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Dividend Reinvestment and Stock Purchase Plan
1,000,000 shares of common stock
This prospectus describes the Commerce Bancorp, Inc. Dividend Reinvestment
and Stock Purchase Plan. Commerce Bancorp wanted to amend its currently
existing Dividend Reinvestment and Stock Purchase Plan to modernize it and
provide new enhanced features. The Plan offers holders of Commerce Bancorp
equity securities the following:
o a simple and convenient method of investing cash dividends in additional
shares of Commerce Bancorp common stock; and
o the opportunity to purchase additional shares of Commerce Bancorp common
stock by making voluntary cash payments of $100 to $5,000 per month, this
$5,000 maximum monthly purchase amount is subject to change, see page 3.
Some of the significant features of the Plan are as follows:
o participants do not have to pay brokerage commissions or service charges
on purchases made through the Plan;
o participants purchase the Commerce Bancorp common stock at a 3% discount,
this 3% discount is subject to change, see page 7;
o holders of shares currently enrolled in Commerce Bancorp's Dividend
Reinvestment and Stock Purchase Plan will automatically be enrolled in
this amended Plan; and
o participation in the Plan is entirely voluntary, and participants may
terminate their participation at any time.
Commerce Bancorp cannot estimate the net proceeds it will receive from the
sale of its common stock in connection with the Plan. The amount of the net
proceeds which Commerce Bancorp will receive will depend upon the following:
o the market price of Commerce Bancorp common stock;
o the extent of shareholder participation in the Plan; and
o other factors.
Commerce Bancorp common stock trades on the New York Stock Exchange under
the symbol "CBH".
The securities offered hereby are not savings accounts, deposits or other
obligations of a bank or savings association and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or has passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
The date of this prospectus is March 5, 1999.
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Table of Contents
Page
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Summary .................................................. 1
The Plan ................................................. 3
Use of Proceeds .......................................... 17
Description of Commerce Bancorp's Capital Stock .......... 17
Dividends ................................................ 20
Legal Matters ............................................ 21
Experts .................................................. 21
Where You Can Find More Information ...................... 22
You should rely only on the information incorporated by reference or provided
in this prospectus. Commerce Bancorp has not authorized anyone else to provide
you with different information. Commerce Bancorp will not make an offer of
these shares in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front page of this prospectus.
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Summary
This summary highlights selected information from this prospectus and may
not contain all of the information that is important to you. To understand the
Plan fully, you should read this entire prospectus carefully before you decide
to participate in the Plan.
The Company
Background
Commerce Bancorp is a multi-bank holding company headquartered in Cherry
Hill, New Jersey which operates:
o four nationally chartered bank subsidiaries:
o Commerce Bank, N.A., Cherry Hill,
New Jersey,
o Commerce Bank/Pennsylvania, N.A., Devon, Pennsylvania,
o Commerce Bank/Shore, N.A., Toms River, New Jersey,
o Commerce Bank/Central, N.A., Flemington, New Jersey, and
o one state chartered bank subsidiary:
o Commerce Bank/North, Ramsey,
New Jersey.
These five bank subsidiaries have 81 retail branch offices in New
Jersey, and 17 retail branch offices in Metropolitan Philadelphia. Commerce
Bancorp, through its five bank subsidiaries, provides a full range of retail
and commercial banking services for consumers and small and mid-sized
companies. Lending services are focused on commercial real estate and
commercial and consumer loans to local borrowers. Commerce Bancorp's lending
and investment activities are funded principally by retail deposits gathered
through its retail branch office network.
Commerce Bancorp also operates one nonbank subsidiary, Commerce Capital
Markets, Inc., Philadelphia, Pennsylvania which engages in municipal securities
and brokerage activities. In addition, Commerce Bancorp, through Commerce
National Insurance Services, Inc., a nonbank subsidiary of Commerce Bank/North,
operates an insurance brokerage firm concentrating on commercial property,
casualty and surety as well as personal lines of insurance for clients in
multiple states, primarily Delaware, New Jersey and Pennsylvania.
Address and telephone number
Commerce Bancorp's principal executive offices are located at Commerce
Atrium, 1701 Route 70 East, Cherry Hill, New Jersey 08034-5400 and its
telephone number is (609) 751-9000.
Enrollment
If you are already a participant in the Plan, you need not do anything
further; your participation will continue until terminated.
Holders of Commerce Bancorp's equity securities can participate in the
Plan by completing and submitting the authorization card, which is enclosed
with this prospectus, to the plan administrator, ChaseMellon Shareholder
Services, at P.O. Box 3339, South Hackensack, NJ 07606. See pages 5-6.
If your shares of Commerce Bancorp stock are held in a brokerage
account, you may either arrange for your broker to be a participant in the Plan
or you may participate directly by transferring registration of some or all of
your shares into your name and submitting a completed authorization card to the
plan administrator. See page 5.
Reinvestment of Dividends
You can reinvest your cash dividends on all or a portion of your shares
of Commerce Bancorp stock toward the purchase of additional shares of Commerce
Bancorp common stock. See page 3.
Fractional Shares
Commerce Bancorp pays dividends on both whole shares and fractional
shares in the Plan and will credit your plan account with dividends on both
your whole and fractional shares. See pages 4 and 10.
Optional Cash Investments
After you are enrolled in the Plan, you may buy additional shares of
Commerce Bancorp common stock under the Plan. You can invest a minimum of
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$100 and a maximum of $5,000 per calendar month. This $5,000 maximum monthly
payment amount is subject to change, see page 3. You can pay by check or money
order made payable to "The Chase Manhattan Bank." See pages 3 and 8-9.
Fees and Purchase Price
You will not have to pay any brokerage commissions or service charges
for any shares of Commerce Bancorp common stock purchased under the Plan. In
addition, you will be able to purchase Commerce Bancorp common stock at a 3%
discount from the market price of Commerce Bancorp common stock. This 3%
discount is subject to change, see page 7.
Safekeeping of Certificates
You can deposit your Commerce Bancorp common stock certificates with the
plan administrator for safekeeping at no cost to you. This feature of the Plan
applies whether or not you are having the dividends on deposited shares
reinvested under the Plan. A certificate for your shares will be sent to you,
free of charge, upon request. However, fractional shares will not be issued.
See pages 4 and 10.
Gifts and Transfers of Shares
You can give or transfer your shares of Commerce Bancorp common stock to
others.
Sell Shares Conveniently
If you choose to have the plan administrator sell your Commerce Bancorp
common stock held in your plan account, you will incur:
o a nominal fee to be deducted from the proceeds of the sale;
o any applicable brokerage commissions; and
o any applicable stock transfer taxes.
See pages 5 and 9.
Tracking Your Investment
You will receive a statement of your plan account confirming purchases
of shares as soon as practicable after purchases are made. Statements provide
the details of such transactions and show the share balance in your plan
account. See pages 4 and 9.
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The Plan
The original Dividend Reinvestment and Stock Purchase Plan was adopted by
the board of directors of Commerce Bancorp in April 1992 and became effective
in November 1992. The Plan was amended by the board of directors of Commerce
Bancorp in January 1999. Shareholders who do not participate in the Plan will
receive cash dividends, as declared, and paid in the usual matter. The Plan,
which is comprised of a series of questions and answers, is set forth below.
Purpose
1. What are the purposes of the Plan?
The primary purposes of the Plan are to provide holders of record of
shares of common stock of the Company, par value $1.5625 per share (the "Common
Stock"), and other classes of equity securities of the Company outstanding from
time to time, or both (collectively "Company Stock"), with the opportunity to
have cash dividends on all or any part of their shares of Company Stock
automatically reinvested in additional shares of Common Stock and with a
convenient and simple method of investing voluntary cash payments in additional
shares of Common Stock, in each case without payment of any service charges or
brokerage commissions and at a discount from the Market Price (as defined in
Question 11). Such shares of Common Stock may be newly issued or treasury
shares purchased directly from the Company or may be shares purchased in the
open market.
When newly issued or treasury shares are purchased from the Company, the
Company will receive new equity capital funds available for general corporate
purposes.
The Plan is intended for the benefit of long-term investors, and not for
the benefit of individuals or institutions who engage in short-term trading
activities that could cause aberrations in the composite trading volume of the
Company's Common Stock. From time to time, financial intermediaries may engage
in positioning transactions in order to benefit from the discount from the
Market Price of the shares of Common Stock acquired through the reinvestment of
dividends and voluntary cash payments under the Plan. Such transactions may
cause fluctuations in the trading volume of the Common Stock. The Company
reserves the right to modify, suspend or terminate participation in the Plan by
otherwise eligible holders of Common Stock in order to eliminate practices
which are not consistent with the purposes of the Plan.
Options Available to Participants
2. What options are available to enrolled participants?
Dividend Reinvestment Program. Holders of the Company's Stock who wish to
participate in the Plan, whether Record Owners or Beneficial Owners (each a
"Participant"; see also Question 5 regarding the definition of a "Participant")
may elect to have all or a portion of their cash dividends paid on their shares
of the Company's Stock automatically reinvested in additional shares of Common
Stock through the Dividend Reinvestment Program. Cash dividends are paid on the
Company's Stock when and as declared by the Company's Board of Directors,
generally on a quarterly basis. Subject to the availability of shares of Common
Stock registered for issuance under the Plan, there is no limitation on the
amount of dividends a Participant may reinvest under the Dividend Reinvestment
Program of the Plan.
Stock Purchase Program. Each month, Participants may also elect to invest
optional cash payments in shares of Common Stock, subject to a minimum monthly
purchase limit of $100 and a maximum monthly purchase limit of $5,000. This
$5,000 maximum monthly purchase is subject to upward or downward adjustment.
Participants may make optional cash payments each month even if no dividend has
been declared. Participants are not required to enroll any shares of Common
Stock purchased through the Stock Purchase Program into the Dividend
Reinvestment Program but may designate all or a portion of such shares for such
participation on the Authorization Card if desired.
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Advantages and Disadvantages
3. What are the advantages and disadvantages of the Plan?
Advantages
(a) The Plan provides Participants with the opportunity to reinvest cash
dividends paid on all or a portion of their shares of the Company's Stock in
additional shares of Common Stock without payment of any brokerage commissions
or service charge and at a 3% discount from the Market Price (as defined in
Question 11 and subject to change).
(b) The Plan provides Participants with the opportunity to make monthly
investments of optional cash payments, subject to a minimum and maximum amount,
for the purchase of shares of Common Stock at a 3% discount from the Market
Price (subject to change) and without payment of any brokerage commission or
service charge. The Participant may designate all, a portion or none of such
Plan shares to be enrolled in the Dividend Reinvestment Program.
(c) All cash dividends paid on Participants' Plan shares enrolled in the
Dividend Reinvestment Program can be fully invested in additional shares of
Common Stock because the Plan permits fractional shares to be credited to Plan
Accounts. Dividends on such fractional shares, as well as on whole shares, will
also be reinvested in additional shares which will be credited to Plan
Accounts.
(d) The Plan Administrator, provides for the safekeeping of stock
certificates for shares credited to each Plan Account. For your convenience,
shares purchased under the Plan will be maintained at no charge by the Plan
Administrator in your name in non-certificated form. You may, however, request
a stock certificate from the Plan Administrator at any time free of charge.
(e) A Participant may also elect to deposit with the Plan Administrator
certificates for the stockholder's other shares of the Company's Stock
registered in his or her name for safekeeping without charge. Because the
Participant bears the risk of loss in sending certificates to the Plan
Administrator, certificates should be sent by registered mail, return receipt
requested, and properly insured to the address specified below:
ChaseMellon Shareholder Services
P.O. Box 3340
South Hackensack, NJ 07606-1940
If certificates are later issued either upon request of the Participant or upon
termination of participation in the Plan, new, differently numbered
certificates will be issued.
(f) Periodic statements reflecting all current activity, including Plan
share purchases and the most recent Plan Account balance, simplify
Participants' record keeping. See Question 22 for information concerning
reports to Participants.
Disadvantages
(a) No interest will be paid by the Company or the Plan Administrator on
dividends or optional cash payments held pending reinvestment or investment.
See Question 17. In addition, optional cash payments of less than $100 and that
portion of any optional cash payments which exceed the maximum monthly purchase
limit of $5,000, are subject to return to the Participant without interest.
This $5,000 maximum monthly payment amount is subject to change, see Question
2.
(b) With respect to shares acquired from the Company, the actual number of
shares to be issued to the Participant or the Participant's Plan Account will
not be determined until after the end of the relevant Pricing Period (as
defined in Question 11). Therefore, during the Pricing Period, Participants
will not know the actual price per share or the number of shares they have
purchased.
(c) With respect to shares acquired from the Company, while the Plan
currently provides for a 3% discount from the Market Price (subject to change)
during the Pricing Period, the Market Price, as so discounted, may exceed the
price at which shares of the Common Stock are trading on the Investment Date
(as defined in Question 13) when the shares are issued or thereafter. The
trading price on the Investment Date generally governs the amount of taxable
income to shareholders. See Question 34.
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(d) Because optional cash payments must be received by the Plan
Administrator by the Optional Cash Payment Due Date (as defined in Question
13), such payments may be exposed to changes in market conditions for a longer
period of time than in the case of typical secondary market transactions. See
Questions 13 and 14 through 18.
(e) Resales of shares of Common Stock credited to a Participant's Plan
Account will involve a nominal fee per transaction to be deducted from the
proceeds of the sale by the Plan Administrator (if such resale is made by the
Plan Administrator at the request of a Participant), plus any brokerage
commission and any applicable stock transfer taxes on the resales. See
Questions 19 and 20.
Administration
4. Who administers the Plan?
The Company has retained The Chase Manhattan Bank as plan administrator
(the "Plan Administrator"), to administer the Plan. Certain administrative
support will be provided to the Plan Administrator by ChaseMellon Shareholder
Services, L.L.C., a registered transfer agent. See Question 22 for information
concerning reports to Participants. If the Plan Administrator resigns or
otherwise ceases to act as plan administrator, the Company will appoint a new
plan administrator to administer the Plan.
Participation
5. Who is eligible to participate?
All registered shareholders are eligible for participation in the Plan.
If your shares of Company Stock are registered in a name other than your
own (e.g., in the name of a broker, bank or nominee) and you want to
participate, you must either make appropriate arrangements for your broker,
bank or nominee to become a Participant or you must become a shareholder of
record by having a part or all of your shares transferred to your own name. To
have shares of which you are the beneficial owner re-registered in your name,
you must request your broker, bank or nominee to send you a certificate
representing such shares.
If you are already a Participant in the Plan, you need not do anything
further; your participation will continue until terminated. (See Question 28).
6. How does an eligible shareholder participate?
An eligible holder of shares of Company Stock may enroll in the Plan by
signing an Authorization Card and returning it to the Plan Administrator:
The Chase Manhattan Bank
c/o ChaseMellon Shareholder Services
P.O. Box 3339
South Hackensack, NJ 07606-1939
An Authorization Card and a return envelope are enclosed. Additional
Authorization Cards may be obtained at any time by contacting the Plan
Administrator at the above address or by telephoning the Plan Administrator at
(888) 470-5884.
7. When may a shareholder join the Plan?
An eligible shareholder may join the Plan at any time.
If an Authorization Card specifying reinvestment of dividends is received
by the Plan Administrator on or prior to two business days before the record
date established for a particular cash dividend, reinvestment will commence
with that cash dividend. With respect to its Common Stock, the Company expects
that dividend record dates will normally fall on or about the latter part of
December, March, June and September, and that dividend payment dates will
normally fall on or about 21 days after the record dates.
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If the Authorization Card is received after the record date established
for a particular cash dividend, then the reinvestment of dividends will not
begin until the cash dividend payment date following the next record date. (See
Questions 14 -18 for information concerning the investment of voluntary cash
payments). Additionally, for Participants wishing to make optional cash
payments to purchase shares under the Stock Purchase Program, full payment must
be received by the Plan Administrator by the Optional Cash Due Date. (See
Questions 13 and 14).
8. What does the Authorization Card provide?
The Authorization Cards provide for the purchase of additional shares of
Common Stock through the following investment options:
(a) Full Dividend Reinvestment directs the investment in accordance with
the Plan of all of your cash dividends on all of the shares of Company
Stock then or subsequently registered in your name and also permits you to
make voluntary cash payments for the purchase of additional shares in
accordance with the Plan.
(b) Partial Dividend Reinvestment directs the investment in accordance
with the Plan of the cash dividends on that number of shares of Company
Stock registered in your name which are designated in the appropriate space
on the Authorization Card and reinvest cash dividends on all other shares
of Company Stock now or hereafter held for you by the Plan Administrator,
and also permits you to make voluntary cash payments for the purchase of
additional shares in accordance with the Plan.
You may select either of the above investment options for your Company
Stock. An eligible shareholder may not elect to make only voluntary cash
payments under the Plan. Participation in the Plan is limited to shareholders
who direct the Plan Administrator to reinvest dividends on shares of Company
Stock held of record by them to the purchase of additional shares of Common
Stock. Once so enrolled, a shareholder may elect to make voluntary cash
payments.
Any Participant who returns a properly executed Authorization Card to the
Plan Administrator without electing a dividend reinvestment option will be
enrolled as having selected the Full Dividend Reinvestment Option.
Common Shares purchased with reinvested dividends or voluntary cash
payments (and shares of Company Stock deposited with the Plan Administrator)
will be held by the Plan Administrator in your name for your account. The cash
dividends on all of the shares of Common Stock credited to Plan Accounts
(whether the related share certificates are held by the Plan Administrator or
by the Participant) will be reinvested in accordance with the Plan. You may
elect to receive cash dividends on shares of Common Stock credited to your Plan
Account only by (i) requesting that the shares you want to receive cash
dividends on are withdrawn from your Plan Account and sent to you in
certificated form and (ii) submitting to the Plan Administrator an
Authorization Card which either elects the Partial Dividend Reinvestment option
or modifies your then current Partial Dividend Reinvestment Option with respect
to Company Stock.
9. How may a Participant change options under the Plan?
As a Participant, you may change investment options or modify the number
of shares of Company Stock designated under the Partial Dividend Reinvestment
option at any time by completing a new Authorization Card and returning it to
the Plan Administrator at the address set forth on the Authorization Card. Any
such change will become effective as of the cash dividend record date following
the date the Authorization Card is received by the Plan Administrator.
Purchases Under the Plan
10. How are shares acquired under the Plan?
A total of 1,000,000 shares of Common Stock are being offered under the
Plan. The Plan Administrator uses cash dividends and voluntary cash payments to
acquire shares of Common Stock directly from the Company for the account of
Participants. If the Company deems it advisable for shares to be acquired in
the open market (rather than directly from the Company) or if newly issued or
treasury shares are not available,
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the Plan Administrator, as agent for the Participants, will arrange for the
purchase of shares in the open market with cash dividends and voluntary cash
payments. Purchases of shares in the open market will be effected through
brokerage transactions and may be made in the over-the-counter market or in
negotiated transactions, which transactions may include situations in which the
broker is selling as a principal or an agent. To the extent the Plan makes
purchases from brokerage firms as principals, the purchase price of shares may
include a retail mark-up. If the shares are traded on a securities exchange,
they may be purchased on such exchange. The Company's Common Stock currently is
traded on the NYSE. Shares will be acquired in the open market with cash
dividends and voluntary cash payments at such times as are described in
Question 13.
Neither the Company nor any Participant shall have any authorization or
power to direct the time or price at which shares will be purchased or the
selection of the broker or dealer through or from whom purchases are to be made
by the Plan Administrator. However, when open market purchases are made by the
Plan Administrator, the Plan Administrator shall use its best efforts to
purchase the shares at the lowest possible price.
In the event that the number of shares purchased for the account of any
Participant in the Plan is not a whole number of shares, the Participant's
account will be credited with the full number of shares and/or fractional
shares computed to four decimal places.
11. At what price will shares be purchased under the Plan with reinvested
dividends?
Shares of Common Stock purchased through the Plan directly from the
Company, whether issued by the Company out of legally authorized but unissued
shares of Common Stock or out of treasury shares, will be purchased at a
discount of 3% from the average of the high and low sale prices of the Common
Stock as reported on the NYSE on the trading day immediately preceding the
particular Investment Date (as defined in Question 13) or the closest preceding
date if there are no high and low sale prices available on that date, referred
to as the Pricing Period. If there are no high and low sale prices available
for the Common Stock for the ten trading days preceding the applicable
Investment Date, then the Company's Board of Directors shall make the
determination of the purchase price on the basis of such information as it
considers best reflects current market value.
The purchase price for shares of Common Stock purchased through the Plan
in the open market shall be at a discount of 3% from the weighted average
purchase price of all shares purchased for the Plan in the open market on the
relevant Investment Date. In making purchases for the Participant's account in
the open market, the Plan Administrator may commingle the Participant's funds
with those of other shareholders of the Company participating in the Plan.
The average price described above is referred to herein as "Market Price"
and the purchase price, as discounted from the Market Price, is referred to
herein as the "Discounted Purchase Price." The discount is subject to change
from time to time (but will not vary from the range of 0% to 3%) and is also
subject to discontinuance at the Company's discretion after a review of current
market conditions, the level of participation in the Plan and the Company's
current and projected capital needs. The Company will provide Participants with
written notice of a change in the applicable discount at least 30 days prior to
the relevant record date or via an appropriate press release for the relevant
Optional Cash Payment Due Date.
12. At what price will shares be purchased under the Plan with voluntary cash
payments?
Shares purchased under the Plan with voluntary cash payments will be
acquired by Participants at a price determined as described in Question 11.
13. When will the Plan purchase shares of Common Stock?
Except as otherwise provided in this Plan, dates on which shares are
purchased with reinvested dividends or with voluntary cash payments are
referred to in this Plan as "Investment Dates."
The Investment Date with respect to the Common Stock acquired pursuant to
dividend reinvestments will be (i) if acquired directly from the Company, the
quarterly dividend payment date declared by the Board of Directors or (ii) in
the case of open market purchases, the date or dates of actual investment, but
no later than 10 business days following the dividend payment date.
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Purchases of Common Stock directly from the Company with voluntary cash
payments will occur every month on the related Investment Date. The Optional
Cash Payment Due Date is three business days prior to the commencement of the
related Investment Date and the Investment Date is on or about the 20th day of
each month. Checks or other drafts must clear prior to the Investment Date on
which the investment is to be made. Please allow sufficient time for your check
to clear.
Purchases of Common Stock in the open market may occur over one or more
trading days and will commence on the same days as specified above for
purchases made directly from the Company. For a number of reasons including
observance of the Rules and Regulations of the Securities and Exchange
Commission requiring temporary curtailment or suspension of purchases, it is
possible that the whole amount of funds available in a Participant's account
for the purchase of shares of the Company might not be applied to the purchase
of such shares on or before the next ensuing Investment Date. Neither the
Company nor the Plan Administrator shall be liable to any shareholder when such
conditions prevent the purchase of shares or interfere with the timing of such
purchases.
Voluntary Cash Payments
14. How does a Participant make voluntary cash payments?
Eligible shareholders enrolling in the Plan may make voluntary cash
payments by mailing a check or money order with an executed Authorization Card
to the Plan Administrator at the address set forth in Question 6. After an
Authorization Card has been received by the Plan Administrator, voluntary cash
payments may be made by mailing a check or money order together with a properly
executed copy of the form for such purpose which will accompany the account
statement sent to Participants. All checks and money orders must be payable to
"The Chase Manhattan Bank." Do not send cash. Voluntary cash payments must be
received on or before the third business day prior to the particular Investment
Date, and checks or other drafts must clear prior to such Investment Date, for
a voluntary cash payment to be invested on such Investment Date.
Shares purchased with voluntary cash payments will be held by the Plan
Administrator and credited to a Participant's account under the Plan.
Thereafter, dividends on such shares automatically will be fully reinvested in
additional shares unless such shares are withdrawn from the Plan (see Question
28).
15. What are the limitations on the amount of voluntary cash payments?
Voluntary cash payments may not be less than $100 per payment nor may they
total more than $5,000 per monthly investment period. This $5,000 maximum
monthly purchase amount is subject to change, see Question 2. Purchases will be
made on or about the 20th day of each month.
The same amount of money need not be sent each time and there is no
obligation to make a voluntary cash payment.
16. May a participant elect to make only voluntary cash payments under the
Plan?
No. Participants who do not otherwise elect to apply all or a portion of
dividends on Company Stock held of record by them to the purchase of additional
shares of Common Stock under the Plan may not elect to participate in the Plan
by making only voluntary cash payments under the Plan.
17. When are voluntary cash payments invested?
Voluntary cash payments will be invested at the times described in
Question 13. NO INTEREST WILL BE PAID BY THE COMPANY OR THE PLAN ADMINISTRATOR
ON CASH DIVIDENDS OR VOLUNTARY CASH PAYMENTS HELD BY THE PLAN ADMINISTRATOR
PRIOR TO THE DATE OF INVESTMENT. For that reason, the Company recommends that
shareholders mail their voluntary cash payments so that they are received by
the Plan Administrator prior to, but as close as possible to, three business
days prior to an Investment Date.
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18. Under what circumstances will voluntary cash payments be returned?
Participants may obtain refunds of voluntary cash payments provided that a
written request for refund is received by the Plan Administrator on or before
not less than five business days prior to the Investment Date for such
voluntary cash payment. Once the check in payment of the voluntary cash payment
has cleared, the Plan Administrator will promptly honor any timely request for
a refund.
Costs
19. Are there any expenses to Participants in connection with the Plan?
Participants incur no service charges or brokerage commissions for
purchases made under the Plan. All costs of administration of the Plan are paid
by the Company. Participants may elect to send the certificates for their other
shares of the Company's Stock to the Plan Administrator for safekeeping, and
there is no fee for this service. However, Participants who request that the
Plan Administrator sell all or any portion of their shares must pay a nominal
fee per transaction to the Plan Administrator, any related brokerage
commissions and applicable stock transfer taxes.
20. What fees will a Plan Participant be responsible for?
Dividend Reinvestment No Charge
Optional Purchases No Charge
Sales Fee* $ 15.00
Fee for Returned Checks $ 25.00
Duplicate Statements
Current Year No Charge
Prior Years $ 20.00
* Plus a $.12 per share trading fee.
The Plan Administrator will deduct the applicable fees from proceeds due
from a sale.
Administration
21. What are the functions of the Plan Administrator?
The Plan Administrator administers the Plan by automatically reinvesting
dividends and investing voluntary cash payments of Participants in additional
shares of Common Stock in accordance with the investment option selected by
Participants. Additionally, the Plan Administrator keeps records, sends
statements of account to Participants and performs other administrative duties
relating to the Plan.
Certain administrative support services will be provided by ChaseMellon
Shareholder Services, L.L.C., the Company's registered transfer agent.
Participants' Accounts and Reports
22. What kind of accounts are maintained for Participants and what reports on
those Accounts do they receive?
The Plan Administrator maintains a separate account for each Participant.
All shares purchased for a Participant under the Plan will be credited to the
Participant's account. The Plan Administrator will mail to each Participant a
statement of account confirming purchases of shares as soon as practicable
after purchases are made for a Participant's Plan Account. Statements of
account should be retained for income tax purposes.
In addition, each Participant will receive copies of the Company's annual
and quarterly reports to shareholders, proxy statements and dividend income
information for tax purposes.
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Dividends
23. Will Participants be credited with dividends on shares credited to their
Accounts under the Plan?
Yes. The Plan Administrator, as agent, will receive dividends for all
shares of Company Stock credited to each Participant's Plan Account on the cash
dividend record date, will credit such cash dividends to each such
Participant's account on the basis of full and fractional shares held in such
account (each Participant's cash dividend will equal the number of whole and
fractional shares in his or her account times the cash dividend rate paid), and
will automatically reinvest such cash dividends in additional shares of Common
Stock, computed to four decimal places, in accordance with the option selected
by the Participant.
Certificates for Shares
24. Will certificates be issued for shares purchased under the Plan?
No. Shares purchased under the Plan will be maintained by the Plan
Administrator in your name in non-certificated form. This service protects
against loss, theft or destruction of the share certificates representing Plan
shares. Certificates for shares purchased under the Plan will not be issued to
a Participant unless a Participant requests certificates in writing for a
specified number of whole shares credited to a Participant's account under the
Plan. No certificate for a fractional share will be issued.
A Participant's written request to the Plan Administrator for share
certificates to be issued in the Participant's name will not be treated as a
withdrawal of such shares from the Participant's account unless the request is
made in conjunction with a Participant's termination of participation in the
Plan and/or change in the number of shares to be reinvested (see Question 28).
In the absence of an accompanying Authorization Card changing the number of
shares to be reinvested or a Participant's termination of participation in the
Plan, the dividends on such shares will continue to be paid to and reinvested
by the Plan Administrator (See Questions 8, 25 and 28).
25. In whose name will certificates be registered when issued?
Accounts under the Plan are maintained in the names in which share
certificates of the Participants are registered at the time the Participants
enroll in the Plan. Certificates for whole shares, when issued at the request
of Participants, will be registered in the same names. However, even after the
Plan Administrator has issued certificates to a Participant for some or all of
the whole shares held in his or her Plan Account, cash dividends on all shares
credited to a Participant's Plan Account will continue to be reinvested in
additional Common Stock pursuant to the Plan. (See Questions 8, 23 and 24).
If a Participant has some or all of his or her shares held re-registered
in another name (because of a sale or gift of these shares, for example),
dividends on the re-registered shares will not continue to be reinvested in
additional Common Stock under the Plan. Dividends on the re-registered shares
will be reinvested in additional Common Stock under the Plan only if the new
record owner elects to become a Participant.
See Question 30 for information concerning the effect on a Participant's
Plan Account if the Participant sells or transfers Common Stock certificates
registered in his or her name.
Shares credited to the account of a Participant may not be pledged or
assigned and any such purported pledge or assignment is void. A Participant who
wishes to pledge or assign such shares must first request that the Plan
Administrator issue certificates for such shares.
26. May a Participant deposit Company shares in his or her account?
You may deposit certificates representing your shares of Company Stock
with the Plan Administrator for safekeeping at no charge. Shareholders are
encouraged but not required to deposit their Company Stock share certificates
with the Plan Administrator upon their election to participate in the Plan.
Such certificates must be accompanied by a written request that the shares be
added to your Plan Account. All shares of Company Stock held in your Plan
Account will have the cash dividends received thereon reinvested in additional
shares of Common Stock as provided in the Plan. (See Questions 8 and 23).
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27. How may share certificates or other documents be sent to the Plan
Administrator?
The method of delivery of share certificates and other documents is at the
election and risk of the Participant. If such delivery is by mail, registered
mail with return receipt requested, properly insured, is recommended.
Certificates should be mailed to:
ChaseMellon Shareholder Services
P.O. Box 3340
South Hackensack, NJ 07606-1940
Termination of Participation in the Plan or Withdrawal of Shares
28. How does a Participant terminate participation in the Plan or withdraw
shares from the Plan?
You may terminate your participation in the Plan at any time by notifying
the Plan Administrator in writing at least five full business days before the
next dividend record date. In the event written notice of termination is not
received by the Plan Administrator by such time, shares will be purchased for
the Participant with the related cash dividend and participation in the Plan
will not terminate until after such dividend has been reinvested. Because the
legal requirements for proper notice of the death of the holder of a Plan
account which is registered solely to that holder vary greatly, depending on
the state of residence of the Participant and form of registration of the
Participant's Plan account, the Plan Administrator should be contacted at the
address or phone number set forth in the response to Question 6 in the event of
such death.
Upon termination by reason of notice of a Participant's death or
adjudicated incompetency, the Participant's shares held by the Plan
Administrator and any cash dividends thereafter received by the Plan
Administrator will be retained by the Plan Administrator until such time as
such Participant's legal representative has been appointed and has furnished
proof satisfactory to the Plan Administrator of the legal representative's
right to receive the share certificate and/or payment. No interest will be paid
by either the Company or the Plan Administrator on any dividends retained by
the Plan Administrator during any such period of time.
A Participant may withdraw a portion of the shares of Company Stock
credited to his or her account from participation in the Plan by giving notice
to that effect to the Plan Administrator and specifying in the notice the
number of whole shares to be withdrawn. This notice should be accompanied by a
new Authorization Card designating the Partial Dividend Reinvestment option and
showing the number of shares registered in your name with respect to which you
desire to have cash dividends reinvested in accordance with the Plan. No
fractional shares may be withdrawn except upon termination of participation in
the Plan. The Plan Administrator will send to the Participant a statement of
account and a certificate representing the withdrawn shares.
29. What will Participants receive when they terminate participation in the
Plan?
Upon electing to terminate participation in the Plan, the Plan
Administrator will send to the Participant a certificate representing the whole
shares of Common Stock held by the Plan Administrator in the Participant's Plan
account and a check for the cash equivalent of any fractional share of Common
Stock less applicable sales fees.
The cash to be paid in lieu of a fractional share will be based on the
current market price of the Common Stock on the Investment Date, which for
purposes of this sentence is the day that the account is terminated by the Plan
Administrator.
Whenever a Participant does not own at least one share directly, the Plan
Administrator may, if instructed by the Company, terminate the Plan Account,
sell the fractional share and send the Participant the sale proceeds, less
related sales fees, if any.
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Other Information
30. What happens when a Participant sells or transfers some (but not all) of
the shares registered in his or her name?
(a) Full Dividend Reinvestment.
If you are reinvesting the cash dividends on all of the shares registered
in your name, and you dispose of a portion of these shares, the Plan
Administrator will continue to reinvest the dividends on the remainder of the
shares registered in your name.
(b) Partial Dividend Reinvestment.
If you have directed the Plan Administrator to pay cash dividends to you
on some of your shares and to reinvest dividends on the remainder of your
shares, and you dispose of a portion of your shares, you should provide new
written instructions to the Plan Administrator on how to handle your account.
If the Plan Administrator does not receive new instructions, it may, in its
discretion, either (i) pay cash dividends on all of your shares or (ii)
continue to reinvest dividends on the number of shares, if any, you own in
which you have requested to have the dividends reinvested.
31. What happens if the Company pays a dividend in stock or splits its shares?
Any shares of the Company's Common Stock issued in connection with a stock
split or dividend distributed by the Company with respect to shares credited to
your Plan account will be added to your account.
As soon as practicable after the payment of a stock dividend or stock
split, a statement will be sent to each Participant which will indicate the
number of shares of Common Stock credited to each Participant's account under
the Plan as a result of the stock dividend or stock split. A Participant may
receive a certificate for such shares (other than fractional shares) at any
time by sending a written request to:
ChaseMellon Shareholder Services
P.O. Box 3338
South Hackensack, NJ 07606-1938
32. If the Company has a Common Stock rights offering or otherwise makes
securities available to its shareholders, how will the rights offering with
respect to shares held in Plan Accounts be handled?
Warrants or other written instruments representing the rights offered with
respect to the whole shares of Common Stock credited to the Plan Account of a
Participant will be mailed directly to the Participant in the same manner as
the warrants or other written instruments are mailed to shareholders of record
who do not participate in the Plan.
33. How will a Participant's shares be voted at meetings of holders of shares?
Each Participant will receive a single proxy card covering the total
number of shares held by the Participant in certificate form plus the total
number of full shares credited to the Participant's Plan Account. If a properly
signed proxy card is returned to the Company and not revoked prior to the time
of voting, the Participant's shares will be voted as directed on the proxy
card. If a proxy card is returned properly signed, but without indicating
instructions as to the manner shares are to be voted with respect to any item
thereon, the shares covered will be voted in accordance with the
recommendations of the Company's management. If the proxy card is not returned,
or if it is returned unexecuted or improperly executed, the shares covered will
not be voted unless the Participant or the Participant's duly appointed
representative votes in person at the meeting.
Federal Income Tax Consequences
34. What are the Federal income tax consequences of participation in the Plan?
The following summary is based upon Federal income tax law as of the date
of the adoption of the Plan. The discussion assumes that all distributions
under the Plan will be from the Company's earnings and profits.
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A Participant in the Plan will generally be treated for Federal income tax
purposes as having received, on each dividend payment date, a dividend in an
amount equal to the fair market value on such dividend payment date of the
shares acquired with reinvested dividends. For Federal income tax purposes, the
fair market value of shares acquired with reinvested dividends under the Plan
will be equal to the mean of the highest and lowest quoted selling price, or if
such information is not available, the mean of the bid and the asked price, for
shares on the dividend payment date; the Discounted Purchase Price is not taken
into account in determining such fair market value. The tax basis of shares
acquired with reinvested dividends will equal the fair market value on the
dividend payment date of such shares. A corporate shareholder participating in
the Plan may be entitled to deduct a portion of that amount deemed received as
a dividend.
A Participant will not be treated as having received a dividend upon the
purchase of shares at the Discounted Purchase Price with a voluntary cash
payment unless the Discounted Purchase Price of the shares is less than the
fair market value of the shares on the date on which shares are acquired for
the Participant's account. If the Discounted Purchase Price is less than the
fair market value of such shares, a Participant will be treated as having
received a dividend equal to the excess of the fair market value of the shares
being purchased over their Discounted Purchase Price. The tax basis of shares
purchased with a voluntary cash payment will equal the Participant's voluntary
cash payment plus the excess, if any, of the fair market value of the shares
being purchased over their Current Discounted Purchase Price.
The Internal Revenue Service may take the position that any service fee
paid by the Company to the Plan Administrator on behalf of Plan Participants is
an additional distribution, taxable as dividend income, to such Participants.
In the event the Internal Revenue Service asserts this position, those
Participants who itemize deductions on their Federal income tax returns may be
entitled to deduct the amount of the service fee attributable to their account
as a miscellaneous itemized deduction, subject to applicable limitations.
A Participant's holding period for shares acquired pursuant to the Plan
should begin no later than the day following the date of acquisition of such
shares for the Participant's account.
A Participant will not realize any taxable income upon receipt of
certificates for whole shares credited to the Participant's account, either
upon the Participant's request for certain of those shares or upon withdrawal
from or termination of the Plan. Upon withdrawal from or termination of the
Plan, a Participant will also receive a cash payment in lieu of any fractional
share equivalent credited to the Participant's account. This payment likely
will be treated as an amount realized from the sale of the fractional share
equivalent, and the participant will recognize gain or loss equal to the
difference between the amount received for the fractional share equivalent and
the Participant's tax basis therefor.
In addition, a Participant will recognize gain or loss when the
Participant sells or exchanges shares received by the Participant after
withdrawal of such shares from the Plan or upon the termination of the Plan.
The amount of such gain or loss will be the difference between the amount that
the Participant receives for the shares and the Participant's tax basis
therefor.
In the case of both foreign shareholders who elect to have their dividends
reinvested and whose dividends are subject to United States income tax
withholding, and other shareholders who elect to have their dividends
reinvested and who are subject to back-up withholding under Section 3406(a)(1)
of the Internal Revenue Code, the Plan Administrator will invest in shares of
Common Stock in an amount equal to the dividends of such participants less the
amount of tax required to be withheld. The full amount of the dividends will be
recognized as taxable income, without reduction for the amount of tax required
to be withheld. The quarterly statements confirming purchases made for such
participants will indicate the net payment reinvested.
Under Section 3406(a)(1) of the Internal Revenue Code, the Company is
required to withhold for United States income tax purposes 31% of all dividend
payments to a shareholder of the Company if (i) such shareholder has failed to
furnish to the Company his/her taxpayer identification number ("TIN"), which
for an individual is his/her Social Security number, (ii) the Internal Revenue
Service has notified the Company that the TIN furnished by the shareholder is
incorrect, (iii) the Internal Revenue Service notifies the Company that back-up
withholding should be commenced because the shareholder has failed to report
interest or dividends
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properly, or (iv) the shareholder has failed to certify, under penalties of
perjury, that he/she is not subject to back-up withholding. Shareholders have
previously been requested by the Company or their broker to submit all
information and certifications required in order to exempt them from back-up
withholding if such exemption is available to them.
The foregoing discussion is based on the assumption that shares are
purchased directly from the Company. If the shares are purchased in the open
market, the Federal tax consequences would generally be the same. However, the
payment of brokerage commissions by the Company in connection with the purchase
or sale of shares in the open market may be treated as additional dividend
income to Participants, in which case the amount of such commissions would not
be deductible, but would increase the basis of the applicable shares.
Each Participant should consult his or her own tax advisor to determine
the particular tax consequences, including state tax consequences (which will
vary from state to state), that may result from participation in the Plan and a
subsequent disposal of shares acquired pursuant to the Plan.
General
35. What are the liabilities of the Plan Administrator and the Company under
the Plan?
The Plan Administrator (or its nominees) and the Company shall not be
liable under the Plan for any act done in good faith, or for any good faith
omission to act, including, without limitation, any claim of liability (a)
arising out of any such act or omission to act which occurs prior to the
termination of participation and (b) with respect to the prices at which shares
are purchased or sold for the Participant's account and the times such
purchases or sales are made.
Participants should recognize that neither the Company nor the Plan
Administrator can assure Participants of profits, or protect participants
against losses, on shares purchased and/or held under the Plan.
The Plan Administrator (or its nominees) and the Company shall have no
duties, responsibilities or liabilities except as are expressly set forth in
the Plan.
Shareholders are cautioned that this Plan does not represent a change in
the Company's dividend policy or a guarantee of future dividends, which will
continue to depend upon the Company's earnings, financial requirements,
governmental regulations and other factors. The Plan Administrator has no
responsibility with respect to the preparation and contents of the Plan.
36. Can the Company terminate the Plan or a Participant's interest in the Plan?
The Company may terminate the Plan or a Participant's interest therein
upon not less than ten calendar days prior notice in writing mailed to the
Participant. In such event the Plan Administrator will follow the procedures
for termination set forth in Question 28.
37. What happens if the Plan cannot acquire shares?
If the Company determines not to make newly issued or treasury shares
available for purchase pursuant to the Plan and in the event that applicable
law or the closing of securities markets requires the temporary curtailment or
suspension of open market purchases of shares under the Plan, the Plan
Administrator is not accountable for the inability of the Plan to acquire
shares at such times. If shares are not available for a period longer than
thirty calendar days, the Plan Administrator will promptly mail to the
Participant a check (without any interest earned thereon) payable to the
Participant's order in the amount of funds submitted for investment.
38. When does a Participant obtain rights in shares acquired under the Plan?
A Participant will not acquire rights to dividends or other benefits of
stock ownership with respect to shares acquired under the Plan until the date
shares are actually purchased for his or her account.
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39. Where should correspondence regarding the Plan be sent?
Any notice, instruction, request or election which by any provision of the
Plan is required or permitted to be given or made by the Participant to the
Plan Administrator shall be in writing, signed by the Participant and addressed
to:
ChaseMellon Shareholder Services
P.O. Box 3338
South Hackensack, NJ 07606-1938
or such address as the Plan Administrator shall furnish to the Participant, and
such notice, instruction, request or election shall be deemed to have been
sufficiently given or made when received by the Plan Administrator.
40. What is sufficient notice to a Participant?
Any notice or certificate which by any provision of the Plan is required
to be given by the Plan Administrator to the Participant shall be in writing
and shall be deemed to have been sufficiently given for all purposes by being
deposited by first class mail, postage prepaid, in a post office letter box,
addressed to the Participant at the Participant's address as it shall last
appear on the Plan Administrator's records.
41. Can a successor Plan Administrators be named?
Upon not less than thirty calendar days prior written notice to
Participants, the Company may terminate the Plan Administrator at any time and
may designate a bank or trust company as successor Plan Administrator for all
or a part of the Plan Administrator's functions under the Plan. If the Company
does so, references in this Plan to The Chase Manhattan Bank shall be deemed to
be references to the successor Plan Administrator, unless the context requires
otherwise.
The Chase Manhattan Bank may resign as Plan Administrator at any time upon
not less than thirty calendar days prior written notice to the Company, such
resignation to become effective as soon as a successor Plan Administrator is
named. The Company will endeavor to name a successor Plan Administrator as soon
as practicable.
42. What law governs the Plan?
The terms and conditions of the Plan and its operation are governed by the
substantive laws of the State of New Jersey.
43. Who bears the risk of fluctuations in the market price of Common Stock?
A Participant's investment in Common Stock held in a Plan Account is no
different with regard to market risk than an investment in Common Stock held in
certificate form. A Participant bears the risk of loss (and receives any
benefit of gain) occurring by reason of fluctuations in the market price of
Common Stock held in a Plan Account.
44. May the Plan be changed or discontinued?
While the Company hopes to continue the Plan indefinitely, the Company
reserves the right upon not less than ten calendar days prior written notice to
Participants to suspend or terminate the Plan or any Participant's Plan Account
(see Question 36) at any time. The Company also reserves the right to interpret
and make modifications in the Plan and any such determination will be final.
The Company may adopt rules and regulations to facilitate the administration of
the Plan. The terms and conditions of any such suspension, termination or
modification will be promptly announced to affected Participants.
45. Are there any restrictions on the resale of shares acquired under the Plan?
Persons who are not "affiliates" of the Company are free to sell Common
Stock acquired under the Plan at any time.
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However, persons who are "affiliates" of the Company, as that term is
defined in Rule 405 promulgated by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, (the "Securities Act") may not publicly
reoffer shares acquired under the Plan except pursuant to Rule 144 of the
Securities Act or pursuant to an effective registration statement. Rule 405
defines an "affiliate" as a person who directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with
the Company. Directors and executive officers of the Company are generally
deemed to be "affiliates" of the Company under this definition. The Company has
no present intention of filing a registration statement which would permit
"affiliates" to reoffer Common Stock acquired under the Plan.
Officers and directors participating in the Plan are subject to the
reporting obligations of Section 16(a) and the short-swing profit recovery
provisions of Section 16(b) of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to purchases of Common Stock made
under the Plan with voluntary cash payments. While executive officers and
directors are not subject to the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act with respect to purchases of Common Stock
made under the Plan with reinvested dividends, ownership and disposition of
Common Stock so acquired must be disclosed on reports filed pursuant to Section
16(a) of the Exchange Act.
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Use of Proceeds
The number of shares of Commerce Bancorp common stock that will be
purchased under the Plan and the prices at which the shares will be sold cannot
be determined at this time. The net proceeds from the sale of any shares by
Commerce Bancorp, after deducting expenses in connection with the Plan of
approximately $30,000, will be added to Commerce Bancorp's working capital.
These proceeds will be used for general corporate purposes, including, without
limitation, contributing all or a significant portion of the proceeds to one or
more of Commerce Bancorp's five banking subsidiaries. Commerce Bancorp cannot
estimate the amount of proceeds which will be devoted to any specific purpose.
Pending investment or application of the net proceeds, Commerce Bancorp will
invest the net proceeds primarily in short-term liquid investments. Commerce
Bancorp will not receive any proceeds from open market purchases of shares by
the Plan.
Description of Commerce Bancorp's Capital Stock
The following description is a summary of certain provisions of Commerce
Bancorp's charter and is qualified in its entirety by reference to the complete
text of Commerce Bancorp's charter which is incorporated by reference as an
exhibit to the registration statement on Form S-3 of which this prospectus is a
part.
Authorized Capital
The authorized capital stock of Commerce Bancorp consists of 50,000,000
shares of common stock, par value $1.5625 per share, and 10,000,000 shares of
preferred stock, without par value.
Common Stock
The number of shares of Commerce Bancorp common stock outstanding as of
the date of this prospectus is approximately 26.2 million shares. The number of
shareholders of record of Commerce Bancorp is approximately 1,800 holders.
The rights, preferences and privileges of holders of Commerce Bancorp
common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock which Commerce Bancorp
may designate and issue in the future.
Voting Rights. Holders of Commerce Bancorp common stock are entitled to
one vote for each share held on all matters submitted to a vote of
shareholders. Commerce Bancorp common shareholders do not have cumulative
voting rights. Holders of a majority of the shares of Commerce Bancorp common
stock entitled to vote in any election of directors may elect all of the
directors standing for election.
Dividends. Holders of Commerce Bancorp common stock are entitled to
receive ratably dividends, if any, as may be declared by Commerce Bancorp's
board of directors out of legally available funds, subject to any preferential
dividend rights of outstanding preferred stock. See "Dividends."
Liquidation. Upon the liquidation, dissolution or winding up of Commerce
Bancorp, the holders of Commerce Bancorp common stock are entitled to receive
ratably the net assets of Commerce Bancorp available after the payment of all
debts and other liabilities and subject to the prior rights of any outstanding
Commerce Bancorp preferred stock.
Preemptive Rights. Holders of Commerce Bancorp common stock have no
preemptive, subscription, redemption or conversion rights.
Transfer Agent and Registrar. The transfer agent and registrar for
Commerce Bancorp common stock is ChaseMellon Shareholder Services, LLC.
Preferred Stock
The Commerce Bancorp preferred stock may be issued with such preferences,
voting rights and conversion rights as Commerce Bancorp's board of directors,
without further approval by the shareholders, may determine by duly adopted
resolution. The issuance of Commerce Bancorp preferred stock may have the
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effect of delaying, deferring or preventing a change in control of Commerce
Bancorp. As of the date of this prospectus, there were no shares of Commerce
Bancorp preferred stock issued and outstanding. Commerce Bancorp has no present
plans to issue any shares of Commerce Bancorp preferred stock.
"Anti-Takeover" Provisions and Management Implications
Commerce Bancorp's Charter.
Commerce Bancorp's charter requires the affirmative vote of the holders of
at least 80% of the outstanding capital stock of Commerce Bancorp entitled to
vote on the following transactions in order to permit the consummation of any
of the following transactions:
o any merger or consolidation of Commerce Bancorp with or into any other
corporation; or
o any sale, lease, exchange or other disposition of all of the assets of
Commerce Bancorp to or with any other corporation, person or other entity.
The 80% voting requirement would not, however, apply to any transaction
approved by Commerce Bancorp's board of directors prior to the consummation of
the transaction.
Commerce Bancorp's charter also provides for the issuance of up to
10,000,000 shares of Commerce Bancorp preferred stock, the rights, preferences
and limitations of which may be determined by the Commerce Bancorp board of
directors. Issuance of Commerce Bancorp preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes, could make it more difficult for a third party to secure a majority
of Commerce Bancorp's outstanding voting stock. The authority of Commerce
Bancorp's board of directors to issue Commerce Bancorp preferred stock with
rights and privileges, including voting rights, as it may deem appropriate, may
enable Commerce Bancorp's board of directors to prevent a change of control
despite a shift in ownership of Commerce Bancorp common stock. In addition,
Commerce Bancorp's board of directors' authority to issue additional shares of
Commerce Bancorp common stock may help deter or delay a change of control by
increasing the number of shares needed to gain control.
The provisions in Commerce Bancorp's charter relating to the 80% voting
requirements and the issuance of Commerce Bancorp preferred stock may have the
effect not only of discouraging tender offers or other stock acquisitions but
also of deterring existing shareholders from making management changes. These
provisions may enhance the possibility that a potential bidder for control of
Commerce Bancorp will be required to act through arms-length negotiation with
respect to major transactions, such as a merger, consolidation or purchase of
substantially all of the assets of Commerce Bancorp. These provisions may also
have the effect of discouraging tender offers or other stock acquisitions,
giving management of Commerce Bancorp the power to reject certain transactions
which might be desired by the owners of a majority of Commerce Bancorp's voting
securities. These provisions could also be deemed to benefit incumbent
management to the extent they deter offers by persons who would wish to make
changes in management or exercise control over management. Commerce Bancorp's
board of directors does not presently know of a third party that plans to make
an offer to acquire Commerce Bancorp through a tender offer, merger or purchase
of substantially all the assets of Commerce Bancorp.
Banking Regulations.
The Change in Bank Control Act prohibits a person or group of persons from
acquiring "control" of a bank holding company unless the Federal Reserve Board
has been given 60 days prior written notice of the proposed acquisition and
within that time period the Federal Reserve Board has not issued a notice:
o disapproving the proposed acquisition, or
o extending for up to another 30 days the period during which such a
disapproval may be issued
or unless the acquisition is subject to Federal Reserve Board approval under
the Bank Holding Company Act of 1956, referred to as the BHCA. An acquisition
may be made prior to the expiration of the disapproval period if the Federal
Reserve Board issues written notice of its intent not to disapprove the action.
Under a
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rebuttable presumption established by the Federal Reserve Board, the
acquisition of more than ten percent of a class of voting stock of a bank
holding company with a class of securities registered under Section 12 of the
Exchange Act, such as Commerce Bancorp, would, under the circumstances set
forth in the presumption, constitute the acquisition of control.
In addition, any "company" would be required to obtain the approval of the
Federal Reserve Board under the BHCA before acquiring 25 percent, five percent
in the case of an acquirer that is a bank holding company, or more of the
outstanding shares of Commerce Bancorp common stock, or otherwise obtaining
"control" over Commerce Bancorp. Under the BHCA, "control" generally means :
o the ownership, control or power to vote 25 percent or more of any class
of voting securities of the banking holding company;
o the ability to elect a majority of the bank holding company's directors;
or
o the ability otherwise to exercise a controlling influence over the
management and policies of the bank holding company.
New Jersey Corporate Law.
The New Jersey Business Corporation Act, referred to as the NJBCA,
restricts the transactions that a publicly held corporation organized under the
laws of New Jersey with its principal executive offices or significant
operations located in New Jersey, referred to as a resident domestic
corporation, can engage. For example, the NJBCA provides that no resident
domestic corporation may engage in a "business combination," as defined in the
NJBCA, with an "interested shareholder" of the corporation for a period of five
years following the interested shareholder's stock acquisition, unless the
business combination is approved by the board of directors of the corporation
prior to the interested shareholder's stock acquisition. An interested
shareholder is a beneficial owner of ten percent or more of the voting power of
a corporation.
In addition, the NJBCA provides that no resident domestic corporation may
engage, at any time, in any business combination, with any interested
shareholders of the corporation other than:
o a business combination approved by the board of directors of such
corporation prior to the interested shareholder's stock acquisition;
o a business combination approved by the affirmative vote of the holders of
two-thirds of the voting stock not beneficially owned by that interested
shareholder at a meeting called for such purpose; or
o a business combination in which the interested shareholder pays a formula
price designed to ensure that all other shareholders receive at least the
highest price per share paid by that interested shareholder.
Commerce Bancorp cannot opt out of the foregoing provisions of the NJBCA.
The NJBCA allows the directors of a New Jersey corporation to look at
various factors in considering a proposal or offer to acquire the corporation.
Specifically, the NJBCA provides that a director of a New Jersey corporation in
evaluating a proposal or offer to acquire the corporation may consider, any of
the following:
o the effects of any action on the corporation's shareholders;
o the effects of the action on the corporation's employees, suppliers,
creditors and customers;
o the effects of the action on the community in which the corporation
operates; and
o the long-term as well as the short-term interests of the corporation and
its shareholders, including the possibility that these interests may best
be served by the continued independence of the corporation.
If, on the basis of the foregoing factors, the board of directors determines
that any proposal or offer to acquire the corporation is not in the best
interest of the corporation, it may reject such proposal or offer, in which
event the board of directors will have no duty to facilitate, remove any
obstacles to, or refrain from impeding, such proposal or offer.
19
<PAGE>
The existence of the foregoing provisions could
o result in Commerce Bancorp being less attractive to a potential
acquirer; and
o result in Commerce Bancorp's shareholders receiving less for their shares
of common stock than otherwise might be available in the event of a
takeover attempt.
Dividends
It is the present intention of Commerce Bancorp's board of directors to
pay quarterly cash dividends on Commerce Bancorp's common stock. However, the
declaration and payment of future dividends will be subject to determination
and declaration by the board of directors, which will consider the following:
o the earnings;
o the financial condition;
o the regulatory requirements; and
o the capital needs
of Commerce Bancorp, Commerce Bank, N.A., Commerce Bank/Central, Commerce
Bank/Pennsylvania, Commerce Bank/North and Commerce Bank/Shore.
Subject to the preferences, limitations and relative rights as may be
fixed for any series of Commerce Bancorp preferred stock that may be issued,
holders of Commerce Bancorp common stock are entitled to receive dividends,
when, as and if declared by the board of directors out of legally available
funds.
Commerce Bancorp is a legal entity separate and distinct from its banking
and other subsidiaries. Under the NJBCA, a corporation may pay dividends or
purchase, redeem or otherwise acquire its own shares unless, after paying
dividends or acquiring its own stock:
o the corporation would be unable to pay its debts as they become due in
the usual course of its business; or
o its assets would be less than the sum of its liabilities plus the amount
that would be needed to satisfy the preferential dissolution rights of
shareholders whose preferential rights are superior to those receiving the
distribution.
Cash available for dividend distribution to the holders of Commerce
Bancorp's common stock and preferred stock must initially come primarily from
dividends paid to Commerce Bancorp by Commerce Bank, N.A., Commerce
Bank/Central, Commerce Bank/Pennsylvania, Commerce Bank/North and Commerce
Bank/Shore. Accordingly, restrictions on Commerce Bank, N.A.'s, Commerce
Bank/Central's, Commerce Bank/Pennsylvania's, Commerce Bank/North's and
Commerce Bank/Shore's cash dividend payments directly affect the payment of
cash dividends by Commerce Bancorp.
Commerce Bank, N.A., Commerce Bank/Central, Commerce Bank/Pennsylvania and
Commerce Bank/Shore, as national banks, are subject to certain limitations on
the amount of cash dividends that they can pay, without the prior approval of
the Office of the Comptroller of the Currency, referred to as the OCC. The
prior approval of the OCC is required if the total of all cash dividends
declared by a national bank in any calendar year will exceed the sum of the
bank's net profits, as defined by statute, for that year combined with the
retained net profits for the preceding two calendar years, less any required
transfers to surplus.
Commerce Bank/North, as a New Jersey State Bank, is also subject to
certain limitations on the amount of cash dividends that it can pay. No
dividends may be paid by Commerce Bank/North unless, following the payment of
the dividend, the capital stock of Commerce Bank/North is unimpaired and
either:
o Commerce Bank/North will have a surplus of not less than 50% of its
capital stock; or
o the payment of the dividend will not reduce the surplus of Commerce
Bank/North.
20
<PAGE>
In addition, the OCC and the Federal Deposit Insurance Corporation have
authority to prohibit banks from engaging in what in their opinion constitutes
an unsafe or unsound practice in conducting their businesses. The payment of
cash dividends could, depending upon the financial condition of the bank
involved, be considered an unsafe or unsound practice.
Legal Matters
An opinion has been delivered by Blank Rome Comisky & McCauley LLP,
Philadelphia, Pennsylvania and Cherry Hill, New Jersey, to the effect that the
shares of common stock offered by Commerce Bancorp, when issued as contemplated
in this prospectus, will be legally issued, fully paid and non-assessable. Jack
R Bershad, a partner in Blank Rome Comisky & McCauley LLP, is a director of
Commerce Bancorp, Commerce Bank, N.A. and Commerce Bank/Pennsylvania. Mr.
Bershad and other partners of Blank Rome Comisky & McCauley LLP are
shareholders of Commerce Bancorp.
Experts
The consolidated financial statements of Commerce Bancorp as of December
31, 1997 and 1996, and for each of the three years in the period ended December
31, 1997, appearing in Commerce Bancorp's Annual Report on Form 10-K for the
year ended December 31, 1997, as amended, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report which accompanied the
financial statements and is incorporated by reference in this prospectus. These
financial statements are incorporated by reference in this prospectus in
reliance upon the report given upon the authority of Ernst & Young LLP as
experts in accounting and auditing.
21
<PAGE>
Where You Can Find More Information
Commerce Bancorp files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, proxy statements and other information Commerce Bancorp files with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Commerce Bancorp's SEC filings are
also available on the SEC's Internet site at http://www.sec.gov.
Commerce Bancorp has filed a registration statement on Form S-3 to
register the shares of Commerce Bancorp common stock offered under this
prospectus. This prospectus is a part of the registration statement on Form S-3
and constitutes a prospectus of Commerce Bancorp. As allowed by SEC rules, this
prospectus does not contain all the information you can find in the
registration statement on Form S-3 or the exhibits to the registration
statement on Form S-3.
The SEC also allows Commerce Bancorp to "incorporate by reference" the
information it files with the SEC, which means Commerce Bancorp can disclose
information to you by referring you to another document filed separately with
the SEC. Information incorporated by reference is deemed to be part of this
prospectus. Later information filed by Commerce Bancorp with the SEC updates
and supersedes this prospectus.
This prospectus incorporates important business and financial information
about Commerce Bancorp that is not included in or delivered with this
prospectus. Copies of any of that information are available without charge to
any person to whom this prospectus is delivered, upon written or oral request.
Written requests for those documents should be directed to Commerce Bancorp
Inc., 1701 Route 70 East, Cherry Hill, New Jersey 08034-5400, Attention: C.
Edward Jordan, Jr. and telephone requests may be directed to the C. Edward
Jordan, Jr. at (609) 751-9000.
The following documents previously filed by Commerce Bancorp with the SEC
pursuant to the Exchange Act are incorporated herein by this reference:
<TABLE>
<CAPTION>
SEC Filings Period
- ---------------------------------------------- ----------------------------------------
<S> <C>
Annual Report on Form 10-K (including those Year ended December 31, 1997
portions of Commerce Bancorp's proxy
statement for its 1998 annual meeting of
shareholders incorporated by reference to the
Annual Report on Form 10-K)
Quarterly Reports on Form 10-Q (as Quarters ended March 31, 1998, June 30,
amended) 1998 and September 30, 1998
Current Reports on Form 8-K Filed on December 21, 1998
</TABLE>
All documents filed by Commerce Bancorp pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and
prior to the termination of the offering will be deemed to be incorporated by
reference
22
<PAGE>
COMMERCE BANCORP, INC.
COMMON STOCK
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
AUTHORIZATION CARD
I wish to participate in the Dividend Reinvestment Plan ("Plan") for the
purchase of full and fractional shares of Common Stock of Commerce Bancorp,
Inc. ("Company") as indicated on this form.
My participation in the Plan is subject to the provisions of the Plan as
set forth in the Prospectus (as amended from time to time) relating to the
shares of Company Common Stock offered pursuant to the Plan. I hereby
acknowledge receipt of such Prospectus and hereby authorize the Company and the
Plan Administrator designated by the Company pursuant to the Plan to take all
action provided for in the Plan.
This Authorization Card revokes all prior Authorization Cards executed by
me. THIS IS NOT A PROXY. Please sign on the other side of the Authorization
Card.
INVESTMENT OPTIONS UNDER THE PLAN
Full Common Stock Dividend Reinvestment -- The dividends on all Company
Common Stock now or hereafter registered in your name as well as dividends on
shares of Common Stock credited to your account under the Plan will be
reinvested to purchase Company Common Stock. In addition, voluntary cash
payments to purchase additional shares of Common Stock of a minimum of $100 and
a maximum of $5,000 per month (subject to change) may be made under this
option.
Partial Common Stock Dividend Reinvestment -- The dividends on less than
all Company Common Stock registered in your name may be reinvested in the Plan.
For example, if you own 300 shares and want to reinvest cash dividends on 100
shares, check off the "Partial Common Stock Dividend Reinvestment" box and fill
in 100 on the blank line. (The cash dividends you wish to reinvest must be on
full shares.) Dividends on the 100 shares as well as dividends on shares of
Common Stock credited to your account under the Plan will be reinvested to
purchase Company Common Stock. In addition, voluntary cash payments to purchase
additional shares of Company Common Stock of a minimum of $100 and a maximum of
$5,000 per month (subject to change) may be made under this option.
(Continued and signed on the reverse side.)
<PAGE>
/ /
Please mark boxes in blue or black ink.
THIS IS NOT A PROXY
<TABLE>
<S> <C>
/ / Full Common Stock Dividend Reinvestment -- / / Partial Common Stock Dividend Reinvestment --
I wish to reinvest all cash dividends on all shares of Company I wish to reinvest all cash dividends on only _________
Common Stock now or hereafter registered in my name or held for shares of Company Common Stock registered in my name
me by the Plan Administrator and, from time to time, make and reinvest cash dividends on all other shares of Company
voluntary cash payments. Common Stock now or hereafter held for me by the Plan
Administrator and, from time to time, make voluntary cash
payments.
</TABLE>
Please address all inquiries concerning the Plan to The Chase Manhattan Bank
c/o ChaseMellon Shareholders Services, P.O. Box 3338, South Hackensack, NJ
07606 or call the Shareholder Services Division of Chase Manhattan Bank at
(888) 470-5884.
Do not return this form unless you intend to participate in the Plan since this
form authorizes the Chase Manhattan Bank to enroll you in the Plan. If no box
is checked you will be enrolled under the Full Common Stock Dividend
Reinvestment Option.
Date__________________________________________
__________________________________________
Signature(s) of Registered Owner(s)
__________________________________________
Please complete this Authorization Card
