EXHIBIT 2
MERGER AGREEMENT
Exhibit 2
AGREEMENT AND PLAN OF MERGER
----------------------------
DATED AS OF SEPTEMBER 5, 2002
BY AND AMONG
NASB FINANCIAL, INC.,
NASB ACQUISITION SUBSIDIARY, INC.,
AND
CBES BANCORP, INC.
Table of Contents
Page
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ARTICLE I The Merger .................................................................................... 2
Section 1.1. Structure of the Merger ........................................................................ 2
Section 1.2. Effect on Shares of CBES Common Stock .......................................................... 2
Section 1.3. Exchange Procedures ............................................................................ 3
Section 1.4. Stock Options; Restricted Stock ................................................................ 5
Section 1.5. Directors and Officers of CBES and Community Bank at Effective Date ............................ 5
Section 1.6. Articles of Incorporation and Bylaws of the Surviving Corporation .............................. 5
Section 1.7. Dissenters' Rights ............................................................................. 6
ARTICLE II Representations and Warranties ................................................................ 6
Section 2.1. Disclosure Letters ............................................................................. 6
Section 2.2. Standards ...................................................................................... 6
Section 2.3. Representations and Warranties of CBES ......................................................... 7
Section 2.4. Representations and Warranties of NASB Holding and Acquisition Sub ............................ 21
ARTICLE III Actions and Conduct Pending the Merger ....................................................... 25
Section 3.1. Regulatory Application ........................................................................ 25
Section 3.2. Conduct of CBES's Business Prior to the Effective Date ........................................ 25
Section 3.3. Forbearance by CBES ........................................................................... 28
Section 3.4. Conduct of NASB Holding's and Acquisition Sub's Businesses Prior to the Effective Date ........ 32
ARTICLE IV Covenants .................................................................................... 32
Section 4.1. Acquisition Proposals ......................................................................... 32
Section 4.2. Certain Policies and Actions of CBES .......................................................... 33
Section 4.3. Access and Information ........................................................................ 33
Section 4.4. Certain Filings, Consents and Arrangements .................................................... 34
Section 4.5. Anti-takeover Provisions ...................................................................... 35
Section 4.6. Additional Actions ............................................................................ 35
Section 4.7. Publicity ..................................................................................... 35
Section 4.8. Stockholders Meeting .......................................................................... 35
Section 4.9. Proxy Statement ............................................................................... 35
Section 4.10. Notification of Certain Matters .............................................................. 36
Section 4.11. Employees .................................................................................... 36
Section 4.12. Indemnification .............................................................................. 38
Section 4.13. Phase I and Phase II Environmental Assessments of Community Bank's Primary Banking
Facility ..................................................................................... 40
ARTICLE V Conditions to Consummation ................................................................... 40
Section 5.1. Conditions to Each Party's Obligations ........................................................ 40
Section 5.2. Conditions to the Obligations of NASB Holding ................................................. 41
Section 5.3. Conditions to the Obligations of CBES ......................................................... 41
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Table of Contents
continued
Page
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ARTICLE VI Data Processing ............................................................ 41
Section 6.1. Sample Data ................................................................. 41
Section 6.2. Information for Check Ordering .............................................. 42
Section 6.3. Installation of Data Circuits ............................................... 42
ARTICLE VII Termination ................................................................ 42
Section 7.1. Termination ................................................................. 42
Section 7.2. Termination Fee ............................................................. 43
Section 7.3. Effect of Termination ....................................................... 44
ARTICLE VIII Closing and Effective Date ................................................. 44
Section 8.1. Effective Date .............................................................. 44
Section 8.2. Deliveries at Closing ....................................................... 44
ARTICLE IX Certain Other Matters .................................................... 44
Section 9.1. Certain Definitions; Interpretation ......................................... 44
Section 9.2. Survival .................................................................... 45
Section 9.3. Waiver; Amendment ........................................................... 45
Section 9.4. Counterparts ................................................................ 45
Section 9.5. Governing Law ............................................................... 45
Section 9.6. Expenses .................................................................... 45
Section 9.7. Notices ..................................................................... 45
Section 9.8. Entire Agreement; etc ....................................................... 46
Section 9.9. Specific Performance ........................................................ 46
Section 9.10. Successors and Assigns; Assignment ......................................... 47
Exhibit A Acquisition Sub Articles of Incorporation
ii
Agreement and Plan of Merger
This is an Agreement and Plan of Merger, dated as of the 5th day of
September, 2002 ("Agreement"), by and among NASB Financial, Inc., a Missouri
corporation ("NASB Holding"), NASB Acquisition Subsidiary, Inc., a Missouri
corporation ("Acquisition Sub"), and CBES Bancorp, Inc., a Delaware corporation
("CBES")
Recitals
A. The Board of Directors of each of CBES, NASB Holding, and
Acquisition Sub (i) has determined that this Agreement and the business
combination and related transactions contemplated hereby are in the best
interests of NASB Holding and CBES, respectively, and in the best interests of
their respective stockholders and (ii) has approved, at meetings of each of such
Boards of Directors, this Agreement.
B. CBES is the beneficial owner of 100 shares of the outstanding
capital stock of Community Bank of Excelsior Springs, a Savings Bank, a
federally chartered savings bank with its principal office in Excelsior Springs,
Missouri ("Community Bank") which shares represent 100% of the outstanding
shares of capital stock of Community Bank.
C. Community Bank is the beneficial owner of 1,000 shares of the
outstanding capital stock of CBES Service Corporation ("Service Corporation"), a
Missouri corporation, which shares represent 100% of the outstanding shares of
capital stock of Service Corporation.
D. NASB Holding is the beneficial owner of 2,375,112 shares of the
outstanding common stock of North American Savings Bank, F.S.B., a federally
chartered savings bank with its principal office in Grandview, Missouri ("NASB
Bank"), which shares represent 100% of the outstanding shares of capital stock
of NASB Bank.
E. NASB Holding is the beneficial owner of 1,000 shares of the
outstanding common stock of Acquisition Sub, which shares represent 100% of the
outstanding shares of capital stock of Acquisition Sub.
F. NASB Holding, CBES and Acquisition Sub desire to make certain
representations, warranties and agreements in connection with the business
combination and related transactions provided for herein and to prescribe
various conditions to such transactions.
ACCORDINGLY, in consideration of the promises, the mutual covenants
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
Agreement
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ARTICLE I
The Merger
Section 1.1. Structure of the Merger. On the Effective Date (as
defined in Section 8.1 below), Acquisition Sub shall merge with and into CBES
(the "Merger"), the separate corporate existence of Acquisition Sub shall cease
and CBES shall survive and continue to as a corporation, pursuant to the
provisions of, and with the effect provided in the Delaware General Corporate
Law (the "DGCL") and The General and Business Corporation Law of Missouri (the
"GBCLM"). The name of CBES, as the surviving corporation in the Merger, shall be
CBES Bancorp, Inc. From and after the Effective Date, CBES shall possess all of
the properties and rights and be subject to all of the liabilities and
obligations of CBES, all as more fully described in the DGCL and the GBCLM. NASB
Holding may at any time prior to the Effective Date change the method of
effecting the combination with CBES (including the provisions of this Article I)
if and to the extent it deems such change necessary, appropriate or desirable;
provided, however, that no such change shall (i) alter or change the amount or
kind of consideration to be issued pursuant to the Merger to holders of CBES
Common Stock (as defined in Section 1.2(a) hereof) as provided for in this
Agreement or (ii) materially impede or delay consummation of the transactions
contemplated by this Agreement.
Section 1.2. Effect on Shares of CBES Common Stock.
(a) On the Effective Date of the Merger, by virtue of the Merger,
automatically and without any action on the part of the holder thereof, each
share of common stock, par value .01 per share of CBES ("CBES Common Stock"),
that is issued and outstanding at the Effective Date, other than Excluded Shares
(as defined below) and including CBES Restricted Stock held pursuant to the CBES
Restricted Stock Plan (as defined in Section 1.4(b)), shall be cancelled and
cease to be outstanding and shall be converted into and become the right to
receive a cash payment equal to $17.50; provided, however, that such per share
amount shall be reduced if the Adjusted Stockholders' Equity (as defined in
Section 3.2(g) hereof) of CBES as of the close of business on the last business
day next prior to the Effective Date shall be equal or greater than $13,500,000
and less than $13,900,000, then the cash payment shall be equal to $17.05 per
share; and provided, further that if the Adjusted Stockholders' Equity is less
than $13,500,000, NASB Holding shall have the right to either (i) terminate this
Agreement pursuant to Section 7.1(g) hereof or (ii) consummate the Merger and
provide the holders of CBES Common Stock with a cash payment of $17.05 per share
(the "Merger Consideration"). After the Effective Date, no dividends or other
distributions made or payable by CBES shall accrued for the benefit of or be
payable with respect to, any CBES Common Stock.
(b) "Excluded Shares" shall consist of (i) shares of CBES Common Stock
as to which the respective holders thereof have properly demanded appraisal
rights and have not failed to perfect, have not effectively withdrawn and have
not lost their rights to appraisal and payment pursuant to any applicable law
providing for dissenters' or appraisal rights (the "Dissenters' Shares") and
(ii) shares held by CBES as treasury stock. After the Effective Date, no
dividends or other distributions made or payable by CBES shall accrue for the
benefit of or be payable with respect to, any Dissenters' Shares, and no
interest shall accrue with respect to
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payments due to holders of Dissenters' Shares, unless such accruals are required
by the DGCL or the GBCLM.
(c) On the Effective Date, each Excluded Share, other than Dissenters'
Shares, shall be canceled and retired and shall cease to exist, and no exchange
or payment shall be made with respect thereto. In addition, no Dissenters'
Shares shall be converted into the Merger Consideration pursuant to this Section
1.2, but instead shall be treated in accordance with the procedures set forth in
Section 1.7 of this Agreement.
Section 1.3. Exchange Procedures.
(a) NASB Holding shall mail appropriate transmittal materials ("Letter
of Transmittal") as soon as reasonably practicable after the Effective Date, and
in no event later than five (5) business days thereafter, to each holder of
record of CBES Common Stock as of the Effective Date. A Letter of Transmittal
will be deemed properly completed only if accompanied by certificates
representing all shares of CBES Common Stock to be converted thereby, except as
provided in Section 1.3(h) below.
(b) At and after the Effective Date, each certificate ("CBES
Certificate") representing shares of CBES Common Stock immediately prior to the
Effective Date (except as specifically set forth in Section 1.2) shall represent
only the right to receive cash in an amount equal to the product of the Merger
Consideration multiplied by the number of shares of CBES Common Stock previously
represented by the CBES Certificate.
(c) Prior to the Effective Date, NASB Holding may select a bank or
trust company acceptable to CBES, which shall act as exchange agent (the
"Exchange Agent") for the benefit of the holders of shares of CBES Common Stock,
for exchange in accordance with this Section 1.3. If NASB Holding elects not to
select such a bank or trust company as the Exchange Agent, then NASB Bank shall
be deemed to be the Exchange Agent for all purposes under this Agreement. At the
Effective Date, NASB Holding shall transfer to the Exchange Agent, or set aside
and hold in trust for the benefit of the stockholders of CBES if NASB Bank is
the Exchange Agent, sufficient funds to pay the Merger Consideration to all the
stockholders of CBES.
(d) The Letter of Transmittal (which shall be subject to the
reasonable approval of CBES and NASB Holding) shall (i) specify that delivery
shall be effected, and risk of loss and title to the CBES Certificates shall
pass, only upon delivery of the CBES Certificates to the Exchange Agent, (ii)
specify that the shares of CBES Common Stock have been canceled, that the
consideration to be paid for such shares shall be paid only upon delivery and
surrender of such CBES Certificates (except as provided in Section 1.3(h)
below), and that neither dividends nor interest shall accrue on the cash
consideration payable after the Effective Date of the Merger, (iii) be in a form
and contain any other provisions as NASB Holding may reasonably determine and
(iv) include instructions for use in effecting the surrender of the CBES
Certificates in exchange for the Merger Consideration. Upon the proper surrender
of the CBES Certificates to the Exchange Agent, together with a properly
completed and duly executed Letter of Transmittal, the holder of such CBES
Certificates shall be entitled to receive in exchange therefor, by transfer of
immediately available funds to such account at such financial institution
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as the holder shall direct, or, at the holder's option, by check drawn on a
commercial bank or a savings bank having an office in the Kansas City
metropolitan area, the amount of cash that such CBES Certificates represent the
right to receive pursuant to Section 1.3(b). CBES Certificates so surrendered
shall forthwith be canceled. As soon as practicable, but no later than the
business day next following receipt of the properly completed Letter of
Transmittal and any necessary accompanying documentation, the Exchange Agent
shall distribute cash as provided herein. The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with respect to the shares
of CBES Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such shares for the account of the persons entitled thereto. If
there is a transfer of ownership of any shares of CBES Common Stock not
registered in the transfer records of CBES, the Merger Consideration shall be
issued to the transferee thereof if the CBES Certificates representing such CBES
Common Stock are presented to the Exchange Agent, accompanied by all documents
required, in the reasonable judgment of NASB Holding and the Exchange Agent, (x)
to evidence and effect such transfer and (y) to evidence that any applicable
stock transfer taxes have been paid.
(e) From and after the Effective Date, there shall be no transfers on
the stock transfer records of CBES of any shares of CBES Common Stock. If, after
the Effective Date, CBES Certificates are presented to NASB Holding, they shall
be exchanged for the Merger Consideration deliverable in respect thereof
pursuant to this Agreement in accordance with the procedures set forth in this
Section 1.3.
(f) If NASB Bank is not acting as the Exchange Agent, any portion of
the aggregate amount of cash for the Merger Consideration, to be paid pursuant
to Section 1.2, or any proceeds from any investments thereof that remain
unclaimed by the stockholders of CBES for twelve months after the Effective Date
shall be repaid by the Exchange Agent to NASB Holding upon the written request
of NASB Holding. After such request is made, any stockholders of CBES who have
not theretofore complied with this Section 1.3 shall look only to NASB Holding
for the Merger Consideration deliverable in respect of each share of CBES Common
Stock such stockholder holds, as determined pursuant to Section 1.2 of this
Agreement, without any interest thereon. If outstanding CBES Certificates are
not surrendered prior to the date on which such payments would otherwise escheat
to or become the property of any governmental unit or agency, the unclaimed
items shall, to the extent permitted by any abandoned property, escheat or other
applicable laws, become the property of NASB Holding (and, to the extent not in
its possession, shall be paid over to it), free and clear of all claims or
interest of any person previously entitled to such claims. Notwithstanding the
foregoing, neither the Exchange Agent nor any party to this Agreement (or any
affiliate thereof) shall be liable to any former holder of CBES Common Stock for
any amount delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) NASB Holding and the Exchange Agent shall be entitled to rely upon
CBES's stock transfer books to establish the identity of those persons entitled
to receive the Merger Consideration, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any CBES Certificate, NASB Holding and the Exchange Agent shall
be entitled (i) deposit any Merger Consideration, represented thereby in escrow
with an independent third party and thereafter be relieved with respect to any
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claims thereto, or (ii) to file a suit in interpleader against the competing
parties, deposit the Merger Consideration due with respect to the disputed CBES
Certificate with a court of competent jurisdiction, and thereafter be discharged
from any responsibility to the competing parties.
(h) If any CBES Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such CBES
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent, the posting by such person of a bond in such amount as the Exchange Agent
may direct as indemnity against any claim that may be made against it with
respect to such CBES Certificate, the Exchange Agent shall pay in exchange for
such lost, stolen or destroyed CBES Certificate the Merger Consideration
deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options; Restricted Stock.
(a) At the Effective Date, each option to acquire shares of CBES
Common Stock (a "CBES Option"), whether or not then vested, granted pursuant to
the CBES's 1997 Stock Option and Incentive Plan (the "CBES Option Plan") that is
then outstanding and unexercised shall be deemed vested and exercisable, whether
or not then exercisable, and shall be canceled and terminated and in lieu
thereof the holders of such options shall be paid by CBES in cash (from funds
provided by NASB Holding) in an amount equal to the product of (i) the number of
shares of CBES Common Stock subject to such unexercised option at the Effective
Date and (ii) the amount by which the Merger Consideration per share exceeds the
exercise price per share of such option net of any cash which must be withheld
under federal and state income and employment tax requirements. In the event
that the exercise price of a CBES Option is greater than the Merger
Consideration, then at the Effective Date such CBES Option shall be canceled
without any payment made in exchange therefore. At the Effective Date, the CBES
Option Plan shall be deemed terminated.
(b) Inasmuch as at the Effective Date, all shares of restricted CBES
Common Stock (the "CBES Restricted Stock"), held under the CBES Recognition and
Retention Plan (the "CBES Restricted Stock Plan") are to be canceled, and in
respect of such shares to be paid the Merger Consideration in respect of such
shares to be paid to the holders thereof. At the Effective Date, the CBES
Restricted Stock Plan shall be deemed terminated.
Section 1.5. Directors and Officers of CBES and Community Bank at
Effective Date. The directors and officers of CBES, the directors of Community
Bank and designated officers of Community Bank shall resign effective as of the
Effective Date. Immediately thereafter, NASB Holding shall appoint new officers
and directors to CBES, each to hold office in accordance with the articles of
incorporation and bylaws of CBES until their respective successors are duly
elected or appointed and qualified. The new officers and directors of CBES shall
then appoint new officers and directors of Community Bank, each to hold office
in accordance with the articles of incorporation and bylaws of Community Bank
until their respective successors are duly elected or appointed and qualified.
Section 1.6. Articles of Incorporation and Bylaws of the Surviving
Corporation. The articles of incorporation (attached hereto as Exhibit A) and
bylaws of Acquisition Sub in
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effect immediately prior to the Effective Date shall be the articles of
incorporation and bylaws of the surviving corporation from and after the
Effective Date until amended as provided by law.
Section 1.7. Dissenters' Rights.
(a) NASB Holding shall pay for any Dissenters' Shares in
accordance with applicable law providing for dissenters' or appraisal rights,
and the holders thereof shall not be entitled to receive any Merger
Consideration; provided, that if appraisal rights under applicable law with
respect to any Dissenters' Shares shall have been effectively withdrawn or lost,
such shares will thereupon cease to be treated as Dissenters' Shares and shall
be converted into the right to receive cash in an amount equal to the Merger
Consideration multiplied by the number of shares of CBES Common Stock previously
represented thereby.
(b) CBES shall (i) give NASB Holding prompt written notice of
the receipt of any notice from a stockholder purporting to exercise any
dissenters' rights, (ii) not settle nor offer to settle any demand for payment
without the prior written consent of NASB Holding and (iii) not waive any
failure to comply strictly with any procedural requirements of applicable
corporate statutes.
ARTICLE II
Representations and Warranties
Section 2.1. Disclosure Letters. Prior to the execution and
delivery of this Agreement, CBES and NASB Holding each shall have delivered to
the other a letter (each, its "Disclosure Letter") setting forth, among other
things, facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the section or subsection, as the
case may be, of this Agreement to which they relate); provided, that (a) no such
fact, circumstance or event is required to be set forth in the Disclosure Letter
as an exception to a representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standards established by Section 2.2 and (b) the mere
inclusion of a fact, circumstance or event in a Disclosure Letter shall not be
deemed an admission by a party that such item represents a material exception or
that such item is reasonably likely to result in a Material Adverse Effect (as
defined in Section 2.2(b)).
Section 2.2. Standards.
(a) No representation or warranty of CBES Bank contained in
Section 2.3, and no representation or warranty of NASB Holding or Acquisition
Sub contained in Section 2.4, shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or warranty, on account
of the existence of any fact, circumstance or event unless, as a direct or
indirect consequence of such fact, circumstance or event, individually or taken
together with all other facts, circumstances or events inconsistent with any
paragraph of Sections 2.3 or 2.4, as applicable, there is reasonably likely to
exist a Material Adverse Effect. CBES's representations, warranties and
covenants contained in this Agreement shall not be deemed to be
6
untrue or breached as a result of effects arising solely from actions taken
pursuant to this Agreement or in compliance with a written request of NASB
Holding.
(b) As used in this Agreement, the term "Material Adverse
Effect" means an effect which is material and adverse to the business, financial
condition or results of operations of NASB Holding, Acquisition Sub, CBES, as
the context may dictate, and its Subsidiaries (as defined herein) taken as a
whole; provided, however, that any such effect resulting from any (i) changes in
laws, rules or regulations or GAAP or regulatory accounting requirements or
interpretations thereof that apply to either NASB Holding, Acquisition Sub, and
CBES, as the case may be, or to similarly situated financial and/or depository
institutions, (ii) changes in economic conditions affecting financial
institutions generally, including but not limited to, changes in the general
level of market interest rates, (iii) fees associated with the transactions
contemplated by this Agreement or (iv) changes to this Agreement requested by
NASB Holding shall not be considered in determining if a Material Adverse Effect
has occurred.
(c) For purposes of this Agreement, "knowledge" shall mean,
with respect to a party hereto, best knowledge after a due inquiry of any of the
CEO, Chairman, Vice Chairman, President or CFO of that party.
Section 2.3. Representations and Warranties of CBES. Subject to
Sections 2.1 and 2.2, CBES represents and warrants to NASB Holding and
Acquisition Sub that, except as disclosed in CBES's Disclosure Letter:
(a) Organization.
(i) CBES is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
registered as a savings and loan holding company under the HOLA. Community Bank
is a stock savings association duly organized, validly existing and in good
standing under the laws of the United States of America and is a wholly-owned
Subsidiary (as defined below) of CBES. Each Subsidiary of CBES other than
Community Bank is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of CBES and its Subsidiaries
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. As used in this
Agreement, unless the context requires otherwise, the term "Subsidiary" when
used with respect to any party means any corporation or other legal entity,
which is consolidated with such party for financial reporting purposes or which
is controlled, directly or indirectly, by such party through a sufficient number
of shares or other evidence of ownership of such corporation or other
organization to have the power to elect a majority of the board of directors or
otherwise to control such corporation or other organization.
(ii) CBES and each of its Subsidiaries has the requisite
corporate power and authority and is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
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(iii) CBES's Disclosure Letter sets forth all of CBES's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which CBES
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each of CBES's Subsidiaries, as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to direct
investments in equity ownership interests. CBES owns, either directly or
indirectly, all of the outstanding capital stock of each of its Subsidiaries. No
Subsidiary of CBES other than Community Bank is an "insured depository
institution" as defined in the Federal Deposit Insurance Act, as amended
("FDIA"), and the applicable regulations thereunder. All of the shares of
capital stock of CBES's Subsidiaries are fully paid, nonassessable and not
subject to any preemptive rights and are owned by CBES or a Subsidiary of CBES
free and clear of any claims, liens, encumbrances or restrictions (other than
those imposed by applicable federal and state securities laws), and there are no
agreements or understandings with respect to the voting or disposition of any
such shares.
(iv) The deposits of Community Bank are insured by the
Savings Association Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC") to the extent provided in the FDIA.
(b) Capital Structure.
(i) The authorized capital stock of CBES consists of
4,000,000 shares of CBES Common Stock, par value $.01 per share, and 500,000
shares of preferred stock, par value $.01 per share. As of the date of this
Agreement (A) 1,031,851 shares of CBES Common Stock had been issued, of which
875,805 shares of CBES Common Stock were issued and outstanding, (B) no shares
of CBES preferred stock were issued and outstanding, (C) no shares of CBES
Common Stock were reserved for issuance, except that 102,495 shares of CBES
Common Stock were reserved for issuance pursuant to the CBES Option Plan and
40,998 shares of CBES Common Stock were reserved for issuance pursuant to the
CBES Restricted Stock Plan, (D) no shares of CBES preferred stock were held by
CBES and (E) 156,046 shares of CBES Common Stock were held by CBES in its
treasury or by its Subsidiaries. The authorized capital stock of Community Bank
consists of 4,000,000 shares of common stock, par value $.01 per share (the
"Community Bank Common Stock"), and 500,000 shares of preferred stock. As of the
date of this Agreement, 100 shares of such common stock were outstanding, no
shares of such preferred stock were outstanding and all outstanding shares of
such common stock were, and as of the Effective Date will be, owned both legally
and beneficially by CBES. The authorized capital stock of Service Corporation
consists of 30,000 shares of common stock, par value $1.00 per share and no
shares of preferred stock. As of the date of this Agreement, 1,000 shares of
such common stock were outstanding and all outstanding shares of such common
stock were, and as of the Effective Date will be, owned both legally and
beneficially by Community Bank. All outstanding shares of capital stock of CBES,
Community Bank and Service Corporation are duly authorized and validly issued,
fully paid and nonassessable and not subject to any preemptive rights and, with
respect to shares of CBES held by CBES in its treasury or by its Subsidiaries
and shares of Community Bank and Service Corporation, are free and clear of all
liens, claims, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws) and there are no agreements or
understandings with respect to the voting or
8
disposition of any such shares. CBES's Disclosure Letter sets forth a complete
and accurate list of all outstanding options to purchase CBES Common Stock that
have been granted pursuant to the CBES Option Plan, including the names of the
optionees, dates of grant, exercise prices, dates of vesting, dates of
termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness
of CBES having the right to vote on any matters on which stockholders may vote
are issued or outstanding.
(iii) As of the date of this Agreement, except for
options granted pursuant to the CBES Option Plan, neither CBES nor any of its
Subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, rights, convertible securities, commitments or agreements of
any character obligating CBES or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional shares of capital
stock of CBES or any of its Subsidiaries or obligating CBES or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. As of the date hereof,
there are no outstanding contractual obligations of CBES or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of CBES or any of its Subsidiaries.
(c) Authority. CBES has all requisite corporate power and
authority to enter into this Agreement, and, subject to approval of this
Agreement by the requisite vote of CBES's stockholders and receipt of all
required regulatory or governmental approvals, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and, subject
to the approval of this Agreement by CBES's stockholders, the consummation of
the transactions contemplated hereby, have been duly authorized by all necessary
corporate actions on the part of CBES. This Agreement has been duly and validly
executed and delivered by CBES and constitutes a valid and binding obligation of
CBES, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative
vote of a majority of the outstanding shares of CBES Common Stock entitled to
vote on this Agreement is the only vote of the stockholders of CBES required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby (the "Stockholders Approvals"). CBES has
received the written opinion of ▇▇▇▇▇ Financial LLC to the effect that, as of
the date hereof, the Merger Consideration to be received by CBES's stockholders
is fair, from a financial point of view, to such stockholders.
(e) No Violations; Consents. The execution, delivery and
performance of this Agreement by CBES does not, and the consummation of the
transactions contemplated hereby will not, constitute (i) assuming receipt of
all Requisite Regulatory Approvals (as defined in Section 2.4(d)) and requisite
stockholder approvals, a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license to which CBES or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) a breach or violation of, or a default under, the
certificate of incorporation or bylaws of CBES or the similar organizational
documents of any of its Subsidiaries or (iii) a breach or violation of, or
9
a default under (or an event which, with due notice or lapse of time or both,
would constitute a default under), or result in the termination of, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the properties or
assets of CBES or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which CBES or any of its Subsidiaries is
a party, or to which any of their respective properties or assets may be
subject. The consummation by CBES of the transactions contemplated hereby will
not require any approval, consent or waiver under any such law, rule,
regulation, judgment, decree, order, governmental permit or license or the
approval, consent or waiver of any other party to any such agreement, or
instrument, other than (x) the approval of the holders of a majority of the
outstanding shares of CBES Common Stock entitled to vote thereon, (y) the
consent of the Office of Thrift Supervision ("OTS") and (z) such other required
regulatory consents. As of the date hereof, the executive officers of CBES know
of no reason pertaining to CBES why any of the approvals referred to in this
Section 2.3(e) should not be obtained without the imposition of any material
condition or restriction described in the last sentence of Section 5.1(b).
(f) Reports and Financial Statements.
(i) CBES and each of its Subsidiaries have each timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file with (a) the FDIC, (b) the OTS, (c) the National Association of Securities
Dealers, Inc. ("NASD"), (d) the Missouri Department of Insurance and (e) the
Securities and Exchange Commission ("SEC") (collectively, "CBES's Reports") and,
to CBES's knowledge have paid all fees and assessments due and payable in
connection therewith. As of their respective dates, none of CBES's Reports
contained any untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. All of CBES's Reports filed with the SEC complied in all material
respects with the applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the SEC
promulgated thereunder.
(ii) Each of the financial statements of CBES included in
CBES's Reports complied as to form, as of their respective dates of filing with
the SEC, in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto and
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited financial statements, as permitted by the SEC). Each of
the consolidated statements of condition contained or incorporated by reference
in CBES's Reports (including in each case any related notes and schedules) and
each of the consolidated statements of operations, consolidated statements of
cash flows and consolidated statements of changes in stockholders' equity,
contained or incorporated by reference in CBES's Reports (including in each case
any related notes and schedules) fairly presented (a) the financial position of
the entity or entities to which it relates as of its date and (b) the results of
operations, stockholders' equity and cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements, to normal year-end
adjustments that are not material in amount or effect).
10
(g) Absence of Certain Changes or Events. Except as disclosed
in CBES's Reports filed on or prior to the date of this Agreement, since June
30, 2001, (i) CBES and its Subsidiaries have not incurred any liability, except
in the ordinary course of their business consistent with past practice and
except for the engagement letter agreements with ▇▇▇▇▇ Financial LLC set forth
in CBES's Disclosure Letter, (ii) CBES and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such businesses
consistent with their past practices and (iii) there has not been any other
event, change or occurrence or continuance of any circumstance which has had, or
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect with respect to CBES and its Subsidiaries. To the knowledge of
CBES, there are no impending termination, expiration, or loss of contracts,
franchises, licenses, permits or other assets that, individually or in the
aggregate, are reasonably likely to have Material Adverse Effect on CBES.
(h) Absence of Claims. No litigation, controversy, claim,
action, suit or other legal administrative or arbitration proceeding before any
court, governmental agency or arbitrator is pending against CBES or any of its
Subsidiaries and to the knowledge of CBES no such litigation, controversy,
claim, action, suit or proceeding has been threatened or asserted in either case
which is reasonably likely to have a Material Adverse Effect with respect to
CBES or its Subsidiaries, or the transactions contemplated by this Agreement, or
upon the ability of CBES to perform its obligations under this Agreement. To the
knowledge of CBES, there are no investigations, reviews or inquiries by any
court or governmental agency pending or threatened against CBES or any of its
Subsidiaries.
(i) Absence of Regulatory Actions. Except as set forth in
CBES's Disclosure Letter, neither CBES nor any of its Subsidiaries has been a
party to any cease and desist order, written agreement or memorandum of
understanding with, or any commitment letter or similar undertaking to, or has
been subject to any action, proceeding, order or directive by, or has been a
recipient of any extraordinary supervisory letter from any federal or state
governmental authority charged with the supervision or regulation of depository
institutions or depository institution holding companies or engaged in the
insurance of bank and/or savings and loan deposits (singularly a "Government
Regulatory Agency;" collectively "Government Regulatory Agencies"), or has
adopted any board resolutions at the request of any Government Regulatory
Agency, or has been advised by any Government Regulatory Agency that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
(j) Taxes. All federal, state, local and foreign tax returns
required to be filed by or on behalf of CBES or any of its Subsidiaries have
been timely filed or requests for extensions have been timely filed and any such
extension has been a permitted automatic extension or has been granted and (in
either case) has not have expired, and all such filed returns are complete and
accurate in all material respects. All taxes shown on such returns, all taxes
required to be shown on returns for which extensions have been granted and all
other taxes required to be paid by CBES or any of its Subsidiaries have been
paid in full or adequate provision has been made for any such taxes, both
current and deferred, on CBES's balance sheet in accordance with GAAP. For
purposes of this Section 2.3(j) and Section 2.4(i), the term "taxes" shall
include all income, franchise, gross receipts, real and personal property, real
11
property transfer and gains, wage and employment taxes. As of the date of this
Agreement, to the knowledge of CBES, there is no audit examination, deficiency
assessment, tax investigation or refund litigation, or any threat of the
foregoing, with respect to any taxes of CBES or any of its Subsidiaries, and, to
the knowledge of CBES, no claim or threat of claim has been made by any
authority in a jurisdiction where CBES or any of its Subsidiaries do not file
tax returns that CBES or any such Subsidiary is subject to taxation in that
jurisdiction. All taxes, interest, additions and penalties due with respect to
completed and settled examinations or concluded litigation relating to CBES or
any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on CBES `s balance sheet in accordance with GAAP. CBES
and its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. CBES and each of its Subsidiaries has withheld and paid all
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, and CBES and each of its Subsidiaries has timely complied, in all
material respects, with all applicable information reporting requirements under
Part III, Subchapter A of Chapter 61 of the IRC and similar applicable state and
local information reporting requirements. Adequate provision for any taxes due
or to become due for CBES or any of its Subsidiaries for the period or periods
reflected on CBES's most recent financial statements has been made and is
reflected on such CBES financial statements. Deferred Taxes of CBES and its
Subsidiaries have been provided for in accordance with GAAP. To the knowledge of
CBES, there is no item of deferred taxable income which will become taxable due
to the consummation of the Merger that is reasonably likely to have a Material
Adverse Effect on CBES or its Subsidiaries, other than as disclosed in CBES's
Disclosure Letter.
(k) Agreements.
(i) Except (w) for arrangements made in the ordinary
course of business, (x) as set forth in CBES's Disclosure Letter, (y) as
disclosed in CBES's Reports filed on or prior to the date of this Agreement or
(z) as contemplated by this Agreement, CBES and its Subsidiaries are not bound
by any material contract (as defined in Item 601(b)(10) of Regulation S-K
promulgated by the SEC) to be performed after the date hereof that has not been
filed with or incorporated by reference to CBES's Reports. Except (1) as
disclosed in CBES's Disclosure Letter, (2) as disclosed in CBES's Reports filed
on or prior to the date of this Agreement or (3) as contemplated by this
Agreement, neither CBES nor any of its Subsidiaries is a party to an oral or
written (A) consulting agreement (including data processing and software
programming contracts) not terminable on 60 days' or less notice, (B) agreement
with any present or former director, officer or employee of CBES or any of its
Subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving CBES or any
of its Subsidiaries of the nature contemplated by this Agreement, (C) agreement
with respect to any employee or director of CBES or any of its Subsidiaries
providing any term of employment or compensation guarantee extending for a
period longer than 60 days, (D) agreement or plan, including any stock option
plan, phantom stock or stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement or (E) agreement containing
covenants that limit the ability of CBES or any of its
12
Subsidiaries to compete in any line of business or with any person, or that
involve any restriction on the geographic area in which, or method by which,
CBES (including any successor thereof) or any of its Subsidiaries may carry on
its business (other than as may be required by law or any regulatory agency). To
the knowledge of CBES, each of the agreements and other documents referenced in
CBES's Disclosure Letter with respect to this Section 2.3(k)(i) is a valid,
binding and enforceable obligation of the parties sought to be bound thereby,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability to
general principles of equity, whether applied in a court of law or a court of
equity.
(ii) Neither CBES nor any of its Subsidiaries is in
default under (and no event has occurred which, with due notice or lapse of time
or both, would constitute a default under) or is in violation of any provision
of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject and, to the knowledge of CBES,
no other party to any such agreement (excluding any loan or extension of credit
made by CBES or any of its Subsidiaries) is in default in any respect
thereunder.
(iii) CBES and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and neither CBES nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of CBES
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
(iv) CBES's Disclosure Letter contains a summary
description of all leases, commitments, contracts, licenses, maintenance
agreements and other agreements of CBES and its Subsidiaries involving a
liability or obligation of CBES in excess of $10,000 per annum, and a true and
complete list of all letters of credit, guarantees, indemnity agreements and all
commitments to loan or discount or issue a letter of credit which would
aggregate in excess of $10,000 to any person, firm or corporation.
(l) Labor Matters. CBES and its Subsidiaries are in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice. Neither CBES nor any of its Subsidiaries
is or has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is CBES or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment nor
has any such proceeding been threatened, nor is there any strike, other labor
dispute or organizational effort involving CBES or any of its Subsidiaries
pending or threatened.
(m) Employee Benefit Plans. CBES's Disclosure Letter contains a
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership,
13
savings, stock appreciation right, profit sharing, deferred compensation,
consulting, bonus, group insurance, severance and other benefit plans, funds,
contracts, agreements and arrangements, including, but not limited to, "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related thereto with
respect to any present or former directors, officers or other employees of CBES
or any of its Subsidiaries (hereinafter collectively referred to as the "CBES
Employee Plans"). All of the CBES Employee Plans comply in all material respects
with all applicable requirements of ERISA, the IRC and other applicable laws;
with respect to the CBES Employee Plans, no event has occurred that would
subject CBES or any of its Subsidiaries to a material liability under ERISA, the
IRC or any other applicable law; there has occurred no "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the IRC) which is likely
to result in the imposition of any material penalties or taxes under Section
502(i) of ERISA or Section 4975 of the IRC upon CBES or any of its Subsidiaries;
and all required contributions to the CBES Employee Plans through the date
hereof have been made. Neither CBES nor any of its Subsidiaries has provided, or
is required to provide, security to any CBES pension plan or to any
single-employer plan of an ERISA Affiliate (as defined under Section 4001(b)(1)
of ERISA or Section 414 of the IRC) pursuant to Section 401(a)(29) of the IRC.
Neither CBES, its Subsidiaries, nor any ERISA Affiliate has contributed to any
"multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Each CBES Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a "CBES Qualified Plan") has received
a favorable determination letter from the Internal Revenue Service ("IRS"), and
CBES and its Subsidiaries are not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending or
threatened litigation, administrative action or proceeding relating to any CBES
Employee Plan. There has been no announcement or commitment by CBES or any of
its Subsidiaries to amend any CBES Employee Plan, except for amendments required
by applicable law which do not materially increase the cost of such CBES
Employee Plan; and, except as specifically identified in CBES's Disclosure
Letter, CBES and its Subsidiaries do not have any obligations for
post-retirement or post-employment benefits under any CBES Employee Plan that
cannot be amended or terminated upon 60 days' notice or less without incurring
any liability thereunder, except for coverage required by Part 6 of Title I of
ERISA or Section 4980B of the IRC, or similar state laws, the cost of which is
borne by the insured individuals. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not result in
any payment or series of payments by CBES or any of its Subsidiaries to any
person which is an "excess parachute payment" (as defined in Section 280G of the
IRC). To the best knowledge of CBES, no breach of a fiduciary duty under ERISA
Section 404 or Section 405 has occurred and with respect to which any
outstanding liability to any participant or any material excise tax or liability
exists or will exist as of the Effective Date with respect to any of the CBES
Employee Plans. Each of the CBES Employee Plans which is a group health plan
within the meaning of IRC Section 5000(b)(1) is in compliance with the
continuation of health care coverage requirements contained in IRC Section 4980B
and ERISA Section 601 et seq. A list of participants or beneficiaries who have
elected continuation coverage in accordance with such laws is provided in CBES's
Disclosure Letter. With respect to each CBES Employee Plan, CBES will supply to
NASB Bank a true and correct copy of (A) the annual report on the applicable
form of the Form 5500 series filed with the IRS
14
for the three most recent plan years, if required to be filed, (B) such CBES
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other funding arrangement relating to such CBES Employee Plan,
including amendments thereto, (D) the most recent summary plan description and
summary of material modifications thereto for such CBES Employee Plan, if the
CBES Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial
report or valuation if such CBES Employee Plan is a CBES pension plan and any
subsequent changes to the actuarial assumptions contained therein, and (F) the
most recent determination letter issued by the IRS if such CBES Employee Plan is
a CBES Qualified Plan. With respect to Community Bank's ESOP, CBES will supply
NASB Bank a true and correct copy of (A) the latest financial statement of the
ESOP including a list of assets, (B) a schedule of stock purchases by the ESOP,
including seller, valuation and number of shares, (C) a schedule of participant
name and amount, and (E) a schedule of the most recent contribution allocation
including participant name, compensation and share of contribution.
(n) Title to Assets. CBES's Disclosure Letter contains a
complete and accurate list of all real property owned or leased by CBES or any
of its Subsidiaries, including all properties of CBES or any of its Subsidiaries
classified as "Real Estate Owned" or words of similar import (the "Real
Property"). To the knowledge of CBES, none of the buildings, structures or other
improvements located on the Real Property encroaches upon or over any adjoining
parcel or real estate or any easement or right-of-way. CBES and each of its
Subsidiaries have good and marketable title to their respective properties and
assets (including any intellectual property asset such as any trademark, service
▇▇▇▇, trade name or copyright) and property acquired in a judicial foreclosure
proceeding or by way of a deed in lieu of foreclosure or similar transfer
whether real or personal, tangible or intangible, reflected on the consolidated
financial statements of CBES as of June 30, 2001 or acquired after such date,
other than such items of personal property as have been disposed of in the
ordinary course of business since June 30, 2001, in each case free and clear of
any liens, security interests, encumbrances, mortgages, pledges, restrictions,
charges or rights or interests of others, except pledges to secure deposits and
other liens incurred in the ordinary course of business. Each lease pursuant to
which CBES or any of its Subsidiaries is lessee or lessor is valid and in full
force and effect and neither CBES nor any of its Subsidiaries, nor any other
party to any such lease is in default or in violation of any provisions of any
such lease. All material tangible properties of CBES and each of its
Subsidiaries are in a good state of maintenance and repair, conform with all
applicable ordinances, regulations and zoning laws and are considered by CBES to
be adequate for the current business of CBES and its Subsidiaries and
improvements on real property owned or leased by CBES are located wholly within
the boundaries of the property owned or leased by CBES or its Subsidiaries.
There are no unpaid charges, debts, liabilities, claims or obligations arising
from the construction, ownership or operation of the banking premises of
Community Bank which would give rise to any mechanics' liens against any such
real estate or any part thereof, or for which CBES or Community Bank would be
responsible, except for (i) liens imposed by law and incurred in the ordinary
course of business for obligations not yet due to carriers, warehousemen,
laborers, materialmen and the like, but only to the extent the obligation giving
rise to the lien is included as a liability on CBES's books and records and (ii)
such minor encumbrances, if any, as do not materially detract from the value of,
or materially interfere with the present use of, such properties, and which
minor encumbrances do not render the title to such property unmarketable.
15
(o) Compliance with Laws. CBES and each of its Subsidiaries has
all permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, all federal, state,
local and foreign governmental or regulatory bodies (each, a "Governmental
Entity") that are required in order to permit it to carry on its business as it
is presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the knowledge of
CBES, no suspension or cancellation of any of them is threatened. Since the date
of its incorporation, the corporate affairs of CBES have not been conducted in
violation in any material respect of any law, ordinance, regulation, order,
writ, rule, decree or approval of any Governmental Entity. Neither CBES nor any
of its Subsidiaries is in material violation of, is, to the knowledge of CBES,
under investigation with respect to any material violation of, or has been given
notice or been charged with any material violation of, any law, ordinance,
regulation, order, writ, rule, decree or condition to approval of any
Governmental Entity.
(p) Fees. Other than financial advisory services performed for
CBES by ▇▇▇▇▇ Financial LLC, neither CBES nor any of its Subsidiaries, nor any
of their respective officers, directors, employees or agents, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for CBES or any of its Subsidiaries in connection with
this Agreement or the transactions contemplated hereby. CBES has provided NASB
Bank with a true and correct copy of the contract between CBES and ▇▇▇▇▇
Financial LLC.
(q) Environmental Matters. There is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or, to the knowledge of CBES, threatened before any court,
Governmental Entity or board or other forum against CBES or any of its
Subsidiaries for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law (as defined below) or relating to the
presence of or release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site owned, leased or
operated by it or any of its Subsidiaries. To CBES's knowledge, the properties
currently owned or operated by CBES or any of its Subsidiaries (including,
without limitation, soil, groundwater or surface water on, under or adjacent to
the properties, and buildings thereon) are not contaminated with and do not
otherwise contain any Hazardous Material other than as permitted under
applicable Environmental Law. Neither CBES nor any of its Subsidiaries has
received any notice, demand letter, executive or administrative order,
directive, request for information or other communication (written or oral) from
any federal, state, local or foreign Governmental Entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law. To CBES's knowledge, there are no underground storage tanks on, in or under
any properties currently owned or operated by CBES or any of its Subsidiaries
and no underground storage tanks have been closed or removed from any properties
currently owned or operated by CBES or any of its Subsidiaries. To CBES's
knowledge, during the period of CBES's or any of its Subsidiaries' ownership or
operation of any of their respective current properties, there has been no
contamination by or release of Hazardous Materials in, on, under or affecting
such properties. To CBES's knowledge, prior to the period of CBES's or any of
its Subsidiaries' ownership or operation of any of their respective current
properties, there was no contamination by or release of Hazardous Material in,
on, under or affecting such properties.
16
"Environmental Law" means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, directive, executive or administrative order,
judgment, decree, injunction, legal requirement or agreement with any
Governmental Entity relating to (A) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety as it relates to Hazardous Materials, or (B) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect. The term
Environmental Law includes all federal, state and local laws, rules, regulations
or requirements relating to the protection of the environment or health and
safety, including, without limitation, (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including, but not limited to,
the Hazardous and Solid Waste Amendments thereto and Subtitle I relating to
underground storage tanks), the Federal Solid Waste Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970 as it relates to
Hazardous Materials, the Federal Hazardous Substances Transportation Act, the
Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act,
the Endangered Species Act, the National Environmental Policy Act, the Rivers
and Harbors Appropriation Act or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Hazardous Material.
"Hazardous Material" means any substance (whether solid, liquid or
gas) which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Material includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance, oil or petroleum, or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos-containing material, urea formaldehyde
foam insulation, lead and polychlorinated biphenyl.
(r) Loan Portfolio; Allowance; Asset Quality.
(i) With respect to each loan (including advances made pursuant
to letters of credit) owned by CBES or its Subsidiaries in whole or in part, to
CBES's knowledge (A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms, (B) the note and
the related security documents, copies of which are included in the loan files,
are true and correct copies of the documents they purport to be and have not
been suspended, amended, modified, canceled or otherwise changed except as
otherwise disclosed by
17
documents in the applicable loan file and (C) CBES or one of its Subsidiaries is
the sole holder of legal and beneficial title to each loan reflected in the
consolidated financial statements of CBES except as otherwise disclosed in the
applicable loan file or on the books and records of CBES and its Subsidiaries.
To the knowledge of CBES (x) all notes, evidences of indebtedness and agreements
for the payment of money and all related documents, instruments, papers and
other agreements for the payment of money and all related documents,
instruments, papers and other security agreements of Community Bank, applicable
thereto, are bona fide, are genuine as to signatures of all makers, endorsers,
and guarantors, and were given for valid consideration; (y) all collateral
securing such indebtedness existed at the disbursement of the funds which
created the indebtedness; and (z) except as may be disclosed in the books and
records of Community Bank relating to its loans, Community Bank has made no
affirmative or negative oral or written commitments which would materially
impair the enforcement of any of Community Bank's loans.
(ii) The allowance for loan losses reflected in CBES's statement
of financial condition at June 30, 2002 (unaudited) was, and the allowance for
loan losses shown on the balance sheets in CBES's Reports for periods ending
after June 30, 2002 (unaudited) will be, in the opinion of management, adequate
to provide for losses inherent in CBES's loan portfolio.
(iii) CBES's Disclosure Letter sets forth a true and complete
listing, as of June 30, 2002, of (A) all loans, leases, advances, credit
enhancements, guarantees, other extensions of credit, commitments and
interest-bearing assets of CBES and its Subsidiaries (collectively, "Loans")
that have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import, listed by
category, including the amounts thereof; (B) Loans (1) that are contractually
past due 90 days or more in the payment of principal and/or interest, (2) that
are on a non-accrual status, (3) where the interest rate terms have been reduced
and/or the maturity dates have been extended subsequent to the agreement under
which the Loan was originally created due to concerns regarding the borrower's
ability to pay in accordance with such initial terms, or (4) where a specific
reserve allocation exists in connection therewith, listed by category, including
the amounts thereof; and (C) Loans with any director, executive officer or five
percent or greater stockholder of CBES or any of its Subsidiaries or any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing, including the amounts thereof. To the knowledge of
CBES, neither CBES nor any of its Subsidiaries is a party to any Loan that is in
violation of any law, regulation or rule of any Governmental Entity. Any asset
of CBES or any of its Subsidiaries that is classified as "Real Estate Owned" or
words of similar import that is included in any non-performing assets of CBES or
any of its Subsidiaries is listed in CBES's Disclosure Letter and is carried net
of reserves at the lower of cost or fair value, less estimated selling costs,
based on current independent appraisals or evaluations or current management
appraisals or evaluations; provided, however, that "current" shall mean within
the past 12 months.
(s) Anti-takeover Provisions Inapplicable. CBES and its Subsidiaries
have taken all actions required to exempt CBES, NASB Holding, NASB Bank,
Acquisition Sub, the Agreement and the Merger from any provisions of an
anti-takeover nature contained in their organizational documents, and the
provisions of any federal or state "anti-takeover," "fair price," "moratorium,"
"control share acquisition" or similar laws or regulations.
18
(t) Charter Provisions. CBES and its Subsidiaries have taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and will
not result in the grant of any rights to any person under the certificate of
incorporation, bylaws, or other governing instruments of CBES or any of its
Subsidiaries or restrict or impair the ability of NASB Bank or any of its
Subsidiaries or Affiliates to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of CBES or any of its Subsidaries that may
be directly or indirectly acquired or controlled by it.
(u) Material Interests of Certain Persons. No officer or director or
5% stockholder of CBES, or any "associate" (as such term is defined in Rule
12b-2 promulgated under the Exchange Act) of any such officer or director or
stockholder, has any material interest in any material contract or property
(real or personal), tangible or intangible, used in or pertaining to the
business of CBES or any of its Subsidiaries. CBES's Disclosure Letter describes
all transactions in which any current officer, or director, or Affiliate or
Subsidiary thereof, directly or indirectly, has borrowed from, loaned to,
supplied or provided goods or services to, purchased assets from, sold assets
to, or done business in any manner with CBES or Community Bank or is a party to
any agreement with CBES or Community Bank, and all transactions known to
management in which any current 5% stockholder or employee of CBES or Community
Bank, or any Affiliate or Subsidiary thereof, directly of indirectly, has
borrowed from, loaned to, supplied or provided goods or services to, purchased
assets from, sold assets to, or done business in any manner with CBES or
Community Bank or is a party to any agreement with CBES or Community Bank.
(v) Insurance. CBES's Disclosure Letter contains a complete list of
all insurance policies of CBES and its Subsidiaries presently in effect. In the
opinion of management, CBES and its Subsidiaries are presently insured for
amounts deemed reasonable by management against such risks as companies engaged
in a similar business would, in accordance with good business practice,
customarily be insured. All of the insurance policies and bonds maintained by
CBES and its Subsidiaries are in full force and effect, CBES and its
Subsidiaries are not in default thereunder and all material claims thereunder
have been filed in due and timely fashion. CBES and its Subsidiaries have
received no notice from any insurance carrier that (i) any insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to any policies of insurance will be substantially
increased.
(w) Investment Securities; Derivatives.
(i) Except for investments in Federal Home Loan Bank ("FHLB")
Stock, pledges to secure FHLB borrowings, pledges to secure deposits and reverse
repurchase agreements entered into in arms-length transactions pursuant to
normal commercial terms and conditions and entered into in the ordinary course
of business, and restrictions that exist for securities to be classified as
"held to maturity," none of the investments held by CBES or any of its
Subsidiaries as of the date of this Agreement is, or will be at Closing, subject
to any restriction (contractual or statutory) that would materially impair the
ability of the entity holding such investment freely to dispose of such
investment at any time.
19
(ii) Except (x) as set forth in CBES's Disclosure Letter, (y) as
disclosed in CBES's Reports filed on or prior to the date of this Agreement, or
(z) for adjustable-rate mortgage loans and adjustable-rate advances, neither
CBES nor any of its Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter equity, interest rate, foreign exchange or
other swap, forward, future, option, cap, floor or collar or any other contract
that is a derivative contract (including various combinations thereof) or owns
securities that (a) are referred to generically as "structured notes," "high
risk mortgage derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (b) are likely to have changes in value as a
result of interest or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange rate changes.
(x) Credit Card Issuing Agreement. Neither CBES nor Community bank
has any credit card agreement which would prevent NASB Bank from soliciting
Community Bank's customers to accept a credit card issued by or on behalf of
NASB Bank or an Affiliate of NASB Bank.
(y) Indemnification. Except (i) as provided in the certificate of
incorporation or bylaws of CBES and the similar governing documents of its
Subsidiaries, or (ii) as set forth in CBES's Disclosure Letter, neither CBES nor
any Subsidiary is a party to any indemnification agreement with any of its
present or former directors, officers, employees, agents or other persons who
serve or served in any other capacity with any other enterprise at the request
of CBES and, to the best knowledge of CBES, there are no claims for which any
such person would be entitled to indemnification under the articles of
incorporation or bylaws of CBES or the similar governing documents of any of its
Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
(z) Books and Records. The books and records of CBES and its
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(aa) Corporate Documents. Complete and correct copies of the
certificate of incorporation, bylaws and similar governing documents of CBES and
each of CBES's Subsidiaries, as in effect as of the date of this Agreement, have
previously been delivered to NASB Bank. The minute books of CBES and each of
CBES's Subsidiaries constitute a complete and correct record of all actions
taken by their respective boards of directors (and each committee thereof) and
their stockholders.
(bb) Community Reinvestment Act Compliance. Community Bank is in
material compliance with the applicable provisions of the Community Reinvestment
Act, as amended ("CRA"), and the regulations promulgated thereunder, and, as of
its most recent CRA examination, Community Bank has a CRA rating of
"Satisfactory" or better. To CBES's knowledge, there is no fact or circumstance
or set of facts or circumstances that would cause Community Bank to fail to
comply with such provisions or cause the CRA rating of Community Bank to fall
below "Satisfactory."
20
(cc) Undisclosed Liabilities. As of the date hereof, CBES and its
Subsidiaries have not incurred any debt, liability or obligation of any nature
whatsoever (whether accrued, contingent, absolute or otherwise and whether due
or to become due) except for (i) liabilities reflected on or reserved against in
the consolidated financial statements of CBES as of ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇)
liabilities incurred since June 30, 2002 in the ordinary course of business
consistent with past practice that, either alone or when combined with all
similar liabilities, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on CBES and its Subsidiaries, taken as a whole, and
(iii) liabilities incurred for legal, accounting, financial advising fees and
out-of-pocket expenses in connection with a proposed sale or merger of CBES.
Section 2.4. Representations and Warranties of NASB Holding and
Acquisition Sub. Subject to Sections 2.1 and 2.2, NASB Holding and Acquisition
Sub represent and warrant to CBES that:
(a) Organization.
(i) NASB Holding is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri and is
registered as a savings and loan holding company under the HOLA. NASB Bank is a
stock savings association duly organized, validly existing and in good standing
under the laws of the United States of America and is a wholly-owned Subsidiary
of NASB Holding. Acquisition Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri. Each
Subsidiary of NASB Holding is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization. Each of NASB Holding and
its Subsidiaries has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(ii) NASB Holding, NASB Bank, Acquisition Sub and each of their
Subsidiaries have the requisite corporate power and authority and are duly
qualified to do business and are in good standing in each jurisdiction in which
the nature of their business or the ownership or leasing of their properties
makes such qualification necessary.
(b) Authority. NASB Holding and Acquisition Sub have all requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the requisite vote of the sole shareholder of
Acquisition Sub and the receipt of all required regulatory or governmental
approvals, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and, subject to the approval of this Agreement by
Acquisition Sub's sole shareholder, the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate actions
on the part of NASB Holding, and Acquisition Sub. This Agreement has been duly
and validly executed and delivered by NASB Holding and Acquisition Sub and
constitutes a valid and binding obligation of NASB Holding and Acquisition Sub,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
21
(c) Shareholder Approval. No approval of this Agreement by the
shareholders of NASB Holding is required for the consummation of the Merger and
the related transactions contemplated hereby. The affirmative vote of the sole
shareholder of Acquisition Sub is the only vote of the sole shareholder of
Acquisition Sub required for approval of this Agreement and the consummation of
the Merger and the related transactions contemplated hereby.
(d) No Violations; Consents. The execution, delivery and performance
of this Agreement by NASB Holding and Acquisition Sub do not, and the
consummation of the transactions contemplated hereby will not, constitute (i)
assuming receipt of all Requisite Regulatory Approvals, a breach or violation
of, or a default under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license to which NASB Holding, Acquisition Sub or
any of their respective Subsidiaries (or any of their respective properties) is
subject, (ii) a breach or violation of, or a default under, the articles of
incorporation or bylaws of NASB Holding or Acquisition Sub or the similar
organizational documents of any of their respective Subsidiaries or (iii) a
breach or violation of, or a default under (or an event which, with due notice
or lapse of time or both, would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of NASB Holding or Acquisition Sub or any
of their respective Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which NASB Holding or Acquisition Sub or
any of their respective Subsidiaries is a party, or to which any of their
respective properties or assets may be subject. The consummation by NASB Holding
and Acquisition Sub of the transactions contemplated hereby will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, or instrument, other than (w) the
approval of NASB Holding as the sole shareholder of Acquisition Sub, (x) the
approval of the OTS under the HOLA, (the "Requisite Regulatory Approvals"), and
(y) such approvals, consents or waivers as are required under the federal and
state securities or "blue sky" laws in connection with the transactions
contemplated by this Agreement. As of the date hereof, the executive officers of
NASB Holding and Acquisition Sub know of no reason pertaining to NASB Holding or
Acquisition Sub why any of the approvals referred to in this Section 2.4(d)
should not be obtained without undue delay or the imposition of any material
condition or restriction described in the last sentence of Section 5.1(b).
(e) Reports and Financial Statements.
(i) NASB Holding and NASB Bank has timely filed all material
reports and financial statements, together, with any amendments required to be
made with respect thereto, that they were required to file with (a) the FDIC and
(b) the OTS (collectively, the "NASB's Reports") and, to NASB Holding's
knowledge, NASB Holding and NASB Bank have paid all taxes and assignments due
and payable in connection therewith. As of their respective dates, none of
NASB's Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
22
(ii) Each of the financial statements of NASB Bank included in
NASB's Reports has been prepared in all material respects in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited financial
statements, as permitted by appropriate regulatory authorities). Each of the
consolidated statements of condition contained or incorporated by reference in
NASB's Reports (including in each case any related notes and schedules) fairly
presented (A) the financial position of the entity or entities to which it
relates as of its date and (B) the results of operations, shareholders' equity
and cash flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject in the case of unaudited
interim statements, to normal year-end adjustments that are not material in
amount or effect), in each case in accordance with GAAP, except as may be noted
therein.
(f) Absence of Certain Changes or Events. Except as disclosed in
NASB's Reports filed on or prior to the date of this Agreement, no event has
occurred or circumstances arisen which has had or might reasonably be expected
to have a Material Adverse Effect with respect to NASB Holding.
(g) Absence of Claims. No litigation, proceeding, controversy, claim,
action or suit or other legal, administrative or arbitration proceeding before
any court, Governmental Entities or arbitrator is pending or has been threatened
against NASB Holding, NASB Bank, Acquisition Sub or any of their respective
Subsidiaries that would reasonably be expected to prevent or adversely affect or
which seeks to prohibit the consummation of the transactions contemplated by
this Agreement or which would have a Material Adverse Effect with respect to
NASB Holding, NASB Bank, Acquisition Sub or their respective Subsidiaries taken
as a whole.
(h) Absence of Regulatory Actions. Neither NASB Holding, NASB Bank,
Acquisition Sub nor any of their respective Subsidiaries is a party to any cease
and desist order, written agreement or memorandum of understanding with, or any
commitment letter or similar written undertaking to, or is subject to any
action, proceeding, order or directive by, or is a recipient of any
extraordinary supervisory letter from any Government Regulatory Agency, or has
adopted any board resolutions at the request of any Government Regulatory
Agency, nor has it been advised by any Governmental Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
(i) Compliance with Laws. NASB Holding, NASB Bank, Acquisition Sub
and their respective Subsidiaries each have all permits, licenses, certificates
of authority, orders and approvals of, and have made all filings, applications
and registrations with, all Governmental Entities that are required in order to
permit them to carry on their business as it is presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect, and to the best knowledge of NASB Holding, NASB Bank and
Acquisition Sub, no suspension or cancellation of any of them is threatened.
Since the date of its incorporation, the corporate affairs of NASB Holding, NASB
Bank and Acquisition Sub have not been conducted in violation in any material
respect of any law, ordinance, regulation, order, writ, rule, decree or approval
of any Governmental Entity. Neither NASB Holding, NASB Bank, Acquisition Sub nor
any of their respective Subsidiaries is in material violation of, is, to the
23
knowledge of NASB Holding or Acquisition Sub, under investigation with respect
to any material violation of, or has been given notice or been charged with any
material violation of, any law, ordinance, regulation, order, writ, rule, decree
or condition to approval of any Governmental Entity.
(j) Community Reinvestment Act Compliance. NASB Bank, and each
Subsidiary of NASB Holding that is an insured depository institution, is in
material compliance with the applicable provisions of CRA, and the regulations
promulgated thereunder, and, as of its most recent CRA examination, NASB Bank,
and each Subsidiary of NASB Holding that is an insured depository institution,
has a CRA rating of "Satisfactory" or better. To the knowledge of NASB Holding,
there is no fact or circumstance or set of facts or circumstances that would
cause NASB Bank, or any Subsidiary of NASB Holding that is an insured depository
institution, to fail to comply with such provisions or cause the CRA rating of
NASB Bank, or any Subsidiary of NASB Holding that is an insured depository
institution to fall below "Satisfactory." Neither NASB Holding, NASB Bank nor
Acquisition Sub has received notice of or has knowledge of any planned or
threatened objection by any community group to the transactions contemplated
hereby.
(k) Fees. Neither NASB Holding, NASB Bank, Acquisition Sub nor any of
their respective Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions or finder's fees,
and no broker or finder has acted directly or indirectly for NASB Holding, NASB
Bank or any of their respective Subsidiaries in connection with this Agreement
or the transactions contemplated hereby.
(l) Availability of Funds. No later than the Closing Date, NASB
Holding will have available sufficient cash or other liquid assets or financing
pursuant to binding arrangements or commitments which may be used to fund this
transaction. NASB Holding's ability to consummate the transactions contemplated
by this Agreement is not contingent on raising any equity capital, obtaining
specific financing thereof, consent of any lender or any other matter.
(m) Pro Forma Capital Requirements. NASB Bank is, and on a pro forma
basis giving effect for the transactions contemplated by this Agreement and any
financing/capital injection contemplated by NASB Bank will be (i) at least
"Adequately Capitalized," as defined for purposes of the FDIA and (ii) in
compliance with all capital requirements, standards and ratios required by each
state or federal regulator with jurisdiction over NASB Bank, including without
limitation, any such higher requirement, standard or ratio as shall apply to
institutions engaging in the acquisition of insured institution deposits, assets
or branches, and no such regulator is likely to, or has indicated that it will,
condition any of the regulatory approvals upon an additional increase in NASB
Bank's capital or compliance with any capital requirement
(n) Anti-Trust. NASB Holding has no knowledge that it will be required
to divest deposit liabilities, branches, loans or any business or line of
business as a condition to the receipt of any of the Regulatory Approvals.
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ARTICLE III
Actions and Conduct Pending the Merger
Section 3.1. Regulatory Application. Within thirty (30) days of the
date of this Agreement, NASB Holding or Acquisition Sub will file applications
with OTS to merge Acquisition Sub with and into CBES.
Section 3.2. Conduct of CBES's Business Prior to the Effective Date.
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Date, CBES shall, and shall cause its
Subsidiaries to, use all reasonable efforts to (i) conduct its business in the
regular, ordinary and usual course consistent with past practice, (ii) maintain
and preserve intact its business organization, properties, leases, employees and
advantageous business relationships and retain the services of its officers and
key employees, (iii) take no action which would adversely affect or delay the
ability of CBES or NASB Holding, NASB Bank or Acquisition Sub to perform their
respective covenants and agreements on a timely basis under this Agreement, (iv)
take no action which would adversely affect or delay the ability of CBES,
Community Bank, NASB Holding or Acquisition Sub to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby or which would reasonably be expected to result
in any such approvals, consents or waivers containing any material condition or
restriction, (v) take no action that results in or is reasonably likely to have
a Material Adverse Effect on CBES or Community Bank, (vi) maintain insurance in
such amounts and against such risks and losses as are customary for companies
engaged in a similar business, (vii) confer on a regular and frequent basis with
one or more representatives of NASB Holding to discuss, subject to applicable
law, material operational matters and the general status of the ongoing
operations of CBES and its Subsidiaries, (viii) promptly notify NASB Holding of
any material change in its business, properties, assets, condition (financial or
otherwise) or results of operations, and (ix) promptly provide NASB Holding with
copies of all filings made by CBES or any of its Subsidiaries with any state or
federal court, administrative agency, commission or other Governmental Entity in
connection with this Agreement and the transactions contemplated hereby. Without
limiting the foregoing covenants, unless the prior written consent of NASB
Holding shall have been obtained, and except as otherwise expressly contemplated
in this Agreement, CBES shall, and shall cause each of its Subsidiaries to:
(a) Board Observers. Permit, at any time after the execution of this
Agreement, two representatives of NASB Bank to attend CBES's and Community
Bank's board of directors' meetings and all Board committee meetings as
observers only and shall give NASB Bank notice of all such meetings concurrently
with the giving of notice to other directors and committee members; provided,
however, that such observers will not be entitled to attend the portions of any
meetings that relate to any deliberation of the transactions contemplated by
this Agreement or meetings with attorneys on other matters who recommend that
such observers not be present in order to preserve the attorney-client
privilege.
(b) Loan Policies. Reserve against, place on non-accrual, and charge
off loans and other assets as losses are recognized or future losses become
apparent, in accordance with Community Bank's past practices, which Community
Bank warrants and represents are in
25
compliance in all material respects with all applicable laws and regulations and
have not been criticized in any past examinations or audits, while maintaining a
loan loss reserve of at least .75% of total loans outstanding;
(c) Tax Returns. Prepare, execute and file, on or before the due date
thereof if prior to the Effective Date, all federal, state and local tax returns
required of CBES or Community Bank with respect to its operations for any period
ending before the Effective Date and will pay the appropriate tax. In addition,
prior to the Effective Date, CBES shall file, and shall cause each of its
Subsidiaries to file, all amended federal, state and local tax returns necessary
to carry back any tax losses incurred by CBES or any of its Subsidiaries to the
extent permitted by law for the purpose of obtaining all available tax refunds.
(d) Customer Notice. Assist NASB Holding in drafting and preparing
for mailing a notice, the form and content of which shall be established by
mutual agreement of NASB Holding and CBES, to all Community Bank's deposit and
loan customers, notifying them of the sale of CBES to NASB Holding. The notice
shall be mailed by NASB Holding after all Requisite Regulatory Approvals and
Stockholders Approvals have been obtained but no later than thirtieth day prior
to the date agreed upon by NASB Holding and CBES pursuant to Section 6.1 for the
data processing conversion.
(e) Copies of Reports. Furnish to NASB Holding, until the Effective
Date, true and complete copies of the following information within five days
after preparation or receipt:
(i) Monthly financial statements prepared with respect to CBES
and Community Bank;
(ii) Daily statements of Community Bank beginning on the date
of the final regulatory approval of the transactions contemplated by this
Agreement and continuing through the Effective Date;
(iii) Community Bank's Reports of Condition and Income to
regulatory authorities at the close of business of each calendar quarter;
(iv) Community Bank's internal watch and problem loan reports;
(v) Any and all board reports prepared for the use of
Community Bank's board of directors or any board committee (other than those
portions of any report which pertain to this Agreement or is privileged
information);
(vi) Any reports submitted to Community Bank by independent
certified public accountants in connection with an examination of Community
Bank's financial statements;
(vii) Notice of all actions, suits, and proceedings before any
court or Governmental Entity, commission, board, bureau, agency, or
instrumentality affecting CBES or Community Bank;
26
(viii) Any notices or communications received from any savings
and loan regulatory body with respect to the affairs or operations of CBES or
Community Bank; and
(ix) Any additional information reasonably requested by NASB
Holding for completion of any applications for regulatory approval of the
transactions contemplated by this Agreement.
(f) Liquidation Account. Cause Community Bank to establish and
maintain on its books a true and complete record of those deposit accounts,
including names of depositors, which would have liquidation rights by reason of
the conversion of Community Bank from mutual to stock form of organization.
(g) Adjusted Stockholders' Equity. Take all efforts necessary to
reduce expenses and maintain the Stockholders' Equity of CBES, consolidated with
all of its Subsidiaries, at the close of business on the day prior to the
Effective Date, at an amount equal to or greater than $13,900,000 after taking
into account the adjustments described below ("Adjusted Stockholders' Equity").
If the Adjusted Stockholders' Equity is less than $13,900,000 but greater than
or equal to $13,500,000, the Merger Consideration shall be adjusted as provided
for in Section 1.2(a) hereof. If the Adjusted Stockholders' Equity is less than
$13,500,000, NASB Holding shall have the right to either (i) terminate the
Agreement pursuant to Section 7.1(g) hereof or (ii) consummate the Merger and
provide the holders of CBES Common Stock with a cash payment of $17.05 per
share. Such Adjusted Stockholders' Equity shall be determined according to GAAP
as it is applied to savings and loan associations and savings and loan
association holding companies and in a manner consistent with CBES's past
practices with the following adjustments:
(i) All professional fees related to the Merger, including but
not limited to legal fees, investment banking fees and accounting fees, shall
not be treated as a reduction to Stockholders' Equity;
(ii) All severance payments from CBES or Community Bank to
employees terminated prior to the Effective Date, including but not limited to
cash severance payments pursuant to the Community Bank Severance Plan,
reimbursement for Welfare Benefits (as defined in the Community Bank Severance
Plan), payment of bonuses and Welfare Benefits pursuant to the terms of Employee
Bonus Agreements entered into by Community Bank and certain key officers of
Community Bank, payment of accrued paid time off and extended leave as required
by the Community Bank Employee Manual dated January 2001, shall not be treated
as a reduction to Stockholders' Equity;
(iii) All market value adjustments required by Statement of
Financial Accounting Standards Number 115 after June 30, 2002, shall not be
treated as an adjustment to Stockholders' Equity;
(iv) If (y) Community Bank's ALLL exceeds the amount required
by applicable statutes and regulations and (z) any of Community Bank's loan(s)
or other real estate owned require subsequent write-down(s), Community Bank
shall be allowed to treat such write-
27
down(s) as a reduction of Community Bank's ALLL instead of a reduction to income
or Stockholders' Equity, to the extent allowed by GAAP and the OTS.
(v) All reductions in the value of loans of Community Bank
requested by NASB Holding shall not be treated as a reduction to Stockholder's
Equity.
(vi) The value of all assets and leasehold improvements of the
Liberty, Missouri branch of Community Bank written off of the books of Community
Bank and all expenses related to the closing of the Liberty, Missouri branch of
Community Bank shall not be treated as a reduction to Stockholders' Equity.
Section 3.3. Forbearance by CBES. Without limiting the covenants set
forth in Section 3.2 hereof, except as otherwise provided in this Agreement and
except to the extent required by law or regulation or any Governmental Entity,
during the period from the date of this Agreement to the Effective Date, CBES
shall not, and shall not permit any of its Subsidiaries to, without the prior
consent of NASB Holding:
(a) unless required by applicable law or regulation or regulatory
directive, change any provisions of the articles of incorporation or bylaws of
CBES or the similar governing documents of its Subsidiaries;
(b) authorize, issue, deliver or sell any shares of its capital stock
or any securities or obligations convertible or exercisable for any shares of
its capital stock or change the terms of any of its outstanding stock options or
warrants or issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement of any character relating to
the authorized or issued capital stock of CBES except pursuant to the exercise
of stock options or warrants outstanding as of the date of this Agreement, or
split, combine, reclassify or adjust any shares of its capital stock or
otherwise change its capitalization;
(c) make, declare or pay any cash or stock dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock;
(d) other than for fair value in the ordinary course of business
consistent with past practice, (i) acquire or sell, transfer, assign, mortgage,
encumber or otherwise dispose of any of its material properties, leases, assets
or other rights or agreements to any individual, corporation or other entity
other than a direct or indirect wholly owned Subsidiary of CBES or (ii) cancel,
release or assign any indebtedness of any such individual, corporation or other
entity or (iii) permit Community Bank to waive any material right or cancel any
material contract, lease, license, obligation or commitment, or permit any lien,
encumbrance or charge of any material effect to attach to any of CBES's or
Community Bank's assets;
(e) except to the extent required by law or as specifically provided
for in Section 4.11(i) or elsewhere herein, increase in any manner the
compensation or fringe benefits of any of its employees or directors; pay
bonuses to its employees or directors; pay any pension or retirement allowance
not required by any existing plan or agreement to any employees or
28
directors, or become a party to, amend or commit itself to fund or otherwise
establish any trust or account related to any CBES Employee Plan (as defined in
Section 2.3(m)) with or for the benefit of any employee or director; voluntarily
accelerate the vesting of any stock options or other compensation or benefit;
grant or award any stock options; make any discretionary contribution to any
CBES Employee Plan; hire any employee with an annual total compensation payment
in excess of $30,000; or enter into any employment contract or other agreement
or arrangement with any director, officer or other employee;
(f) except as contemplated by Section 4.2, change its method of
accounting as in effect at June 30, 2001, except as required by changes in GAAP
as concurred in by CBES's independent auditors;
(g) commence any litigation other than in the ordinary course of
business, settle any claim, action or proceeding involving any liability of CBES
or any of its Subsidiaries for money damages in excess of $25,000 or impose
material restrictions upon the operations of CBES or any of its Subsidiaries;
(h) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case which are material,
individually or in the aggregate, to CBES, except in satisfaction of debts
previously contracted or by way of foreclosure on collateral security for any
such debts;
(i) establish or commit to the establishment of any new branch or
other office facilities or file any application to relocate or terminate the
operation of any banking office, provided, however, that if prior to September
25, 2002, CBES is unable to obtain a six (6) month extension of the lease of the
Liberty, Missouri branch of Community Bank, CBES shall (i) provide notice to the
landlord of the Liberty, Missouri branch of Community Bank of its intent not to
renew the lease and (ii) notify the OTS of its intent to close the Liberty,
Missouri branch of Community Bank. Moreover, Community Bank may proceed to
attempt to sell the deposits of the Liberty, Missouri branch of Community Bank
to another bank or savings association at a price as agreed to by NASB Holding;
(j) other than investments for CBES's portfolio made in accordance
with Section 3.3(k), make any investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity;
(k) make any investment in any debt security, including
mortgage-backed and mortgage-related securities, or materially restructure or
change its investment securities portfolio, through purchases, sales or
otherwise; provided, however, that CBES shall be permitted to invest in the
following securities with final maturities no later than November 30, 2002: U.S.
government and U.S. government agency securities, securities of the FHLB, or
insured jumbo certificates of deposit;
29
(l) enter into, renew, amend or terminate any contract or agreement,
or make any change in any of its leases or contracts, provided, however, that if
prior to September 25, 2002, CBES is unable to obtain a six (6) month extension
of the lease of the Liberty, Missouri branch of Community Bank, CBES shall (i)
provide notice to the landlord of the Liberty, Missouri branch of Community Bank
of its intent not to renew the lease and (ii) notify the OTS of its intent to
close the Liberty, Missouri branch of Community Bank. Moreover, Community Bank
may proceed to attempt to sell the deposits of the Liberty, Missouri branch of
Community Bank to another bank or savings association at a price as agreed to by
NASB Holding;
(m) make, renegotiate, renew, increase, extend, modify or purchase
any loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any commitment in respect of any of the foregoing,
except (i) in conformity with existing safe and sound lending and pricing
practices; (ii) loans or advances as to which CBES has a binding obligation to
make such loan or advances as of the date hereof; and (iii) with respect to any
loan or additional advance resulting in an aggregate indebtedness to any
individual borrower of $100,000 or more for loans or advances secured by real
estate or certificates of deposit held by Community Bank, $25,000 or more for
loans secured by collateral other than real estate or certificates of deposit
held by Community Bank or $0 or more unsecured, unless such loan has been
approved in a loan committee or Board meeting of which an authorized
representative of NASB Holding was given at least 24 hours written notice or
oral notification and at which such representative did not object, provided,
however, that renewals (or extensions) of loans of no more than six months, or
one year in the case of construction loans that have been outstanding one year
or less, may be made at the time such loans are due for renewal, if consistent
with past practices, notwithstanding such objection if the Board of Directors or
Loan and Discount Committee determines after taking into account such objection
that such renewal is necessary to protect Community Bank's interest and such
loan is current, is not a classified asset and is not on Community Bank's watch
list;
(n) except as provided in Section 3.3(m), extend or renew loans, or
advance additional sums to a borrower whose loans, in whole or in part, have
been classified or listed as special mention by any regulatory authority or
included on Community Bank's watch list unless such extension, renewal or
advance shall have been approved in advance by the Board of Directors of
Community Bank or Community Bank's Loan and Discount Committee, and only if such
extension, renewal or advance was found by such Board or Committee to be
necessary in order to protect Community Bank's interests and in accordance with
sound banking practices at a loan committee or Board meeting of which NASB Bank
was given at least 24 hours written notice or oral notification and at which
such representative did not object;
(o) incur any additional borrowings other than short-term (six months
or less) FHLB borrowings and reverse repurchase agreements at reasonable market
interest rates consistent with past practice, or pledge any of its assets to
secure any borrowings other than as required pursuant to the terms of borrowings
of CBES or any Subsidiary in effect at the date hereof or in connection with
borrowings or reverse repurchase agreements permitted hereunder;
(p) accept any deposits from any person on terms materially more
favorable in any respect than those available to the general public in CBES's
market area, unless such
30
deposits are accepted in accordance with a safe and sound program or practice in
existence at Community Bank prior to the date of this Agreement;
(q) establish or impose a schedule of service charges or fees which
applies charges either substantially more or substantially less than similar
service charges and fees charged by other banks in CBES's market areas;
(r) make any capital expenditures in excess of $5,000 per expenditure
other than pursuant to binding commitments existing on the date hereof disclosed
in the CBES Disclosure Letter and other than expenditures necessary to maintain
existing assets in good repair or to make payment of necessary taxes;
(s) organize, capitalize, lend to or otherwise invest in any
Subsidiary;
(t) elect to any senior executive office any person who is not a
member of the senior executive officer team of CBES as of the date of this
Agreement or elect to the Board of Directors of CBES any person who is not a
member of the Board of Directors of CBES as of the date of this Agreement;
(u) engage in any transaction that is not in the usual and ordinary
course of business and consistent with past practices;
(v) enter into any new line of business;
(w) take or omit to take any action that is intended or may
reasonably be expected to result in any of CBES's representations and warranties
set forth in this Agreement being or becoming untrue in any material respect, or
which would make any of such representations and warranties untrue or incorrect
in any material respect if made anew after taking such action;
(x) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructuring in the ordinary course of business consistent with
prudent banking practices;
(y) make, renew or increase any loan or other extension of credit, or
commit to make, renew or increase any such loan or extension of credit, to any
director or officer of CBES or any of its Subsidiaries, or any entity
controlled, directly or indirectly, by any of the foregoing; or
(z) agree or make any commitment to take any action that is
prohibited by this Section 3.3.
In the event that NASB Holding does not respond in writing to CBES
within two (2) business days of receipt by NASB Holding of a written request for
CBES to engage in any of the actions for which NASB Holding's prior written
consent is required pursuant to this Section 3.3, NASB Holding shall be deemed
to have consented to such action. Any request by CBES or response thereto by
NASB Holding shall be made in accordance with the notice provisions of
31
Section 9.7 and shall note that it is a request pursuant to this Section 3.3 and
shall state that a failure to respond within two (2) business days shall
constitute consent.
Section 3.4. Conduct of NASB Holding's and Acquisition Sub's
Businesses Prior to the Effective Date. Except as expressly provided in this
Agreement, during the period from the date of this Agreement to the Effective
Date, NASB Holding and Acquisition Sub shall, and shall cause their respective
Subsidiaries to, use their commercially reasonable efforts to (i) conduct their
business in the regular, ordinary and usual course consistent with past
practice; (ii) maintain and preserve intact their business organization,
properties, leases, employees and advantageous business relationships; (iii)
take no action which would materially adversely affect or delay the ability of
CBES, NASB Holding, or Acquisition Sub to perform their respective covenants and
agreements on a timely basis under this Agreement and (iv) take no action which
would adversely affect or delay the ability of CBES, NASB Holding or Acquisition
Sub to obtain any necessary approvals, consents or waivers of any Governmental
Entity required for the transactions contemplated hereby or which would
reasonably be expected to result in any such approvals, consents or waivers
containing any material condition or restriction.
ARTICLE IV
Covenants
Section 4.1. Acquisition Proposals. From and after the date hereof
until the termination of this Agreement, neither CBES nor Community Bank, nor
any of their respective officers, directors, employees, representatives, agents
or affiliates (including, without limitation, any investment banker, attorney or
accountant retained by CBES or any of its Subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by any
of its Subsidiaries to take any such action; provided, however, that nothing
contained in this Section 4.1 shall prohibit the Board of Directors of CBES from
(i) furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited, written, bona fide
proposal to acquire CBES pursuant to a merger, consolidation, share exchange,
business combination, tender or exchange offer or other similar transaction, if,
and only to the extent that (A) the Board of Directors of CBES, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that such action is necessary for the Board of
Directors of CBES to comply with its fiduciary duties to stockholders under
applicable law, and (B) prior to furnishing such information to, or entering
into discussions or negotiations with, such person or entity, CBES (x) provides
reasonable notice to NASB Holding to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (y) receives from such person or entity an executed
confidentiality agreement in substantially the same form as the one heretofore
executed by NASB Holding (except that disclosure of the person's identity will
be permitted); (ii) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer;
32
or (iii) failing to make or withdrawing or modifying its recommendation if there
exists an Acquisition Proposal as to which the Board of Directors of CBES has
received a written opinion from its independent financial adviser that such
Proposal may be superior to the Merger from a financial point-of-view to CBES's
stockholders and, after consultation with independent legal counsel, the Board
of Directors of CBES determines in good faith that such action is necessary for
the Board of Directors of CBES to comply with its fiduciary duties to
stockholders under applicable law (any such Acquisition Proposal as to which the
Board of Directors has received the opinion and made the determination described
in this clause (iii) being referred to herein as a "Superior Proposal"). CBES
shall notify NASB Holding orally and in writing of any Acquisition Proposal
(including, without limitation, the terms and conditions of any such Acquisition
Proposal and the identity of the person making such Acquisition Proposal) as
promptly as practicable (but, in any event, no later than 24 hours) after the
receipt thereof and shall keep NASB Holding informed of the status and details
of any such Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" shall mean a proposal to enter into or make any of the following
(other than the transactions contemplated hereunder) involving CBES or any of
its Subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 25% or more of the assets of
CBES or Community Bank, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of CBES or the filing of a registration
statement under the Securities Act of 1933 in connection therewith; or (iv) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.
Section 4.2. Certain Policies and Actions of CBES.
(a) At the request of NASB Bank, CBES shall use reasonable efforts to
cause Community Bank to modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) and investment and asset/liability management policies and practices
after the date on which all Requisite Regulatory Approvals and stockholder
approvals are received, and after receipt of written confirmation from NASB
Holding that it is not aware of any fact or circumstance that would prevent
completion of the Merger, and prior to the Effective Date; provided, however,
that CBES shall not be required to take such action more than 30 days prior to
the Effective Date; and provided, further, that such policies and procedures are
not prohibited by GAAP or any applicable laws and regulations or, in the view of
the Board of Directors of Community Bank not in the best interests of Community
Bank.
(b) CBES's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of Section 4.2(a). NASB Bank agrees to hold harmless, indemnify and
defend CBES and its Subsidiaries, and their respective directors, officers and
employees, for any loss, claim, liability or other damage caused by or resulting
from compliance with Section 4.2(a).
Section 4.3. Access and Information. Upon reasonable notice, CBES
shall (and shall cause its Subsidiaries to) afford NASB Holding and its
representatives (including, without
33
limitation, directors, officers and employees of NASB Holding and its affiliates
and counsel, accountants and other professionals retained by NASB Holding) such
reasonable access during normal business hours throughout the period prior to
the Effective Date to the books, records (including, without limitation, tax
returns and work papers of independent auditors), contracts, properties,
personnel and to such other information relating to CBES and its Subsidiaries as
NASB Holding may reasonably request; provided, however, that no investigation
pursuant to this Section 4.3 shall affect or be deemed to modify any
representation or warranty made herein. CBES shall provide NASB Holding with
true and complete copies of all financial and other information relating to the
business or operations of CBES and its Subsidiaries that is provided to
directors of CBES and Community Bank in connection with meetings of their Board
of Directors or committees thereof. In furtherance, and not in limitation of the
foregoing, CBES shall make available to NASB Holding all information necessary
or appropriate for the preparation and filing of all real property and real
estate transfer tax returns and reports required by reason of the Merger. NASB
Holding will not, and will cause its representatives not to, remove any original
documents from the Premises of CBES or Community Bank or use any information
obtained pursuant to this Section 4.3 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. Subject to the
requirements of applicable law, NASB Holding will keep confidential, and will
cause its representatives to keep confidential, all information and documents
obtained pursuant to this Section 4.3 unless such information (i) was already
known to NASB Holding or an affiliate of NASB Holding, other than pursuant to a
confidentiality agreement or other confidential relationship, (ii) becomes
available to NASB Holding or an affiliate of NASB Holding from other sources not
known by such party to be bound by a confidentiality agreement or other
obligation of secrecy, (iii) is disclosed with the prior written approval of
CBES or (iv) is or becomes readily ascertainable from published information or
trade sources. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies and abstracts of
documents received from any other party, and all extracts of or from and
materials containing information or data taken from any such document to be
returned to the party that furnished the same.
Section 4.4. Certain Filings, Consents and Arrangements. NASB Holding
or Acquisition Sub shall as soon as practicable and in cooperation with CBES
(and in any event within 30 days after the date hereof) make, or cause to be
made, any filings and applications and provide any notices required to be filed
or provided in order to obtain all approvals, consents and waivers of
Governmental Entities and third parties necessary or appropriate for the
consummation of the transactions contemplated hereby, including approvals needed
for the payment of any special dividends required to fund the Merger
Consideration. NASB Holding or Acquisition Sub and CBES each shall provide the
other and its counsel with an opportunity to review all filings, applications
and notices and related correspondence and other documents and information prior
to their being submitted to, and all correspondence and other documents and
information received from, any governmental authority and shall provide the
other with copies of all filings, applications and notices submitted to any
Governmental Entity, in each case within two (2) business days after the
submission or receipt thereof. NASB Holding, Acquisition Sub, CBES and Community
Bank shall promptly provide all information and documents requested by any
Governmental Entity in connection with any filing, application or notice filed
or provided
34
under this Section 4.4 and shall otherwise use its best efforts to obtain the
requisite approvals, consents and waivers as promptly as is reasonably possible.
Section 4.5. Anti-takeover Provisions. CBES and its Subsidiaries shall
take all steps required by any relevant federal or state law or regulation or
under any relevant agreement or other document to exempt or continue to exempt
NASB Holding, Acquisition Sub, the Agreement and the Merger from any provisions
of an anti-takeover nature contained in CBES's or its Subsidiaries',
certificates of incorporation and bylaws and the provisions of any federal or
state anti-takeover laws.
Section 4.6. Additional Actions. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the Merger,
as expeditiously as possible, including using efforts to obtain all necessary
actions or non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Entities, effecting all necessary registrations,
applications and filings (including, without limitation, filings under any
applicable state securities laws) and obtaining any required contractual
consents and regulatory approvals.
Section 4.7. Publicity. CBES and NASB Holding shall jointly develop a
plan regarding press releases and other public statements with respect to the
Merger and any other transaction contemplated hereby and in making any filings
with any Governmental Entity or with any national securities exchange with
respect thereto.
Section 4.8. Stockholders Meeting. CBES shall take all action
necessary, in accordance with applicable law and its certificate of
incorporation and bylaws, to convene a meeting of its stockholders ("Stockholder
Meeting") as promptly as practicable for the purpose of considering and voting
on approval and adoption of this Agreement, the Merger and the other
transactions provided for in this Agreement. CBES shall file its preliminary
proxy statement with the SEC within 15 days of the receipt of its audited
financial statements for the fiscal year ended June 30, 2002, provided, however,
that if CBES receives its audited financial statements for the fiscal year ended
June 30, 2002 prior to the date of execution of this Agreement, CBES shall file
its preliminary proxy statement with the SEC within 15 days of the date of
execution of this Agreement. Except to the extent legally required for the
discharge by the Board of Directors of its fiduciary duties as advised by CBES's
counsel, the Board of Directors of CBES shall (a) recommend at its Stockholder
Meeting that the stockholders vote in favor of and approve the transactions
provided for in this Agreement and (b) use all reasonable efforts to solicit
such approvals. CBES may employ professional proxy solicitors to assist in
contacting stockholders in connection with soliciting favorable votes on the
Merger.
Section 4.9. Proxy Statement. For the purposes of holding the
Stockholders' Meeting of CBES, CBES shall prepare a proxy statement satisfying
in all material respects all applicable requirements of the Exchange Act, and
the rules and regulations thereunder. NASB Holding agrees to provide for
inclusion in such proxy statement all information reasonably necessary to
satisfy the requirements of the Exchange Act and the rules and regulations
35
thereunder and such information shall not contain any untrue statements of a
material fact or omit to state any material fact required to be stated in such
proxy statement with respect to NASB Holding or its Subsidiaries or to make the
statements therein with respect to NASB Holding or its Subsidiaries not
misleading.
Section 4.10. Notification of Certain Matters. Each party shall give
prompt notice to the other of: (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Date, under
any contract material to the financial condition, properties, businesses or
results of operations of each party and its Subsidiaries taken as a whole to
which each party or any Subsidiary is a party or is subject; and (b) any event,
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Effect with respect to such
party and its Subsidiaries taken as a whole. Each of CBES and NASB Holding shall
give prompt notice to the other party of any (i) notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with any of the transactions contemplated by this
Agreement and (ii) the occurrence or non-occurrence of any fact or event which
would be reasonably likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any respect at any time from the
date hereof to the Effective Date or to cause any covenant, condition or
agreement under this Agreement not to be complied with or satisfied in all
material respects.
Section 4.11. Employees.
(a) All persons who are employees of Community Bank immediately prior
to the Effective Date and whose employment is not specifically terminated at or
prior to the Effective Date (a "Continuing Employee") shall, at the Effective
Date, remain employees of Community Bank. All of the Continuing Employees shall
be employed at the will of Community Bank and no contractual right to employment
shall inure to such employees because of this Agreement. NASB Holding will use
its best efforts to retain all of the employees of Community Bank, subject to
the qualifications of such employees and the needs of NASB Holding. At any time
after the receipt of the Requisite Regulatory Approvals and Stockholder approval
for the transactions contemplated by this Agreement, or by mutual consent prior
thereto, CBES shall (i) allow NASB Holding to conduct interviews with the
existing employees of CBES and Community Bank and to communicate with the
employees regarding the terms of their employment which will be in effect on or
after the Effective Date and (ii) allow NASB Bank to conduct training sessions
for employees of CBES and its Subsidiaries at NASB Bank's or Community Bank's
facilities. All such training sessions shall be scheduled so as to have minimal
impact upon the employees' performance of their normal daily duties.
(b) Immediately following the Effective Date, each Continuing Employee
shall be eligible to participate in NASB Holding's or NASB Bank's benefit plans
on the same basis as a new employee of NASB Holding's or NASB Bank's (it being
understood that inclusion of Continuing Employees in NASB Holding's or NASB
Bank's benefit plans may occur at different times with respect to different
plans). Service with CBES or its Subsidiaries shall be treated as service with
NASB Holding or NASB Bank for purposes of satisfying any waiting
36
periods, evidence of insurability requirements, or the application of any
preexisting condition limitation with respect to any NASB Holding or NASB Bank
"welfare benefit plan", as defined in Section 3(1) of ERISA. Each Continuing
Employee shall receive credit for service with CBES or its Subsidiaries for
purposes of any employee benefit plans or computing vacation pay benefits.
(c) CBES shall retain all existing life insurance policies owned by
CBES.
(d) CBES shall not encourage the further exercise of any CBES Options
and shall advise optionees as to the payments to which they will be entitled
hereunder.
(e) Prior to September 30, 2002, Community Bank shall fund the CBES
Employee Stock Ownership Plan (the "ESOP") with the scheduled contribution of
Twenty Four Thousand Nine Hundred Sixty Five and 80/100 Dollars ($24,965.80) to
provide the ESOP funds to pay the principal and interest due on the CBES loan to
the ESOP from CBES; provided, however, that the amount of such payment from
Community Bank to the ESOP may be adjusted if the total amount of scheduled
interest due on the loan to CBES changes due to a variation in the adjustable
interest rate of the loan; and provided, further, that if the Effective Date of
the Merger occurs after December 31, 2002, Community Bank shall fund the CBES
ESOP with the scheduled contribution payment necessary to provide the ESOP funds
to pay the principal and interest due on the CBES loan to the ESOP from CBES.
(f) Prior to the Effective Date, the ESOP shall be amended to state
that any Merger Consideration remaining after repayment of the loan between CBES
and the ESOP shall be allocated as investment earnings of the ESOP to the ESOP
accounts of employees of Community Bank or any of its Subsidiaries who are ESOP
participants and beneficiaries ("ESOP Participants") in accordance with the
terms of the ESOP as amended with respect to such termination and as in effect
on the Effective Date. All ESOP Participants shall fully vest and have a
nonforfeitable interest in their accounts under the ESOP determined as of the
Effective Date. As soon as practicable after the Effective Date, any loan
between CBES and the ESOP shall be repaid in full from the Merger Consideration
received by the ESOP for unallocated shares of CBES Common Stock held by the
ESOP upon the conversion of such shares into cash pursuant to this Agreement. As
soon as reasonably practicable after the ESOP loan has been repaid, NASB Holding
shall terminate the ESOP and shall file an application for determination with
the Internal Revenue Service ("IRS") as to the tax qualified status of the ESOP
upon its termination under Section 401(a) and 4975(e)(7) of the IRC (the
"Determination Letter"). As soon as reasonably practicable after the receipt of
a favorable Determination Letter from the IRS, NASB Holding shall instruct the
ESOP Trustee to make distributions of the benefits under the ESOP to the ESOP
Participants in accordance with the provisions of the ESOP.
(g) NASB Holding agrees to honor the terms and conditions of all
Director Emeritus Agreements by and between Community Bank and certain directors
of Community Bank, a copy of each of which is attached to CBES's Disclosure
Letter, and NASB Holding agrees that the benefits to be paid to each affected
director shall be the amount accrued on the books and records of Community Bank
as of the last day of the calendar month preceding the Closing Date, which
amount shall not be less than the amount shown in CBES's Disclosure Letter.
37
(h) NASB Holding agrees to honor the terms and conditions of all
Salary Continuation Agreements by and between Community Bank and certain
employees of Community Bank, a copy of each of which is attached to CBES's
Disclosure Letter, and NASB Holding agrees that the benefits to be paid to each
affected employee shall be the amount accrued on the books and records of
Community Bank as of the last day of the calendar month preceding the Closing
Date, which amount shall not be less than the amount shown in CBES's Disclosure
Letter.
(i) NASB Holding agrees to honor the terms and conditions of (i) the
Community Bank Severance Plan, which Severance Plan shall not be revoked,
terminated, modified or amended by NASB Holding or its Subsidiaries or its
successors and assigns, (ii) the Employee Bonus Agreements by and between
Community Bank and certain employees of Community Bank, (iii) the Severance
Agreement, as amended, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Community Bank and
(iv) the Severance Agreement , as amended, by and between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
and Community Bank; a copy of each of which is attached to CBES's Disclosure
Letter.
Section 4.12. Indemnification. Unless prohibited by law or regulation
in effect at the time a Claim (as defined below) is pending and except as
provided in Section 4.12(b) below, from the Effective Date through six (6) years
after the Effective Date, NASB Holding (and any successor) agrees to indemnify
each director, officer and employee of CBES and Community Bank serving in such
capacities as of the date of this Agreement (each, an "Indemnified Party"), from
and against Indemnified Payments and Indemnified Expenses (as both terms are
defined below) incurred in connection with Claims brought against any
Indemnified Party, arising out of matters existing or occurring at or prior to
the Effective Date (including the transactions contemplated by this Agreement),
whether asserted or claimed prior to, at or after the Effective Date, provided
that in the case of any Claims asserted prior to the Effective Date NASB Holding
has been notified of such Claims prior to Closing. NASB Holding further agrees,
subject to applicable regulatory restrictions, to advance any reasonable
Indemnified Expenses to such Indemnified Party as they are from time to time
incurred provided that the Indemnified Party to whom expenses are being advanced
provides a written undertaking to repay such expenses if it is ultimately
determined that such person is not entitled to Indemnification.
(a) As used herein, the foregoing terms have the following meanings:
(i) A "Claim" is any threatened, pending or completed action,
suit, investigation or proceeding (whether civil, criminal, administrative or
investigative) which relates to services rendered prior to the Effective Date by
an Indemnified Party on behalf of CBES or its Subsidiaries.
(ii) "Indemnified payments" shall mean judgments, fines and
amounts paid in settlement of Claims.
(iii) "Indemnified expenses" shall mean all costs and expenses
(including but not limited to attorneys' fees) actually and reasonably incurred
by an Indemnified Party in connection with defending against such Claims.
38
(b) NASB Holding shall not be required to indemnify any Indemnified
Party from and against Indemnified expenses and/or Indemnified payments if (i) a
final non-appealable order is entered by a court or administrative tribunal
having jurisdiction pursuant to a Claim brought by a person other than the OTS
that such Indemnified Party's conduct was knowingly fraudulent, deliberately
dishonest, or willful misconduct and the Claim giving rise to the entry of such
order was brought by a third party; or (ii) a final non-appealable order is
issued by an administrative tribunal or court having jurisdiction pursuant to a
Claim brought by the OTS or a settlement agreement is entered into between the
Indemnified Party and the OTS: (x) imposing a civil money penalty against the
Indemnified Party; (y) removing the Indemnified Party from office or prohibiting
such person from participating in the conduct of NASB Holding; or (z) directing
the Indemnified Party to cease and desist taking any of the actions set forth in
Section 8(b) of the FDIA (12 U.S.C. ss. 1818(b)).
(c) Any Indemnified Party wishing to claim indemnification under
Section 4.12, must (i) upon learning of any such Claim, promptly notify NASB
Holding thereof and provide to NASB Holding copies of all written materials
related to the Claim and any other information related to such Claim; (ii)
consent to the defense of any such Claim by competent counsel chosen by NASB
Holding; and (iii) cooperate in the defense of any such matter by offering
testimony and by complying with all reasonable requests made by NASB Holding or
by counsel hired by NASB Holding. NASB Holding shall not be liable for any
settlement effected by an Indemnified Party without its prior written consent,
which consent may not be withheld unless such settlement is unreasonable in
light of such Claims against, or defenses available to, such Indemnified Party.
If NASB Holding assumes the defense of any such Claim pursuant to this Section
4.12(c), NASB Holding shall not be liable to such Indemnified Party for any
legal expenses of additional counsel subsequently incurred by such Indemnified
Party in connection with the defense thereof. If NASB Holding does not elect to
assume such defense within thirty days from the date NASB Holding receives
notice of the Claim, the Indemnified Party may retain counsel satisfactory to
such Indemnified Party, and NASB Holding shall remain responsible for the
reasonable fees and expenses of such counsel as set forth above.
(d) NASB Holding shall pay all reasonable costs, including attorneys'
fees and expenses, that may be incurred by any Indemnified Party in successfully
enforcing the indemnity and other obligations provided for in this Section 4.12
to the fullest extent permitted by law. The rights of each Indemnified Party
under this paragraph (d) shall be in addition to any other right of
indemnification under this Section 4.12.
(e) If NASB Holding or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of NASB
Holding assume the obligations set forth in this Section 4.12.
(f) NASB Holding shall pay up to $50,000 for premiums to provide
reporting endorsement coverage under CBES's and Community Bank's current
director and officer insurance policies for each director, officer and employee
of CBES and Community Bank for a period of three (3) years.
39
(g) The provisions of this Section 4.12 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and the heirs,
executors, and administrators of such Indemnified Party.
Section 4.13. Phase I and Phase II Environmental Assessments of
Community Bank's Primary Banking Facility. CBES hereby agrees that NASB Holding
may cause to be performed a Phase I and Phase II environmental assessment of the
real property on which Community Bank's primary banking facility is located
(1001 North ▇▇▇▇▇ ▇▇▇▇▇ Road, Excelsior Springs, Missouri 64024). If as a result
of such assessment it is determined that environmental clean-up costs would
exceed $500,000, then NASB Holding may elect to terminate this Agreement
pursuant to Section 7.1(h).
ARTICLE V
Conditions to Consummation
Section 5.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger and any other transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following conditions:
(a) This Agreement shall have been approved by the requisite vote of
CBES's stockholders in accordance with applicable laws and regulations.
(b) The Requisite Regulatory Approvals, the consent of the OTS and any
other waivers with respect to this Agreement and the transactions contemplated
hereby shall have been obtained and shall remain in full force and effect, and
all statutory waiting periods shall have expired; and all other consents,
waivers and approvals of any third parties which are necessary to permit the
consummation of the Merger and the other transactions contemplated hereby shall
have been obtained or made except for those the failure to obtain which would
not have a Material Adverse Effect (i) on CBES and its Subsidiaries taken as a
whole or (ii) on NASB Holding and its Subsidiaries taken as a whole. No such
approval or consent shall have imposed any condition or requirement that would
so materially and adversely impact the economic or business benefits to NASB
Holding or CBES of the transactions contemplated hereby that, had such condition
or requirement been known, such party would not, in its reasonable judgment,
have entered into this Agreement.
(c) No party hereto shall be subject to any order, decree, ruling or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement and no Governmental Entity shall have instituted any
proceeding for the purpose of enjoining or prohibiting the consummation of the
Merger or any transactions contemplated by this Agreement.
(d) No statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger or any other
transactions contemplated by this Agreement.
40
(e) No litigation, claim, action, suit or other legal or
administrative proceeding challenging the Merger shall be pending against any
party hereto or any of their Subsidiaries, directors or officers, which in the
opinion of counsel for NASB Holding is likely to result in the incurring of
damages and defense costs not covered by insurance by NASB Holding or any of its
Subsidiaries or by any person or persons whom NASB Holding would be required to
indemnify in an aggregate amount exceeding $250,000.
Section 5.2. Conditions to the Obligations of NASB Holding. Each of
the obligations of CBES required to be performed by it at or prior to the
Closing pursuant to the terms of this Agreement shall have been duly performed
and complied with in all material respects and the representations and
warranties of CBES contained in this Agreement shall be true and correct,
subject to Sections 2.1 and 2.2, as of the date of this Agreement and as of the
Effective Date as though made at and as of the Effective Date (except as to any
representation or warranty which specifically relates to an earlier date), and
NASB Holding shall have received a certificate to the foregoing effect signed by
the chief executive officer and the president of CBES.
Section 5.3. Conditions to the Obligations of CBES. The obligations of
CBES to effect the Merger and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions:
(a) Each of the obligations of NASB Holding or Acquisition Sub
required to be performed by it at or prior to the Closing pursuant to the terms
of this Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of NASB Holding or
Acquisition Sub contained in this Agreement shall be true and correct, subject
to Sections 2.1 and 2.2, as of the date of this Agreement and as of the
Effective Date as though made at and as of the Effective Date (except as to any
representation or warranty which specifically relates to an earlier date), and
CBES shall have received a certificate to the foregoing effect signed by the
chief executive officer and the chief financial or principal accounting officer
of NASB Holding and Acquisition Sub.
(b) NASB Holding shall have provided to the Exchange Agent sufficient
cash to pay the aggregate Merger Consideration and CBES shall have received a
certificate from the Exchange Agent to such effect.
ARTICLE VI
Data Processing
Section 6.1. Sample Data. CBES shall cause Community Bank to provide
to NASB Bank, a machine-readable data tape of all of Community Bank's loan and
deposit accounts, together with a written description of the file, record, and
field data types and formats, to allow NASB Bank to prepare for a data
processing conversion, at a date prior to Closing agreed upon between NASB Bank
and CBES. Representatives of NASB Bank shall have reasonable access to Community
Bank's IT staff or other pertinent personnel during normal business hours to
facilitate the accurate and proper mapping or conversion of all customer
accounts to NASB Bank's data processing system. If this Agreement is terminated
for any
41
reason, customer information will either be promptly returned to Community Bank
or destroyed by NASB Bank at the option of Community Bank. At the request of
Community Bank, NASB Holding shall cause NASB Bank to enter into an agreement
with Community Bank to ensure compliance with Section 502(b)(2) of the
▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (15 U.S.C. ss. 6802(b)(2)) and to ensure the
confidentiality and security of nonpublic personal information of Community
Bank's consumer customers. In addition, at the request of Community Bank, NASB
Holding shall cause NASB Bank to enter into an agreement with Community Bank
required to ensure that, if this Agreement is terminated, NASB Bank will not use
the customer data provided to it for competitive purposes and to ensure that
NASB Bank will not directly and purposefully solicit business with any of the
customers included in the customer data provided by Community Bank.
Section 6.2. Information for Check Ordering. After receipt of the
Requisite Regulatory Approvals of the transactions contemplated by this
Agreement, CBES shall provide to NASB Bank a machine-readable data tape of all
of Community Bank's deposits, including all customer name and address
information, to enable NASB Bank to begin ordering checks, deposit slips, and
other transaction items for use by its customers.
Section 6.3. Installation of Data Circuits. After the Effective Date
of this Agreement, CBES shall cause Community Bank to give NASB Bank reasonable
access to Community Bank's locations during normal business hours for the
purposes of installing and testing data circuits and data processing equipment,
provided that the location, installation, and testing of said circuits and
equipment shall not be permitted to disrupt Community Bank's normal daily
functions and operation. In the event that this Agreement is terminated without
consummation of the planned transactions, NASB Holding shall cause NASB Bank to
remove its data processing equipment and circuits within 30 days after the
termination and shall repair promptly any damage done to Community Bank's
property during the installation or removal, all at NASB Bank's sole expense.
ARTICLE VII
Termination
Section 7.1. Termination. This Agreement may be terminated, and the
Merger abandoned, at or prior to the Effective Date, either before or after any
requisite stockholder approval:
(a) by the mutual consent of NASB Holding and CBES in a written
instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board; or
(b) by NASB Holding or CBES, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the event of the
failure of the stockholders of CBES to approve the Agreement at the Stockholder
Meeting; or
(c) by NASB Holding or CBES, by written notice to the other party, if
either (i) any approval, consent or waiver of a Government Regulatory Agency
required to permit consummation of the transactions contemplated hereby shall
have been denied or (ii) any
42
Governmental Entity of competent jurisdiction shall have issued a final,
unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement; or
(d) by NASB Holding or CBES, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by January 31, 2003, unless the failure to so
consummate by such time is due to the breach of any representation, warranty or
covenant contained in this Agreement by the party seeking to terminate; or
(e) by NASB Holding or CBES (provided that the party seeking
termination is not then in material breach of any representation, warranty,
covenant or other agreement contained herein), in the event of (i) a failure to
perform or comply by the other party with any covenant or agreement of such
other party contained in this Agreement, which failure or non-compliance is
material in the context of the transactions contemplated by this Agreement, or
(ii) subject to Section 2.2(a), any inaccuracies, omissions or breach in the
representations, warranties, covenants or agreements of the other party
contained in this Agreement the circumstances as to which either individually or
in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or cannot
be cured within 30 calendar days after written notice thereof is given by the
party seeking to terminate to such other party; or
(f) by CBES, if the Board of Directors of CBES reasonably determines
by vote of a majority of the members of its entire Board that a proposal made by
a third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of CBES Common Stock then outstanding or all
or substantially all of the assets of CBES constitutes a Superior Proposal and
that such proposal must be accepted in order to comply with the Board of
Directors' fiduciary duties to stockholders under applicable law; provided,
however, that prior to any such termination, CBES shall use its reasonable
efforts to negotiate in good faith with NASB Holding to make such adjustments in
the terms and conditions of this Agreement that would enable CBES to proceed
with the transactions contemplated herein; or
(g) by NASB Holding, if the Adjusted Stockholders' Equity of CBES, as
defined in Section 3.2(g) hereof, is less than $13,500,000.
(h) by NASB Holding, if the Phase I and Phase II environmental
assessments permitted by Section 4.13 hereof determine that environmental
clean-up costs would exceed $500,000.
Section 7.2. Termination Fee. In the event that CBES terminates this
Agreement pursuant to Section 7.1(f) and, within six (6) months after the
termination of this Agreement, CBES or Community Bank enters into a definitive
agreement with the person that made the Superior Proposal then CBES shall,
within 10 business days following written demand by NASB Holding pay to NASB
Holding $250,000 in cash.
43
Section 7.3. Effect of Termination. In the event of termination of
this Agreement by either NASB Holding or CBES prior to the consummation of the
Merger as provided in Section 7.2, this Agreement shall forthwith become void
and have no effect except (i) the obligations of the parties under Sections 4.3
(with respect to confidentiality and the return of information), 7.2 and 9.6
shall survive any termination of this Agreement and (ii) that notwithstanding
anything to the contrary contained in this Agreement, no party shall be relieved
or released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
ARTICLE VIII
Closing and Effective Date
Section 8.1. Effective Date. The closing of the transactions
contemplated hereby ("Closing") shall take place at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
unless another place is agreed to by NASB Bank and CBES, on a date designated by
NASB Holding and CBES ("Closing Date") that is no later than fifteen (15) days
following the date on which the expiration of the last applicable waiting period
in connection with the notices to and the approvals of Governmental Entities
shall occur and all conditions to the consummation of this Agreement are
satisfied or waived or on such other date as may be agreed to by the parties.
Prior to the Closing Date, CBES and Community Bank shall each execute a
Certificate of Merger in accordance with all appropriate legal requirements,
which shall be filed as required by law on the Closing Date, and the Merger
provided for therein shall become effective upon such filing or on such date as
may be specified in such Certificate of Merger. The date of such filing or such
later effective date as specified in the Certificate of Merger is herein
referred to as the "Effective Date."
Section 8.2. Deliveries at Closing. Subject to the provisions of
Article V and Article VII, on the Closing Date there shall be delivered to NASB
Holding and CBES the documents and instruments required to be delivered under
Article V.
ARTICLE IX
Certain Other Matters
Section 9.1. Certain Definitions; Interpretation. As used in this
Agreement, the following terms shall have the meanings indicated:
"Affiliate" means any person (a) which directly or indirectly
controls, or is controlled by, or is under common control with any other
person or any Subsidiary of that other person; (b) which directly or
beneficially owns or controls 5% or more of any class of voting stock of
another person or any Subsidiary of that other person; or (c) of which 5%
or more of any class of voting stock is owned directly or beneficially by
any other person or any Subsidiary of that other person.
"Material" means material to NASB Holding or CBES (as the case may be)
and its respective Subsidiaries, taken as a whole.
44
"Person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
Section 9.2. Survival. Only those agreements and covenants of the
parties that are by their terms applicable in whole or in part after the
Effective Date, including Section 4.3, Section 4.11 and Section 4.12 of this
Agreement, shall survive the Effective Date. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Agreement and shall not survive the Effective Date.
Section 9.3. Waiver; Amendment. Prior to the Effective Date, any
provision of this Agreement may be (i) waived in writing by the party benefited
by the provision or (ii) amended or modified at any time (including the
structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of CBES, no amendment or
modification may be made that would reduce the amount or alter or change the
kind of consideration to be received by holders of CBES Common Stock or
contravene any provision of the DGCL or the federal banking laws, rules and
regulations.
Section 9.4. Counterparts. This Agreement may be executed in
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 9.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Missouri, without
regard to conflicts of laws principles.
Section 9.6. Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
Section 9.7. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission (confirmed in writing) to such party at its address or facsimile
number set forth below or such other address or facsimile transmission as such
party may specify by notice (in accordance with this provision) to the other
party hereto.
If to CBES, to:
CBES Bancorp, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
With copies to:
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to NASB Holding or Acquisition Sub, to:
NASB Financial, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇
With copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
Suite 1100
▇▇▇ ▇▇▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.8. Entire Agreement; etc. This Agreement, together with the
Disclosure Letters, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except for Sections
4.11 and 4.12 which confer rights on the parties described therein, nothing in
this Agreement is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 9.9. Specific Performance. NASB Holding and CBES agree that
the franchise value of Community Bank represents a unique asset and that the
failure of either party to perform the terms of this Agreement would cause
irreparable harm for which monetary damages would be totally inadequate.
Therefore, either party shall be entitled to specific performance of the terms
of this Agreement. Nothing contained in this Agreement, however, shall be deemed
as granting to NASB Holding control over CBES or Community Bank prior to the
Effective Date. Until the Requisite Regulatory Approvals and CBES's Stockholders
Approvals have been received, a breach of this Agreement by either party may be
remedied only by an action for money damages.
46
Section 9.10. Successors and Assigns; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this Agreement may
not be assigned by either party hereto without the written consent of the other
party.
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
NASB FINANCIAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
----------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: President
NASB ACQUISITION SUBSIDIARY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇
----------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: President
CBES BANCORP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
48