated as an
adjustment to Stockholders' Equity;
(iv) If (y) Community Bank's ALLL exceeds the amount required by
applicable statutes and regulations and (z) any of Community Bank's loan(s) or
other real estate owned require subsequent write-down(s), Community Bank shall
be allowed to treat such write-down(s) as a reduction of Community Bank's ALLL
instead of a reduction to income or Stockholders' Equity, to the extent allowed
by GAAP and the OTS.
(v) All reductions in the value of loans of Community Bank requested
by NASB Holding shall not be treated as a reduction to Stockholder's Equity.
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(vi) The value of all assets and leasehold improvements of the Liberty,
Missouri branch of Community Bank written off of the books of Community Bank and
all expenses related to the closing of the Liberty, Missouri branch of Community
Bank shall not be treated as a reduction to Stockholders' Equity.
Section 3.3. Forbearance by CBES. Without limiting the covenants set forth
in Section 3.2 hereof, except as otherwise provided in this Agreement and except
to the extent required by law or regulation or any Governmental Entity, during
the period from the date of this Agreement to the Effective Date, CBES shall
not, and shall not permit any of its Subsidiaries to, without the prior consent
of NASB Holding:
(a) unless required by applicable law or regulation or regulatory
directive, change any provisions of the articles of incorporation or bylaws of
CBES or the similar governing documents of its Subsidiaries;
(b) authorize, issue, deliver or sell any shares of its capital stock or
any securities or obligations convertible or exercisable for any shares of its
capital stock or change the terms of any of its outstanding stock options or
warrants or issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement of any character relating to
the authorized or issued capital stock of CBES except pursuant to the exercise
of stock options or warrants outstanding as of the date of this Agreement, or
split, combine, reclassify or adjust any shares of its capital stock or
otherwise change its capitalization;
(c) make, declare or pay any cash or stock dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock;
(d) other than for fair value in the ordinary course of business consistent
with past practice, (i) acquire or sell, transfer, assign, mortgage, encumber or
otherwise dispose of any of its material properties, leases, assets or other
rights or agreements to any individual, corporation or other entity other than a
direct or indirect wholly owned Subsidiary of CBES or (ii) cancel, release or
assign any indebtedness of any such individual, corporation or other entity or
(iii) permit Community Bank to waive any material right or cancel any material
contract, lease, license, obligation or commitment, or permit any lien,
encumbrance or charge of any material effect to attach to any of CBES's or
Community Bank's assets;
(e) except to the extent required by law or as specifically provided for in
Section 4.11(i) or elsewhere herein, increase in any manner the compensation or
fringe benefits of any of its employees or directors; pay bonuses to its
employees or directors; pay any pension or retirement allowance not required by
any existing plan or agreement to any employees or directors, or become a party
to, amend or commit itself to fund or otherwise establish any trust or account
related to any CBES Employee Plan (as defined in Section 2.3(m)) with or for the
benefit of any employee or director; voluntarily accelerate the vesting of any
stock options or other compensation or benefit; grant or
A-34
award any stock options; make any discretionary contribution to any CBES
Employee Plan; hire any employee with an annual total compensation payment in
excess of $30,000; or enter into any employment contract or other agreement or
arrangement with any director, officer or other employee;
(f) except as contemplated by Section 4.2, change its method of accounting
as in effect at June 30, 2001, except as required by changes in GAAP as
concurred in by CBES's independent auditors;
(g) commence any litigation other than in the ordinary course of business,
settle any claim, action or proceeding involving any liability of CBES or any of
its Subsidiaries for money damages in excess of $25,000 or impose material
restrictions upon the operations of CBES or any of its Subsidiaries;
(h) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case which are material,
individually or in the aggregate, to CBES, except in satisfaction of debts
previously contracted or by way of foreclosure on collateral security for any
such debts;
(i) establish or commit to the establishment of any new branch or other
office facilities or file any application to relocate or terminate the operation
of any banking office, provided, however, that if prior to September 25, 2002,
CBES is unable to obtain a six (6) month extension of the lease of the Liberty,
Missouri branch of Community Bank, CBES shall (i) provide notice to the landlord
of the Liberty, Missouri branch of Community Bank of its intent not to renew the
lease and (ii) notify the OTS of its intent to close the Liberty, Missouri
branch of Community Bank. Moreover, Community Bank may proceed to attempt to
sell the deposits of the Liberty, Missouri branch of Community Bank to another
bank or savings association at a price as agreed to by NASB Holding;
(j) other than investments for CBES's portfolio made in accordance with
Section 3.3(k), make any investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any property or
assets of any other individual, corporation or other entity; (k) make any
investment in any debt security, including mortgage-backed and mortgage-related
securities, or materially restructure or change its investment securities
portfolio, through purchases, sales or otherwise; provided, however, that CBES
shall be permitted to invest in the following securities with final maturities
no later than November 30, 2002: U.S. government and U.S. government agency
securities, securities of the FHLB, or insured jumbo certificates of deposit;
(l) enter into, renew, amend or terminate any contract or agreement, or
make any change in any of its leases or contracts, provided, however, that if
prior to
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September 25, 2002, CBES is unable to obtain a six (6) month extension of the
lease of the Liberty, Missouri branch of Community Bank, CBES shall (i) provide
notice to the landlord of the Liberty, Missouri branch of Community Bank of its
intent not to renew the lease and (ii) notify the OTS of its intent to close the
Liberty, Missouri branch of Community Bank. Moreover, Community Bank may proceed
to attempt to sell the deposits of the Liberty, Missouri branch of Community
Bank to another bank or savings association at a price as agreed to by NASB
Holding;
(m) make, renegotiate, renew, increase, extend, modify or purchase any
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing, except (i)
in conformity with existing safe and sound lending and pricing practices; (ii)
loans or advances as to which CBES has a binding obligation to make such loan or
advances as of the date hereof; and (iii) with respect to any loan or additional
advance resulting in an aggregate indebtedness to any individual borrower of
$100,000 or more for loans or advances secured by real estate or certificates of
deposit held by Community Bank, $25,000 or more for loans secured by collateral
other than real estate or certificates of deposit held by Community Bank or $0
or more unsecured, unless such loan has been approved in a loan committee or
Board meeting of which an authorized representative of NASB Holding was given at
least 24 hours written notice or oral notification and at which such
representative did not object, provided, however, that renewals (or extensions)
of loans of no more than six months, or one year in the case of construction
loans that have been outstanding one year or less, may be made at the time such
loans are due for renewal, if consistent with past practices, notwithstanding
such objection if the Board of Directors or Loan and Discount Committee
determines after taking into account such objection that such renewal is
necessary to protect Community Bank's interest and such loan is current, is not
a classified asset and is not on Community Bank's watch list;
(n) except as provided in Section 3.3(m), extend or renew loans, or advance
additional sums to a borrower whose loans, in whole or in part, have been
classified or listed as special mention by any regulatory authority or included
on Community Bank's watch list unless such extension, renewal or advance shall
have been approved in advance by the Board of Directors of Community Bank or
Community Bank's Loan and Discount Committee, and only if such extension,
renewal or advance was found by such Board or Committee to be necessary in order
to protect Community Bank's interests and in accordance with sound banking
practices at a loan committee or Board meeting of which NASB Bank was given at
least 24 hours written notice or oral notification and at which such
representative did not object;
(o) incur any additional borrowings other than short-term (six months or
less) FHLB borrowings and reverse repurchase agreements at reasonable market
interest rates consistent with past practice, or pledge any of its assets to
secure any borrowings other than as required pursuant to the terms of borrowings
of CBES or any Subsidiary in effect at the date hereof or in connection with
borrowings or reverse repurchase agreements permitted hereunder;
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(p) accept any deposits from any person on terms materially more favorable
in any respect than those available to the general public in CBES's market area,
unless such deposits are accepted in accordance with a safe and sound program or
practice in existence at Community Bank prior to the date of this Agreement;
(q) establish or impose a schedule of service charges or fees which applies
charges either substantially more or substantially less than similar service
charges and fees charged by other banks in CBES's market areas;
(r) make any capital expenditures in excess of $5,000 per expenditure other
than pursuant to binding commitments existing on the date hereof disclosed in
the CBES Disclosure Letter and other than expenditures necessary to maintain
existing assets in good repair or to make payment of necessary taxes;
(s) organize, capitalize, lend to or otherwise invest in any Subsidiary;
(t) elect to any senior executive office any person who is not a member of
the senior executive officer team of CBES as of the date of this Agreement or
elect to the Board of Directors of CBES any person who is not a member of the
Board of Directors of CBES as of the date of this Agreement;
(u) engage in any transaction that is not in the usual and ordinary course
of business and consistent with past practices;
(v) enter into any new line of business;
(w) take or omit to take any action that is intended or may reasonably be
expected to result in any of CBES's representations and warranties set forth in
this Agreement being or becoming untrue in any material respect, or which would
make any of such representations and warranties untrue or incorrect in any
material respect if made anew after taking such action;
(x) make any equity investment or commitment to make such an investment in
real estate or in any real estate development project, other than in connection
with foreclosures, settlements in lieu of foreclosure or troubled loan or debt
restructuring in the ordinary course of business consistent with prudent banking
practices;
(y) make, renew or increase any loan or other extension of credit, or
commit to make, renew or increase any such loan or extension of credit, to any
director or officer of CBES or any of its Subsidiaries, or any entity
controlled, directly or indirectly, by any of the foregoing; or
(z) agree or make any commitment to take any action that is prohibited by
this Section 3.3.
In the event that NASB Holding does not respond in writing to CBES within
two (2) business days of receipt by NASB Holding of a written request for CBES
to engage in any of the actions for which NASB Holding's prior written consent
is
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required pursuant to this Section 3.3, NASB Holding shall be deemed to have
consented to such action. Any request by CBES or response thereto by NASB
Holding shall be made in accordance with the notice provisions of Section 9.7
and shall note that it is a request pursuant to this Section 3.3 and shall state
that a failure to respond within two (2) business days shall constitute consent.
Section 3.4. Conduct of NASB Holding's and Acquisition Sub's Businesses
Prior to the Effective Date. Except as expressly provided in this Agreement,
during the period from the date of this Agreement to the Effective Date, NASB
Holding and Acquisition Sub shall, and shall cause their respective Subsidiaries
to, use their commercially reasonable efforts to (i) conduct their business in
the regular, ordinary and usual course consistent with past practice; (ii)
maintain and preserve intact their business organization, properties, leases,
employees and advantageous business relationships; (iii) take no action which
would materially adversely affect or delay the ability of CBES, NASB Holding, or
Acquisition Sub to perform their respective covenants and agreements on a timely
basis under this Agreement and (iv) take no action which would adversely affect
or delay the ability of CBES, NASB Holding or Acquisition Sub to obtain any
necessary approvals, consents or waivers of any Governmental Entity required for
the transactions contemplated hereby or which would reasonably be expected to
result in any such approvals, consents or waivers containing any material
condition or restriction.
ARTICLE IV
COVENANTS
---------
Section 4.1. Acquisition Proposals. From and after the date hereof until
the termination of this Agreement, neither CBES nor Community Bank, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by CBES or any of its Subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by any
of its Subsidiaries to take any such action; provided, however, that nothing
contained in this Section 4.1 shall prohibit the Board of Directors of CBES from
(i) furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited, written, bona fide
proposal to acquire CBES pursuant to a merger, consolidation, share exchange,
business combination, tender or exchange offer or other similar transaction, if,
and only to the extent that (A) the Board of Directors of CBES, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is necessary for the Board of
Directors of CBES to comply with its fiduciary duties to stockholders under
applicable law, and (B) prior to furnishing such information to, or
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entering into discussions or negotiations with, such person or entity, CBES (x)
provides reasonable notice to NASB Holding to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (y) receives from such person or entity an executed
confidentiality agreement in substantially the same form as the one heretofore
executed by NASB Holding (except that disclosure of the person's identity will
be permitted); (ii) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer; or (iii) failing to make or
withdrawing or modifying its recommendation if there exists an Acquisition
Proposal as to which the Board of Directors of CBES has received a written
opinion from its independent financial adviser that such Proposal may be
superior to the Merger from a financial point-of-view to CBES's stockholders
and, after consultation with independent legal counsel, the Board of Directors
of CBES determines in good faith that such action is necessary for the Board of
Directors of CBES to comply with its fiduciary duties to stockholders under
applicable law (any such Acquisition Proposal as to which the Board of Directors
has received the opinion and made the determination described in this clause
(iii) being referred to herein as a "Superior Proposal"). CBES shall notify NASB
Holding orally and in writing of any Acquisition Proposal (including, without
limitation, the terms and conditions of any such Acquisition Proposal and the
identity of the person making such Acquisition Proposal) as promptly as
practicable (but, in any event, no later than 24 hours) after the receipt
thereof and shall keep NASB Holding informed of the status and details of any
such Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" shall mean a proposal to enter into or make any of the following
(other than the transactions contemplated hereunder) involving CBES or any of
its Subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 25% or more of the assets of
CBES or Community Bank, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of CBES or the filing of a registration
statement under the Securities Act of 1933 in connection therewith; or (iv) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
Section 4.2. Certain Policies and Actions of CBES.
-------------------------------------
(a) At the request of NASB Bank, CBES shall use reasonable efforts to cause
Community Bank to modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) and investment and asset/liability management policies and practices
after the date on which all Requisite Regulatory Approvals and stockholder
approvals are received, and after receipt of written confirmation from NASB
Holding that it is not aware of any fact or circumstance that would prevent
completion of the Merger, and prior to the Effective Date; provided, however,
that CBES shall not be required to take such action more than 30 days prior to
the Effective Date; and provided, further, that such policies and procedures are
not prohibited by GAAP or any applicable laws and regulations or, in the view of
the Board of Directors of Community Bank not in the best interests of Community
Bank.
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(b) CBES's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of Section 4.2(a). NASB Bank agrees to hold harmless, indemnify and
defend CBES and its Subsidiaries, and their respective directors, officers and
employees, for any loss, claim, liability or other damage caused by or resulting
from compliance with Section 4.2(a).
Section 4.3. Access and Information. Upon reasonable notice, CBES shall
(and shall cause its Subsidiaries to) afford NASB Holding and its
representatives (including, without limitation, directors, officers and
employees of NASB Holding and its affiliates and counsel, accountants and other
professionals retained by NASB Holding) such reasonable access during normal
business hours throughout the period prior to the Effective Date to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), contracts, properties, personnel and to such other
information relating to CBES and its Subsidiaries as NASB Holding may reasonably
request; provided, however, that no investigation pursuant to this Section 4.3
shall affect or be deemed to modify any representation or warranty made herein.
CBES shall provide NASB Holding with true and complete copies of all financial
and other information relating to the business or operations of CBES and its
Subsidiaries that is provided to directors of CBES and Community Bank in
connection with meetings of their Board of Directors or committees thereof. In
furtherance, and not in limitation of the foregoing, CBES shall make available
to NASB Holding all information necessary or appropriate for the preparation and
filing of all real property and real estate transfer tax returns and reports
required by reason of the Merger. NASB Holding will not, and will cause its
representatives not to, remove any original documents from the Premises of CBES
or Community Bank or use any information obtained pursuant to this Section 4.3
for any purpose unrelated to the consummation of the transactions contemplated
by this Agreement. Subject to the requirements of applicable law, NASB Holding
will keep confidential, and will cause its representatives to keep confidential,
all information and documents obtained pursuant to this Section 4.3 unless such
information (i) was already known to NASB Holding or an affiliate of NASB
Holding, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to NASB Holding or an
affiliate of NASB Holding from other sources not known by such party to be bound
by a confidentiality agreement or other obligation of secrecy, (iii) is
disclosed with the prior written approval of CBES or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies and abstracts of documents received from any other party, and all
extracts of or from and materials containing information or data taken from any
such document to be returned to the party that furnished the same.
Section 4.4. Certain Filings, Consents and Arrangements. NASB Holding or
Acquisition Sub shall as soon as practicable and in cooperation with CBES (and
in any event within 30 days after the date hereof) make, or cause to be made,
any filings and applications and provide any notices required to be filed or
provided in order to obtain all approvals, consents and waivers of Governmental
Entities and third parties
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necessary or appropriate for the consummation of the transactions contemplated
hereby, including approvals needed for the payment of any special dividends
required to fund the Merger Consideration. NASB Holding or Acquisition Sub and
CBES each shall provide the other and its counsel with an opportunity to review
all filings, applications and notices and related correspondence and other
documents and information prior to their being submitted to, and all
correspondence and other documents and information received from, any
governmental authority and shall provide the other with copies of all filings,
applications and notices submitted to any Governmental Entity, in each case
within two (2) business days after the submission or receipt thereof. NASB
Holding, Acquisition Sub, CBES and Community Bank shall promptly provide all
information and documents requested by any Governmental Entity in connection
with any filing, application or notice filed or provided under this Section 4.4
and shall otherwise use its best efforts to obtain the requisite approvals,
consents and waivers as promptly as is reasonably possible.
Section 4.5. Anti-takeover Provisions. CBES and its Subsidiaries shall
take all steps required by any relevant federal or state law or regulation or
under any relevant agreement or other document to exempt or continue to exempt
NASB Holding, Acquisition Sub, the Agreement and the Merger from any provisions
of an anti-takeover nature contained in CBES's or its Subsidiaries',
certificates of incorporation and bylaws and the provisions of any federal or
state anti-takeover laws.
Section 4.6. Additional Actions. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the Merger,
as expeditiously as possible, including using efforts to obtain all necessary
actions or non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Entities, effecting all necessary registrations,
applications and filings (including, without limitation, filings under any
applicable state securities laws) and obtaining any required contractual
consents and regulatory approvals.
Section 4.7. Publicity. CBES and NASB Holding shall jointly develop a plan
regarding press releases and other public statements with respect to the Merger
and any other transaction contemplated hereby and in making any filings with any
Governmental Entity or with any national securities exchange with respect
thereto.
Section 4.8. Stockholders Meeting. CBES shall take all action necessary,
in accordance with applicable law and its certificate of incorporation and
bylaws, to convene a meeting of its stockholders ("Stockholder Meeting") as
promptly as practicable for the purpose of considering and voting on approval
and adoption of this Agreement, the Merger and the other transactions provided
for in this Agreement. CBES shall file its preliminary proxy statement with the
SEC within 15 days of the receipt of its audited financial statements for the
fiscal year ended June 30, 2002, provided, however, that if CBES receives its
audited financial statements for the fiscal year ended June 30,
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2002 prior to the date of execution of this Agreement, CBES shall file its
preliminary proxy statement with the SEC within 15 days of the date of execution
of this Agreement. Except to the extent legally required for the discharge by
the Board of Directors of its fiduciary duties as advised by CBES's counsel, the
Board of Directors of CBES shall (a) recommend at its Stockholder Meeting that
the stockholders vote in favor of and approve the transactions provided for in
this Agreement and (b) use all reasonable efforts to solicit such approvals.
CBES may employ professional proxy solicitors to assist in contacting
stockholders in connection with soliciting favorable votes on the Merger.
Section 4.9. Proxy Statement. For the purposes of holding the
Stockholders' Meeting of CBES, CBES shall prepare a proxy statement satisfying
in all material respects all applicable requirements of the Exchange Act, and
the rules and regulations thereunder. NASB Holding agrees to provide for
inclusion in such proxy statement all information reasonably necessary to
satisfy the requirements of the Exchange Act and the rules and regulations
thereunder and such information shall not contain any untrue statements of a
material fact or omit to state any material fact required to be stated in such
proxy statement with respect to NASB Holding or its Subsidiaries or to make the
statements therein with respect to NASB Holding or its Subsidiaries not
misleading.
Section 4.10. Notification of Certain Matters. Each party shall give
prompt notice to the other of: (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Date, under
any contract material to the financial condition, properties, businesses or
results of operations of each party and its Subsidiaries taken as a whole to
which each party or any Subsidiary is a party or is subject; and (b) any event,
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Effect with respect to such
party and its Subsidiaries taken as a whole. Each of CBES and NASB Holding shall
give prompt notice to the other party of any (i) notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with any of the transactions contemplated by this
Agreement and (ii) the occurrence or non-occurrence of any fact or event which
would be reasonably likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any respect at any time from the
date hereof to the Effective Date or to cause any covenant, condition or
agreement under this Agreement not to be complied with or satisfied in all
material respects.
Section 4.11. Employees.
----------
(a) All persons who are employees of Community Bank immediately prior to
the Effective Date and whose employment is not specifically terminated at or
prior to the Effective Date (a "Continuing Employee") shall, at the Effective
Date, remain employees of Community Bank. All of the Continuing Employees shall
be employed at the will of Community Bank and no contractual right to employment
shall inure to such employees because of this Agreement. NASB Holding will use
its best
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efforts to retain all of the employees of Community Bank, subject to the
qualifications of such employees and the needs of NASB Holding. At any time
after the receipt of the Requisite Regulatory Approvals and Stockholder approval
for the transactions contemplated by this Agreement, or by mutual consent prior
thereto, CBES shall (i) allow NASB Holding to conduct interviews with the
existing employees of CBES and Community Bank and to communicate with the
employees regarding the terms of their employment which will be in effect on or
after the Effective Date and (ii) allow NASB Bank to conduct training sessions
for employees of CBES and its Subsidiaries at NASB Bank's or Community Bank's
facilities. All such training sessions shall be scheduled so as to have minimal
impact upon the employees' performance of their normal daily duties.
(b) Immediately following the Effective Date, each Continuing Employee
shall be eligible to participate in NASB Holding's or NASB Bank's benefit plans
on the same basis as a new employee of NASB Holding's or NASB Bank's (it being
understood that inclusion of Continuing Employees in NASB Holding's or NASB
Bank's benefit plans may occur at different times with respect to different
plans). Service with CBES or its Subsidiaries shall be treated as service with
NASB Holding or NASB Bank for purposes of satisfying any waiting periods,
evidence of insurability requirements, or the application of any preexisting
condition limitation with respect to any NASB Holding or NASB Bank "welfare
benefit plan", as defined in Section 3(1) of ERISA. Each Continuing Employee
shall receive credit for service with CBES or its Subsidiaries for purposes of
any employee benefit plans or computing vacation pay benefits.
(c) CBES shall retain all existing life insurance policies owned by CBES.
(d) CBES shall not encourage the further exercise of any CBES Options and
shall advise optionees as to the payments to which they will be entitled
hereunder.
(e) Prior to September 30, 2002, Community Bank shall fund the CBES
Employee Stock Ownership Plan (the "ESOP") with the scheduled contribution of
Twenty Four Thousand Nine Hundred Sixty Five and 80/100 Dollars ($24,965.80) to
provide the ESOP funds to pay the principal and interest due on the CBES loan to
the ESOP from CBES; provided, however, that the amount of such payment from
Community Bank to the ESOP may be adjusted if the total amount of scheduled
interest due on the loan to CBES changes due to a variation in the adjustable
interest rate of the loan; and provided, further, that if the Effective Date of
the Merger occurs after December 31, 2002, Community Bank shall fund the CBES
ESOP with the scheduled contribution payment necessary to provide the ESOP funds
to pay the principal and interest due on the CBES loan to the ESOP from CBES.
(f) Prior to the Effective Date, the ESOP shall be amended to state that
any Merger Consideration remaining after repayment of the loan between CBES and
the ESOP shall be allocated as investment earnings of the ESOP to the ESOP
accounts of employees of Community Bank or any of its Subsidiaries who are ESOP
participants and beneficiaries ("ESOP Participants") in accordance with the
terms of the ESOP as
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amended with respect to such termination and as in effect on the Effective Date.
All ESOP Participants shall fully vest and have a nonforfeitable interest in
their accounts under the ESOP determined as of the Effective Date. As soon as
practicable after the Effective Date, any loan between CBES and the ESOP shall
be repaid in full from the Merger Consideration received by the ESOP for
unallocated shares of CBES Common Stock held by the ESOP upon the conversion of
such shares into cash pursuant to this Agreement. As soon as reasonably
practicable after the ESOP loan has been repaid, NASB Holding shall terminate
the ESOP and shall file an application for determination with the Internal
Revenue Service ("IRS") as to the tax qualified status of the ESOP upon its
termination under Section 401(a) and 4975(e)(7) of the IRC (the "Determination
Letter"). As soon as reasonably practicable after the receipt of a favorable
Determination Letter from the IRS, NASB Holding shall instruct the ESOP Trustee
to make distributions of the benefits under the ESOP to the ESOP Participants in
accordance with the provisions of the ESOP.
(g) NASB Holding agrees to honor the terms and conditions of all Director
Emeritus Agreements by and between Community Bank and certain directors of
Community Bank, a copy of each of which is attached to CBES's Disclosure Letter,
and NASB Holding agrees that the benefits to be paid to each affected director
shall be the amount accrued on the books and records of Community Bank as of the
last day of the calendar month preceding the Closing Date, which amount shall
not be less than the amount shown in CBES's Disclosure Letter.
(h) NASB Holding agrees to honor the terms and conditions of all Salary
Continuation Agreements by and between Community Bank and certain employees of
Community Bank, a copy of each of which is attached to CBES's Disclosure Letter,
and NASB Holding agrees that the benefits to be paid to each affected employee
shall be the amount accrued on the books and records of Community Bank as of the
last day of the calendar month preceding the Closing Date, which amount shall
not be less than the amount shown in CBES's Disclosure Letter.
(i) NASB Holding agrees to honor the terms and conditions of (i) the
Community Bank Severance Plan, which Severance Plan shall not be revoked,
terminated, modified or amended by NASB Holding or its Subsidiaries or its
successors and assigns, (ii) the Employee Bonus Agreements by and between
Community Bank and certain employees of Community Bank, (iii) the Severance
Agreement, as amended, by and between Dennis D. Hartman and Community Bank and
(iv) the Severance Agreement , as amended, by and between Margaret E. Teegarden
and Community Bank; a copy of each of which is attached to CBES's Disclosure
Letter.
Section 4.12. Indemnification. Unless prohibited by law or regulation in
effect at the time a Claim (as defined below) is pending and except as provided
in Section 4.12(b) below, from the Effective Date through six (6) years after
the Effective Date, NASB Holding (and any successor) agrees to indemnify each
director, officer and employee of CBES and Community Bank serving in such
capacities as of the date of this Agreement (each, an "Indemnified Party"), from
and against Indemnified Payments and Indemnified Expenses (as both terms are
defined below) incurred in connection with
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Claims brought against any Indemnified Party, arising out of matters existing or
occurring at or prior to the Effective Date (including the transactions
contemplated by this Agreement), whether asserted or claimed prior to, at or
after the Effective Date, provided that in the case of any Claims asserted prior
to the Effective Date NASB Holding has been notified of such Claims prior to
Closing. NASB Holding further agrees, subject to applicable regulatory
restrictions, to advance any reasonable Indemnified Expenses to such Indemnified
Party as they are from time to time incurred provided that the Indemnified Party
to whom expenses are being advanced provides a written undertaking to repay such
expenses if it is ultimately determined that such person is not entitled to
Indemnification.
(a) As used herein, the foregoing terms have the following meanings:
(i) A "Claim" is any threatened, pending or completed action, suit,
investigation or proceeding (whether civil, criminal, administrative or
investigative) which relates to services rendered prior to the Effective Date by
an Indemnified Party on behalf of CBES or its Subsidiaries.
(ii) "Indemnified payments" shall mean judgments, fines and amounts
paid in settlement of Claims.
(iii) "Indemnified expenses" shall mean all costs and expenses
(including but not limited to attorneys' fees) actually and reasonably incurred
by an Indemnified Party in connection with defending against such Claims.
(b) NASB Holding shall not be required to indemnify any Indemnified Party
from and against Indemnified expenses and/or Indemnified payments if (i) a final
non-appealable order is entered by a court or administrative tribunal having
jurisdiction pursuant to a Claim brought by a person other than the OTS that
such Indemnified Party's conduct was knowingly fraudulent, deliberately
dishonest, or willful misconduct and the Claim giving rise to the entry of such
order was brought by a third party; or (ii) a final non-appealable order is
issued by an administrative tribunal or court having jurisdiction pursuant to a
Claim brought by the OTS or a settlement agreement is entered into between the
Indemnified Party and the OTS: (x) imposing a civil money penalty against the
Indemnified Party; (y) removing the Indemnified Party from office or prohibiting
such person from participating in the conduct of NASB Holding; or (z) directing
the Indemnified Party to cease and desist taking any of the actions set forth in
Section 8(b) of the FDIA (12 U.S.C. ss. 1818(b)).
(c) Any Indemnified Party wishing to claim indemnification under Section
4.12, must (i) upon learning of any such Claim, promptly notify NASB Holding
thereof and provide to NASB Holding copies of all written materials related to
the Claim and any other information related to such Claim; (ii) consent to the
defense of any such Claim by competent counsel chosen by NASB Holding; and (iii)
cooperate in the defense of any such matter by offering testimony and by
complying with all reasonable requests made by NASB Holding or by counsel hired
by NASB Holding. NASB Holding shall not be liable for any settlement effected by
an Indemnified Party without its prior
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written consent, which consent may not be withheld unless such settlement is
unreasonable in light of such Claims against, or defenses available to, such
Indemnified Party. If NASB Holding assumes the defense of any such Claim
pursuant to this Section 4.12(c), NASB Holding shall not be liable to such
Indemnified Party for any legal expenses of additional counsel subsequently
incurred by such Indemnified Party in connection with the defense thereof. If
NASB Holding does not elect to assume such defense within thirty days from the
date NASB Holding receives notice of the Claim, the Indemnified Party may retain
counsel satisfactory to such Indemnified Party, and NASB Holding shall remain
responsible for the reasonable fees and expenses of such counsel as set forth
above.
(d) NASB Holding shall pay all reasonable costs, including attorneys' fees
and expenses, that may be incurred by any Indemnified Party in successfully
enforcing the indemnity and other obligations provided for in this Section 4.12
to the fullest extent permitted by law. The rights of each Indemnified Party
under this paragraph (d) shall be in addition to any other right of
indemnification under this Section 4.12.
(e) If NASB Holding or any of its successors or assigns (i) consolidates
with or merges into any other person or entity and shall not be the continuing
or surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person or entity, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of NASB
Holding assume the obligations set forth in this Section 4.12.
(f) NASB Holding shall pay up to $50,000 for premiums to provide reporting
endorsement coverage under CBES's and Community Bank's current director and
officer insurance policies for each director, officer and employee of CBES and
Community Bank for a period of three (3) years.
(g) The provisions of this Section 4.12 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and the heirs,
executors, and administrators of such Indemnified Party.
Section 4.13. Phase I and Phase II Environmental Assessments of Community
Bank's Primary Banking Facility. CBES hereby agrees that NASB Holding may cause
to be performed a Phase I and Phase II environmental assessment of the real
property on which Community Bank's primary banking facility is located (1001
North Jesse James Road, Excelsior Springs, Missouri 64024). If as a result of
such assessment it is determined that environmental clean-up costs would exceed
$500,000, then NASB Holding may elect to terminate this Agreement pursuant to
Section 7.1(h).
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ARTICLE V
CONDITIONS TO CONSUMMATION
---------------------------
Section 5.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger and any other transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) This Agreement shall have been approved by the requisite vote of CBES's
stockholders in accordance with applicable laws and regulations.
(b) The Requisite Regulatory Approvals, the consent of the OTS and any
other waivers with respect to this Agreement and the transactions contemplated
hereby shall have been obtained and shall remain in full force and effect, and
all statutory waiting periods shall have expired; and all other consents,
waivers and approvals of any third parties which are necessary to permit the
consummation of the Merger and the other transactions contemplated hereby shall
have been obtained or made except for those the failure to obtain which would
not have a Material Adverse Effect (i) on CBES and its Subsidiaries taken as a
whole or (ii) on NASB Holding and its Subsidiaries taken as a whole. No such
approval or consent shall have imposed any condition or requirement that would
so materially and adversely impact the economic or business benefits to NASB
Holding or CBES of the transactions contemplated hereby that, had such condition
or requirement been known, such party would not, in its reasonable judgment,
have entered into this Agreement.
(c) No party hereto shall be subject to any order, decree, ruling or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement and no Governmental Entity shall have instituted any
proceeding for the purpose of enjoining or prohibiting the consummation of the
Merger or any transactions contemplated by this Agreement.
(d) No statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger or any other
transactions contemplated by this Agreement.
(e) No litigation, claim, action, suit or other legal or administrative
proceeding challenging the Merger shall be pending against any party hereto or
any of their Subsidiaries, directors or officers, which in the opinion of
counsel for NASB Holding is likely to result in the incurring of damages and
defense costs not covered by insurance by NASB Holding or any of its
Subsidiaries or by any person or persons whom NASB Holding would be required to
indemnify in an aggregate amount exceeding $250,000.
Section 5.2. Conditions to the Obligations of NASB Holding. Each of the
obligations of CBES required to be performed by it at or prior to the Closing
pursuant
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to the terms of this Agreement shall have been duly performed and complied with
in all material respects and the representations and warranties of CBES
contained in this Agreement shall be true and correct, subject to Sections 2.1
and 2.2, as of the date of this Agreement and as of the Effective Date as though
made at and as of the Effective Date (except as to any representation or
warranty which specifically relates to an earlier date), and NASB Holding shall
have received a certificate to the foregoing effect signed by the chief
executive officer and the president of CBES.
Section 5.3. Conditions to the Obligations of CBES. The obligations of
CBES to effect the Merger and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions:
(a) Each of the obligations of NASB Holding or Acquisition Sub required to
be performed by it at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of NASB Holding or Acquisition
Sub contained in this Agreement shall be true and correct, subject to Sections
2.1 and 2.2, as of the date of this Agreement and as of the Effective Date as
though made at and as of the Effective Date (except as to any representation or
warranty which specifically relates to an earlier date), and CBES shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of NASB Holding
and Acquisition Sub.
(b) NASB Holding shall have provided to the Exchange Agent sufficient cash
to pay the aggregate Merger Consideration and CBES shall have received a
certificate from the Exchange Agent to such effect.
ARTICLE VI
DATA PROCESSING
---------------
Section 6.1. Sample Data. CBES shall cause Community Bank to provide to
NASB Bank, a machine-readable data tape of all of Community Bank's loan and
deposit accounts, together with a written description of the file, record, and
field data types and formats, to allow NASB Bank to prepare for a data
processing conversion, at a date prior to Closing agreed upon between NASB Bank
and CBES. Representatives of NASB Bank shall have reasonable access to Community
Bank's IT staff or other pertinent personnel during normal business hours to
facilitate the accurate and proper mapping or conversion of all customer
accounts to NASB Bank's data processing system. If this Agreement is terminated
for any reason, customer information will either be promptly returned to
Community Bank or destroyed by NASB Bank at the option of Community Bank. At the
request of Community Bank, NASB Holding shall cause NASB Bank to enter into an
agreement with Community Bank to ensure compliance with Section 502(b)(2) of the
Gramm-Leach-Bliley Act (15 U.S.C. ss. 6802(b)(2)) and to ensure the
confidentiality and security of nonpublic personal information of Community
Bank's consumer customers. In addition, at the request of Community Bank, NASB
Holding shall cause NASB Bank to enter into an agreement with Community Bank
required to
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ensure that, if this Agreement is terminated, NASB Bank will not use the
customer data provided to it for competitive purposes and to ensure that NASB
Bank will not directly and purposefully solicit business with any of the
customers included in the customer data provided by Community Bank.
Section 6.2. Information for Check Ordering. After receipt of the
Requisite Regulatory Approvals of the transactions contemplated by this
Agreement, CBES shall provide to NASB Bank a machine-readable data tape of all
of Community Bank's deposits, including all customer name and address
information, to enable NASB Bank to begin ordering checks, deposit slips, and
other transaction items for use by its customers.
Section 6.3. Installation of Data Circuits. After the Effective Date of
this Agreement, CBES shall cause Community Bank to give NASB Bank reasonable
access to Community Bank's locations during normal business hours for the
purposes of installing and testing data circuits and data processing equipment,
provided that the location, installation, and testing of said circuits and
equipment shall not be permitted to disrupt Community Bank's normal daily
functions and operation. In the event that this Agreement is terminated without
consummation of the planned transactions, NASB Holding shall cause NASB Bank to
remove its data processing equipment and circuits within 30 days after the
termination and shall repair promptly any damage done to Community Bank's
property during the installation or removal, all at NASB Bank's sole expense.
ARTICLE VII
Termination
-----------
Section 7.1. Termination. This Agreement may be terminated, and the Merger
abandoned, at or prior to the Effective Date, either before or after any
requisite stockholder approval:
(a) by the mutual consent of NASB Holding and CBES in a written instrument,
if the Board of Directors of each so determines by vote of a majority of the
members of its entire Board; or
(b) by NASB Holding or CBES, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of the
failure of the stockholders of CBES to approve the Agreement at the Stockholder
Meeting; or
(c) by NASB Holding or CBES, by written notice to the other party, if
either (i) any approval, consent or waiver of a Government Regulatory Agency
required to permit consummation of the transactions contemplated hereby shall
have been denied or (ii) any Governmental Entity of competent jurisdiction shall
have issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement; or
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(d) by NASB Holding or CBES, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by January 31, 2003, unless the failure to so
consummate by such time is due to the breach of any representation, warranty or
covenant contained in this Agreement by the party seeking to terminate; or
(e) by NASB Holding or CBES (provided that the party seeking termination
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein), in the event of (i) a failure to perform or
comply by the other party with any covenant or agreement of such other party
contained in this Agreement, which failure or non-compliance is material in the
context of the transactions contemplated by this Agreement, or (ii) subject to
Section 2.2(a), any inaccuracies, omissions or breach in the representations,
warranties, covenants or agreements of the other party contained in this
Agreement the circumstances as to which either individually or in the aggregate
have, or reasonably could be expected to have, a Material Adverse Effect on such
other party; in either case which has not been or cannot be cured within 30
calendar days after written notice thereof is given by the party seeking to
terminate to such other party; or
(f) by CBES, if the Board of Directors of CBES reasonably determines by
vote of a majority of the members of its entire Board that a proposal made by a
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of CBES Common Stock then outstanding or all
or substantially all of the assets of CBES constitutes a Superior Proposal and
that such proposal must be accepted in order to comply with the Board of
Directors' fiduciary duties to stockholders under applicable law; provided,
however, that prior to any such termination, CBES shall use its reasonable
efforts to negotiate in good faith with NASB Holding to make such adjustments in
the terms and conditions of this Agreement that would enable CBES to proceed
with the transactions contemplated herein; or
(g) by NASB Holding, if the Adjusted Stockholders' Equity of CBES, as
defined in Section 3.2(g) hereof, is less than $13,500,000.
(h) by NASB Holding, if the Phase I and Phase II environmental assessments
permitted by Section 4.13 hereof determine that environmental clean-up costs
would exceed $500,000.
Section 7.2. Termination Fee. In the event that CBES terminates this
Agreement pursuant to Section 7.1(f) and, within six (6) months after the
termination of this Agreement, CBES or Community Bank enters into a definitive
agreement with the person that made the Superior Proposal then CBES shall,
within 10 business days following written demand by NASB Holding pay to NASB
Holding $250,000 in cash.
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Section 7.3. Effect of Termination. In the event of termination of this
Agreement by either NASB Holding or CBES prior to the consummation of the Merger
as provided in Section 7.2, this Agreement shall forthwith become void and have
no effect except (i) the obligations of the parties under Sections 4.3 (with
respect to confidentiality and the return of information), 7.2 and 9.6 shall
survive any termination of this Agreement and (ii) that notwithstanding anything
to the contrary contained in this Agreement, no party shall be relieved or
released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
ARTICLE VIII
CLOSING AND EFFECTIVE DATE
--------------------------
Section 8.1. Effective Date. The closing of the transactions contemplated
hereby ("Closing") shall take place at the offices of Stinson Morrison Hecker
LLP, 1201 Walnut Street, Suite 2800, Kansas City, Missouri, unless another place
is agreed to by NASB Bank and CBES, on a date designated by NASB Holding and
CBES ("Closing Date") that is no later than fifteen (15) days following the date
on which the expiration of the last applicable waiting period in connection with
the notices to and the approvals of Governmental Entities shall occur and all
conditions to the consummation of this Agreement are satisfied or waived or on
such other date as may be agreed to by the parties. Prior to the Closing Date,
CBES and Community Bank shall each execute a Certificate of Merger in accordance
with all appropriate legal requirements, which shall be filed as required by law
on the Closing Date, and the Merger provided for therein shall become effective
upon such filing or on such date as may be specified in such Certificate of
Merger. The date of such filing or such later effective date as specified in the
Certificate of Merger is herein referred to as the "Effective Date."
Section 8.2. Deliveries at Closing. Subject to the provisions of Article V
and Article VII, on the Closing Date there shall be delivered to NASB Holding
and CBES the documents and instruments required to be delivered under Article V.
ARTICLE IX
CERTAIN OTHER MATTERS
---------------------
Section 9.1. Certain Definitions; Interpretation. As used in this
Agreement, the following terms shall have the meanings indicated:
"Affiliate" means any person (a) which directly or indirectly
controls, or is controlled by, or is under common control with any other
person or any Subsidiary of that other person; (b) which directly or
beneficially owns or controls 5% or more of any class of voting stock of
another person or any Subsidiary of that other person; or (c) of which 5%
or more of any class of voting stock is owned directly or beneficially by
any other person or any Subsidiary of that other person.
"Material" means material to NASB Holding or CBES (as the case may
be) and its respective Subsidiaries, taken as a whole.
"Person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
Section 9.2. Survival. Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective Date,
including Section 4.3, Section 4.11 and Section 4.12 of this Agreement, shall
survive the Effective Date. All other representations, warranties, agreements
and covenants shall be deemed to be conditions of the Agreement and shall not
survive the Effective Date.
Section 9.3. Waiver; Amendment. Prior to the Effective Date, any provision
of this Agreement may be (i) waived in writing by the party benefited by the
provision or (ii) amended or modified at any time (including the structure of
the transaction) by an agreement in writing between the parties hereto except
that, after the vote by the stockholders of CBES, no amendment or modification
may be made that would reduce the amount or alter or change the kind of
consideration to be received by holders of CBES Common Stock or contravene any
provision of the DGCL or the federal banking laws, rules and regulations.
Section 9.4. Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
Section 9.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Missouri, without
regard to conflicts of laws principles.
Section 9.6. Expenses. Each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby.
Section 9.7. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission (confirmed in writing) to such party at its address or facsimile
number set forth below or
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such other address or facsimile transmission as such party may specify by notice
(in accordance with this provision) to the other party hereto.
If to CBES, to:
CBES Bancorp, Inc.
913 West Liberty Drive
Liberty, Missouri 64068
Facsimile: (816) 415-2002
Attention: Mr. Paul L. Thomas
With copies to:
C. Robert Monroe, Esq.
Stinson Morrison Hecker LLP
1201 Walnut Street, Suit 2800
Kansas City, Missouri 64106-2150
Facsimile: (816) 292-2001
If to NASB Holding or Acquisition Sub, to:
NASB Financial, Inc.
12498 South 71 Highway
Grandview, Missouri 64030
Facsimile: (816) 316-4504
Attention: Mr. Keith B. Cox
With copies to:
Joseph T. Porter, Jr., Esq.
Polsinelli Shalton & Welte, P.C.
Suite 1100
100 South 4th Street
St. Louis, Missouri 63102
Facsimile: (314) 231-1776
Section 9.8. Entire Agreement; etc. This Agreement, together with the
Disclosure Letters, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except for Sections
4.11 and 4.12 which confer rights on the parties described therein, nothing in
this Agreement is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 9.9. Specific Performance. NASB Holding and CBES agree that the
franchise value of Community Bank represents a unique asset and that the failure
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of either party to perform the terms of this Agreement would cause irreparable
harm for which monetary damages would be totally inadequate. Therefore, either
party shall be entitled to specific performance of the terms of this Agreement.
Nothing contained in this Agreement, however, shall be deemed as granting to
NASB Holding control over CBES or Community Bank prior to the Effective Date.
Until the Requisite Regulatory Approvals and CBES's Stockholders Approvals have
been received, a breach of this Agreement by either party may be remedied only
by an action for money damages.
Section 9.10. Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by either party hereto without the written consent of the other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
NASB FINANCIAL, INC.
By: /s/ Keith B. Cox
------------------------------------
Name: Keith B. Cox
Title: President
NASB ACQUISITION SUBSIDIARY, INC.
By: /s/ Keith B. Cox
------------------------------------
Name: Keith B. Cox
Title: President
CBES BANCORP, INC.
By: /s/ Paul L. Thomas
------------------------------------
Name: Paul L. Thomas
Title: CEO
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EXHIBIT A
ACQUISITION SUB ARTICLES OF INCORPORATION
A-56
ARTICLES OF INCORPORATION
OF
NASB ACQUISITION SUBSIDIARY, INC.
The undersigned, being a natural person of the age of eighteen (18) years
or more and for the purpose of forming a corporation under The General and
Business Corporation Law of Missouri, as amended, hereby adopts the following
Articles of Incorporation:
ARTICLE I - NAME
----------------
The name of the corporation (the "Corporation") is: NASB Acquisition
Subsidiary, Inc.
ARTICLE II - REGISTERED OFFICE AND REGISTERED AGENT
---------------------------------------------------
The address of its initial registered office in the State of Missouri is:
12498 S. Highway 71, Grandview, Missouri 64030. The name of its initial
registered agent at such address is: Keith B. Cox.
ARTICLE III - CAPITAL STOCK
---------------------------
(a) The total number of shares of stock which the Corporation shall
have authority to issue is thirty thousand (30,000) shares of common stock,
of the par value of $1.00 per share.
(b) No holder of any of the shares of stock of the Corporation of any
class shall be entitled, as a matter of right, to subscribe for, purchase,
or otherwise acquire any shares of stock of the Corporation of any class
which the Corporation proposes to issue or any rights or options which the
Corporation proposes to grant for the purchase of shares of stock of the
Corporation of any class or for the purchase of any bonds, notes,
debentures, securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any rights to
subscribe for, purchase, or otherwise acquire shares of stock of the
Corporation of any class; and any and all of such shares, bonds, notes,
debentures, securities or obligations of the Corporation, whether now or
hereafter authorized or created, may be issued, or may be reissued or
transferred if the same have been re-acquired and have treasury status, and
any and all of such rights and options may be granted by the Board of
Directors, to such persons and other entities, and for such lawful
consideration, and on such terms, as the Board of Directors, in its
discretion, may determine, without first offering the same, or any part
thereof, to any said holder of stock.
ARTICLE IV - INCORPORATOR
-------------------------
The name and place of residence of the incorporator are: Joseph T. Porter,
Jr., 1531 Country Bend Drive, St. Charles, Missouri 63303.
ARTICLE V - DIRECTORS
---------------------
(a) The number of directors to constitute the Board of Directors of
the Corporation is one (1). Directors need not be shareholders unless the
Bylaws require them to be shareholders.
(b) At all elections of directors of the Corporation and for the
purposes of all other matters upon which shareholders are entitled to vote,
each shareholder shall be entitled to as many votes as shall equal the
number of shams of stock held by that shareholder. No cumulative voting
shall be permitted.
ARTICLE VI - EXISTENCE
----------------------
The Corporation is to have perpetual existence.
ARTICLE VII - PURPOSE
---------------------
The nature of the business or purposes to be conducted, transacted,
promoted or carried on by the Corporation is:
(a) To acquire, own, operate and manage a bank holding company,
including all aspects thereof and all acts and actions incidental thereto;
(b) To engage in any lawful act, activity or business for which
corporations maybe organized under The General and Business Corporation Law
of Missouri.
In addition to the powers and privileges conferred upon the Corporation by
law and those incidental thereto, the Corporation shall possess and may exercise
all the powers and privileges which are necessary or convenient to the conduct,
promotion or attainment of the business purposes of the Corporation.
ARTICLE VIII - BYLAWS
---------------------
The original Bylaws of the Corporation shall be adopted in any manner
provided by law. Thereafter, the Bylaws of the Corporation may from time to time
be amended or repealed, or new Bylaws may be adopted, in any of the following
ways: (i) by the holders of a majority of the outstanding shares of stock of the
Corporation entitled to vote thereon (or, if applicable, such larger percentage
of the outstanding shares of stock entitled to vote thereon as may be specified
in the Bylaws), or (ii) by a majority of the full Board of Directors. Any change
so made by the shareholders may thereafter be further changed by a majority of
the full Board of Directors; provided, however, that the power of the Board of
Directors to amend or repeal the Bylaws, or to adopt new Bylaws, (A) may be
denied as to any Bylaws or portion thereof by the shareholders if, at the time
of enactment, the shareholders shall so expressly provide, and (B) shall not
divest the shareholders of their power, nor limit their power, to amend or
repeal the Bylaws, or to adopt new Bylaws.
ARTICLE IX - NO SHARE HOLDER LIABILITY
--------------------------------------
The shareholders of the Corporation shall not be personally liable for the
payment or performance of the debts or other obligations of the Corporation.
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ARTICLE X - INDEMNIFICATION
---------------------------
(a) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation,
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right or the Corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including attorney's fees and amounts paid in settlement,
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of his duty to
the Corporation unless and only to the extent that the court in which the
action or suit was brought determines upon application that, despite the
adjudication of liability and in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the action, suit or
proceeding.
(d) Any indemnification under Sections (a) and (b) of this Article,
unless ordered by a court, shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in this
Article. The determination shall be made by the Baud of Directors of the
Corporation by a majority vote of a quorum consisting of directors who were
not parties to the action, suit or proceeding, or if such a quorum is not
obtainable, or even if
A-59
obtainable a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or by the shareholders of the
Corporation.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of the action, suit or Proceeding as authorized by the Board of
Directors in the specific case upon receipt of an undertaking by or an
behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
(f) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders, or disinterested
directors or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and administrators
of such person.
(g) The Corporation may give any further indemnity, in addition to the
indemnity authorized or contemplated under this Article, including Section
(f), to any person who is or was a director, officer, employee or agent, or
to any person who is or was serving at the request of the Corporation as a
director, officer, employee or agent or another corporation, partnership,
joint venture, trust or other enterprise, provided such further indemnity
is either (i) authorized, directed, or provided for in these Articles of
Incorporation or any duly adopted amendment thereof or (ii) is authorized,
directed, or provided for in any bylaw or agreement of the Corporation
which has been adopted by a vote of the shareholders of the Corporation,
and provided further than no such indemnity shall indemnify any person from
or on account of such persons conduct which was finally adjudged to have
been knowingly fraudulent deliberately dishonest or willful misconduct.
Nothing in this Section (g) shall be deemed to limit the power of the
Corporation under Section (f) of this Article to enact bylaws or to enter
into agreements without shareholder adoption of the same.
(h) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article.
(i) For the purpose of this Article, references to "the Corporation"
include all constituent corporations absorbed in a consolidation or merger
as well as the resulting or surviving corporation so that any person who is
or was a director, officer, employee or agent of such a constituent
corporation or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity.
A-60
(j) For purposes of this Article, the term "other enterprise" shall
include employee benefit plans; the term "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
the term "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the Corporation" as
referred to in this section.
ARTICLE XI - AMENDMENTS
-----------------------
From time to time any of the provisions of these Articles of Incorporation
may be amended, altered, changed or repealed, and other provisions authorized or
permitted by The General and Business Corporation Law of Missouri at the time in
force may be added or inserted in the manner and at the time prescribed by such
law, and all rights at any time conferred upon the shareholders of the
Corporation by these Articles of Incorporation are granted subject to the
provisions of this Article.
Any person, upon becoming the owner or holder of any shares of stock or
other securities issued by the Corporation, does thereby consent and agree that
(i) all rights, powers, privileges, obligations or restrictions pertaining to
such person or such shares or securities in any way may be altered, amended,
restricted, enlarged or repealed by legislative enactments of the State of
Missouri or of the United States hereinafter adopted which have reference to or
affect corporations, such shares, securities, or persons and (ii) the
Corporation reserves the right to transact any business of the Corporation, to
alter, amend or repeal these Articles of Incorporation, or to do any other acts
or things as authorized, permitted or allowed by such legislative enactments.
IN WITNESS WHEREOF, these Articles of Incorporation have been signed this
3rd day of September, 2002.
/s/ Joseph T. Porter, Jr.
------------------------------------------
Joseph T. Porter, Jr., Incorporator
A-61
STATE OF MISSOURI )
) ss.
CITY OF ST. LOUIS )
I, Kathleen J. Dow, a notary public, do hereby certify that on the 3rd day
of September, 2002, personally appeared before me, Joseph T. Porter, Jr., who
being by me first duly sworn, declared that he is the person who signed the
foregoing document as incorporator, and that the statements therein contained
are true.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial
seal, the day and year last above mentioned.
/s/ Kathleen J. Dow
------------------------------------------
NOTARY PUBLIC
My Commission Expires:
Kathleen J. Dow
Notary Public - Notary Seal
STATE OF MISSOURI
St. Louis County
My Commission Expires: March 9, 2005
- ---------------------
[SEAL]
A-62
APPENDIX B--OPINION OF HOVDE FINANCIAL LLC
B-1
HOVDE FINANCIAL LLC
INVESTMENT BANKERS & FINANCIAL ADVISORS
September 3, 2002
Board of Directors
CBES Bancorp, Inc.
1001 North Jesse James Road
Excelsior Springs, MO 64024
Dear Members of the Board:
We understand that NASB Financial, Inc. ("NASB Holding"), a Missouri
corporation, and CBES Bancorp, Inc. ("CBES"), a Delaware corporation, have
entered into an Agreement and Plan of Merger (the "Agreement") dated September
3, 2002 pursuant to which CBES will merge with and into NASB Holding (the
"Merger"). As set forth in Section 1.1 of the Agreement, at the Effective Time
of the Merger (as defined in the Agreement) each of the outstanding shares of
CBES common stock ("CBES Common Stock"), par value $0.01 per share, shall be
converted into the right to receive a cash amount equal to seventeen dollars and
fifty cents ($17.50) (the "Merger Consideration"). In connection therewith, you
have requested our opinion as to the fairness, from a financial point of view,
of the Merger Consideration to the shareholders of CBES.
Hovde Financial LLC ("Hovde"), as part of its investment banking business,
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
bidding, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with CBES, having acted as its financial advisor in connection with,
and having participated in the negotiations leading to, the Agreement. As you
are aware, in the course of its daily trading activities, investment funds
controlled by an affiliate (as such term is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934, as amended) of Hovde and their
affiliates may from time to time effect transactions and hold securities of NASB
Holding and CBES. As of the date hereof, no shares of either NASB Holding common
stock or CBES Common Stock are owned.
We were retained by CBES to act as its financial advisor in connection with
the Merger. We will receive compensation from CBES in connection with our
services, a significant portion of which is contingent upon the consummation of
the Merger. CBES has agreed to indemnify us for certain liabilities arising out
of our engagement.
During the course of our engagement and for the purposes of the opinion set
forth herein, we have:
B-2
(i) reviewed the Agreement;
(ii) reviewed certain historical publicly available business and financial
information concerning NASB Holding and CBES;
(iii) reviewed certain internal financial statements and other financial
and operating data concerning NASB Holding and CBES;
(iv) analyzed certain financial projections prepared by the managements of
CBES;
(v) reviewed historical market prices and trading volumes for CBES Common
Stock,
(vi) reviewed the terms of recent merger and acquisition transactions, to
the extent publicly available, involving thrift and thrift holding
companies that we considered relevant;
(vii) analyzed the pro forma impact of the Merger on the combined company's
earnings per share, consolidated capitalization and financial ratios;
(viii) performed such other analyses and considered such other factors as we
have deemed appropriate.
We also took into account our assessment of general economic, market and
financial conditions and our experience in other transactions, as well as our
knowledge of the banking industry and our general experience in securities
valuations.
In rendering this opinion, we have assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to us by
NASB Holding and CBES and in the discussions with NASB Holding and CBES
management. In that regard, we have assumed that the financial forecasts,
including, without limitation, the projections regarding under-performing and
non-performing assets and net charge-offs have been reasonably prepared on a
basis reflecting the best currently available information and judgments and
estimates of NASB Holding and CBES and that such forecasts will be realized in
the amounts and at the times contemplated thereby. We are not experts in the
evaluation of loan and lease portfolios for purposes of assessing the adequacy
of the allowances for losses with respect thereto and have assumed that such
allowances for NASB Holding and CBES are in the aggregate adequate to cover such
losses. We were not retained to and did not conduct a physical inspection of any
of the properties or facilities of NASB Holding or CBES. In addition, we have
not reviewed individual credit files nor have we made an independent evaluation
or appraisal of the assets and liabilities of NASB Holding and CBES and we were
not furnished with any such evaluations or appraisals.
We have assumed that the Merger will be consummated substantially in
accordance with the terms set forth in the Agreement. We have further assumed
that the Merger will be accounted for as a purchase under generally accepted
accounting
B-3
principles and that it will not qualify as a tax-free reorganization for United
States federal income tax purposes. We have assumed that the Merger is, and will
be, in compliance with all laws and regulations that are applicable to NASB
Holding and CBES. In rendering this opinion, we have been advised by NASB
Holding and CBES and we have assumed that there are no factors that would impede
any necessary regulatory or governmental approval of the Merger and we have
further assumed that, in the course of obtaining the necessary regulatory and
governmental approvals, no restriction will be imposed on NASB Holding or the
surviving corporation that would have a material adverse effect on NASB Holding
or the contemplated benefits of the Merger. We have also assumed that there
would not occur any change in applicable law or regulation that would cause a
material adverse change in the prospects or operations of NASB Holding or the
surviving corporation after the Merger.
Our opinion is based solely upon the information available to us, and the
economic, market and other circumstances, as they exist as of the date hereof.
Events occurring and information that becomes available after the date hereof
could materially affect the assumptions and analyses used in preparing this
opinion. We have not undertaken to reaffirm or revise this opinion or otherwise
comment upon any events occurring or information that becomes available after
the date hereof, except as otherwise agreed in our engagement letter.
We are not expressing any opinion herein as to constitute a recommendation
to any holder of CBES Common Stock as to how such holder should vote with
respect to the Agreement at any meeting of holders of CBES Common Stock.
This letter is solely for the information of the Board of Directors of CBES
and is not to be used, circulated, quoted or otherwise referred to for any other
purpose, nor is it to be filed with, included in or referred to in whole or in
part in any registration statement, proxy statement or any other document,
except in each case in accordance with our prior written consent which shall not
be unreasonably withheld; provided, however, that we hereby consent to the
inclusion and reference to this letter in any registration statement, proxy
statement, information statement or tender offer document to be delivered to the
holders of CBES Common Stock in connection with the Merger if and only if this
letter is quoted in full or attached as an exhibit to such document and this
letter has not been withdrawn prior to the date of such document.
Subject to the foregoing and based on our experience as investment bankers,
our activities and assumptions as described above, and other factors we have
deemed relevant, we are of the opinion as of the date hereof that the Merger
Consideration pursuant to the Agreement is fair, from a financial point of view,
to the shareholders of CBES.
Sincerely,
/s/ Hovde Financial LLC
HOVDE FINANCIAL LLC
B-4
APPENDIX C-- SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
TEXT OF SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
APPRAISAL RIGHTS. - (a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to ss. 228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 251 (other than a merger effected pursuant to ss.
251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264 of
this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to ss.ss. 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected underss.253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
C-1
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to ss. 228 or ss.
253 of this title, then either a constituent corporation before the effective
date of the merger or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders of any class or
series of stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to appraisal
rights may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holder's shares. If such notice did not
notify stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders of
any class or series of stock of such constituent corporation that are entitled
to appraisal rights of the effective date of the merger or consolidation or (ii)
the surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each stockholder who
is entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is required
to give either notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10
days prior to the date the notice is given, provided, that if the notice is
given on or after the effective date of the merger or consolidation, the record
date shall be such effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the close of
business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
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determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
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(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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APPENDIX D-- PROXY
D-1
PROXY
CBES BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
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December 12, 2002
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The undersigned hereby appoints Rodney G. Rounkles, Paul L. Thomas and Dennis D.
Hartman, and each of them, jointly and severally, with full powers of
substitution, as attorneys and proxies for the undersigned, to vote all shares
of common stock of CBES Bancorp, Inc., which the undersigned is entitled to vote
at a special meeting of stockholders, to be held at the primary location of
Community Bank of Excelsior Springs, a Savings Bank, located at 1001 North Jesse
James Road, Excelsior Springs, Missouri, on December 12, 2002, commencing at
9:00 a.m., local time, and at any and all adjournments thereof, as follows:
FOR AGAINST ABSTAIN
1. Proposal to approve and adopt the Agreement [ ] [ ] [ ]
and Plan of Merger, dated September
5, 2002, between NASB Financial,
Inc., NASB Acquisition Subsidiary,
Inc. and CBES Bancorp, Inc.
2. In their discretion, upon such other [ ] [ ] [ ]
matters as may properly come before the
meeting, including a proposal to
adjourn or postpone the meeting for the
purpose of soliciting additional
proxies in favor of Proposal 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ABOVE PROPOSALS. THIS PROXY CARD WILL ALSO
BE USED TO PROVIDE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANY SHARES OF
COMMON STOCK OF CBES BANCORP, INC. ALLOCATED TO PARTICIPANTS UNDER THE
COMMUNITY BANK OF EXCELSIOR SPRINGS, A SAVINGS BANK, EMPLOYEE STOCK OWNERSHIP
PLAN.
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D-2
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the special meeting of
stockholders or at any adjournment thereof, after notification to the Secretary
of CBES Bancorp, Inc. at the meeting of the stockholder's decision to terminate
this proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt from CBES Bancorp, Inc. prior to the
execution of this proxy of the notice of the meeting and proxy statement dated
October 28, 2002.
Dated: ______________, 2002.
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SIGNATURE(S) OF STOCKHOLDER(S)
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE.
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APPENDIX E--LETTER TO ESOP PARTICIPANTS
E-1
_______________, 2002
TO: COMMUNITY BANK OF EXCELSIOR SPRINGS, a Savings Bank
EMPLOYEE STOCK OWNERSHIP PLAN
RE: CBES BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
As a participant in the Employee Stock Ownership Plan, you are entitled to
instruct First Bankers Trust Company how to vote the shares allocated to you in
this plan.
Enclosed please find a PROXY CARD, which we ask that you vote, sign, date and
return to us by _______________, 2002 in the envelope provided. Your vote will
remain confidential.
If you have questions, please feel free to contact me. My direct phone line is
217-228-8063.
Sincerely,
Linda Shultz
Trust Officer
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