AGREEMENT AND PLAN OF MERGER among

Agreement and Plan of Merger

You are currently viewing:

This Agreement and Plan of Merger involves

Aurora, CO | Campbell Bohn Killin Brittan & Ray, LLC | Commerce Bancshares, Inc | COMMERCE BANK, NA | COMMERCE BANKSHARES, INC | Denver, CO

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: AGREEMENT AND PLAN OF MERGER among
Governing Law: Missouri Date: 4/4/2007
Industry: Regional Banks Law Firm: Blackwell Sanders Sector: Financial

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

among

COMMERCE BANK,

COMMERCE BANK, N.A.

and

COMMERCE BANKSHARES, INC.

Dated April 2, 2007

TABLE OF CONTENTS


			Page

ARTICLE I
THE MERGER

1.1	Effective Time of the Merger			1

1.2	Closing			1

1.3	Effects of the Merger			2

1.4	Absence of Control			2

1.5	Further Assurances			2

ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF COMMERCE;
CONVERSION OF BANK STOCK

2.1	Effect of Merger on Commerce Stock			2

2.2	Conversion of Bank Shares in the Merger			3

2.3	Shareholder Approval			3

ARTICLE III
REPRESENTATIONS AND WARRANTIES

3.1	Representations and Warranties of Company and Bank			3

	(a)	Organization, Standing and Power		3

	(b)	Capital Structure; Ownership of Bank Common Stock		4

	(c)	Authority; No Violation		5

	(d)	Financial Statements		6

	(e)	Compliance with Applicable Laws		6

	(f)	Litigation		7

	(g)	Taxes		7

	(h)	Certain Agreements		8

	(i)	Benefit Plans		9

	(j)	Agreements with Bank or Other Regulators		11

	(k)	Absence of Certain Changes or Events		11

	(l)	Undisclosed Liabilities		12

	(m)	Governmental Reports		12

	(n)	Environmental Liability		12

	(o)	Properties		14


	(p)	Brokers or Finders	15

	(q)	Intellectual Property	15

	(r)	Insurance	15

	(s)	Loans and Other Assets	16

	(t)	Labor Matters	16

	(u)	Internal Controls and Records	17

	(v)	Fees from Employee Plans	17

3.2	Representations and Warranties of Commerce		17

	(a)	Organization and Authority	17

	(b)	Valid and Binding Agreement; No Violation	17

	(c)	Litigation	18

ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS

4.1	Covenants of Bank		18

4.2	Cooperation With Commerce		21

4.3	Covenants of Commerce		22

	(a)	Regulatory Approvals	22

	(b)	Information	22

	(c)	Employee Benefits	22

4.4	Allocation		22

ARTICLE V
ADDITIONAL AGREEMENTS

5.1	Governmental Entity Communications		24

5.2	Acquisition Proposals		24

5.3	Legal Conditions		24

5.4	Additional Agreements		25

5.5	Fees and Expenses		25

5.6	Cooperation		25

5.7	Advice of Changes		25

5.8	Indemnification; Directors’ and Officers’ Insurance		25

5.9	Certain Financial Statement Adjustments		26

5.10	Phase II Environmental Assessment		26

5.11	Plan Termination		26


ARTICLE VI
CONDITIONS PRECEDENT

6.1	Conditions to Each Party’s Obligation		26

	(a)	Shareholder Approval	26

	(b)	Other Approvals	26

	(c)	No Injunctions or Restraints	27

6.2	Conditions to Obligations of Commerce		27

	(a)	Representations and Warranties	27

	(b)	Performance of Obligations	27

	(c)	Corporate Action	27

	(d)	Material Adverse Effect	27

	(e)	Closing Documents	27

	(f)	Financial Measures	28

	(g)	Bank Building	28

	(h)	Opinion of Counsel	28

	(i)	Phase II Environmental Assessment	28

6.3	Conditions to Obligations of Bank		28

	(a)	Representations and Warranties	28

	(b)	Performance of Obligations	28

	(c)	Corporate Action	28

	(d)	Closing Documents	29

ARTICLE VII
TERMINATION AND AMENDMENT

7.1	Termination		29

7.2	Effect of Termination		30

7.3	Amendment		30

7.4	Extension; Waiver		30

7.5	Termination Fee		30

ARTICLE VIII
GENERAL PROVISIONS

8.1	Survival of Representations, Warranties and Covenants		31

8.2	Notices		31

8.3	Interpretation		32

iii


8.4	Counterparts	33

8.5	Entire Agreement; No Third Party Beneficiaries; Rights of Ownership	33

8.6	Governing Law	33

8.7	Severability	33

8.8	Assignment	33

8.9	Publicity	33

List of Schedules/Exhibits:
	Schedule 3.1(a)
	Schedule 3.1(b)(ii)
	Schedule 3.1(c)(i)
	Schedule 3.1(e)
	Schedule 3.1(f)
	Schedule 3.1(g)
	Schedule 3.1 (h)
	Schedule 3.1(i)
	Schedule 3.1(j)
	Schedule 3.1(k)
	Schedule 3.1(l)
	Schedule 3.1(m)
	Schedule 3.1(n)
	Schedule 3.1(o)
	Schedule 3.1(q)
	Schedule 3.1(s)
	Schedule 3.1(u)
	Schedule 4.1
	Exhibit 6.2(i)

INDEX OF DEFINED TERMS


TERM	PAGE		SECTION

Acquisition Proposal		23		5.2
Affiliate		4	3.1(a)(vi)
Agreement		1	Intro Paragraph
ASTM		13		3.1(n)(3)
ASTM Phase II Environmental Assessment		13		3.1(n)(3)
Bank		1	Intro Paragraph
Bank Common Stock		3,4		2.2, 3.1(b)(i)
Bank Disclosure Schedule		3,4	3.1(a), 3.2(b)(ii)
Bank Financial Statements		6		3.1(d)
Bank Intellectual Property		15		3.1(q)
Bank Permits		6		3.1(e)
Bank Regulators		6		3.1(e)
Business Day		2		1.2
Closing		1		1.2
Closing Date		1		1.2
Code		7		3.1(g)
Commerce		1	Intro Paragraph
Company		1	Recitals
Confidentiality Agreement		21		4.2(a)
Consents		25		6.1(b)
Doubtful		16		3.1(s)(i)
Effective Time		1		1.1
Employee Plans		9		3.1(i)
Employees		9		3.1(i)
Environmental Audit		13		3.1(n)(3)
Environmental Law		14		3.1(n)(4)
Environmental Liability		14		3.1(n)(3)
ERISA		9,		.1(i)
FDIC		3		3.1(a)
GAAP		6		3.1(d)
Governmental Entity		5	3.1(c)(ii)
Hazardous Substances		14		3.1(n)(4)
Indemnified Party		24		5.8
knowledge		4		3.1(a)(v)
Litigation		7		3.1(f)
Loss		16		3.1(s)(i)
material		3	3.1(a)(ii)
Material Adverse Effect		4	3.1(a)(iii)
Merger		1	Recitals
New Credit		21		4.1(s)
OREO		16		3.1	(s)(i)
Other Loans Especially Mentioned		16		3.1	(s)(i)


person	4	3.1(a)(vii)
Properties	13		3.1(n)(3)
Qualified Subchapter S Subsidiaries	8		3.1(g)
Real Property	14		3.1(n)(4)
Recognition Period	7		3.1(g)
Requested Adjustments	25		5.9
Requisite Regulatory Approvals	25		6.1(b)
Subsidiary	3,		.1(a)(i)
Substandard	16		3.1(s)(i)
Superior Proposal	23		5.2
Surviving Bank	2		1.3(c)
Tax or Taxes	7		3.1(g)
Tax Returns	7		3.1(g)
Termination Fee	29		7.5(a)
to the best knowledge of	4		3.1(a)(v)
Transaction Agreements	4	3.1(a)(iv)

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of April 2, 2007 among COMMERCE BANK , a Colorado state bank (“Bank”), COMMERCE BANK, N.A. , a national banking association (“Commerce”), and COMMERCE BANKSHARES, INC. , a Colorado corporation (“Company”).

WHEREAS, the Board of Directors of Commerce and the Board of Directors of Bank have approved this Agreement, declared it advisable and deem it advisable and in the best interests of their respective shareholders to consummate the transactions contemplated by this Agreement in which, inter alia, Commerce and Bank become affiliated through the merger of Bank with and into Commerce (the “Merger”);

WHEREAS, the Board of Directors of Bank has approved this Agreement and declared it advisable and deems it advisable and in the best interests of its sole shareholder, Company, to consummate the Merger;

WHEREAS, Company will receive a substantial benefit from the consummation of the transactions contemplated by this Agreement, and, as such, Company has agreed to execute this Agreement (i) to assure Commerce of the accuracy and the full and complete performance of the representations, warranties, covenants and agreements provided for herein by Bank, and (ii) to provide Company’s consent to the Merger and other transactions contemplated by this Agreement as the sole shareholder of Bank as required by law; and

WHEREAS, the Boards of Directors of Commerce and Company have each determined that the Merger and the other transactions contemplated by this Agreement are consistent with, and will contribute to the furtherance of, their respective business strategies and goals.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE I
THE MERGER

1.1 Effective Time of the Merger . Subject to the terms and conditions of this Agreement, on the Closing Date (as hereinafter defined), the proper officers of Commerce and Bank shall file with appropriate regulatory authorities such instruments as may be required so that the Merger shall become effective on the first day of the first calendar month following the Closing Date (the “Effective Time”).

1.2 Closing . The closing of the Merger (the “Closing”) will take place at 10 a.m., Kansas City time, on a day occurring not less than two (2) and not more than four (4) Business Days before the Effective Time and not later than thirty (30) days after the date on which the last of any condition precedent contained herein is waived or fulfilled, as specified in a notice delivered by Commerce to Bank not less than three (3) Business Days prior to such Closing Date or on such other date as Bank and Commerce shall mutually agree (the “Closing Date”). The Closing shall be held at the offices of Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri or at such other location as is agreed to in writing by the parties hereto. As used in this

Agreement, “Business Day” shall mean any day that is not a Saturday, Sunday or other day on which banks are required or authorized by law to be closed in Missouri.

1.3 Effects of the Merger .

(a) At the Effective Time (i) Bank shall be merged with and into Commerce under the charter of Commerce and the separate corporate existence of Bank shall cease and Commerce shall be the Surviving Bank, (ii) the charter of Commerce as in effect immediately prior to the Effective Time shall be the charter of the Surviving Bank, (iii) the By-laws of Commerce as in effect immediately prior to the Effective Time shall be the By-laws of the Surviving Bank, (iv) the directors of Commerce at the Effective Time shall be the directors of the Surviving Bank, and (v) the officers of Commerce immediately prior to the Effective Time shall be the officers of the Surviving Bank, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

(b) At the Effective Time the separate existence of Bank shall cease, and all of the property (real, personal and mixed), rights, powers, duties and obligations of Bank shall be taken and deemed to be transferred to and vested in the Surviving Bank, without further act or deed, as provided by applicable laws and regulations.

(c) As used in this Agreement, “Surviving Bank” shall mean Commerce, at and after the Effective Time, as the surviving bank in the Merger.

1.4 Absence of Control . Subject to any specific provisions of this Agreement, it is the intent of the parties hereto that Commerce by reason of this Agreement shall not be deemed (until consummation of the transactions contemplated hereby) to control, directly or indirectly, the other party and shall not exercise, or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of such other party.

1.5 Further Assurances . If at any time after the Effective Time, Commerce shall consider it advisable that any further conveyances, agreements, documents, instruments or assurances of law or any other actions or things are necessary or desirable to vest, perfect, confirm, or record in Commerce the title to any property, rights, privileges, powers, or franchises of Bank, the Board of Directors and officers of Commerce shall, and will be authorized to, execute and deliver in the name and on behalf of Bank or otherwise, any and all proper conveyances, agreements, documents, instruments, and assurances of law and do all things necessary or proper to vest, perfect, or confirm title to such property, rights, privileges, powers and franchises in Commerce, and otherwise to carry out the provisions of this Agreement.

ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF COMMERCE;
CONVERSION OF BANK STOCK

2.1 Effect of Merger on Commerce Stock . At the Effective Time of the Merger, each share of common stock, $100.00 par value per share, of Commerce issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding at the Effective Time and shall be unaffected by the Merger.

2.2 Conversion of Bank Shares in the Merger . At the Effective Time, by virtue of the Merger and without any action on the part of Bank thereof, the outstanding shares of common stock, $10.00 par value per share, of Bank (“Bank Common Stock”) shall be converted into $29,500,000.

2.3 Shareholder Approval . By signing this Agreement, Company, as sole shareholder of Bank, consents to and approves the Merger and the other transactions contemplated by this Agreement.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of Company and Bank . Company and Bank, jointly and severally, hereby represent and warrant to Commerce as follows:

(a) Organization, Standing and Power . Company is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Company has one Subsidiary, Bank; Bank is a wholly owned Subsidiary of Company and is a bank organized under the laws of the State of Colorado. The deposit accounts of Bank are insured by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by law, and all premiums and assessments required in connection therewith have been paid when due. Each of Company and Bank is a corporation or bank duly organized, validly existing and in good standing under the applicable laws of Colorado and have all requisite power and authority to own, lease and operate their respective properties and to carry on their respective business as now being conducted. The charter and By-laws of Bank, copies of which are attached to Section 3.1(a) of the disclosure schedule of Bank delivered to Commerce on the date hereof (the “Bank Disclosure Schedule”), are true, complete and correct. The minute books of Bank have been made available to Commerce and contain, in all material respects, a complete (except for certain portions thereof relating to the Merger and the transactions contemplated hereby) and accurate record of all meetings of its Board of Directors (and committees thereof) and shareholder. Bank has no Subsidiaries.

As used in this Agreement,

(i) the term “Subsidiary” when used with respect to any party means any corporation or other organization, whether incorporated or unincorporated, (x) of which such party or any other Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any Subsidiary of such party do not have a majority of the voting interests in such partnership), or (y) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries,

(ii) any reference to any event, change or effect being “material” with respect to any entity means an event, change or effect which is material in relation to the

condition (financial or otherwise), properties, assets, liabilities, businesses, results of operations or prospects of such entity and its Subsidiaries taken as a whole,

(iii) the term “Material Adverse Effect” means, with respect to any party to this agreement, a material adverse effect (whether or not required to be accrued or disclosed under Statement of Financial Accounting Standards No. 5) (A) on the condition (financial or otherwise), properties, assets, liabilities, businesses or results of operations of such entity and its Subsidiaries taken as a whole (but does not include any such effect resulting from or attributable to any action or omission by Bank or Commerce required to be taken under this Agreement or taken with the prior written consent of the other parties hereto, in contemplation of the transactions contemplated hereby), or (B) on the ability of such entity to perform its obligations under the Transaction Agreements (as defined below) on a timely basis; provided, that in determining whether a Material Adverse Effect has occurred, there shall be excluded the effect of: (i) general economic, regulatory or political conditions (including the outbreak or continuation of war, armed conflict or other hostilities), (ii) changes in interest rates and foreign currency exchange rates, (iii) circumstances that affect the industries in which Bank operates generally, (iv) changes in law, in GAAP or in any interpretation thereof, (v) the announcement or pendency of the transactions provided for in this Agreement, (vi) the disclosure of the fact that Commerce is the prospective acquirer of Bank, or (vii) any expenses incurred in connection with this Agreement or the transactions contemplated hereby.

(iv) the term “Transaction Agreements” shall mean this Agreement and other documents prepared or filed in accordance with applicable law,

(v) the term “knowledge” or “to the best knowledge of” a party hereto means the actual knowledge of a director or executive officer or senior management of a party after reasonable inquiry under all the circumstances,

(vi) the term “Affiliate” means, as to any person, a person which controls, is controlled by or is under common control with such person, and

(vii) the term “person” shall mean an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.

(b) Capital Structure; Ownership of Bank Common Stock .

(i) The authorized capital stock of Bank consists of 50,000 shares of common stock, $ 10.00 par value per share, of which 50,000 shares are outstanding (the “Bank Common Stock”). All outstanding shares of Bank Common Stock have been duly authorized and validly issued and are fully paid and, except as provided by Section 11-103-405(5), 11-103-201, 11-103-202 and 11-103-203 of the Colorado Banking Code, non-assessable and not subject to preemptive rights. The Company owns all of the issued and outstanding shares of its Subsidiaries free and clear of all liens, encumbrances, equities or claims.

(ii) Except for this Agreement and any arrangements or agreements described in Section 3.1(b)(ii) of the Bank Disclosure Schedule, (A) there are no outstanding options, warrants, calls, rights, commitments or agreements of any character to which Bank or

any of its Affiliates (as defined herein) is a party or by which any of the foregoing are bound obligating Bank or its Affiliates to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of Bank or to grant, extend or enter into any such option, warrant, call, right, commitment or agreement, (B) there are no outstanding contractual obligations of Bank or any of its Affiliates to repurchase, redeem or otherwise acquire any shares of capital stock of Bank, and (C) there are no outstanding securities of any kind convertible into or exchangeable for the capital stock of Bank (or any interest therein). There is no agreement of any kind to which Bank is a party that gives any person any right to participate in the equity, value or income of, or to vote (x) in the election of directors or officers of, or (y) otherwise with respect to the affairs of Bank.

(c) Authority; No Violation . Each of Company and Bank has all requisite corporate power and authority to enter into this Agreement and the other Transaction Agreements, as applicable, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, and, to the extent execution by Company and Bank is required, the other Transaction Agreements and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Company and Bank, including the approval of this Agreement and the Merger by Company as the sole shareholder of Bank. This Agreement has been duly executed and delivered by Company and Bank, and (assuming due authorization, execution and delivery by Commerce) constitutes the valid and binding obligations of Company and Bank, enforceable against Company and Bank in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(i) Except as set forth in Section 3.1(c)(i) of the Bank Disclosure Schedule, subject to approval by the appropriate regulatory agencies, the execution, delivery and performance of this Agreement and the other Transaction Agreements by Company and Bank do not, and the consummation of the transactions contemplated hereby will not, constitute (x) a breach or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Company or Bank to which Company or Bank (or any of its properties) is subject, except where any such breach, violation or default would not have a Material Adverse Effect, (y) a breach or violation of, or a default under, the charter or bylaws of Company or Bank, or (z) 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 Company or Bank 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 Company or Bank is a party, or to which any of its respective properties or assets may be bound or affected except where any such breach, violation or default would not have a Material Adverse Effect.

(ii) No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign (a “Governmental Entity”), is required by or with respect to Company or Bank in connection with the execution and delivery of this

Agreement or the other Transaction Agreements or the consummation by Company or Bank of the transactions contemplated hereby or thereby, which, if not made or obtained, would have a Material Adverse Effect on Company or Bank or on the ability of Company or Bank to perform its respective obligations hereunder or thereunder on a timely basis, or on Commerce’s ability to own, possess or exercise the rights of an owner with respect to the business and assets of Bank, except for the filing of applications and notices with regulatory authorities.

(d) Financial Statements . Bank has previously delivered to Commerce copies of the financial statements of Bank, as of December 31, 2006, consisting of balance sheets as of December 31, 2005 and 2006 and the related statements of income, stockholders’ equity and cash flows for the years ended December 31, 2005 and 2006, inclusive, accompanied by the report of Fortner, Bayens, Levkulich & Co., P.C., independent auditors with respect to Bank (the financial statements of Bank referred to in this clause being hereinafter sometimes referred to as the “Bank Financial Statements”). The financial statements referred to in this Section 3.1(d) (including the related notes, where applicable) fairly present the results of the operations and changes in shareholders’ equity and financial condition of Bank as of the dates and for the respective periods therein set forth. Each of such statements (including the related notes, where applicable) has been prepared, in accordance with United States generally accepted accounting principles (“GAAP”) consistently applied during the periods involved, except in each case as indicated in such statements (including the Independent Accountants’ Report in the case of the Bank Financial Statements) or in the notes thereto. The books and records of Bank have been, and are being, maintained where required in material compliance with GAAP and any other applicable legal and accounting requirements and, where such books and records purport to reflect any transactions, the transactions so reflected are actual transactions. Bank has no material liabilities or obligations of a type which would be included in a balance sheet prepared in accordance with GAAP whether related to tax or non-tax matters, accrued or contingent, due or not yet due, liquidated or unliquidated, or otherwise, except as and to the extent disclosed or reflected in the balance sheet of Bank as of December 31, 2006.

(e) Compliance with Applicable Laws . Company and Bank hold, and at all relevant times have held, all material permits, licenses, variances, exemptions, orders, approvals, franchises and rights of all Governmental Entities necessary for the lawful operation of the businesses of Bank (the “Bank Permits”). Company and Bank are in compliance and have complied with the terms of the Bank Permits, except where the failure so to comply, individually or in the aggregate, would not have a Material Adverse Effect on Company or Bank. The business of Company or Bank is not being conducted in violation of any law, ordinance or regulation of any Governmental Entity, except for possible violations which, individually or in the aggregate, do not, and, insofar as reasonably can be foreseen, in the future will not, have a Material Adverse Effect on Company or Bank. Except for routine examinations by Federal or state Governmental Entities charged with the supervision or regulation of banks or bank holding companies or engaged in the insurance of bank deposits (“Bank Regulators”), no investigation by any Governmental Entity with respect to Company or Bank is pending or, to the knowledge of Company or Bank, threatened, and no proceedings by any Bank Regulator are pending or, to the knowledge of Company or Bank, threatened which seek to revoke or materially limit any of the Bank Permits. Neither Company nor Bank offers or sells insurance and/or securities products, including but not limited to annuity products, for their own account or the account of others, except as described in Section 3.1(e) of the Bank Disclosure Schedule.

(f) Litigation . Except as set forth in Section 3.1(f) of the Bank Disclosure Schedule, there is no suit, action, proceeding, arbitration or investigation (“Litigation”) pending to which Bank is a party or by which any of such persons or their respective assets may be bound or, to the knowledge of Bank, threatened against or affecting Bank, or challenging the validity or propriety of the transactions contemplated hereby which, if adversely determined, would, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on Bank or on the ability of Bank to perform its obligations under this Agreement in a timely manner, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Bank.

(g) Taxes . Except as set forth in Section 3.1(g) of the Bank Disclosure Schedule, Company and Bank have timely filed all Tax Returns (as defined below) required to be filed by them, and have timely paid and discharged all Taxes (as defined below) due in connection with or with respect to the filing of such Tax Returns and have timely paid all other Taxes as are due, except such as are being contested in good faith by appropriate proceedings and with respect to which Bank is maintaining reserves adequate for their payment. The liability for Taxes set forth on each such Tax Return adequately reflects the Taxes required to be reflected on such Tax Return, and the Bank Financial Statements reflect as liabilities all Taxes that have accrued but are unpaid. For purposes of this Agreement, “Tax” or “Taxes” shall mean taxes, charges, fees, levies, and other governmental assessments and impositions of any kind, payable to any federal, state, local or foreign governmental entity or taxing authority or agency, including, without limitation, (a) income, franchise, profits, gross receipts, estimated, ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, disability, employment, social security, workers compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, (b) custom duties, imposts, charges, levies or other similar assessments of any kind, and (c) interest, penalties and additions to tax imposed with respect thereto, and “Tax Returns” shall mean returns, reports, and information statements with respect to Taxes required to be filed with the United States Internal Revenue Service or any other governmental entity or taxing authority or agency, domestic or foreign, including, without limitation, , combined and unitary tax returns. Company has been an “S Corporation” within the meaning of Section 1361(a) of the Internal Revenue Code (the “Code”) continuously since January 1, 1997 and will continue to be an S Corporation until the Closing Date (the “Recognition Period”). Bank has not acquired or will acquire any property during the Recognition Period from a “C Corporation” within the meaning of Section 1361(a)(2) of the Code the basis of which in the hands of the acquirer was determined by reference to the basis in the hands of a C Corporation. No Tax will be imposed by Section 1374 of the Code in connection with the Merger. Except as set forth in Section 3.1(g) of the Bank Disclosure Schedule, to the knowledge of Bank, but such knowledge qualification shall only apply to (i), (ii) and (iii), below: (i) there are no liens with respect to Taxes (other than current Taxes not yet due and payable) upon any of the assets or properties of Bank, (ii) no material issue relating to Taxes of Bank has been raised in writing by any taxing authority in any audit or examination which can result in a proposed adjustment or assessment by a governmental authority in a taxable period (or portion thereof) ending on or before the Closing Date, (iii) Bank has duly and timely withheld from all payments (including employee salaries, wages and other compensation paid to independent contractors, creditors, stockholders or other third parties) and paid over to the appropriate taxing authorities all amounts required to be so withheld and paid over for all periods

for which the statute of limitations has not expired under all applicable laws and regulations and have complied with the applicable information reporting requirements under Part III, Subchapter A of Chapter 61 of the Code and similar state and local information reporting requirements, (iv) as of the Closing Date, Bank shall not be a party to, be bound by or have any obligation under, any tax sharing agreement or similar contract or arrangement or any agreement that obligates it to make any payment computed by reference to the income taxes, taxable income or taxable losses of any other person, (v) there is no contract or agreement, plan or arrangement by Bank covering any person that, individually, collectively, or together with this Agreement, could give rise to the payment of any material amount that would not be deductible by Bank by reason of section 280G of the Code, (vi) Bank has not been a United States real property holding corporation within the meaning of section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code, (vii) Bank has not been a member of an affiliated group filing a federal income tax return and (B) has no liability for the income taxes of any person under Treasury Regulation section 1.1502-6(a) (or any similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise, (viii) neither Company nor Bank has waived any statute of limitations or agreed to any extension of time for assessment in respect of Taxes, (ix) neither Company nor Bank has entered into any closing or other agreement with any taxing authority which affects any taxable year of Bank, (x) neither Company nor Bank has applied for, been granted, or agreed to any accounting method change since December 31, 2006, and (xi) Bank has been and will be a “Qualified Subchapter S Subsidiary” within the meaning of Section 1361(b)(3)(B) of the Code throughout the Recognition Period.

(h) Certain Agreements . Section 3.1(h) of the Bank Disclosure Schedule sets forth a listing of all of the following material contracts and other agreements, oral or written (which are currently in force or which may in the future be operative in any respect) to which Bank is a party or by or to which Bank or any of its assets or properties are bound or subject: (i) consulting agreements not terminable on six months or less notice involving the payment of more than $25,000 per annum, or union, guild or collective bargaining agreements covering any employees in the United States, (ii) agreements with any officer or other key employee of Bank (x) providing any term of employment or (y) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving Bank of the nature contemplated by this Agreement, (iii) any agreement or plan, any of the benefits of which will be increased, or the vesting 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, (iv) contracts and other agreements for the sale or lease (other than where Bank is a lessor) of any assets or properties (other than in the ordinary course of business) or for the grant to any person (other than to Bank) of any preferential rights to purchase any assets or properties, (v) contracts and other agreements relating to the acquisition by Bank of any operating business or entity or any interest therein, (vi) contracts or other agreements under which Bank agrees to indemnify any party, other than in the ordinary course of business, consistent with past practice, or to share a tax liability of any party, (vii) contracts and other agreements containing covenants restricting Bank from competing in any line of business or with any person in any geographical area or requiring Bank to engage in any line of business, (viii) contracts or other agreements (other than contracts in the ordinary course of their banking business) relating to the borrowing of money by Bank, or the direct or indirect guaranty by Bank of any obligation for, or an

agreement by Bank to service, the repayment of borrowed money, or any other contingent obligations of Bank in respect of indebtedness of any other person, (ix) contracts or other agreements the termination of which by Bank in advance of its stated termination date imposes a termination fee, penalty or similar payment requirement and the amount thereof, and (x) any other material contract or other agreement whether or not made in the ordinary course of business, but shall not include any contract or agreement made with Bank with respect to ordinary and customary deposit arrangements or loan agreements entered into by Bank in the ordinary course of its business. There have been delivered or made available to Commerce true and complete copies of all of the contracts and other agreements set forth in Section 3.1(h) of the Bank Disclosure Schedule and in any other Section of the Bank Disclosure Schedule. Except as set forth in Section 3.1(h) of the Bank Disclosure Schedule, each such contract and other agreement is in full force and effect and constitutes a legal, valid and binding obligation of Bank, and to the best knowledge of Bank, each other party thereto, enforceable in accordance with its terms subject, as to enforceability, to bankruptcy, insolvency, and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles. Bank has not received any written, or, to the knowledge of Bank, any oral, notice of termination or intention to terminate from any other party to such contract or agreement. Bank is not or, to the best knowledge of Bank, any other party to any such contract or agreement in violation or breach of or default under any such contract or agreement (or with or without notice or lapse of time or both, would be in violation or breach of or default under any such contract or agreement), which violation, breach or default has had or would have, individually or in the aggregate, a Material Adverse Effect on Bank.

(i) Benefit Plans . Section 3.1(i) of the Bank Disclosure Schedule lists all the employee benefit plans (as defined in Sections (3)(3) or 3(37) of the Employee Retirement Income Security Act of 1974 (“ERISA”)), health, welfare, supplemental unemployment benefit, bonus, pension, profit sharing, 401(k), deferred compensation, stock compensation, stock purchase, retirement, medical, dental, post-termination benefits (including, but not limited to, medical or dental or life insurance), legal, disability and similar plans or arrangements or practices relating to employees of Bank (“Employees”) or former Employees which Bank has established or maintained, or to which Bank has contributed or have had any obligation to contribute at any time during the five-year period ending on the date hereof (the “Employee Plans”). Section 3.1(i) of the Bank Disclosure Schedules includes (i) a copy of each written Employee Plan document (and, in the case of any unwritten Employee Plan, a description thereof), (ii) the most recent summary plan description for each Employee Plan if any such description was required, (iii) the most recent Form 5500s (if applicable), (iv) the most recent audited financial reports (if any), (v) any related trust agreements and all amendments thereto, (vi) the most recent Internal Revenue Service determination letter for each Employee Plan intended to be qualified under Section 401(a) of the Code, and (vii) all other required reports and supporting schedules filed with any governmental agency in respect of the Employee Plans for the three most recent years.

Except as set out in Section 3.1(i) of the Bank Disclosure Schedules:

(i) All of the Employee Plans are and have been established, registered, qualified, invested and administered, in all material respects, in accordance with their terms and all Laws applicable to the Employee Plans, including without limitation, ERISA, and

each Employee Plan which is intended to be qualified under Section 401(a) of the Code satisfies the requirements for such qualification.

(ii) All obligations regarding the Employee Plans have been satisfied and there are no outstanding defaults or violation of any requirement by any party to any Employee Plan and no Taxes, penalties or fees are owing under or with respect to any of the Employee Plans. No taxes, penalties or fees will become due after Closing based solely on facts in existence on or before Closing. Bank, as well as the Employee Plans, have no material current or threatened liability of any kind to any person, including but not limited to any government agency, other than for payment of benefits in the ordinary course.

(iii) All contributions or premiums required to be made by Bank under the terms of each Employee Plan have been made in a timely fashion in accordance with ERISA and the terms of the Employee Plans.

(iv) There have been no improper withdrawals, applications or transfers of assets from any Employee Plan or the trusts or other funding media relating thereto, and neither Bank nor any of its agents has been in breach of any fiduciary obligation with respect to the administration of the Employee Plans or the trusts or other funding media relating thereto.

(v) No prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code has occurred with respect to an Employee Plan or any trust created thereunder for which an exemption does not exist.

(vi) To the knowledge of Bank no Employee Plan, nor any related trust or other funding medium thereunder, is subject to any pending investigation, examination or other proceeding, action or claim initiated by any governmental agency or instrumentality, or by any other party (other than routine claims for benefits), and there exists no state of facts which after notice or lapse of time or both could reasonably be expected to give rise to any such investigation, examination or other proceeding, action or claim.

(vii) All material filings required by ERISA and the Code as to each Employee Plan have been timely filed, and all material notices and disclosures to participants in the Employee Plans required by ERISA or the Code have been timely provided.

(viii) Neither Bank nor any other Person that, together with Bank, would be treated as a single employer under Section 414 of the Code, has ever established, maintained or been obligated to contribute to, or otherwise participated in, any multiemployer plan as defined in Section 3(37)(A) of Title I of ERISA and/or any pension plan as described in Section 3(2) of Title I of ERISA.

(ix) None of the Employee Plans provides medical or other benefits not determinable in advance to Employees who have terminated employment with Bank or to the beneficiaries or dependents of such Employees, other than benefits required to be furnished under Part 6 of Title I of ERISA and/or Section 4980B of the Code.

(x) No changes to any Employee Plan have been promised and no amendments or changes to an Employee Plan will be made or promised before the Effective

Time, except as otherwise permitted by this Agreement or except to the extent agreed to by Commerce in writing.

(xi) The Employee Plans and each fiduciary (as defined in Section 3(21) of ERISA) of the Employee Plans are in compliance in all material respects with all applicable requirements (including nondiscrimination requirements in effect as of the date hereof) of the Code, including, but not limited to, Sections 79, 105, 106, 125, 401, 501, and 4975 of the Code. For purposes of this Section 3.1(i), noncompliance with the Code or ERISA is material if such noncompliance could have a Material Adverse Effect on the condition of one or more of the Employee Plans or of Bank, either as of the Effective Time or upon discovery of the noncompliance.

(xii) All assets of any retirement plan may be readily liquidated within five (5) business days without incurring any penalty or cost, other than ordinary sales commission expenses.

(xiii) There is no impediment to termination of any Employee Plan by action of Bank’s Board of Directors.

(j) Agreements with Bank or Other Regulators .

Except as set forth in Section 3.1(j) of the Bank Disclosure Schedule, Bank is not a party to any written agreement or memorandum of understanding with, or a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or is a recipient of any extraordinary supervisory letter from, or has adopted any board resolutions at the request of, any Bank Regulator which restricts materially the conduct by Bank of their businesses, or in any manner relates to their capital adequacy, credit policies, community reinvestment, loan underwriting or documentation or management, nor has Bank been advised by any Bank Regulator that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, extraordinary supervisory letter, commitment letter or similar submission, or any such board resolutions.

(k) Absence of Certain Changes or Events.

Except as set forth in Section 3.1(k) of the Bank Disclosure Schedule, since December 31, 2006 (i) there has not been any change, or any event involving a prospective change, in the business, financial condition or results of operations or, to the knowledge of Bank, prospects of Bank or in the relationship of Bank with respect to its employees, creditors, suppliers, distributors, customers or others with whom it has business relationships, which has had, or would be reasonably likely to have, a Material Adverse Effect on Bank, (ii) Bank has conducted its business in the ordinary course consistent with its past practices and Bank has not taken any action or entered into any transaction, and, to the knowledge of Bank, no event has occurred, that would have required Bank’s consent pursuant to Section 4.1 of this Agreement if such action had been taken, transaction entered into or event had occurred, in each case, after the date of this Agreement, nor has Bank entered into any agreement, plan or arrangement to do any of the foregoing, (iii) there have been no dividends or other distributions declared, set aside or

paid in respect of Bank Common Stock, nor has any action with respect to Bank Common Stock proscribed by Section 4.1 of this Agreement occurred or been taken, and (iv) Bank has not entered into any employment contract with any director, officer or salaried employee, paid any or made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any of its officers, employees or directors, increased the rate of compensation, if any, or instituted or made any material increases in any officer’s, employee’s or director’s welfare, retirement or similar plan or arrangement, other than annual and merit increases made in accordance with past practices and procedures.

(l) Undisclosed Liabilities . Except as set forth in Section 3.1(l) of the Bank Disclosure Schedule, and except (i) for those liabilities or obligations that are fully reflected or reserved against in the balance sheet as of December 31, 2006 of Bank included in the Bank Financial Statements or (ii) obligations incurred in the ordinary course of business consistent with past practice since December 31, 2006, Bank has not incurred any debt, liability or obligation of any nature whatsoever (whether absolute, accrued or contingent or otherwise and whether due or to become due). Except as set forth in Section 3.1(l) of the Bank Disclosure Schedule, no agreement pursuant to which any loans or other assets have been or will be sold by Bank entitle the buyer of such loans or other assets, unless there is material breach of a representation or covenant by Bank not relating to the payment or other performance by an obligor of such loan or other asset of its obligations thereunder, to cause Bank to repurchase such loan or other asset or the buyer to pursue any other form of recourse against Bank.

(m) Governmental Reports . Bank has timely filed all material reports, registrations and statements, together with any amendments required to be made with respect thereto with any Governmental Entity and have paid all fees and assessments due and payable in connection therewith. Except as set forth in Section 3.1(m) of the Bank Disclosure Schedule and except for normal examinations conducted by a Governmental Entity in the regular course of business of Bank, to the knowledge of Bank, no Governmental Entity has initiated any proceeding or investigation into the business or operations of Bank. Except as set forth in Section 3.1(m) of the Bank Disclosure Schedule, there is no material unresolved violation, criticism or exception by any Governmental Entity with

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates