<PAGE>
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
STIFEL FINANCIAL CORP.
FSFC ACQUISITION CO.
AND
FIRST SERVICE FINANCIAL COMPANY
NOVEMBER 20, 2006
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TABLE OF CONTENTS
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Section
Page
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ARTICLE I DEFINITIONS,
CONSTRUCTION...................................... 1
Section 1.01.
Definitions.............................................
1
ARTICLE II MERGER, EFFECTS OF
MERGER..................................... 8
Section 2.01.
Merger..................................................
8
Section 2.02.
Closing, Effective Date and Effective Time..............
8
Section 2.03.
Effects of Merger.......................................
8
Section 2.04.
Certificate of Incorporation and By-Laws................
9
Section 2.05.
Directors and Officers..................................
9
ARTICLE III MERGER CONSIDERATION, EXCHANGE
PROCEDURES.................... 9
Section 3.01.
Effect on Common Stock..................................
9
Section 3.02.
Adjustment Amount; Additional Escrow Amount.............
10
Section 3.03.
Exchange Fund...........................................
11
Section 3.04.
Exchange Procedures.....................................
11
Section 3.05. No
Further Rights in Seller Common Stock................ 12
Section 3.06.
Termination of Exchange Fund............................
12
Section 3.07. No
Liability............................................ 12
Section 3.08.
Investment of Exchange Fund.............................
12
Section 3.09.
Lost Certificates.......................................
12
Section 3.10.
Withholding Rights......................................
13
Section 3.11.
Further Assurances......................................
13
Section 3.12.
Stock Transfer Books....................................
13
Section 3.13.
Seller Stock Options....................................
13
Section 3.14.
Shareholders Committee..................................
13
ARTICLE IV ACTIONS PENDING
MERGER........................................ 14
Section 4.01.
Forbearance of Seller...................................
14
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ARTICLE V REPRESENTATIONS AND
WARRANTIES................................. 16
Section 5.01.
Disclosure Schedule.....................................
16
Section 5.02.
Representations and Warranties of Seller................
16
Section 5.03.
Representations and Warranties of Company and
AcquisitionCo...........................................
29
ARTICLE VI
COVENANTS.....................................................
30
Section 6.01.
Reasonable Efforts......................................
30
Section 6.02.
Regulatory Applications; Other Approvals................
30
Section 6.03.
Press Release...........................................
30
Section 6.04.
Access, Information.....................................
30
Section 6.05. No
Solicitation of Transactions......................... 31
Section 6.06.
Shareholder Approval....................................
33
Section 6.07.
Takeover Laws...........................................
33
Section 6.08.
Delivery of Shareholder List............................
33
Section 6.09.
Indemnification, Directors' and Officers' Insurance.....
33
Section 6.10.
Benefit Plans...........................................
35
Section 6.11.
Notification of Certain Matters.........................
35
Section 6.12. Escrow
Agreement........................................ 35
Section 6.13.
Employee Stock Purchase Plan............................
35
ARTICLE VII CONDITIONS TO CONSUMMATION OF
MERGER......................... 36
Section 7.01.
Conditions to Each Party's Obligations to
Effect Merger...........................................
36
Section 7.02.
Conditions to Obligations of Seller to Effect Merger....
36
Section 7.03.
Conditions to Obligations of Company and
AcquisitionCo to Effect Merger..........................
36
ARTICLE VIII
TERMINATION.................................................
38
Section 8.01.
Termination.............................................
38
Section 8.02.
Effect of Termination...................................
39
Section 8.03.
Termination Fee.........................................
39
ARTICLE IX
MISCELLANEOUS.................................................
40
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Section 9.01.
Survival................................................
40
Section 9.02.
Waiver, Amendment.......................................
40
Section 9.03.
Counterparts............................................
41
Section 9.04.
Governing Law, Waiver of Jury Trial.....................
41
Section 9.05.
Expenses................................................
41
Section 9.06.
Notices.................................................
41
Section 9.07.
Entire Understanding, No Third Party Beneficiaries......
41
Section 9.08.
Interpretation..........................................
41
Section 9.09.
Assignment..............................................
41
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EXHIBITS:
A -- FORM OF ESCROW AGREEMENT
iii
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 20, 2006
(this
"Agreement"), by and among STIFEL FINANCIAL CORP., a Delaware
corporation (the
"Company"), FSFC ACQUISITION CO., a Missouri corporation (the
"AcquisitionCo"),
and FIRST SERVICE FINANCIAL COMPANY, a Missouri corporation (the
"Seller").
RECITALS
A.
Company and AcquisitionCo. The Company is a holding company, having
its
principal place of business in St. Louis, Missouri. AcquisitionCo
is a
wholly-owned subsidiary of the Company recently organized in order
to facilitate
the transactions contemplated by this Agreement.
B.
Seller. The Seller is registered as a bank holding company, having
its
principal place of business in St Louis County, Missouri. The
Seller owns one
hundred percent (100%) of FirstService Bank (the "Bank").
C.
Merger. The respective Boards of Directors of each of the
Company,
AcquisitionCo and the Seller have determined that it is advisable
and in the
best interests of their respective organizations and their
shareholders for
AcquisitionCo to merge with and into the Seller (the "Merger"),
upon the terms
and subject to the conditions set forth herein and in accordance
with The
General and Business Corporation Law of Missouri (the "MGBCL").
D. Board Approval. The
respective Boards of Directors of each of
AcquisitionCo and the Seller have approved the Merger, upon the
terms and
subject to the conditions set forth herein, and approved and
adopted this
Agreement as required under the MGBCL.
E. Voting Agreements.
Subsequent to the Seller's approval of this Agreement
and concurrently with the execution of this Agreement and as a
condition and an
inducement to the willingness of the Company and AcquisitionCo to
enter into
this Agreement, AcquisitionCo has entered into a Shareholder Voting
Agreement
(the "Voting Agreement") pursuant to which each Affiliate
Shareholder (as
defined in Section 1.01) has agreed to vote the shares of the
Seller Common
Stock beneficially owned by such shareholder in favor of the
Merger.
F.
Non-Compete Agreements. Concurrently with the execution of this
Agreement and as a condition and an inducement to the willingness
of the Company
and AcquisitionCo to enter into this Agreement, the Company and the
Seller have
entered into Non-Compete Agreements (each, a "Non-Compete
Agreement") with each
Affiliate Shareholder and certain other employees of the Company or
the Bank
which contain non-competition and non-solicitation terms and
conditions,
effective as of the date hereof but subject to termination if the
Closing (as
defined in Section 2.02) shall not occur.
AGREEMENT
In
consideration of the foregoing, the mutual covenants herein
contained
and other good and valuable consideration (the receipt, adequacy
and sufficiency
of which are hereby acknowledged by the Parties by their execution
hereof), the
Parties agree as follows.
ARTICLE I
DEFINITIONS, CONSTRUCTION
SECTION 1.01.
DEFINITIONS. For purposes of this Agreement, the following
capitalized terms have the following meanings.
1
<PAGE>
"AcquisitionCo" has the meaning set forth in the preamble to
this
Agreement.
"Acquisition Proposal" means any offer or proposal (other than
an
offer or proposal by the Company) relating to any Acquisition
Transaction.
"Acquisition Transaction" means any transaction or series of
related
transactions (other than the transactions contemplated by this
Agreement)
involving: (i) any acquisition or purchase from the Seller by any
Person of more
than a 15% interest in the total outstanding voting securities of
the Seller or
any of the Seller Subsidiaries or any tender offer or exchange
offer that if
consummated would result in any Person beneficially owning 15% or
more of the
total outstanding voting securities of the Seller or any of the
Seller
Subsidiaries, or any merger, consolidation, business combination or
similar
transaction involving the Seller or any of the Seller Subsidiaries,
(ii) any
sale, lease, exchange, transfer, license, acquisition or other
disposition of
more than 15% of the assets of the Seller or any of the Seller
Subsidiaries, or
(iii) any liquidation or dissolution of the Seller or any of the
Seller
Subsidiaries.
"Additional Escrow Amount" has the meaning set forth in Section
3.02(b)(iii).
"Adjustment Amount" has the meaning set forth in Section
3.02(a).
"Affiliate" means a Person that directly or indirectly, through one
or
more intermediaries, controls, is controlled by, or is under common
control
with, the first mentioned Person including, without limitation, any
partnership
or joint venture in which any Person (either alone, or through or
together with
any other Person) has, directly or indirectly, an interest of 5% or
more. For
purposes of this definition, "control" means the possession, direct
or indirect,
of the power to direct or cause the direction of management and
policies of a
Person, whether through the ownership of voting securities, by
Contract or
otherwise.
"Affiliate Shareholders" means each of the following Persons: Allen
R.
Vogel, John G. Martens, James C. Jacobsmeyer, R. Dale Arn, Jr.,
Thomas Cummings,
Thomas W. Hagar, Karen A. Hopper, Ted C. Matulewic, Clyde Sansone,
Stephen D.
Schaefer, Charles F. Stone and John C. Vatterott.
"Agreement" means this Agreement, as amended or modified from time
to
time in accordance with Section 9.02.
"Bank" has the meaning set forth in the Recitals.
"Bank Secrecy Act" has the meaning set forth in Section
5.02(h)(iv).
"Basket Amount" has the meaning set forth in Section 3.02(a).
"BHCA" has the meaning set forth in Section 5.02(a)(i).
"Blue Sky Laws" has the meaning set forth in Section
5.02(e)(ii).
"Business Day" means any day on which banks are not required or
authorized to close in the State of Missouri.
"Certificate(s)" has the meaning set forth in Section 3.01(f).
"Change of Recommendation" has the meaning set forth in Section
6.05(d).
"Closing" has the meaning set forth in Section 2.02.
2
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"Closing Date"
has the meaning set forth in Section 2.02.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Employee Plans" has the meaning set forth in Section
6.10.
"Consent" means any consent, approval, authorization,
clearance,
exemption, waiver, permit, franchise, charter, license, easement,
grant or
similar affirmation by any Person pursuant to any Contract, Law or
Order.
"Contract" means, whether written or unwritten, any legally
binding
agreement, arrangement, authorization, commitment, indenture,
instrument,
license, lease, obligation, plan, practice, restriction,
understanding or
undertaking to which any Person is a party or that is binding on
any Person or
its capital stock, assets or business, including, any binding
letter of intent
or memorandum of understanding.
"Continued Employee" has the meaning set forth in Section 6.10.
"Costs" has the meaning set forth in Section 6.09(a).
"Dissenting Shares" has the meaning set forth in Section
3.01(e).
"Effect" means any effect, change, event, fact, condition,
occurrence,
circumstance or development.
"Effective Date" has the meaning set forth in Section 2.02.
"Effective Time" means the effective time of the Merger, as
provided
for in Section 2.02.
"Environmental Claims" has the meaning set forth in Section
5.02(l).
"Environmental Laws" has the meaning set forth in Section
5.02(l).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"Escrow Agreement" means the escrow agreement in the form
attached
hereto as Exhibit A to be entered into by the Parties and the
Shareholders
Committee on or before the Closing Date.
"Escrow Agent" means the escrow agent named in the Escrow
Agreement.
"Escrow Amount" means $1,091,651.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.01(f).
"Exchange Fund" has the meaning set forth in Section 3.03.
"FDIC" has the meaning set forth in Section 5.02(a)(ii).
"Federal Reserve Board" has the meaning set forth in Section
5.02(a)(i).
3
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"GAAP" has the meaning set forth in Section 5.02(g)(ii).
"GLB Act" has the meaning set forth in Section 5.02(h)(iv).
"Governmental Authority" has the meaning set forth in Section
3.06.
"Hazardous Materials" has the meaning set forth in Section
5.02(r).
"Indemnified Party(ies)" has the meaning set forth in Section
6.09(a).
"IRS" has the meaning set forth in Section 5.02(i)(i).
"Knowledge" means those facts that are actually known by any of
the
executive officers of the Seller or the Bank, and those facts that
would
reasonably be expected to have come to the attention of one or more
of the
officers referred to above had such officer conducted a reasonable
due diligence
review of the Seller's operations and business.
"Law" means any federal, state, local, municipal, foreign,
international, multinational, territorial or other administrative
order,
constitution, law, ordinance, rule, regulation, statute or treaty
and any
guidance issued thereunder, including any transitional relief or
rules provided
in connection therewith.
"Liability", as to any Person, means (i) any obligation of such
Person
for borrowed money, (ii) any obligation of such Person evidenced by
bonds,
debentures, notes or other instruments, (iii) any obligation of
such Person to
pay the deferred purchase price of property or services, (iv) any
capitalized
lease obligation of such Person, (v) any obligation or liabilities
of others
secured by a Lien on any asset owned by such Person, whether or not
such
obligation or liability is assumed by such Person, (vi) any
contingent
obligation of such Person, and (vii) any other liability of such
Person, whether
known or unknown, unasserted or asserted, absolute or contingent,
accrued or
unaccrued, liquidated or unliquidated or due or to become due.
"Liens" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement,
lien,
mortgage, pledge, reservation, restriction, security interest,
title retention
or other security arrangement, or any adverse right or interest,
charge or claim
of any nature whatsoever of, on or with respect to any property
(real or
personal) or property (real or personal) interest, other than (i)
Liens for
current Taxes upon the assets or property of a Person or its
subsidiaries which
are not yet due and payable provided appropriate reserves have been
established
therefor on the financial statements of such Person, (ii) for
depository
institution subsidiaries of a Person, pledges to secure deposits
and Liens
incurred in the ordinary course of the banking business, and (iii)
zoning
restrictions, easements, licenses and other restrictions on the use
of real
property, or minor irregularities in title thereto, that do not
materially
impair the use of such property in the operation of the business of
such Person
as such is now presently being conducted.
"Loan Classification Policy" has the meaning set forth in
Section
5.02(g)(iv).
"Loan Property" has the meaning set forth in Section 5.02(l).
"Loss" of
a Person means any and all loss, Liability, damage, award,
judgment, deficiency, diminution in value (including any loan
charge-off, net of
any recoveries), action, order, decree, penalty, fine, amount paid
in
settlement, cost or expense (including reasonable attorney's fees)
suffered or
incurred by such Person.
4
<PAGE>
"Material Contract" has the meaning set forth in Section
5.02(r).
"Maximum Amount" has the meaning set forth in Section 6.09(c).
"MDF" means the Missouri Division of Finance.
"Merger" has the meaning set forth in the Recitals.
"MGBCL" has the meaning set forth in the Recitals.
"Non-Compete Agreements" has the meaning set forth in the
Recitals.
"Order" means any award, decision, decree, injunction,
judgment,
order, ruling, subpoena or verdict entered, issued, made or
rendered by any
court, administrative agency or any other Governmental
Authority.
"Participation Facility" has the meaning set forth in Section
5.02(l).
"Party" means the Company, AcquisitionCo or the Seller, as
applicable,
and "Parties" means the Company, AcquisitionCo and the Seller.
"Patriot Act" has the meaning set forth in Section 5.02(h)(iv).
"Per Share Closing Amount" has the meaning set forth in Section
3.01(b).
"Per Share Escrow Amount" means an amount equal to the quotient of
"A"
divided by "B", where "A" equals the sum of the Escrow Amount and
the Additional
Escrow Amount, if any, and where "B" equals the difference between
(1) sum of
(i) the number of shares of Seller Common Stock presented for
exchange pursuant
to Article III or otherwise issued and outstanding at the Effective
Time, and
(ii) the number of shares of Seller Common Stock issuable upon the
exercise of
Seller Stock Options or other Rights (whether pursuant to Seller
Stock Options
or otherwise) as of the Effective Time, and (2) the aggregate
number of Seller
Treasury Shares, Dissenting Shares and shares of Seller Common
Stock owned by
the Company.
"Per Share Merger Consideration" has the meaning set forth in
Section
3.01(b).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Previously Disclosed" means information set forth in the
Seller
Disclosure Schedule.
"Proceeding" means any lawsuit, action, arbitration, cause of
action,
claim, complaint, criminal prosecution, demand letter, governmental
or other
examination or investigation, hearing, formal inquiry,
administrative or other
proceeding, or written notice by any Person alleging potential
Liability of
another Person, or invoking or seeking to invoke legal process to
obtain
information relating to or affecting another Person, which affects
such other
Person's business, assets (including Contracts related to it), or
obligations
under the transactions contemplated by this Agreement, but shall
not include
regular, periodic examinations of depository institutions and their
Affiliates
by Regulatory Authorities in the ordinary course consistent with
past practice.
"Proxy Statement" has the meaning set forth in Section 5.02(j).
5
<PAGE>
"Regulatory Authority" means the Federal Trade Commission, the
United
States Department of Justice, the Federal Reserve Board, the FDIC,
the OCC, the
MDF, the SEC, and all other federal and state regulatory agencies
and public
authorities having jurisdiction over the Parties and their
respective
subsidiaries.
"Rights" means all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, warrants or other binding
obligations of
any character whatsoever by which a Person is or may be bound to
issue
additional shares of its capital stock or other Rights, or
securities or Rights
convertible into or exchangeable for, shares of the capital stock
of a Person.
"Scheduled Loans" has the meaning set forth in Section
3.02(b)(ii).
"SEC" means the Securities and Exchange Commission.
"Section 409A" has the meaning set forth in Section 5.02(i)(v).
"Securities Act" means the Securities Act of 1933, as amended, and
the
rules and regulations thereunder.
"Seller" has the meaning set forth in the preamble to this
Agreement.
"Seller Approvals" has the meaning set forth in Section
5.02(a)(ii).
"Seller Benefit Plans" has the meaning set forth in Section
5.02(i)(i).
"Seller's Board of Directors Recommendation" has the meaning set
forth
in Section 5.02(d).
"Seller By-Laws" has the meaning set forth in Section 5.02(b).
"Seller Articles" has the meaning set forth in Section 5.02(b).
"Seller Common Stock" means the common stock, par value $0.10
per
share, of the Seller.
"Seller Disclosure Schedule" has the meaning set forth in
Section
5.01.
"Seller Financial Statements" has the meaning set forth in
Section
5.02(g)(ii).
"Seller Material Adverse Effect" means, with respect to the
Seller,
(i) any Effect, individually or taken together with any other
Effects, that is,
or is reasonably expected to be, material and adverse to the
financial position,
results of operations or business of the Seller and the Seller
Subsidiaries
taken as a whole, including any Effect, individually or taken
together with any
other Effects described in this definition of Seller Material
Adverse Effect,
that has caused, or is reasonably likely to cause the Seller or the
Surviving
Corporation to pay, suffer or incur, or to otherwise become liable
for, any
Losses in excess of $1,200,000, (ii) any Effect that would
materially impair the
ability of the Seller to perform its obligations under this
Agreement or
otherwise materially threaten or materially impede the consummation
of the
Merger and the other transactions contemplated by this Agreement,
or (iii) any
Effect, individually or taken together with any other Effects, that
causes or
otherwise results in any breach, untruth or inaccuracy of any one
or more of the
representations or warranties made by the Seller in this Agreement
and has
caused, or is reasonably likely to cause, the Seller or the
Surviving
Corporation to pay, suffer or incur, or to otherwise become liable
for, Losses
in excess of $1,200,000, whether individually or taken together
with any other
Effects described in this definition of Seller Material Adverse
Effect;
provided,
6
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however, that, for purposes of clause (i) hereof, Seller Material
Adverse Effect
shall not be deemed to include the impact of (a) changes in banking
and similar
Laws of general applicability or interpretations thereof by courts
or
Governmental Authorities, (b) changes in GAAP or regulatory
accounting
requirements applicable to banks and their holding companies
generally, (c)
changes resulting from conditions generally affecting the banking
industry, (d)
changes in general business or economic conditions, or (e) changes
resulting
from compliance by the Seller with its obligations under this
Agreement (except
to the extent that any of the changes described in clauses (a),
(b), (c) or (d)
have a disproportionately adverse effect upon the Seller as
compared to
comparable U.S. banking or financial services organizations).
"Seller Reports" has the meaning set forth in Section
5.02(g)(i).
"Seller Stock Options" has the meaning set forth in Section
3.13.
"Seller Stock Option Plan" means the Amended First Service
Financial
Company 2001 Stock Option Plan.
"Seller Shareholders' Meeting" has the meaning set forth in
Section
5.02(j).
"Seller Subsidiary(ies)" has the meaning set forth in Section
5.02(a)(i).
"Seller Treasury Shares" has the meaning set forth in Section
3.01(a).
"Shareholders Committee" has the meaning set forth in Section
3.14.
"Subsidiary Organizational Documents" has the meaning set forth
in
Section 5.02(b).
"Superior Offer" means an unsolicited, bona fide written offer made
by
a third Person to consummate any of the following transactions or
in one or a
series of related transactions: (i) a merger, consolidation,
business
combination, recapitalization, liquidation, dissolution or similar
transaction
involving the Seller pursuant to which those shareholders of the
Seller
immediately preceding such transaction will hold less than 50% of
the equity
interest in the surviving or resulting entity of such transaction,
(ii) a sale,
lease, exchange, transfer, license or other disposition by the
Seller or the
Seller Subsidiaries of all or substantially all of their assets, as
a
consolidated group, or (iii) the acquisition by any Person
(including by way of
a tender offer, merger, consolidation, business combination,
exchange offer or
similar transaction or issuance by the Seller), directly or
indirectly, of
beneficial ownership or a right to acquire beneficial ownership of
shares
representing in excess of 50% of the voting power of the then
outstanding shares
of capital stock of the Seller; provided, however, that in each of
clause (i),
(ii) or (iii) above, the Superior Offer shall be on terms that the
Seller's
Board of Directors determines, in its good faith judgment, to be
more favorable
to the Seller shareholders (taking into account all factors which
the Seller's
Board of Directors may deem reasonably relevant, including the
relative value
and form of the consideration offered, all other terms and
conditions of the
respective offer, including the presence of a financial
contingency, the
likelihood of obtaining financing on a timely basis if a financing
contingency
is present, and the likelihood of obtaining any required Consents
or Orders from
Governmental Authorities) than the terms of the Merger (after
receipt and
consideration of the advice of a financial advisor of nationally
recognized
reputation to the effect that the consideration offered in such
offer is
superior, from a financial point of view, to the Merger
Consideration).
"Surviving Corporation" has the meaning set forth in Section
2.01.
"Takeover Laws" has the meaning set forth in Section
5.02(e)(i).
7
<PAGE>
"Tax" and "Taxes" means any federal, state, local or foreign
taxes,
charges, fees, levies or other assessments, however denominated,
including all
net income, gross income, gains, gross receipts, profits,
alternative or add-on
minimum, sales, use, ad valorem, goods and services, capital,
capital stock,
production, transfer, registration, franchise, windfall profits,
license,
withholding, payroll, social security (or similar) employment,
disability,
employer health, excise, estimated, severance, stamp, occupation,
premium,
property, environmental (including taxes under Code Section 59A),
unemployment
or other taxes, custom duties, fees, assessments or charges of any
kind
whatsoever, whether computed on a separate or consolidated, unitary
or combined
basis or in any other manner, together with any interest and any
penalties,
additions to tax or additional amounts imposed by any Governmental
Authority,
whether disputed or not, and including any obligation to indemnify
or otherwise
assume or succeed to the tax Liability of any other Person, whether
arising
before, on or after the Effective Date.
"Tax Returns" means any return, amended return, claim for refund
or
information return or other report (including elections,
declarations,
disclosures, schedules and estimates) required to be filed with
respect to any
Tax, including any amendment thereof.
"Termination Fee" has the meaning set forth in Section 8.03(a).
"Title IV Plan" has the meaning set forth in Section
5.02(i)(ii).
"Voting Agreement" has the meaning set forth in the Recitals.
ARTICLE II
MERGER, EFFECTS OF MERGER
SECTION 2.01. MERGER. Upon the terms and subject to the conditions
set
forth in this Agreement, and in accordance with the MGBCL, at the
Effective Time
AcquisitionCo shall be merged with and into the Seller. As a result
of the
Merger, the separate corporate existence of AcquisitionCo shall
cease and the
Seller shall continue as the surviving corporation of the Merger
(the "Surviving
Corporation").
SECTION 2.02. CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME. At the
Company's
election, the closing of the Merger (the "Closing") shall take
place on (i) the
last business day of, or (ii) the first business day of the month
following, or
(iii) the first business day of the month which is the first month
of the
earliest calendar quarter following, in each case, the month during
which all
applicable waiting periods in connection with approvals of
Governmental
Authorities and the receipt of all approvals of Governmental
Authorities and all
conditions to the consummation of the Merger set forth in Article
VII are
satisfied or waived as provided in Article VII (other than those
conditions that
by their nature are to be satisfied at the Closing, but subject to
the
fulfillment or waiver of such conditions), or on such other date
after such
satisfaction or waiver as the Company and the Seller may agree (the
"Closing
Date"). Contemporaneous with the Closing, the Parties shall cause
the Merger to
be consummated by filing articles of merger, as necessary, and any
other
required documents, with the Secretary of State of the State of
Missouri, in
such form as required by, and executed in accordance with the
relevant
provisions of, the MGBCL (the effective time that the Secretary of
State of the
State of Missouri issues a certificate of merger is referred to
herein as the
"Effective Time"; the date on which the Effective Time shall occur
is referred
to herein as the "Effective Date").
SECTION 2.03. EFFECTS OF MERGER. At the Effective Time, the effect
of the
Merger shall be as provided in this Agreement and the applicable
provisions of
the MGBCL. Without limiting the generality of the foregoing, and
subject
thereto, at the Effective Time, except as otherwise provided
herein, all of the
property, rights, privileges, powers and franchises of
AcquisitionCo and the
Seller shall vest in the
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Surviving Corporation, and all debts, liabilities and duties of
AcquisitionCo
and the Seller shall become the debts, liabilities and duties of
the Surviving
Corporation.
SECTION 2.04. CERTIFICATE OF INCORPORATION AND BY-LAWS. At the
Effective
Time, the Seller Articles and the Seller By Laws, as in effect
immediately prior
to the Effective Time, shall be the Articles of Incorporation and
the By-Laws of
the Surviving Corporation.
SECTION 2.05. DIRECTORS AND OFFICERS. At the Effective Time, (i)
the
directors of AcquisitionCo immediately prior to the Effective Time
shall become
the initial directors of the Surviving Corporation, each to hold
office in
accordance with the Articles of Incorporation and By Laws of the
Surviving
Corporation, and (ii) the officers of AcquisitionCo immediately
prior to the
Effective Time shall be the initial officers of the Surviving
Corporation, in
each case until their respective successors are duly elected or
appointed.
ARTICLE III
MERGER CONSIDERATION, EXCHANGE PROCEDURES
SECTION 3.01. EFFECT ON COMMON STOCK. As of the Effective Time, by
virtue
of the Merger and without any action on the part of the holder of
any shares of
Seller Common Stock or any other Person:
(A) SELLER TREASURY SHARES. All shares of Seller Common Stock that
are
owned by the Seller other than in a fiduciary capacity as treasury
stock or
otherwise (the "Seller Treasury Shares") or by the Company shall be
canceled and
retired and shall cease to exist and no cash or other consideration
shall be
delivered in exchange therefor.
(B) OTHER SELLER COMMON STOCK. Each share of Seller Common
Stock
issued and outstanding immediately prior to the Effective Time
(other than the
Seller Treasury Shares, the Dissenting Shares and shares of Seller
Common Stock
owned by the Company) shall be converted at the Effective Time into
the right to
receive an amount of cash equal to the quotient of "A" divided by
"B", where "A"
shall equal $37,896,765 (which figure is subject to possible
reduction as
provided in Section 3.02(a)), and where "B" shall equal the sum of
(i) the
number of shares of Seller Common Stock presented for exchange
pursuant to this
Article III or otherwise issued and outstanding at the Effective
Time, and (ii)
the number of shares of Seller Common Stock issuable upon the
exercise of Seller
Stock Options or other Rights (whether pursuant to Seller Stock
Options or
otherwise) as of the Effective Time (the per share amount as so
calculated is
referred to herein as the "Per Share Merger Consideration");
provided, however,
that a portion of the aggregate Per Share Merger Consideration
equal to the
aggregate Per Share Escrow Amount shall be deposited by the Company
with the
Escrow Agent pursuant to the Escrow Agreement (rather than
delivered to the
shareholders of the Seller) and shall be held and distributed by
the Escrow
Agent in accordance with the Escrow Agreement (the amount of the
Per Share
Merger Consideration less the amount of the Per Share Escrow Amount
is referred
to herein as the "Per Share Closing Amount"). Upon such conversion,
all such
shares of Seller Common Stock shall no longer be outstanding and
shall
automatically be canceled and retired and shall cease to exist, and
each
Certificate shall thereafter represent the right to receive the
Merger
consideration in accordance with this Article III upon the
surrender of the
Certificate in accordance with the terms of this Agreement. The
Escrow Amount
and the Additional Escrow Amount, if any, shall be held and
distributed by the
Escrow Agent as provided in the Escrow Agreement and the amount of
the Escrow
Amount and the Additional Escrow Amount, if any, that may
ultimately be
distributed to the shareholders of the Seller shall depend upon the
outcome of
the contingencies described in the Escrow Agreement.
(C) ACQUISITIONCO COMMON STOCK. Each share of common stock of
AcquisitionCo outstanding immediately prior to the Effective Time
shall be
converted into one share of Seller Common
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Stock.
(D) COMPANY COMMON STOCK. Each share of common stock of the
Company
outstanding immediately prior to the Effective Time shall remain
outstanding and
unchanged following the Effective Time.
(E) DISSENTING SHARES. Notwithstanding anything in this Agreement
to
the contrary, shares of Seller Common Stock that are issued and
outstanding
immediately prior to the Effective Time and that are owned by
shareholders that
have properly perfected their rights of dissent within the meaning
of Section
351.455 of the MGBCL (the "Dissenting Shares") shall not be
converted into the
right to receive the Merger consideration in accordance with this
Article III,
unless and until such shareholders shall have failed to perfect any
available
right of dissent under applicable Law, but, instead, the holders
thereof shall
be entitled to payment of the appraised value of such Dissenting
Shares in
accordance with Section 351.455 of the MGBCL. If any such holder
shall have
failed to perfect or shall have effectively withdrawn or lost such
right of
dissent, the shares of Seller Common Stock held by such shareholder
shall not be
deemed Dissenting Shares for purposes of this Agreement and shall
thereupon be
deemed to have been converted into the Merger consideration in
accordance with
this Article III at the Effective Time in accordance with Section
3.01(b). The
Seller shall give the Company (A) prompt notice of any demands for
dissent filed
pursuant to Section 351.455 of the MGBCL received by the Seller,
withdrawals of
such demands and any other instruments served or delivered in
connection with
such demands pursuant to the MGBCL and received by the Seller, and
(B) the
opportunity to participate in all negotiations and proceedings with
respect to
demands made pursuant to Section 351.455 of the MGBCL. The Seller
shall not,
except with the prior written consent of the Company, (x) make any
payment with
respect to any such demand, (y) offer to settle or settle any such
demand, or
(z) waive any failure to timely deliver a written demand for
appraisal or timely
take any other action to perfect dissenters' rights in accordance
with the
MGBCL.
(F) EXCHANGE AGENT. Prior to the Effective Time, the Company
shall
appoint, subject to the approval of the Seller (which approval
shall not be
unreasonably withheld or delayed), an exchange agent (the "Exchange
Agent") for
the purpose of exchanging certificates which immediately prior to
the Effective
Time evidenced shares of Seller Common Stock (the "Certificates")
for the Merger
consideration in accordance with this Article III.
SECTION 3.02. ADJUSTMENT AMOUNT; ADDITIONAL ESCROW AMOUNT.
(A) ADJUSTMENT AMOUNT. In the event that, prior to the Effective
Time,
there shall be discovered any inaccuracy, breach or untruth of any
one or more
of the representations or warranties made by the Seller in this
Agreement (other
than any additional Scheduled Loans which shall be the subject of
the Additional
Escrow Amount as provided in Section 3.02(b)) and it is reasonably
likely that
the Seller or the Surviving Corporation has or will, incur, suffer,
pay or
otherwise sustain Losses, individually or in the aggregate, in
excess of
$200,000 (the "Basket Amount") as a result of, in connection with,
arising out
of, or based upon such inaccuracy(ies), breach(es) or untruth(s) of
any one or
more of the representations or warranties made by the Seller in
this Agreement,
then, in such event, the $37, 896,765 figure used in Section
3.01(b) shall be
reduced by the amount by which such Losses exceed, or are
reasonably likely to
exceed, the Basket Amount (such amount is referred to herein as the
"Adjustment
Amount").
(B) ADDITIONAL ESCROW AMOUNT.
(I) In the event that
the Parties cannot agree upon the amount of
the Adjustment Amount in accordance with Section 3.02(a), then the
amount in
dispute, as reasonably
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determined by the Company, shall be deposited by the Company in
escrow pursuant
to the Escrow Agreement and held and distributed by the Escrow
Agent as provided
therein.
(II) Between the date hereof and the Closing Date, the Seller
shall, or shall cause the Bank to, monitor and review the Bank's
loan portfolio
in accordance with past practice and applicable Law and shall
classify the
Bank's loans in accordance with the Loan Classification Policy. The
Seller shall
promptly advise the Company of the amount and other terms and
specifics of each
new Scheduled Loan (as defined below in this Section 3.02(b)(ii)).
On the date
five (5) days prior to the contemplated Closing Date (as determined
by the
Company pursuant to Section 2.02), the Seller shall deliver to the
Company a
list, certified as to its accuracy by the Chief Executive Officer
of the Seller,
of each of the loans or other lending relationships, if any,
classified by the
Seller or the Bank as of such date as a "4" or higher (e.g., "5" or
"6") in
accordance with the Loan Classification Policy (collectively, the
"Scheduled
Loans"). The Company and its advisors or representatives shall have
the right to
review the analyses and underlying loan documents and records
related to the
Scheduled Loans so identified by the Seller and any other loan
documents or
other information related to the Bank's loan portfolio deemed
necessary by the
Company, and the Seller and the Bank shall answer any questions of
the Company
and provide any additional information reasonably requested by the
Company
related to the classifications and quality of the Bank's loan
portfolio
generally. If the Company shall, prior to the Closing Date, notify
the Seller
that, in its reasonable opinion, the list of Scheduled Loans
provided by the
Seller should include any additional loan(s), then the Parties
shall promptly
attempt to resolve their disagreement and the Company shall provide
to the
Seller its rationale for the inclusion of any such additional
loan(s) as a
Scheduled Loan(s) pursuant to the Loan Classification Policy;
provided, however,
that the Closing shall not occur until such time as the Company
shall agree to
use the Seller's list of Scheduled Loans as provided by the Seller
to the
Company pursuant to the third sentence of this Section 3.02(b)(ii)
or the Seller
shall agree to use the Company's list of Scheduled Loans as
provided by the
Company to the Seller pursuant to this sentence, or the Parties
shall otherwise
agree upon a modified list of Scheduled Loans for purposes of this
Section
3.02(b)(ii). An amount equal to the aggregate principal balances of
the
Scheduled Loans (as agreed upon as provided above in this Section
3.02(b)(ii),
but excluding any Scheduled Loans identified on Section 5.02(g)(iv)
of the
Seller Disclosure Schedule as of the date hereof), plus the amount
of any
accrued and unpaid interest thereon (but less the amount of any
theretofore
unused Basket Amount after taking into consideration the matters
described in
Section 3.02(a) and Section 3.02(b)(i)), shall be deposited by the
Company in
escrow pursuant to the Escrow Agreement and held and distributed by
the Escrow
Agent as provided therein.
(III) Any additional amounts deposited in escrow by the Company
pursuant to Section 3.02(b) are referred to herein as the
"Additional Escrow
Amount".
SECTION 3.03. EXCHANGE FUND. On or before the Effective Time, (i)
the
Company shall deposit with the Exchange Agent, in trust for the
benefit of
holders of shares of Seller Common Stock, cash sufficient to pay
the aggregate
Per Share Closing Payments (the cash deposited with the Exchange
Agent shall
hereinafter be referred to as the "Exchange Fund"), and (ii) the
Company shall
deposit with the Escrow Agent an amount of cash equal to the Escrow
Amount and,
if applicable, any Additional Escrow Amount.
SECTION 3.04. EXCHANGE PROCEDURES. As soon as practicable after
the
Effective Time, but in no event later than five (5) Business Days
after the
Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail
to each holder of a Certificate (i) a letter of transmittal which
shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates
shall pass, only upon delivery of the Certificates to the Exchange
Agent, and
which letter shall be in customary form and have such other
provisions as the
Company may reasonably specify, and (ii) instructions for effecting
the
surrender of such Certificates in exchange for the aggregate
Merger
consideration payable in accordance with this
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<PAGE>
Article III represented by such Certificate. Upon surrender of a
Certificate to
the Exchange Agent together with such letter of transmittal, duly
executed and
completed in accordance with the instructions thereto, and such
other documents
as may reasonably be required by the Exchange Agent, the holder of
such
Certificate shall be entitled to receive in exchange therefor a
check for the
aggregate Per Share Closing Amount represented by such Certificate.
No interest
shall be paid or shall accrue on any cash payable for the Merger
consideration
payable in accordance with this Article III. In the event of a
transfer of
ownership of Seller Common Stock which is not registered in the
transfer records
of the Seller, a check for the aggregate Per Share Closing Amount
may be issued
with respect to such Seller Common Stock to such a transferee if
the Certificate
representing such shares of Seller Common Stock is presented to the
Exchange
Agent, accompanied by all documents required to evidence and effect
such
transfer and to evidence that any applicable stock transfer taxes
have been
paid.
SECTION 3.05. NO FURTHER RIGHTS IN SELLER COMMON STOCK. All cash
paid upon
conversion of shares of Seller Common Stock in accordance with the
terms of this
Article III shall be deemed to have been paid in full satisfaction
of all rights
pertaining to the shares of Seller Common Stock. Until surrendered
as
contemplated by this Article III, each Certificate shall be deemed
at any time
after the Effective Time to represent only the right to receive
upon such
surrender the Merger consideration payable in accordance with this
Article III.
SECTION 3.06. TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange
Fund which remains undistributed to the holders of Certificates for
six (6)
months after the Effective Time shall be delivered to the Company
or otherwise
on the instruction of the Company and any holders of the
Certificates who have
not theretofore complied with this Article III shall thereafter
look only to the
Surviving Corporation for the Merger consideration with respect to
the shares of
Seller Common Stock formerly represented thereby to which such
holders are
entitled pursuant to Section 3.01. Any portion of the Exchange Fund
remaining
unclaimed by holders of Shares as of a date which is immediately
prior to such
time as such amounts would otherwise escheat to or become property
of any United
States federal, state or local or any foreign government, or
political
subdivision thereof, or any multinational organization or authority
or any
authority, agency or commission entitled to exercise any
administrative,
executive, judicial, legislative, police, regulatory (including any
Regulatory
Authority) or taxing authority or power, any court or tribunal (or
any
department, bureau or division thereof), or any arbitrator or
arbitral body
(each a "Governmental Authority"), shall, to the extent permitted
by applicable
Law, become the property of the Surviving Corporation free and
clear of any
claims or interest of any Person previously entitled thereto.
SECTION 3.07. NO LIABILITY. None of the Company, AcquisitionCo, the
Seller,
the Surviving Corporation or the Exchange Agent shall be liable to
any Person in
respect of any Merger consideration from the Exchange Fund
delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar Law.
SECTION 3.08. INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest
any cash included in the Exchange Fund as directed by the Company.
Any interest
and other income resulting from such investments shall promptly be
paid to the
Company.
SECTION 3.09. LOST CERTIFICATES. If any Certificate shall have been
lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the Person
claiming such Certificate to be lost, stolen or destroyed and, if
required by
the Surviving Corporation, the posting by such Person of a bond in
such
reasonable amount as the Surviving Corporation may direct as
indemnity against
any claim that may be made against it with respect to such
Certificate, the
Exchange Agent shall deliver in exchange for such lost, stolen or
destroyed
Certificate the applicable Merger consideration with respect to the
shares of
Seller Common Stock formerly represented thereby.
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<PAGE>
SECTION 3.10. WITHHOLDING RIGHTS. The Surviving Corporation and/or
the
Company shall be entitled to deduct and withhold from the
consideration
otherwise payable pursuant to this Agreement to any holder of
shares of Seller
Common Stock such amounts as it is required to deduct and withhold
with respect
to the making of such payment under the Code and the rules and
regulations
promulgated thereunder, or any provision of state, local or foreign
tax Law. To
the extent that amounts are so withheld by the Surviving
Corporation and/or the
Company, such withheld amounts shall be treated for all purposes of
this
Agreement as having been paid to the holder of the shares of Seller
Common Stock
in respect of which such deduction and withholding was made by the
Surviving
Corporation, and such amounts shall be delivered by the Surviving
Corporation to
the applicable Taxing authority.
SECTION 3.11. FURTHER ASSURANCES. At and after the Effective Time,
the
officers and directors of the Surviving Corporation shall be
authorized to
execute and deliver, in the name and on behalf of the Seller or
AcquisitionCo,
any deeds, bills of sale, assignments or assurances and to take and
do, in the
name and on behalf of the Seller or AcquisitionCo, any other
actions and things
to vest, perfect or confirm of record or otherwise in the Surviving
Corporation
any and all right, title and interest in, to and under any of the
rights,
properties or assets acquired or to be acquired by the Surviving
Corporation as
a result of, or in connection with, the Merger.
SECTION 3.12. STOCK TRANSFER BOOKS. The stock transfer books of the
Seller
shall be closed immediately upon the Effective Time and there shall
be no
further registration of transfers of shares of Seller Common Stock
thereafter on
the records of the Seller. On or after the Effective Time, any
Certificates
presented to the Exchange Agent or the Surviving Corporation for
any reason
shall be converted into the Merger consideration in accordance with
this Article
III with respect to the shares of Seller Common Stock formerly
represented
thereby.
SECTION 3.13. SELLER STOCK OPTIONS. The Seller shall take all
action
reasonably necessary so that, on or before the Closing Date, each
holder of a
stock option (the "Seller Stock Options") heretofore granted under
the Seller
Stock Option Plan or pursuant to any employment or other agreement
shall
exercise such Seller Stock Option in accordance with its terms;
provided,
however, that in the event that any such Seller Stock Options shall
remain
outstanding immediately prior to the Effective Time, then each such
Seller Stock
Option shall be exchanged for an amount of cash equal to $0.01 and
at the
Effective Time each such Seller Stock Option shall become null and
void and of
no further force or effect.
SECTION 3.14. SHAREHOLDERS COMMITTEE. There is hereby
irrevocably
constituted a committee (the "Shareholders Committee") on behalf of
the holders
of the shares of Seller Common Stock entitled to payment pursuant
to Section
3.01(b) to act as such shareholders' respective agent,
representative and
attorney-in-fact for all purposes and with respect to all matters
arising under
the Escrow Agreement. The powers and authority of the Shareholders
Committee
shall include the power and authority to amend and vary the Escrow
Agreement as
permitted therein, to give and accept notices thereunder, to
provide for, manage
and administer the defense or resolution of any claims or
contingencies
described therein, to enter into one or more agreements or other
instruments in
furtherance of their duties under the Escrow Agreement, and to
otherwise
exercise all rights and privileges necessary and appropriate to
carry out the
purposes and intent of the Escrow Agreement. The initial members of
the
Shareholders Committee shall be Allen R. Vogel, John G. Martens and
James C.
Jacobsmeyer. In the event that any member of the Shareholders
Committee becomes
unable or unwilling to serve for any reason, then the remaining
members of the
Shareholders Committee shall appoint a successor. All decisions of
the
Shareholders Committee shall be made by majority vote. No bond
shall be required
of the Shareholders Committee, and the Shareholders Committee shall
receive no
compensation for its services, provided that they shall be
reimbursed for their
expenses as provided in this Section 3.14. The Shareholders
Committee shall have
the right to retain counsel, financial advisors and other
professionals
necessary in its discretion for the administration of its duties.
The
Shareholders Committee shall not be liable to any of the
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<PAGE>
shareholders for any act done or omitted as provided hereunder and
under the
Escrow Agreement, except in the case of gross negligence, bad
faith, or willful
misconduct. The Shareholders Committee shall be entitled to
recover, solely from
that portion of the Escrow Amount or the Additional Escrow Amount,
if any, that
is payable to the shareholders of the Seller in accordance with the
terms of the
Escrow Agreement, all of its out-of-pocket expenses incurred by the
Shareholders
Committee in fulfilling its duties hereunder and under the Escrow
Agreement,
including travel, legal and accounting fees.
ARTICLE IV
ACTIONS PENDING MERGER
SECTION 4.01. FORBEARANCE OF SELLER. From the date hereof until the
earlier
to occur of the Effective Time or the termination of this Agreement
pursuant to
Article VIII, except as expressly contemplated by this Agreement,
without the
prior written consent of the Company (which consent shall not be
unreasonably
withheld or delayed), the Seller shall not, and shall cause each of
the Seller
Subsidiaries not to:
(A) ORDINARY COURSE. Conduct the business of the Seller and the
Seller
Subsidiaries other than in the ordinary and usual course in
compliance in all
material respects with all applicable Laws, or fail to use
reasonable efforts to
preserve intact their business organizations and assets and
maintain their
rights, franchises and existing relations with customers,
suppliers, employees
and business associates, or take any action that would adversely
affect or delay
the ability of the Seller, the Company or any of their Subsidiaries
to perform
any of their obligations on a timely basis under this Agreement, or
take any
action that would have a Seller Material Adverse Effect.
(B) CAPITAL STOCK. (i) issue, sell or otherwise permit to
become
outstanding, or authorize the creation of, any additional shares of
Seller
Common Stock (except as a result of the exercise of Seller Stock
Options for up
to 46,367 shares of Seller Common Stock granted as of the date
hereof and rights
to purchase up to 616 shares of Seller Common Stock under the
Amended First
Service Financial Company Employee Stock Purchase Plan for the 2006
Plan Year),
or any Rights, or any securities or other Rights of any of the
Seller
Subsidiaries, (ii) enter into any agreement with respect to the
foregoing, or
(iii) permit any additional shares of Seller Common Stock to become
subject to
new grants of employee or director stock options, other Rights or
similar
stock-based employee rights.
(C) DIVIDENDS AND DISTRIBUTIONS. (i) directly or indirectly
adjust,
split, combine, redeem, reclassify, purchase or otherwise acquire,
any shares of
its capital stock, or (ii) make, declare, pay or set aside for
payment any
dividend or other distribution on any shares of Seller Common
Stock.
(D) COMPENSATION, EMPLOYMENT AGREEMENTS. Enter into or amend or
renew
any employment, consulting, severance or similar agreements or
arrangements with
any director, officer or employee of the Seller or the Seller
Subsidiaries, or
grant any salary or wage increase or increase any employee benefit
(including
incentive or bonus payments), except (i) for changes that are
required by
applicable Law, (ii) to satisfy Previously Disclosed contractual
obligations
existing as of the date hereof, (iii) normal increases in
compensation to
employees in the ordinary course of business, consistent with past
practice, or
(iv) for newly hired non-officer employees, consistent with past
practices,
hired to replace any employee who may leave the employ of the
Company or its
Subsidiaries after the date hereof.
(E) SELLER BENEFIT PLANS. Enter into, establish, adopt or amend
(except (i) as may be required by applicable Law, or (ii) to
satisfy Previously
Disclosed contractual obligations existing as of the date hereof)
Seller Benefit
Plans (including any pension, retirement, stock option, stock
purchase, savings,
profit sharing, deferred compensation, consulting, bonus, group
insurance or
other employee benefit, incentive or welfare contract, plan or
arrangement, or
any trust agreement (or similar arrangement) related thereto), in
respect of any
director, officer or employee of the Seller or any Seller
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Subsidiaries, or take any action to accelerate the vesting or
exercisability of
stock options, restricted stock or other compensation or benefits
payable
thereunder.
(F) DISPOSITIONS. Except as Previously Disclosed, sell,
transfer,
mortgage, encumber or otherwise dispose of or discontinue any of
its assets,
deposits, business or properties, except in the ordinary course of
business
consistent with past practice and in a transaction that is not
material to the
Seller and the Seller Subsidiaries taken as a whole.
(G) ACQUISITIONS. Except as Previously Disclosed, acquire (other
than
by way of foreclosures or acquisitions of control in a bona fide
fiduciary
capacity or in satisfaction of debts previously contracted in good
faith, in
each case in the ordinary and usual course of business consistent
with past
practice) all or any portion of, the assets, business, deposits or
properties of
any other Person, except in the ordinary course of business
consistent with past
practice and in a transaction that is not material to the Seller
and the Seller
Subsidiaries taken as a whole.
(H) CAPITAL EXPENDITURES. Except as Previously Disclosed, make
any
capital expenditures that, individually or in the aggregate, exceed
$50,000.
(I) GOVERNING DOCUMENTS. Amend the Seller Articles, the Seller
By-Laws
or the Subsidiary Organizational Documents of any of the Seller
Subsidiaries.
(J) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by
GAAP.
(K) CONTRACTS. Except in the ordinary course of business
consistent
with past practice, enter into or terminate any Material Contract
or amend or
modify in any material respect any of its existing Material
Contracts.
(L) NON-COMPETE AGREEMENTS. Amend, modify or terminate any of
the
Non-Compete Agreements.
(M) CLAIMS. Except in the ordinary course of business consistent
with
past practice, settle any claim, action or Proceeding, except for
any claim,
action or Proceeding involving solely money damages, in an amount,
individually
or in the aggregate for all such settlements, that is not material
to the Seller
and the Seller Subsidiaries taken as a whole.
(N) ADVERSE ACTIONS. Knowingly take any action that is intended or
is
reasonably likely to result in (1) any of its representations and
warranties set
forth in this Agreement being or becoming untrue in any material
respect at any
time at or prior to the Effective Time, (2) any of the conditions
to the Merger
set forth in Article VII not being satisfied, or (3) a material
violation of any
provision of this Agreement except, in each case, as may be
required by
applicable Law.
(O) RISK MANAGEMENT. Except as required by applicable Law, (i)
implement or adopt any material change in its interest rate and
other risk
management policies, procedures or practices, or (ii) fail to
follow its
existing policies or practices with respect to managing its
exposure to interest
rate and other risk.
(P) INDEBTEDNESS. Incur any indebtedness for borrowed money other
than
in the ordinary course of business consistent with past
practice.
(Q) LOANS. Make or commit to make any new loan or letter of credit
or
any new or additional discretionary advance under any existing line
of credit
not in accordance with the Seller's loan
15
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policy and authority in existence as of the date of this Agreement;
provided,
however, that, in addition to the foregoing, the Seller shall not
make or commit
to make or otherwise incur aggregate credit exposure to any one
borrower (or
group of affiliated borrowers) in principal amounts in excess of
$1,000,000
without the prior written consent of the Company, acting through
its Chief
Executive Officer or such other designee as the Company may give
notice of to
the Seller (except that, notwithstanding the foregoing proviso, the
Seller may
increase the amount of the aggregate credit exposure to any one
borrower and its
affiliated borrowers by up to an additional $250,000 even if doing
so would
increase the aggregate credit exposure to such borrower and its
affiliates to an
amount in excess of $1,000,000); provided further, however, that
the Seller or
any Seller Subsidiary may make any loan, notwithstanding the amount
of the loan,
in the event that (A) there has been delivered to the Company a
notice of its
intention to make such loan, and (B) the Company shall not have
reasonably
objected to such loan by delivering a written notice of such
objection within
two (2) Business Days following receipt of the notice described in
clause (A).
(R) FORECLOSURES. Foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining
a phase one
environmental report thereon which indicates that the property is
free of
pollutants, contaminants or hazardous or toxic waste materials,
provided,
however, that the Seller shall not be required to obtain such a
report with
respect to single family, non-agricultural residential property of
one acre or
less to be foreclosed upon unless it has or should have had reason
to believe
that such property might contain any such waste materials or
otherwise might be
contaminated.
(S) COMMITMENTS. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. DISCLOSURE SCHEDULE. On or prior to the date hereof,
the
Seller has delivered to the Company a schedule (the "Seller
Disclosure
Schedule") setting forth, among other things, items the disclosure
of which is
necessary or appropriate either in response to an express
disclosure requirement
contained in a provision hereof or as an exception to one or
more
representations or warranties contained in Section 5.02. The Seller
Disclosure
Schedule shall be arranged in paragraphs corresponding to the
Section numbers
contained in Section 5.02. Nothing in the Seller Disclosure
Schedule shall be
deemed adequate to disclose an exception to a representation or
warranty made
herein unless the Seller Disclosure Schedule identifies the
exception with
reasonable particularity and describes the relevant facts in
reasonable detail.
SECTION 5.02. REPRESENTATIONS AND WARRANTIES OF SELLER. Subject to
Section
5.01 and except as Previously Disclosed in a section of the Seller
Disclosure
Schedule corresponding to the relevant section below, the Seller
hereby
represents and warrants to the Company:
(A) ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(I) The Seller is a corporation duly organized, validly
existing
and in good standing under the Laws of the State of Missouri and a
registered
bank holding company under the Bank Holding Company Act of 1956 and
the
regulations promulgated thereunder, as amended (the "BHCA"). The
Seller is also
subject to regulation by the Board of Governors of the Federal
Reserve System
(the "Federal Reserve Board"). Each subsidiary of the Seller (a
"Seller
Subsidiary," or collectively, the "Seller Subsidiaries") is a state
banking
association, corporation, limited liability company, limited
partnership or
trust duly organized, validly existing and in good standing under
the Laws of
the state of its incorporation or organization. Each of the Seller
and the
Seller Subsidiaries has the requisite power and authority to own,
lease and
operate the properties it now owns or holds under lease and to
carry on its
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business as it is now being conducted, is duly qualified or
licensed as a
foreign business entity to do business, and is in good standing, in
each
jurisdiction where the character of the properties owned, leased or
operated by
it or the nature of its business makes such qualification or
licensing
necessary.
(II) Each of the Seller and the Seller Subsidiaries has all
Consents and Orders (the "Seller Approvals") necessary to own,
lease and operate
its properties and to carry on its business as it is now being
conducted,
including all required authorizations from the Federal Reserve
Board, the
Federal Deposit Insurance Corporation (the "FDIC") and the MDF, and
neither the
Seller nor any Seller Subsidiary has received any notice of any
Proceedings
relating to the revocation or modification of any Seller
Approvals.
(III) A true and complete list of the Seller Subsidiaries,
together with (i) the Seller's percentage ownership of each Seller
Subsidiary,
and (ii) Laws under which the Seller Subsidiary is incorporated or
organized, is
set forth in the Seller Disclosure Schedule. The Seller or one or
more of the
Seller Subsidiaries owns beneficially and of record all of the
outstanding
shares of capital stock of each of the Seller Subsidiaries. Except
for the
Seller Subsidiaries, the Seller does not directly or indirectly own
any capital
stock or equity interest in, or any interests convertible into or
exchangeable
or exercisable for any capital stock or equity interest in, any
corporation,
partnership, joint venture or other business association or other
Person, other
than in the ordinary course of business and in no event in excess
of 5% of the
outstanding equity securities of such Person.
(IV) The minute books of the Seller and each of the Seller
Subsidiaries contain true, complete and accurate records in all
material
respects of all meetings and other corporate actions held or taken
since June
30, 2001, of their respective shareholders and Boards of Directors
(including
committees of their respective Boards of Directors).
(B) ARTICLES OF INCORPORATION AND BY-LAWS. The Seller has
heretofore
furnished or made available to the Company a complete and correct
copy of the
Seller's Articles of Incorporation and the Seller's By-Laws, each
as amended or
restated (the "Seller Articles" and the "Seller By-Laws",
respectively), and the
Articles or Certificate of Incorporation and the By-Laws, or
other
organizational documents, as the case may be, of each Seller
Subsidiary, each as
amended or restated (the "Subsidiary Organizational Documents").
The Seller
Articles, the Seller By-Laws and the Subsidiary Organizational
Documents are in
full force and effect. Neither the Seller nor any Seller Subsidiary
is in breach
or violation of any of the provisions of the Seller Articles, the
Seller By-Laws
or the Subsidiary Organizational Documents.
(C) CAPITALIZATION. The authorized capital stock of the Seller
consists of 2,000,000 shares of Seller Common Stock, $0.10 par
value per share.
As of the date of this Agreement, (i) 475,731 shares of Seller
Common Stock were
issued and outstanding, all of which were duly authorized, validly
issued, fully
paid and non-assessable, and not issued in violation of any
preemptive right of
any Seller shareholder, (ii) no shares of Seller Common Stock were
held as
treasury shares by the Seller, and (iii) 46,367 shares of Seller
Common Stock
were subject to outstanding Seller Stock Options issued pursuant to
the Seller
Stock Option Plan or subject to purchase pursuant to the Amended
First Service
Financial Company Employee Stock Purchase Plan. All Seller Stock
Options shall
vest and become exercisable in accordance with their terms prior to
the
Effective Time. Attached to the Seller Disclosure Schedule is a
true and
complete list of the holders of record of the Seller Common Stock
and the number
of shares of Seller Common Stock held by each such holder of
record. The
authorized capital stock of Bank consists of 10,000 shares of
common stock, par
value $100.00 per share. All of such issued and outstanding shares
of common
stock are duly authorized, validly issued, fully paid and non
assessable and
owned beneficially and of record by the Seller. Except as set forth
above in
this Section 5.02(c), there are no securities of the Seller or any
Seller
Subsidiary (debt, equity or otherwise) authorized, issued or
17
<PAGE>
outstanding. All of the issued and outstanding shares of capital
stock of the
Seller and the Seller Subsidiaries have been issued in compliance
with all
applicable federal and state securities Laws or in accordance with
exemptions
therefrom. Except as set forth in clause (iii) above, there are no
outstanding
Rights relating to the issued or unissued capital stock of the
Seller or any
Seller Subsidiary or obligating the Seller or any Seller Subsidiary
to issue or
sell any shares of capital stock or other securities of or in the
Seller or any
Seller Subsidiary. There are no obligations, contingent or
otherwise, of the
Seller or any Seller Subsidiary to repurchase, redeem or otherwise
acquire any
shares of Seller Common Stock or the capital stock of any Seller
Subsidiary or
to provide funds to or make any investment (in the form of a loan,
capital
contribution or otherwise) in any Seller Subsidiary or any other
Person, except
for loan commitments and ot
