<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
- --------------------------------------------------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 15, 1997
COMMERCIAL BANCSHARES, INCORPORATED
-----------------------------------
(Exact Name of Registrant as Specified in Charter)
West Virginia 1-11791 55-0622108
------------- ------- ----------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No. )
415 Market Street, Parkersburg, West Virginia 26101
--------------------------------------------- -----
(Address of Prinicipal Executive Offices (Zip Code)
Registrant's telephone number, including area code: (304) 424-0300
---------------
Not Applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5: OTHER EVENTS
As of August 15, 1997, the Board of Directors of Gateway Bancshares,
Inc. ("Gateway") approved, and Gateway entered into, an Agreement and Plan of
Merger (the "Plan") with Commercial BancShares, Incorporated ("Commercial").
According to the Plan, Gateway will merge with CWV Holding Company, Inc., a
subsidiary that is to be formed by Commercial. The Plan anticipates that
Gateway's only subsidiary, The Bank of McMechen, will be operated as a separate
banking subsidiary of Commercial. A copy of the Plan and the joint press release
issued by Commercial and Gateway are attached to this Form as exhibits 1 and 2,
and are incorporated herein by reference.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
1. Text of joint press release issued by Commercial
BancShares, Incorporated, and Gateway Bancshares, Inc.,
on August 15, 1997.
2. Agreement and Plan of Merger dated August 15, 1997, by
and among Gateway Bancshares, Inc., Commercial
BancShares, Incorporated, and CWV Holding Company, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 19, 1997
COMMERCIAL BANCSHARES, INCORPORATED
By: /s/ Larry G. Johnson
Larry G. Johnson
Its: Executive Vice President
and Chief Financial Officer
-2-
<PAGE>
ITEM 7 (c) 1. Text of joint press release issued by Commercial BancShares,
Incorporated, and Gateway Bancshares, Inc., on August 15, 1997.
Commercial BancShares, Gateway Bancshares Announce Merger
PARKERSBURG, WV, 8/15/97--Commercial BancShares, Incorporated, (AMEX:
CWV) and Gateway Bancshares, McMechen, West Virginia, (OTC) today announced they
had reached a definitive agreement whereby Gateway will become a wholly-owned
subsidiary of Commercial. The agreement has been approved by the boards of
directors of both companies and is subject to the approval of Gateway's
shareholders and appropriate regulatory agencies. The merger is expected to
close by year end.
Gateway, a $30 million bank holding company, is the parent of The Bank
of McMechen, a state-chartered bank that operates offices in McMechen and
Benwood in Marshall County, West Virginia. Its full-service offices provide
complete banking service to individuals and small businesses in its trade area.
The agreement with Gateway will be structured as a pooling of
interests, and provides for a tax free exchange of Commercial common shares for
Gateway common shares at a value of $80 per share of Gateway, or a purchase
price of $5.3 million. The exchange ratio will be a minimum of 1.742 and a
maximum of 2.129 shares of Commercial. The transaction is expected to be
slightly dilutive to Commercial's earnings in 1998, and to have a positive
impact on 1999 earnings.
Commercial has been interested in expanding its presence into the
northern panhandle of West Virginia. William E. Mildren, Jr., Chairman,
President and Chief Executive Officer, of Commercial said, "We are extremely
pleased that Bank of McMechen has decided to affiliate with Commercial. As a
network of community banks, we look forward to the opportunities this expansion
affords."
"Since 1906, The Bank of McMechen has been committed to the people of
northern Marshall County. Commercial's investment in technology, its trust
capabilities, and its history of community banking will allow us to continue to
improve our service in McMechen and Benwood," said Michael E. Moore, President
of The Bank of McMechen.
The acquisition of Gateway will give Commercial a retail network of 18
banking offices, in one Ohio and seven West Virginia counties. The combined
total assets will be $450 million, with total deposits of $387 million.
Commercial, headquartered in Parkersburg, WV, has 7 banking subsidiaries and a
consumer lending subsidiary.
-3-
<PAGE>
ITEM 7 (c) 2. Agreement and Plan of Merger dated August 15, 1997, by and among
Gateway Bancshares, Inc., Commercial BancShares, Incorporated, and CWV Holding
Company, Inc.
AGREEMENT AND PLAN OF MERGER
By and Among
GATEWAY BANCSHARES, INC.
COMMERCIAL BANCSHARES, INCORPORATED
and
CWV HOLDING COMPANY, INC.
August 15, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. PLAN OF MERGER...................................... 2
--------------
1.1 Parties to Merger and Surviving Bank.................. 2
1.2 Terms of Merger....................................... 2
1.3 Effect of Merger...................................... 3
1.4 Consideration......................................... 3
1.5 Exchange of Shares.................................... 4
1.6 Articles of Incorporation and Bylaws of
Surviving Bank Holding Company........................ 5
1.7 Additional Requirements............................... 5
ARTICLE II. REPRESENTATIONS AND WARRANTIES..................... 6
------------------------------
2.1 Representations and Warranties of Commercial and CWV.. 6
(a) Organization..................................... 6
(b) Authority........................................ 6
(c) Financial Statements............................. 7
(d) Applications..................................... 7
(e) Authority to Exchange Shares..................... 7
(f) Registered Bank Holding Company.................. 8
(g) Absence of Certain Changes....................... 8
(h) Litigation....................................... 8
(i) Absence of Undisclosed or Contingent Liabilities. 9
(j) No Adverse Event................................. 9
(k) SEC Reports...................................... 9
(l) Capitalization................................... 9
(m) Registration..................................... 10
(n) Title to Properties.............................. 10
(o) Taxes............................................ 11
(p) Subsidiaries of Commercial....................... 11
(q) ERISA............................................ 11
(r) Absence of Defaults and Violation................ 12
(s) Other Transactions............................... 13
(t) Environmental Concerns........................... 13
(u) Matters Relevant to Tax Treatment................ 15
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
2.2. Representation and Warranties of Gateway.............. 17
(a) Organization..................................... 17
(b) Authority of Gateway............................. 17
(c) Capital Stock of Gateway......................... 18
(d) Absence of Certain Changes....................... 18
(e) Taxes............................................ 20
(f) Litigation, Etc.................................. 20
(g) Absence of Defaults and Violations............... 21
(h) Absence of Undisclosed Assets and of
Undisclosed Contingent Liabilities............... 21
(i) Financial Statements............................. 22
(j) Real Property.................................... 22
(k) No Adverse Event................................. 22
(l) Material Contracts............................... 22
(m) ERISA............................................ 23
(n) Regulatory Reports............................... 24
(o) Environmental Concerns........................... 24
ARTICLE III. ADDITIONAL AGREEMENTS............................. 25
3.1 Approval of Gateway Shareholders...................... 25
3.2 Approval of Commercial Shareholders and Sole
Shareholder of CWV.................................... 25
3.3 Rights of Dissenting Stockholders..................... 25
3.4 Regulatory Approval................................... 25
3.5 Conduct of Business by Gateway and Its Subsidiary
Until Closing......................................... 26
3.6 Conduct of Business by Commercial Until Closing....... 29
3.7 Proxy Statement....................................... 31
3.8 Directors, Independent Bank........................... 31
(a) Board of Directors............................... 31
(b) Independent Bank................................. 31
(c) Commercial Board of Directors.................... 32
3.9 Employees of Bank of McMechen......................... 32
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV. CONDITIONS....................................... 33
4.1 Conditions to Obligations of All Parties............ 33
(a) Shareholder Approval of Transaction............ 33
(b) CWV............................................ 33
(c) Absence of Restraints.......................... 33
(d) Governmental Approvals......................... 33
(e) Compliance and Representations................. 33
(f) Securities Law Compliance...................... 34
(g) Confidentiality................................ 34
(h) Accounting Treatment........................... 34
(i) Tax Free Exchange.............................. 34
(j) Execution of Closing........................... 35
4.2 Additional Conditions to Obligations of Commercial.. 35
(a) Shareholder Approval........................... 35
(b) Counsel's Opinion.............................. 35
(c) Affiliates Agreements.......................... 36
4.3 Additional Conditions to Obligations of Gateway..... 37
(a) Opinion of Counsel............................. 37
(b) Tax Opinion.................................... 38
(c) Fairness Opinion............................... 39
ARTICLE V. CLOSING........................................... 39
5.1 Closing............................................. 39
ARTICLE VI. MISCELLANEOUS.................................... 40
6.1 Termination......................................... 40
6.2 Expenses............................................ 41
6.3 Survival of Provisions.............................. 41
6.4 Individual Directors of Gateway..................... 41
6.5 Amendment........................................... 42
6.6 Assignability....................................... 42
6.7 Notices............................................. 42
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
6.8 Entire Agreement.................................... 43
6.9 Counterparts........................................ 43
6.10 Governing Law....................................... 43
6.11 Invalid Provisions.................................. 43
6.12 Headings and Subheadings............................ 43
6.13 Third-Party Beneficiaries........................... 43
EXHIBIT LIST.................................................. 45
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
</TABLE>
iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of this 15th day of August, 1997, among GATEWAY BANCSHARES,
INC., a West Virginia banking corporation ("Gateway"); COMMERCIAL BANCSHARES,
INCORPORATED, a West Virginia bank holding company ("Commercial") and CWV
HOLDING COMPANY, INC., ("CWV"), a West Virginia banking corporation to be formed
as a wholly-owned subsidiary of Commercial.
WHEREAS, Gateway is a West Virginia corporation organized and existing
under the laws of the State of West Virginia with its principal office in
McMechen, West Virginia, and a registered bank holding company under the Bank
Holding Company Act of 1956, as amended;
WHEREAS, Gateway owns one hundred percent of the issued and outstanding
shares of The Bank of McMechen, a state chartered banking corporation with its
main office in McMechen, West Virginia.
WHEREAS, CWV will be organized as a West Virginia corporation with its
principal office located in Parkersburg, West Virginia, and will be registered
as a bank holding company under the Bank Holding Company Act of 1956, as
amended;
WHEREAS, Commercial is a West Virginia corporation with its principal
office located in Parkersburg, West Virginia, and is a registered bank holding
company under the Bank Holding Company Act of 1956, as amended;
WHEREAS, the parties hereto desire to accomplish the merger of Gateway into
CWV with CWV surviving and operating under the name "CWV Holding Company, Inc."
(the "Merger");
1
<PAGE>
WHEREAS, shareholders of Gateway will receive common stock of Commercial
("Commercial stock") equal to $80.00 for each share of Gateway common stock
("Gateway stock") they own as consideration for the Merger; provided, however
that no fractional shares of Commercial stock will be issued and in lieu thereof
Gateway shareholders will receive cash consideration as provided herein;
WHEREAS, for federal income tax purposes, the transaction is intended to be
treated as a tax free reorganization under Internal Revenue Code (S)
368(a)(2)(D).
NOW, THEREFORE, for and in consideration of the premises and the
representations, warranties, covenants and agreements contained herein,
Commercial and Gateway do represent, warrant, covenant and agree (and CWV will
represent, warrant, covenant and agree) as follows:
ARTICLE I
PLAN OF MERGER
1.1 Parties to Merger and Surviving Bank. The parties to the Plan of
------------------------------------
Merger are Gateway Bancshares, Inc. and CWV. Gateway shall merge with and
into CWV under the charter of the latter, pursuant to the laws of West Virginia.
At the time of the Merger, Gateway will cease to exist and CWV will be the
surviving bank holding company (the "Surviving Bank Holding Company"). The name
of the Surviving Bank Holding Company shall be "CWV Holding Company, Inc." and
its principal office will be in Parkersburg, West Virginia.
1.2 Terms of Merger. The terms and conditions of the Merger are set forth
---------------
in this Agreement. Upon satisfaction of all of the terms and conditions
set forth herein, the Merger shall be effective upon the date (the "Merger
Effective Date") so indicated by the West Virginia Secretary of State
("Secretary of State").
2
<PAGE>
1.3 Effect of Merger. Upon consummation, the Merger shall have the
-----------------
following effects:
(a) The Surviving Bank Holding Company will, upon the time of the
Merger and thereafter, possess all of the rights, privileges, immunities and
franchises of CWV and
Gateway.
(b) All property, real, personal and mixed; all debts due in whatever
amount; all choses in action; and all other rights and interests belonging to
or due to CWV and Gateway will be taken and deemed to be transferred to and
vested in CWV as the Surviving Bank Holding Company and all such property, real,
personal and mixed; all debts due in whatever amount; all choses in action; and
all other rights and interests belonging to or due to CWV and Gateway shall
remain in the Surviving Bank Holding Company without further act, and the title
to any real estate, or any interest therein, vested in Gateway shall not revert
or be in any way impaired by reason of the Merger.
(c) The Surviving Bank Holding Company will be responsible and liable
for all of the liabilities and obligations of CWV and Gateway, respectively, and
neither the rights of creditors nor liens upon the property of Gateway shall be
impaired by the Merger, including, but not limited to, any liability of Gateway
arising under its bylaws or the applicable laws of West Virginia in connection
with the indemnification of directors and officers of Gateway arising at any
time prior to the Merger Effective Date.
(d) The Surviving Bank Holding Company will have a capital stock
account equal to the capital stock account of CWV.
1.4 Consideration. As consideration for the Merger, shareholders of
-------------
Gateway who do not dissent to this transaction will be entitled to receive the
number of shares of Commercial common stock equal to $80.00 divided by the
average price of Commercial common stock reported
3
<PAGE>
on the American Stock Exchange for the twenty (20) trading days preceding
Closing; provided, however, that such consideration shall be paid for no more
than 66,652 shares of Gateway common stock. The average price shall be
calculated by adding the closing prices of Commercial stock reported by the
American Stock Exchange on each of the twenty (20) trading days preceding the
Closing and dividing the sum by twenty (20) (the "Average Price"). In the event
there are no reported trades on any day during such twenty (20) day period then
the closing price for such a day, for purposes of calculating the Average Price,
shall be the closing price last reported on a date preceding the date on which
no trade occurred. For purposes of this paragraph "trading day" shall mean a day
on which the American Stock Exchange is open and conducts business. If the
Average Price quotient is less than or equal to 1.742, the exchange ratio will
be 1.742 and Gateway shareholders will be entitled to receive 1.742 shares of
Commercial common stock for each share of Gateway stock they own. If such
quotient is greater than or equal to 2.129, then the exchange ratio will be
2.129 and Gateway shareholders will be entitled to receive 2.129 shares of
Commercial common stock for each share of Gateway stock they own.
No fractional shares of Commercial stock will be issued and in lieu
thereof, Gateway shareholders will be entitled to receive cash based upon the
Average Price of Commercial stock, without interest. If on or after the date
hereof, and prior to the Merger, the outstanding shares of Commercial stock are
changed into a different number or class by virtue of any reclassification,
split, stock dividend or similar event, then the exchange ratio provided herein
will be adjusted proportionately. The issuance of Commercial stock in accordance
with Section 2.1(l) will not result in an adjustment to the exchange ratio. From
and after the date of the Merger, the holders of certificates representing
Gateway shares shall cease to have any rights with respect to such shares
(except dissenters' rights) and such shares will thereafter be deemed canceled
and void. The sole rights of such shareholders (excluding dissenters' rights)
will be to receive the Merger Consideration.
1.5 Exchange of Shares. Except for any shares of Gateway as to which
------------------
dissenters' rights are exercised pursuant to the West Virginia Corporation Act,
(S) 31-1-122 (the
4
<PAGE>
"West Virginia Appraisal Statute"), each holder of certificates representing
shares of the stock of Gateway will, upon the surrender to Commercial, or its
agent, of such certificates in proper form, be entitled to receive a certificate
or certificates representing the number of whole shares of the common stock of
Commercial into which the surrendered certificates shall have been converted by
reason of the Merger. Until surrendered for exchange, each outstanding
certificate of Gateway submitted for exchange for Commercial stock shall be
deemed for all corporate purposes to evidence the ownership of the full shares
of stock of Commercial into which such shares have been converted by reason of
the Merger. Until a Gateway shareholder's outstanding certificates have been
surrendered, Commercial may, at its sole discretion, withhold, with respect to
such Gateway shareholder, as applicable (i) the certificates representing the
shares of its stock into which such Gateway shares are converted by reason of
the Merger; and (ii) the distribution of any and all dividends and payment for
fractional shares with respect to the stock of Commercial to which the Gateway
shareholder is entitled. Upon the delivery to Commercial of the outstanding
Gateway certificates by a Gateway shareholder, there will be delivered to the
record holder thereof (i) the certificate representing the shares of the stock
of Commercial to which the exchanging Gateway holder is entitled, (ii) any
dividends and (iii) any payment for fractional shares, all without interest.
1.6 Articles of Incorporation and Bylaws of Surviving Bank Holding
--------------------------------------------------------------
Company. Upon the Merger being consummated, the Articles of Incorporation of
- -------
CWV will be the Articles of Incorporation of the Surviving Bank Holding Company
and the Bylaws of CWV shall be the Bylaws of the Surviving Bank Holding Company
until altered, amended or repealed in accordance with their provisions and
applicable law.
1.7 Additional Requirements. If at any time the Surviving Bank Holding
-----------------------
Company shall consider or be advised that any further assignments, conveyances
or assurances are necessary or desirable to vest, perfect or conform in the
Surviving Bank Holding Company the title to any property or rights of Gateway or
are otherwise necessary to carry out the provisions of the Plan of Merger and
this Agreement, the proper officers and directors of Gateway, as of the Merger
Effective Date, and, thereafter, the officers of the Surviving Bank Holding
Company, will execute and deliver any and all property assignments, conveyances,
assurances, and other instruments
5
<PAGE>
necessary to vest, perfect or confirm title to any such property or rights in
the Surviving Bank Holding Company or to otherwise carry out the provisions of
this Agreement.
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Representations and Warranties of Commercial and CWV. Unless
----------------------------------------------------
disclosed in Exhibit A hereto , as of the date of this Agreement, and as of the
date of the consummation of the transactions contemplated herein, Commercial
represents and warrants, and CWV will represent and warrant as of the date it
executes the Adoption Agreement contained in Exhibit B hereto and as of the date
of consummation of the transactions contemplated herein, the following to
Gateway:
(a) Organization. Commercial is a West Virginia corporation duly
------------
organized, validly existing and in good standing under the laws of the State of
West Virginia. Commercial has the requisite corporate power and authority to own
and lease its properties and to conduct its business as currently conducted and
as currently contemplated to be conducted. Commercial shall cause CWV to be to
be formed, and as of the date of its execution of the Adoption Agreement, it
will be a duly organized, validly existing West Virginia bank holding company in
good standing under the laws of the State of West Virginia.
(b) Authority. Commercial has and CWV will have the power to enter
---------
into this Agreement and to consummate the transactions contemplated herein. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by the Board of
Directors of Commercial and will be so authorized by the Board of Directors of
CWV. Commercial, as sole shareholder of CWV, will vote all shares of CWV in
favor of the Merger and the transactions contemplated herein. Upon its execution
and delivery, this Agreement will constitute the valid and legally binding
obligation of Commercial, and will constitute the valid and legally binding
obligation of CWV upon its execution of the Adoption Agreement. Subject to
obtaining the permits, approvals, consents and authorizations set forth in
6
<PAGE>
Article IV hereto, the execution and delivery of this Agreement does not and
will not, and the consummation of the transaction contemplated herein will not,
violate (i) any provisions of the Articles of Incorporation or Bylaws of
Commercial or CWV, (ii) any laws of the State of West Virginia, or (ii) any
material restriction to which either of them is subject.
(c) Financial Statements. Commercial has delivered to Gateway copies
--------------------
of its audited consolidated financial statements for the fiscal year ended
December 31, 1996, and its unaudited consolidated financial statements for the
period ended June 30, 1997. Commercial represents and warrants that the
financial statements which have been or will be delivered pursuant to any
provision of this Agreement fairly present its financial position of as of the
date thereof and the results of its operations and its cash flows for each of
the respective periods specified therein in conformity with generally accepted
accounting principles applied on a consistent basis.
(d) Applications. Commercial and CWV, with the cooperation of
------------
Gateway, will cause to be filed all necessary regulatory applications with the
appropriate bank regulators to accomplish the transactions contemplated herein.
Commercial will pay all expenses associated with the filing of such regulatory
applications, excluding legal, accounting or other expenses incurred by Gateway
in connection therewith.
(e) Authority to Exchange Shares. The shares of Commercial to be
----------------------------
issued pursuant to this Agreement are or will be duly authorized. When issued
upon the terms and conditions specified in this Agreement, the shares will be
validly issued, fully paid and non-assessable. There are no preemptive or
similar rights with regard to the shares of Commercial to be issued in
connection with the transactions contemplated herein. The shares of Commercial
stock to be issued pursuant to this Agreement to Gateway shareholders will be,
when issued, registered with the SEC pursuant to an effective registration on
Form S-4.
7
<PAGE>
(f) Registered Bank Holding Company. Commercial is a duly registered
-------------------------------
bank holding company under the Bank Holding Company Act of 1956, as amended.
Authority for CWV, as a wholly-owned second-tier bank holding company, will be
obtained in the regulatory filings made in connection with the transactions
contemplated herein.
(g) Absence of Certain Changes. Except as may be disclosed in Exhibit
--------------------------
A hereto and made a part hereof, since June 30, 1997:
(i) There has been no material change in the operations, financial
condition, or results of operation of Commercial or any subsidiary of Commercial
which could have a material adverse effect on the consolidated assets, financial
condition, or operations of Commercial, nor has any event or condition occurred
which is known to its officers which may result in such a change;
(ii) There has not been any damage, destruction, or loss by reason
of fire, flood, accident or other casualty (whether insured or not insured)
materially and adversely affecting the consolidated assets, financial condition
or operations of Commercial;
(iii) Neither Commercial nor any subsidiary of Commercial has
disposed of or agreed to dispose of any properties or assets material to
Commercial, nor has it leased to others, or agreed to so lease, any of such
material properties or assets; and
(iv) Commercial has not granted any warrant, option or right to
acquire, or agreed to repurchase, redeem or otherwise acquire, any shares of its
capital stock or any
other of its securities whatsoever, except as set forth on Exhibit A hereto.
(h) Litigation. Except as disclosed in Exhibit A, neither Commercial
----------
nor any subsidiary of Commercial is a party to, or, to the knowledge of its
executive officers, threatened with, any litigation, action, governmental or
other proceeding, investigation, strike or other labor dispute which might
affect the validity of this Agreement or which, individually or in the
aggregate,
8
<PAGE>
might have a materially adverse effect on Commercial's consolidated assets,
financial condition,
operations or material contractual rights; and there is no outstanding order,
writ, injunction or decree
of any court or governmental agency against or materially affecting Commercial
or a material
portion of any of its consolidated businesses or assets.
(i) Absence of Undisclosed or Contingent Liabilities. Except to the
------------------------------------------------
extent set forth in the footnotes to the December 31, 1996, consolidated
financial statements of Commercial and its subsidiaries delivered to Gateway, or
on Exhibit A hereto, there exists no claim, liability, obligation, or any known
asserted claim, secured or unsecured (whether accrued, absolute, contingent or
otherwise), that would have a material adverse effect on the consolidated
operations, financial condition or results of operations of Commercial.
(j) No Adverse Event. Since June 30, 1997, there has been no change
----------------
or changes, which, individually or in the aggregate, has or have materially and
adversely affected the business of Commercial.
(k) SEC Reports. The Form 10-K Annual Report to the Securities and
------------
Exchange Commission by Commercial for the year ended December 31, 1996, its
quarterly filings made during 1997 on Form 10-Q, and its current reports made on
Form 8-K made during 1997, if any, do not contain, as of the date hereof or as
of their respective dates, any untrue statement of a material fact or omission
of any material fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
(l) Capitalization. As of June 30, 1997, the authorized capital stock
--------------
of Commercial is 2,000,000 shares of common stock, par value of $5.00 per share,
of which 1,616,187 are issued and outstanding as of the date hereof and are
fully paid and nonassessable, and of which no shares are held in treasury by
Commercial. Commercial may issue additional shares or options or similar rights
pursuant to its Employee Stock Ownership Plan with 401(K) provisions("KSOP")or
9
<PAGE>
in connection with other acquisitions. On May 14, 1997, the shareholders of
Commercial approved an amendment to the Articles of Incorporation of Commercial,
increasing authorized common stock to 5,000,000 shares. The Amendment to the
Articles of Incorporation reflecting this change will be filed in August, 1997.
As of June 30, 1997, Commercial has authorized 43,328 shares of cumulative $100
preferred stock, none of which has been issued.
(m) Registration. As soon as practicable after the date hereof,
------------
Commercial will cause a Registration Statement (or, in the case of State "blue
sky" filings, other appropriate form) to be filed with and declared effective by
the Securities and Exchange Commission, the appropriate state agencies
regulating securities, and any other governmental agencies having jurisdiction,
with respect to the Commercial stock to be issued pursuant to this Agreement.
The Registration Statement (and other appropriate forms) will comply as to form
with applicable requirements of law and, except as to the information about
Gateway furnished by it in writing for use in the Registration Statement (or
other appropriate form), or written information about Gateway contained therein
and reviewed by it, the Registration Statement will contain no untrue statement
of any material fact required to be stated therein or omission of any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Registration Statement and "blue
sky" filings contemplated by this Agreement will be sufficient to ensure that
the Commercial stock held by non-affiliates of Gateway may be freely resold
without further registration.
(n) Title to Properties. Commercial and its subsidiaries have good and
-------------------
marketable title to all of their property and assets set forth on the
consolidated balance sheet of Commercial as of June 30, 1997 subject to no
liens, mortgages, pledges, encumbrances or charges of any kind except liens
reflected on said balance sheet, liens which do not materially affect the
current use of the property, or liens for ad valorem taxes not yet due and
payable, and all of their leases are in full force and effect, and neither
Commercial nor any of its subsidiaries is aware of any default thereunder.
10
<PAGE>
(o) Taxes. Except as disclosed in Exhibit A hereto, (i) Commercial and
-----
its subsidiaries have filed all federal income tax returns and all other
federal, state, municipal and other tax returns which they are required to file,
have paid all taxes shown to be due on such returns and, in the opinion of their
respective chief executive and financial officers, have adequately reserved for
all current taxes; (ii) neither the Internal Revenue Service ("IRS") nor any
other taxing authority is now asserting against Commercial or its subsidiaries,
or, to their knowledge, threatening to assert against them, or any of them, any
deficiency or claim for additional taxes, interest or penalties; (iii) there is
no pending or threatened examination of the federal income tax returns of
Commercial or its subsidiaries and, except for tax years still subject to the
assessment and collection of additional federal income taxes under the three-
year period of limitations described in IRC (S) 6501(a), no tax year of
Commercial or its subsidiaries remains open to the assessment and collection of
additional federal income taxes; and (iv) there is no pending or threatened
examination of the West Virginia business and occupation tax returns of
Commercial or its subsidiaries and, except for tax years still subject to the
assessment and collection of additional business and occupation taxes under the
three-year period of limitations described in W.Va. Code (S) 11-10-15, no tax
year of Commercial or its subsidiaries remains open to the assessment and
collection of additional business and occupation taxes.
(p) Subsidiaries of Commercial. The subsidiaries of Commercial consist
--------------------------
of state banking corporations which are duly organized, validly existing and in
good standing under applicable laws. Each has the corporate power, and all
necessary Federal, state, and local banking and other authorizations, to own its
property and conduct its business as currently conducted and as currently
contemplated to be conducted. Commercial owns, free and clear of liens and
encumbrances of any nature, 100% of the issued and outstanding stock of its
subsidiaries.
(q) ERISA. For purposes of this Agreement, Benefit Arrangement means
-----
(i) any employee welfare benefits plan or employee pension benefit plan within
the meaning of section 3(1) or section 3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), (ii) any profit sharing, deferred compensation,
bonus, stock option, pension retainer, consulting, retirement, severance,
welfare, or incentive plan, agreement, or arrangement; or (iii) any plan,
agreement or arrangement providing for fringe benefits or perquisites to
employees, officers,
11
<PAGE>
directors, or agents, including, but not limited to benefits relating to
automobiles, clubs, vacations, child care, sabbatical, sick leave, medical
benefits, dental benefits, hospitalization, life insurance and other types of
insurance.
Each Benefit Arrangement that is subject to (i) the group health care
continuation coverage requirements of section 4980B of the Internal Revenue Code
of 1986 (the "Code") and sections 601-608 of ERISA; (ii) the secondary payor
requirements imposed by section 1862 of the Social Security Act; or (iii) the
health insurance portability and anti-discrimination requirements of Part 7 of
ERISA (29 U.S.C. (S)(S) 1181-1183), has been operated in all material respects
in accordance with those provisions to the extent they apply.
There have been no acts or omissions relating to any Benefit
Arrangement that has resulted or may result in the imposition of fines,
penalties, taxes or related charges under ERISA or the Code, including, but not
limited to (i) ERISA sections 502(c), (i) or (l); (ii) ERISA section 4071; (iii)
the prohibited transaction provisions of ERISA section 406 or Code section 4975;
(iv) or the imposition of a lien pursuant to Code sections 401(a)(29) or 412(n).
Unless disclosed in Exhibit A, each Benefit Arrangement has been
fully operated and administered in all material respects in accordance with its
terms. Each Benefit Arrangement that is intended to comply with section 401(a)
of the Internal Revenue Code or ERISA complies in all material respects in form,
operation and administration with such provisions to the extent they apply.
All contributions (including all employer contributions and employee
salary reductions contributions, if any) which are due have been paid to each
Benefit Arrangement.
(r) Absence of Defaults and Violation. Except as disclosed in Exhibit
---------------------------------
A attached hereto and made a part hereof, neither Commercial nor its
subsidiaries (i) are in default under any term or provision of any mortgage,
deed of trust, note, bond, indenture, commitment,
12
<PAGE>
contract, agreement, franchise, permit, license, lease or instrument to which
they are a party or by which any of them or any of their properties is bound and
which is material to the consolidated financial condition, businesses or
operations of Commercial, (ii) are subject to any decree, order, writ or
injunction of any court or authority which materially restricts their operations
or requires any material actions, (iii) are in violation of any law, rule or
regulation known and applicable to them which could materially affect the
consolidated financial condition, assets, businesses or operations of
Commercial; or (iv) has received notification from any agency or department of
any federal, state or local governmental or regulatory authority or the staff
thereof asserting that any of them is not in compliance with any of the
statutes, regulations, rules or ordinances which such governmental or regulatory
authority or regulatory authority enforces, or any threat to revoke any license,
franchise, permit or governmental authorization which could materially affect
the consolidated financial condition, assets, business, or operations of
Commercial or its subsidiaries.
(s) Other Transactions. Nothing herein shall be construed to limit at
------------------
any time the ability of Commercial or any of its subsidiaries from entering into
other agreements or transactions pursuant to which it or its subsidiaries may
merge, consolidate or affiliate with any other entity, or acquire or establish
other branches or subsidiaries.
(t) Environmental Concerns. Unless otherwise indicated in Exhibit A,
----------------------
to the knowledge of their respective chief executive and chief financial
officers, neither Commercial nor its subsidiary banks own any property where:
1. Material amounts of Hazardous Substances have been
generated, treated, stored, disposed of, incinerated or recycled at or
on the property;
2. Aboveground or underground storage tanks are or have been
located;
13
<PAGE>
3. Spills, discharges, releases, deposits of material amounts of
any Hazardous Substances have occurred;
4. Hazardous Substances have been released on adjacent
properties which could migrate on to the property of Commercial or any
of its subsidiaries;
5. An investigation or administrative proceeding by a
governmental agency or a lawsuit by a governmental agency or private
third party has occurred involving Applicable Environmental Law or where
the property contains conditions which would give rise to such an event;
or
6. Solid waste, as defined in the West Virginia Solid Waste
Management Act, West Virginia Code (S) 20-5F-1 et seq., has been
disposed of.
To the knowledge of their respective chief executive and chief financial
officers, neither Commercial nor any of its subsidiary banks has a loan secured
by property which is owned or operated by an entity or person in violation of
Applicable Environmental Law or has a condition which could lead to a claim of
violation of Applicable Environmental Law.
For purposes of this Agreement, (i) the term "Applicable Environmental
Law" shall include but shall not be limited to the laws and implementing
regulations of the United States Government, the State of West Virginia and
local governments, whether currently in existence or hereafter enacted, that
govern: (a) the existence, cleanup and/or remedy of or for hazardous substance
contamination on property; (b) the protection of the environment from released,
spilled, deposited or otherwise emplaced hazardous substance contamination; (c)
the control of hazardous substances and hazardous substance waste; and (d ) the
reporting, use, generation, transport, treatment and removal of Hazardous
Substances and (ii) the term "Hazardous Substance" shall mean
14
<PAGE>
any substance which at any time is toxic, ignitable, reactive or corrosive and
that is regulated by any Applicable Environmental Law or which has been or shall
be determined at any time by any agency or court to be a toxic, ignitable,
reactive or corrosive substance regulated under Applicable Environmental Law or
detrimental to the environment or health of living organisms. "Hazardous
Substance" includes any and all materials or substances that are defined as
"hazardous wastes", "extremely hazardous wastes" or a "hazardous substances"
pursuant to any Applicable Environmental Law. "Hazardous Substance" includes,
but is not restricted to, asbestos, polychlorinated biphenyls ("PCBs"), radon,
nuclear materials and petroleum.
(u) Matters Relevant to Tax Treatment.
---------------------------------
(i) Commercial has no plan or intention to liquidate CWV; to
merge CWV with or into another corporation; to sell or otherwise dispose of the
stock of CWV; or to cause CWV to sell or otherwise dispose of any of the assets
of Gateway acquired in the Merger, except for dispositions made in the ordinary
course of business or transfers described in I.R.C. Section 368(a)(2)(C).
(ii) Following the Merger, CWV will continue the historic
business of Gateway or use a significant portion of Gateway's business assets in
such business.
(iii) Commercial has no plan or intention to reacquire any of its
stock issued in the Merger.
(iv) Neither Commercial nor CWV has any plan or intention to sell
or otherwise dispose of any of the assets of Gateway acquired in the Merger,
except for dispositions made in the ordinary course of business, dispositions in
arm's length transactions made to avoid duplicative facilities or to comply with
regulatory requirements.
15
<PAGE>
(v) Prior to the Merger, Commercial will be in control of CWV
within the meaning of I.R.C. Section 368(c).
(vi) Following the Merger, CWV will not issue additional shares
of its stock that would result in Commercial losing control of CWV within the
meaning of Section 368(c).
(vii) Neither Commercial nor CWV are investment companies, as
defined in I.R.C. Section 368(a)(2)(F)(iii) and (iv).
(viii) The payment of cash to Gateway shareholders in lieu of
fractional shares of Commercial stock is not separately bargained for
consideration and is solely for the purpose of saving Commercial the expense and
inconvenience of issuing fractional shares. The total cash consideration that
will be paid in the Merger to the Gateway shareholders instead of issuing
fractional shares of Commercial stock will not exceed 1% of the total
consideration to be issued in the transaction to Gateway shareholders in
exchange for their shares of Gateway common stock. The fractional share
interests of each Gateway shareholder will be aggregated and no Gateway
shareholder will receive cash for fractional shares in an amount equal to or
greater than the value of one full share of Commercial stock.
(ix) None of the compensation received by any shareholder-employee of
Gateway will be separate consideration for, or allocable to, any of his or her
shares of Gateway stock; none of the shares of Commercial stock received by any
shareholder-employee will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any shareholder-employee will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
16
<PAGE>
2.2. Representation and Warranties of Gateway. Unless disclosed in Exhibit
----------------------------------------
C hereto as of the date of this Agreement and as of the date of the consummation
of the transactions contemplated herein, Gateway represents and warrants the
following to Commercial and CWV:
(a) Organization. Gateway is a West Virginia corporation duly
------------
organized, validly existing and in good standing under the laws of the State of
West Virginia. Bank of McMechen is a state banking corporation duly organized,
validly existing and in good standing under the laws of the State of West
Virginia. Each has all of the requisite corporate power and authority to own and
lease its properties and to conduct its business as it is now being conducted
and as currently contemplated to be conducted.
(b) Authority of Gateway. Subject to all applicable state and federal
--------------------
regulatory approvals and the requisite shareholder approval, Gateway has the
power to enter into this Agreement and to cause the transaction contemplated
herein to be carried out. The execution and delivery of this Agreement and the
consummation of the transaction contemplated herein have been duly authorized by
the Board of Directors of Gateway. Except for the ratification, confirmation and
approval of this Agreement by Gateway's stockholders, no other acts or
proceedings on its part are necessary to authorize the transaction contemplated
by this Agreement. Upon its execution and delivery, subject only to shareholder
ratification, confirmation and approval, this Agreement constitutes the valid
and legally binding obligation of Gateway. Subject to obtaining the permits,
approvals, consents and authorizations set forth in Article IV hereto, the
execution and delivery of this Agreement does not, and the consummation of the
transaction contemplated herein will not, violate (i) any provision of the
Articles of Incorporation or Bylaws of Gateway, (ii) any laws of the State of
West Virginia or of the United States of America or (iii) any other material
restriction of any kind or character to which Gateway is subject. No
acceleration of payment, default, breach or termination will occur in any
material respect by virtue of the consummation of the transaction contemplated
in this Agreement under any material contract, agreement, deed of trust, note,
instrument, order, judgment or decree.
17
<PAGE>
(c) Capital Stock of Gateway. Gateway has one class of capital stock
------------------------
consisting of 200,000 shares of authorized common stock having a par value of
$12.50 per share, 66,652 of which are issued and outstanding. The outstanding
shares of Gateway stock have been duly and validly authorized and issued and
have not been issued in violation of any preemptive rights of any of its
shareholders. Gateway holds 4,628 shares of its stock as treasury stock, none of
which has been acquired within the last two (2) years.
(d) Absence of Certain Changes. Except as disclosed in Exhibit C
--------------------------
attached hereto and made a part hereof, since June 30, 1997:
(i) There has been no change in the assets, consolidated financial
condition, or results of operations of Gateway, taken as a whole, which has had,
or changes which in the aggregate have had, a materially adverse effect on
Gateway's assets, financial condition or operations, nor has any event occurred
which is known to the officers of Gateway which may result in such changes.
(ii) There has not been any damage, destruction, or loss by reason
of fire, flood, accident or other casualty (whether insured or not insured)
materially and adversely affecting the assets, financial condition or operations
of Gateway;
(iii) Gateway has not disposed of or agreed to dispose of any of
its material properties or assets, nor has either leased to others, or agreed to
so lease, any of such material properties or assets;
(iv) There has not been any change in the authorized, issued or
outstanding capital stock of Gateway or any material change in the outstanding
debt of Gateway, other than changes due to payments in accordance with the terms
of such debt and other than the acceptance of deposits by Gateway in the
ordinary course of business;
18
<PAGE>
(v) There has not been, nor will there be, any declaration, setting
aside or payment of any dividend or distribution in respect of any shares of the
common stock of Gateway except for dividends of up to twenty (20) cents per
share per quarter; provided that Gateway shall not pay such a dividend for any
quarter for which Gateway shareholders will be entitled to receive a dividend as
Commercial shareholders;
(vi) Gateway has not granted at any time any warrant, option or
right to acquire, or agreed to repurchase, redeem or otherwise acquire, any
shares of its capital stock or any other of its securities whatsoever except as
granted or agreed to in this Agreement;
(vii) No change has occurred in the personnel who are key
personnel with respect to the operations of Gateway; nor has there been any
increase in the compensation or fees payable by Gateway to its directors,
officers, employees or former employees, nor has there been any increase in any
loans, bonus, insurance, pension or other employee benefit plan, payment or
arrangement for or with any of such directors, officers, employees or former
employees;
(viii) Gateway has not made any loan or advance, other than in the
ordinary course of business;
(ix) Gateway has not made any expenditure or commitment for the
purchase, acquisition, construction or improvement of any material capital asset
or of capital assets which in the aggregate would be material;
(x) Except transactions contemplated herein, Gateway has not
entered into any other material transaction, contract or lease, or incurred any
other material obligation or liability; and
19
<PAGE>
(xi) There has not been any other event, condition or development
of any kind which materially and adversely affects the assets, financial
condition or operations of Gateway, and it has no knowledge of any such event,
condition or development which may materially and adversely affect the assets,
financial condition or operations of Gateway.
(e) Taxes. Except as disclosed in Exhibit C attached hereto and made
-----
a part hereof:
(i) Gateway has filed all federal income tax returns and all other
federal, state, municipal and other tax returns which it is required to file,
has paid all taxes shown to be due on such returns and, in the opinion of its
chief executive and chief financial officer, has adequately reserved or
recognized for all current and deferred taxes;
(ii) Neither the IRS nor any other taxing authority is now asserting
against Gateway or its subsidiary, or, to its knowledge, threatening to assert
against either of them, any material deficiency or material claim for additional
taxes, interest or penalties;
(iii) There is no pending or threatened examination of the
federal income tax returns of Gateway and, except for tax years still subject to
the assessment and collection of additional federal income taxes under the three
year period of limitations prescribed in IRC (S) 6501(a), no tax year of Gateway
remains open to the assessment and collection of additional federal income
taxes; and
(iv) There is no pending or threatened examination or outstanding
liability for any West Virginia state taxes, except for tax liabilities not yet
due and payable.
(f) Litigation, Etc.. Except as disclosed in Exhibit C attached hereto
----------------
and made a part hereof, neither Gateway nor its subsidiary is a party to, or, to
the knowledge of its chief executive officer, threatened with, any litigation,
action, governmental or other proceeding,
20
<PAGE>
investigation, strike or other labor dispute which might affect the validity of
this Agreement, or which, individually or in the aggregate, might have a
materially adverse affect on its assets, financial condition or operations or on
any of its material contractual rights; and there is no outstanding material
order, writ, injunction or decree of any court or governmental agency against or
affecting Gateway or a material portion its business or assets.
(g) Absence of Defaults and Violations. Except as disclosed in Exhibit
----------------------------------
C attached hereto and made a part hereof, Gateway and its subsidiary are not (i)
in default under any term or provision of any mortgage, deed of trust, note,
bond, indenture, commitment, contract, agreement, franchise, permit, license,
lease or instrument to which it is a party or by which it or its properties are
bound and which is material to its financial condition, businesses or
operations, (ii) subject to any judgment, decree or order of any court or order,
agreement, or similar arrangement with a regulatory authority which materially
restricts it operations or requires any material action, (iii) in violation of
any law, rule or regulation known and applicable to either of them which then
violation of which could materially affect their financial condition, assets,
businesses or operations, or (iv) in receipt of notification from any agency or
department of any federal, state or local governmental or regulatory authority
or the staff thereof asserting that either of them is not in compliance with any
of the statutes, regulations, rules or ordinances which such governmental
authority or regulatory authority enforces and which lack of compliance could
materially affect the financial condition, assets, business or operations of
either of them, or any threat to revoke any license, franchise, permit or
governmental or regulatory authorization which could materially affect the
financial condition, assets, business or operations of either of them.
(h) Absence of Undisclosed Assets and of Undisclosed Contingent
-----------------------------------------------------------
Liabilities. Except to the extent reflected on the latest financial statements
of Gateway delivered to Commercial or except as disclosed in Exhibit C attached
hereto and made a part hereof, Gateway and its subsidiary have no undisclosed
assets, or any material claim, liability, obligation, or any known asserted
claim, secured or unsecured, any of which is material (whether accrued,
absolute, contingent or otherwise), against either of them or either of their
assets.
21
<PAGE>
(i) Financial Statements. Gateway has delivered to Commercial copies
--------------------
of the audited financial statements of Gateway for the year ended December 31,
1996, and unaudited statements for the period ended June 30, 1997, consisting of
Balance Sheets, Statements of Income, and Statements of Changes in Stockholders'
Equity and Statements of Cash Flows and notes thereto. Gateway represents and
warrants that its financial statements which have been or will be delivered
pursuant to any provision of this Agreement fairly present the financial
position of Gateway as of the date thereof and the results of its operations for
each period specified therein.
(j) Real Property. Gateway or its subsidiary owns the real property
-------------
shown on Exhibit C. Except as disclosed on Exhibit C, each is the owner of good
and marketable title in fee simple of the real property reflected on its books
and records as being owned by it. All real property owned by Gateway or its
subsidiary is free and clear of liens and encumbrances except for liens of
record, liens which do not materially affect the current use of the property or
liens for ad valorem taxes not yet due and payable.
(k) No Adverse Event. Since June 30, 1997, there has been no change,
----------------
other than changes in the ordinary course of business, which, individually or in
the aggregate, has or have materially and adversely affected the financial
condition, results of operations or businesses of Gateway.
(l) Material Contracts. Except as disclosed in Exhibit C attached
------------------
hereto and made a part hereof, Gateway or its subsidiary is not a party to, or
bound or affected by, nor receives benefits under (i) any material agreement,
arrangement or commitment not cancelable by it without penalty, other than
agreements, arrangements or commitments entered into in the ordinary course of
business consistent with its past practice and negotiated on an arm's length
basis, or (ii) any material agreement, arrangement or commitment relating to the
employment, election or retention in office of any director or officer.
22
<PAGE>
(m) ERISA. For purposes of this Agreement, Benefit Arrangement means
-----
(i) any employee welfare benefits plan or employee pension benefit plan within
the meaning of section 3(1) or section 3(2) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), (ii) any profit sharing, deferred compensation,
bonus, stock option, pension retainer, consulting, retirement, severance,
welfare, or incentive plan, agreement, or arrangement; or (iii) any plan,
agreement or arrangement providing for fringe benefits or perquisites to
employees, officers, directors, or agents, including, but not limited to
benefits relating to automobiles, clubs, vacations, child care, sabbatical, sick
leave, medical benefits, dental benefits, hospitalization, life insurance and
other types of insurance.
Each Benefit Arrangement that is subject to (i) the group health care
continuation coverage requirements of section 4980B of the Internal Revenue Code
of 1986 (the "Code") and sections 601-608 of ERISA; (ii) the secondary payor
requirements imposed by section 1862 of the Social Security Act; or (iii) the
health insurance portability and anti-discrimination requirements of Part 7 of
ERISA (29 U.S.C. (S)(S) 1181-1183), has been operated in all material respects
in accordance with those provisions to the extent they apply.
There have been no acts or omissions relating to any Benefit
Arrangement that has resulted or may result in the imposition of fines,
penalties, taxes or related charges under ERISA or the Code, including, but not
limited to (i) ERISA sections 502(c), (i) or (l); (ii) ERISA section 4071; (iii)
the prohibited transaction provisions of ERISA section 406 or Code section 4975;
(iv) or the imposition of a lien pursuant to Code sections 401(a)(29) or 412(n).
Unless disclosed in Exhibit C, each Benefit Arrangement has been
fully operated and administered in all material respects in accordance with its
terms. Each Benefit Arrangement that is intended to comply with section 401(a)
of the Internal Revenue Code or ERISA complies in all material respects in form,
operation and administration with such provisions to the extent they apply.
23
<PAGE>
All contributions (including all employer contributions and employee
salary reductions contributions, if any) which are due have been paid to each
Benefit Arrangement.
(n) Regulatory Reports. Gateway and its subsidiary have filed all
------------------
material reports required to be filed by it with all applicable banking
regulators, and with any other regulatory authority to which it must report, and
such reports have been completed in accord with applicable regulations and
requirements.
(o) Environmental Concerns. Unless otherwise indicated in Exhibit C,
----------------------
to the knowledge of its chief executive and chief financial officer, Gateway and
its subsidiary own or lease no property where:
(i) Material amounts of Hazardous Substances have been
generated, treated, stored, disposed of, incinerated or recycled at or on the
property;
(ii) Aboveground or underground storage tanks are or have been
located;
(iii) Spills, discharges, releases, or deposits of material
amounts of any Hazardous Substances have occurred;
(iv) Hazardous Substances have been released on adjacent
properties which could migrate on to the property of Gateway or its subsidiary;
(v) Any investigation or administrative proceeding by a
governmental agency or any lawsuit by a governmental agency or private third
party has occurred involving Applicable Environmental Law or where the property
contains conditions which would give rise to such an event; or
24
<PAGE>
(vi) Solid waste, as defined in the West Virginia Solid Waste
Management Act , West Virginia Code (S) 20-5F-1 et seq., has been disposed of.
To the knowledge of its respective chief executive and chief financial
officer, Gateway and its subsidiary have no loan secured by property which is
owned or operated by an entity or person in violation of Applicable
Environmental Law or has a condition which could lead to a claim of violation of
Applicable Environmental Law.
ARTICLE III
-----------
ADDITIONAL AGREEMENTS
---------------------
3.1 Approval of Gateway Shareholders. Gateway will submit to its
--------------------------------
shareholders, as part of the proxy materials prepared for its shareholders'
consideration, this Agreement, and the transaction contemplated herein, for
approval, ratification and confirmation by the holders of at least a majority of
the issued and outstanding shares in accordance with law.
3.2 Approval of Commercial Shareholders and Sole Shareholder of CWV.
------------------------------------------------------------------
Commercial will vote all its shares in CWV in favor of the Merger of Gateway
into CWV.
3.3 Rights of Dissenting Stockholders. Any shareholder of Gateway who
---------------------------------
properly perfects his or her right to dissent under West Virginia Code (S) 31-1-
123 (the "West Virginia Appraisal Statute") shall be entitled to the fair value
of such shares as determined in the West Virginia Appraisal Statute.
3.4 Regulatory Approval. Commercial and CWV, with Gateway's cooperation
-------------------
and assistance, will prepare and file with the Board of Governors of the Federal
Reserve System ("FRB"), the West Virginia Board of Banking and Financial
Institutions and any other applicable regulatory authority all applications
required to seek approval of the Merger. The parties hereto
25
<PAGE>
agree to expeditiously, continuously and aggressively pursue regulatory approval
of the transactions contemplated herein. Commercial shall provide Gateway with
copies of all correspondence, applications, and other documents submitted in the
regulatory approval proceedings.
3.5 Conduct of Business by Gateway and Its Subsidiary Until Closing.
------------------------------------------------------------------
Gateway acknowledges and agrees that the obligations contained in this Section
3.5 are an integral part of the consideration for this Agreement and that
Commercial's commitments herein are conditioned upon performance of these
operational covenants. Unless the prior written consent of Commercial is
obtained, or unless otherwise provided for herein, Gateway, between the date of
this Agreement and the Merger Effective Date will:
(a) Take no action, and not permit any action to be taken, which will
have a material adverse effect upon Gateway or its subsidiary, or their
respective properties, financial condition, businesses or operations, including,
without limitation, the commencement of any new branch banking operation.
(b) Take no action or do anything (i) which will cause Gateway or its
subsidiary to be, as of the Merger Effective Date, in violation of any of their
respective representations, warranties, covenants and agreements contained in
this Agreement or (ii) which will materially and adversely affect the
consummation of the transactions contemplated in this Agreement.
(c) Take no action to reclassify or alter Gateway's authorized stock,
to issue shares of capital stock, debt instruments, or other securities, or to
amend the Articles of Incorporation or Bylaws of Gateway or its subsidiary.
(d) Not pay or declare any dividend or make any other distribution in
respect of Gateway's shares of common stock or acquire for value any of such
shares or pay any dividend, except as permitted herein.
26
<PAGE>
(e) Take no action, and not permit any action to be taken, to mortgage,
pledge or subject to any lien or other encumbrance any of Gateway's material
assets; to dispose of any material assets; or to incur or cancel any material
debt or claim, except in the ordinary course of business as heretofore
conducted.
(f) Afford to the officers, attorneys, accountants, and other
authorized representatives of Commercial full access to the respective
properties, books, tax returns and records of Gateway and its subsidiary, during
normal business hours and upon reasonable request, in order that they may make
such investigations of the affairs of Gateway and its subsidiary as Commercial
deems necessary or advisable. The parties hereto and their respective affiliates
shall use all information that each obtains from the other pursuant to this
Agreement solely for the transaction contemplated by this Agreement or for
purposes consistent with the intent of this Agreement, and shall not use any of
such information for any other purpose, including, without limitation, the
competitive detriment of any party. Each of the parties hereto and their
respective affiliates shall maintain as strictly confidential all information
any of them learns from another of the parties hereto pursuant to this Agreement
and shall, at any time, upon request, return promptly all documentation provided
or made available to them or third parties, including all copies thereof. Each
of the parties may disclose such information to its respective affiliates,
counsel, accountants, tax advisers, and consultants. The confidentiality
agreement contained in this section shall remain operative and in full force,
and shall survive the termination of this Agreement.
The parties hereto shall mutually agree in advance upon the form and
substance of all public disclosures concerning this Agreement and the
transaction contemplated hereby.
(g) Promptly advise Commercial of any material adverse change in the
financial condition, assets, businesses or operations of Gateway or its
subsidiary and of any material breach of any representation, warranty, covenant
or agreement made by Gateway or its subsidiary set forth in this Agreement.
27
<PAGE>
(h) Maintain in full force and effect adequate fire, casualty, public
liability, employee fidelity and other insurance coverage in accordance with
prudent practices to protect Gateway or its subsidiary against losses for which
insurance protection can be obtained at reasonable cost.
(i) Take no action, and take such reasonable steps as are practicable
to avoid any action to be taken to change the senior management of Gateway; to
increase any compensation, benefits, or fees payable by Gateway to their
respective directors and officers, employees, or former employees; or to
increase any loans, insurance, pension or other employee benefit plan, payment
or arrangement for such officers, directors, employees; provided, however, that
Gateway and its subsidiary may: (i) make such increases in salary or wages as
may be required by law and (ii) at the time of its regular periodic compensation
adjustments, make increases in salaries and wages in amounts not to exceed three
percent (3%) of any individual's salary or wage rate.
(j) Take no action (i) to acquire, or to be acquired by, to merge or
merge with, any company or business;, (ii) to sell substantially all of Gateway
or its subsidiary's assets, or to enter into any similar transaction other than
pursuant to the provisions of this Agreement; or (iii) to acquire any branch,
or, except in the ordinary course of business, any material assets of any other
company or business.
(k) Take no material action, and not permit any material action to be
taken, whatsoever with respect to its properties, assets, businesses or
operations, other than in the ordinary course of its business.
(l) Not permit the loan loss reserve to be less than $225,000 before
the Merger Effective Date, less any amounts recovered from previously charged-
off loans; and in addition, Gateway agrees that it will (i) properly and timely
charge-off any loan losses, as required by any applicable regulatory agency and
prudent banking practices, and (ii) at the time of any such
28
<PAGE>
charge-off, Gateway will make a provision to the loan loss reserve equal to the
amount of the loss, less the specific amount allocated in the reserve, if any,
relating to the charged-off loan (such specific amounts having been previously
identified in writing by loan and amount). The requirements of this subparagraph
(l) are qualified in that Gateway is not obligated to take the actions set forth
if such action will cause Gateway to report a loss in any quarter; in which case
Gateway shall fulfill the foregoing requirements to the extent possible without
producing a loss. The requirements of this subparagraph shall not be construed
to preclude the payment of bonuses otherwise expressly authorized herein.
(m) Make no loans including but not limited to any extension, renewal,
modification or refinancing of an existing loan, in excess of $150,000, without
Commercial's prior written consent, which consent will not be unreasonably
withheld.
(n) Not sell, trade or purchase any securities in its investment
portfolio without prior consent of Commercial's Chief Financial Officer, which
will not be unreasonably withheld.
3.6 Conduct of Business by Commercial Until Closing. Commercial, as a
-----------------------------------------------
bank holding company, in the normal conduct of its business, may acquire other
banks or bank holding companies or engage in certain nonbanking activities which
are closely related to banking, all as permitted under federal and state law.
Accordingly, Commercial may continue to seek and consider such opportunities and
will not be restrained from doing so by the terms of this Agreement. In the
event that Commercial should reach an understanding with another entity
regarding a merger, purchase or consolidation, Commercial may proceed with a
merger, purchase or consolidation concurrently with the acquisition by merger
contemplated by this Agreement.
Notwithstanding the prior paragraph of this Section 3.6 to the contrary,
unless the prior written consent of Gateway is obtained, Commercial, between the
date hereof and the Effective Time of the Merger, shall:
29
<PAGE>
(a) Take no action, and not permit any action to be taken, by it or
its subsidiaries, which will have a material adverse effect upon any of their
properties, financial conditions, businesses or operations.
(b) Take no action or do anything (i) which will cause Commercial
or CWV to be in violation of their representations, warranties, covenants and
agreements contained in this Agreement or (ii) which will materially and
adversely affect the consummation of the transaction contemplated in this
Agreement.
(c) Promptly advise Gateway of any material adverse change in
the financial condition, assets, businesses or operations of Commercial and any
breach of any representation, warranty, covenant or agreement made by Commercial
or CWV in this Agreement.
(d) Maintain in full force and effect adequate fire, casualty,
public liability, employee fidelity and other insurance coverage in accordance
with prudent practices to protect fully Commercial and its subsidiaries against
losses for which insurance protection can reasonably be obtained.
(e) Afford to the officers, attorneys, accountants, and other
authorized representatives of Gateway full access to the respective properties,
books and records of Commercial and its subsidiaries, during normal business
hours and upon reasonable request, in order that they may make such
investigations of the affairs of Commercial and its subsidiaries as they deem
necessary or advisable. The parties hereto and their respective affiliates shall
use all information that any of them obtains from the other pursuant to this
Agreement solely for the effectuation of the transactions contemplated by this
Agreement or for purposes consistent with the intent of this Agreement, and
shall not use any of such information for any other purpose, including, without
limitation, the competitive detriment of any party. Each of the parties hereto
and their respective affiliates shall maintain as strictly confidential all
information it learns from another of the parties hereto pursuant to this
Agreement and shall, at any time, upon request, return promptly
30
<PAGE>
all documentation provided or made available to it or to any third parties. Each
of the parties may disclose such information to its respective affiliates,
counsel, accountants, tax advisers, and consultants. The confidentiality
agreement contained in this section shall remain operative and in full force,
and shall survive the termination of this Agreement.
3.7 Proxy Statement. It is understood that as an integral part of the
---------------
transaction contemplated by this Agreement, proxy materials must be prepared and
sent to Gateway shareholders presenting certain disclosures about Commercial,
Gateway and the transaction contemplated herein. Gateway agrees to assist in the
due diligence related thereto, and to cooperate fully in the preparation of the
proxy materials to be sent to the shareholders of Gateway. The proxy materials
sent to shareholders of Gateway shall be subject to prior review and approval by
of the management of Gateway.
3.8 Directors, Independent Bank. In order to assure continuity, the
---------------------------
parties agree as follows:
(a) Board of Directors. Commercial and CWV agree that the current
------------------
Board of Directors of The Bank of McMechen (designated on the signature page,
the "Current Board") will continue to constitute a majority of its Board of
Directors for at least two (2) years from the Closing, unless any such member
shall resign, die or be removed for cause. Commercial shall select up to two (2)
additional representatives to serve on the Board of Directors, and the parties
hereto shall cause to be made any amendments to the Articles of Incorporation or
Bylaws of The Bank of McMechen necessary to increase the size of its Board of
Directors.
(b) Independent Bank. Further, The Bank of McMechen shall remain an
----------------
independent subsidiary bank for a period of not less than two (2) years from the
Closing; provided, however, that The Bank of McMechen need not remain an
independent subsidiary bank for said two (2) year period if (i) a majority of
the Current Board then serving on The Bank of McMechen Board of Directors,
approve a merger, consolidation or other restructuring or (ii) all of the
existing seven
31
<PAGE>
(7) subsidiary banks currently owned by Commercial are merged, consolidated or
otherwise combined into a single subsidiary. In the event the transaction
contemplated by the preceding subparagraph (ii) is consummated, the Current
Board (as defined above) shall be entitled (a) to serve as members of an
advisory board to the surviving subsidiary bank for the remainder of the two (2)
year period referred to herein and (b) to receive directors fees equal to an
amount that is not less than the fees received by the Current Board as of the
date of this Agreement.
(c) Commercial Board of Directors. The continuing members of the
-----------------------------
Current Board, after the Closing, shall nominate a representative to the Board
of Directors of Commercial. Commercial agrees, in turn, to elect the nominee to
its Board of Directors, effective as of the Closing and to include the nominee
among its slate of directors at the next annual meeting of its shareholders.
3.9 Employees of Bank of McMechen. Commercial anticipates that all
-----------------------------
employees of Bank of McMechen will continue their employment following the
Closing. If, however, Commercial finds it necessary to terminate any current
employee of the Bank of McMechen due to a reduction in staff during the first
twelve months after Closing, it will provide severance for those terminated
employees. Severance will equal one week's base pay for each full year of
continuous service as an employee of the Bank of McMechen as of the severance
date. Any officer of the Bank of McMechen (excluding Michael E. Moore) who is
terminated will receive severance equal to two weeks' base pay for each full
year of continuous service as an employee of the Bank of McMechen as of the
severance date. Severance will be in addition to any payment for accumulated
vacation. Severed employees will be offered health benefits paid for entirely by
the employee under COBRA. Notwithstanding the foregoing, in no event shall the
severance to which an employee or officer is entitled exceed fifty-two (52)
weeks of base pay.
32
<PAGE>
ARTICLE IV
----------
CONDITIONS
----------
4.1 Conditions to Obligations of All Parties. Subject to the respective
----------------------------------------
right of each party to waive any condition required to be met by the other party
or parties hereto by this Section 4.1, the parties are not obligated to
consummate, or to cause to be consummated, the transactions contemplated by this
Agreement unless:
(a) Shareholder Approval of Transaction. Before the Closing, Gateway
-----------------------------------
shall have obtained the approval, ratification and confirmation of this
Agreement and the transaction contemplated herein by the requisite vote of its
shareholders, as required by law and by any applicable provision of its articles
of incorporation and bylaws.
(b) CWV. Commercial shall have caused the organization and chartering
---
of CWV and CWV shall have executed the Adoption Agreement.
(c) Absence of Restraint. No order to restrain, enjoin or otherwise
--------------------
prevent the consummation of the transaction contemplated in this Agreement shall
have been entered by any court or administrative body which remains in effect on
the Merger Effective Date.
(d) Governmental Approvals. There shall have been obtained by the
----------------------
Merger Effective Date any and all permits, approvals and consents of every
governmental body or regulatory authority which are necessary or appropriate so
that consummation of the transaction contemplated in this Agreement shall be in
compliance with all applicable laws, including, without limitation, those the
FRB, the Board of Banking and Financial Institutions and any other governmental
or regulatory authority with jurisdiction over the transaction.
(e) Compliance with Representations, Warranties and Additional
----------------------------------------------------------
Agreements. All of the representations and warranties of the parties contained
- ----------
in this Agreement shall be true in all material respects at and as of the Merger
Effective Date with the same force and
33
<PAGE>
effect as if they had been made at and as of such date (except for changes
contemplated and permitted by this Agreement or otherwise consented to in
writing by the appropriate party to this Agreement) and each party shall have
complied with and performed, in all material respects, all of the agreements
contained in this Agreement to be performed by it at or before the Merger
Effective Date. At the Closing of the transaction contemplated herein, each
party shall have received from the other party to this Agreement, a certificate,
in affidavit form, dated as of the date of the Closing, signed by the other
party's chief executive officer and chief financial officer, certifying that the
foregoing statements made in this Section 4.1(e) are true and correct to the
best of their knowledge and belief.
(f) Securities Law Compliance. The Registration Statement to be filed
-------------------------
by Commercial with the Securities and Exchange Commission pursuant to Section
2.1(m) hereof, shall be declared effective on or before the date of the Closing.
No order suspending the effectiveness thereof shall have been issued which
remains in effect on the date of the Closing, and no proceedings for that
purpose shall, before the Closing, have been initiated or, to the best knowledge
of Commercial, threatened. All state securities and "blue sky" permits or
approvals required to carry out the transaction contemplated in this Agreement
shall have been received to permit free trading of the Commercial stock issued
to the non-affiliate Gateway shareholders.
(g) Confidentiality. Commercial and Gateway shall each execute
---------------
mutually agreed upon confidentiality agreements.
(h) Accounting Treatment. All criteria for the Merger to be accounted
--------------------
for under the pooling of interests method of accounting shall have been met, and
no party hereto shall knowingly take any action which would have the effect of
disqualifying the Merger under the pooling of interests method of accounting.
(i) All criteria to assure the tax-free exchange of Gateway shares for
Commercial shares shall have been met.
34
<PAGE>
(j) Commercial and/or The Bank of McMechen, as appropriate, shall
have negotiated, for execution as of Closing: (1) an employment agreement with
change of control provisions for a term of not more than three (3) years from
the date of the Closing, with Michael E. Moore, President and (2) a change of
control agreement with Linda Miller, Chief Operating Officer; both of which must
be, in form and substance, satisfactory to Commercial.
4.2 Additional Conditions to Obligations of Commercial.
---------------------------------------------------
(a) Shareholder Approval. Holders of an aggregate of greater than 10%
--------------------
of the issued and outstanding shares of Gateway shall not have perfected their
rights to dissent to the transaction contemplated herein.
(b) Counsel's Opinion. Commercial shall have received an opinion of
-----------------
counsel for Gateway dated as of the Merger Effective Date, to the effect that:
(i) Gateway is a state chartered bank duly organized, validly
existing and in good standing under the laws of the State of West Virginia;
(ii) The authorized capital stock and the number of shares issued
and outstanding of Gateway are as stated in the opinion. The issued and
outstanding shares are validly issued, fully paid and non-assessable, and were
not issued in violation of any preemptive rights of the shareholders of Gateway.
As of such date, to the best of counsel's knowledge, there are no options,
warrants, convertible securities or similar items outstanding on behalf of
Gateway.
(iii) Gateway has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly authorized, executed and delivered by Gateway and constitutes the
legal, valid and binding obligation of Gateway, enforceable in accordance with
its terms except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium, or other laws
affecting creditors' rights generally.
35
<PAGE>
(iv) The Affiliate's agreements in the form of Exhibit D executed on
or prior to the Merger Effective Date have been duly executed and delivered by
the Gateway directors and constitute the legal, valid and binding obligation of
the respective directors and are enforceable in accordance with their terms.
(v) All necessary corporate proceedings have been duly and validly
taken by Gateway, to the extent required by law, its respective articles of
incorporation and bylaws, or otherwise, to authorize the execution and delivery
of this Agreement by Gateway and the consummation of the transaction
contemplated herein.
(vi) Counsel has reviewed the proxy statement contemplated hereby
and, with respect to all information relating to Gateway contained therein,
counsel does not know of any misleading statement of any material fact or
failure to state a material fact which was necessary to be stated to prevent the
statements made from being false or misleading in any material respect, except
as to financial data, as to which counsel expresses no opinion.
(vii) The consummation of the transaction contemplated herein will
not violate or result in a breach of, or constitute a default under, the
articles of incorporation or bylaws of Gateway, or constitute a breach or
termination of, or default under, any agreement or instrument of which counsel
is aware and which would have a material adverse effect on the business of
Gateway, and to which it is a party or by which it or any of its property is
bound.
(c) Affiliates Agreements. Commercial shall have received an
---------------------
agreement, in the form of Exhibit D hereto, executed and delivered by each
shareholder of Gateway who, in the reasonable opinion of Commercial, may be
deemed an "affiliate" of Gateway, as that term is defined in Rule 145
promulgated by the Securities and Exchange Commission.
36
<PAGE>
4.3 Additional Conditions to Obligations of Gateway.
--------------------------------------------------
(a) Opinion of Counsel. Gateway shall have received the opinion of
------------------
counsel to Commercial to the effect that:
(i) Commercial is a West Virginia corporation, validly existing
and in good standing under the laws of West Virginia and is duly authorized to
own its properties and to conduct its business as presently conducted. CWV is
validly existing and in good standing under the laws of the State of West
Virginia is duly authorized to own its properties and to conduct its business as
presently conducted.
(ii) All necessary corporate proceedings have been duly taken by
Commercial and CWV to the extent required by law, their respective articles of
incorporation, bylaws or otherwise, to authorize the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein.
This Agreement constitutes the legal, valid and binding obligation of Commercial
and CWV (once it executes the Adoption Agreement) and is enforceable against
them in accordance with its terms except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting creditors rights generally.
(iii) All regulatory approvals of federal or state banking
authorities and regulators necessary to consummate the transactions contemplated
herein have been obtained.
(iv) Counsel has reviewed the proxy statement described herein with
respect to all information relating to the Merger and to Commercial and CWV
contained therein, and knows of no respect in which the proxy statement
contained any false or misleading statement of any material fact or of any
failure to state a material fact which was necessary to be stated to prevent the
statements made from being false or misleading in any material respect, except
as to the financial statements and other financial data as to which counsel
expresses no opinion.
37
<PAGE>
(b) Tax Opinion. On or before the Closing, Gateway shall have
-----------
received an opinion from Bowles Rice McDavid Graff & Love, P.L.L.C., Charleston,
West Virginia in a form reasonably satisfactory to Gateway's counsel to the
effect that:
(i) The statutory merger of Gateway with and into CWV will
constitute a tax-free reorganization within the meaning of IRC Section
368(a)(1)(A) and IRS Section
368(a)(2)(D);
(ii) Except as provided in (iii) immediately below, no gain or loss
will be recognized by a Gateway shareholder as a result of the exchange of the
stock owned by Gateway in the Bank of McMechen in exchange for the Commercial
stock by Gateway and the subsequent liquidation of Gateway and distribution of
the stock held by Gateway in Commercial to the shareholders of Gateway in
exchange for their stock in Gateway.
(iii) The shareholders of Gateway will recognize gain or loss on
the receipt of cash, if any, received in lieu of fractional shares. The
provisions of IRC Section 302 will govern whether the character of the gain will
be ordinary income or capital gain.
(iv) The tax basis of the shares of Commercial received by each
shareholder of Gateway will equal the tax basis of such shareholder's shares of
Gateway (reduced by any amount allocable to fractional share or interests for
which cash is received) exchanged in the merger.
(v) The holding period for the shares of Commercial received by
each shareholder of Gateway will include the holding period for the shares of
Gateway of such shareholder exchanged in the merger.
(vi) Commercial will not recognize any gain or loss as a result of
the merger.
38
<PAGE>
(vii) Bank of McMechen will not recognize any gain or loss as a
result of the merger.
(viii) Gateway will not recognize any gain or loss as a result of
the merger and its subsequent liquidation.
(ix) A Gateway shareholder who dissents from the transaction and
receives solely cash in exchange for his stock in Gateway will be treated as
having received such cash in redemption of his or her Gateway stock subject to
the provisions of IRC (S)(S) 302 and 318.
(c) Fairness Opinion. The board and shareholders of Gateway shall have
----------------
received the opinion of Charles Webb & Company that the transaction is fair,
from a financial perspective, to the shareholders of Gateway.
ARTICLE V
---------
CLOSING
-------
5.1 Closing. The closing (the "Closing") of each merger transaction
-------
shall take place at the principal office of Commercial, or such other place as
may be agreeable to the parties hereto, shall consist of the exchange of items
required hereby and the filing of the Articles of Merger. The parties will use
their best efforts to close on or about December 31, 1997. The payment of the
Merger Consideration will commence as soon as possible after the Merger
Effective Date.
39
<PAGE>
ARTICLE VI
------------
MISCELLANEOUS
-------------
6.1 Termination. This Agreement may be terminated and canceled, and the
-----------
transaction contemplated herein may be abandoned, notwithstanding shareholder
authorization, at any time before the Merger Effective Date as follows:
(a) By mutual consent of the Board of Directors of Commercial and
Gateway as evidenced by a majority vote of each of their respective Boards of
Directors; or
(b) By Commercial, if any of the conditions required to be satisfied by
Gateway specified in Sections 4.1 and 4.2 hereof shall not have been satisfied
within the time contemplated by this Agreement for consummation of this
transaction; or
(c) By Gateway, if any of the conditions required to be satisfied by
Commercial specified in Section 4.1 and 4.3 hereof shall not have been satisfied
within the time contemplated by this Agreement for consummation of the
transactions; or
(d) By any party, if the Merger will violate any nonappealable final
order, decree or judgment of any court of governmental body which binds any
party.
In any event, the obligations of the parties under this Agreement shall
terminate March 31, 1998, if the Closing has not occurred before that date,
unless the parties hereto mutually agree in writing to an extension of the time
within which to close.
In the event of the termination of this Agreement for any reason, each
party shall forthwith deliver to the other parties hereto all documents, work
papers and other material obtained from it or any of its subsidiaries relating
to the transaction contemplated herein, whether obtained before or after the
execution hereof, and will continue to treat as confidential all such
information in the same manner as it treats similar confidential information of
its own and shall cause its and its
40
<PAGE>
subsidiaries' employees, agents and representatives, to keep all such
information confidential except for such disclosures that are required by law or
regulation or by rule, order or decree or any court or government agency.
6.2 Expenses. Each of the parties to this Agreement agrees to pay,
--------
without a right to reimbursement from the other party hereto and whether or not
the transaction contemplated in this Agreement shall be consummated, all of the
costs incurred by it incident to the performance of its obligations under this
Agreement and to the consummation of the transaction contemplated herein.
6.3 Survival of Provisions. The representations, warranties, obligations
----------------------
and other agreements contained in all sections of Article I and Article II and
Sections 3.5(f) and 6.2 of this Agreement shall survive the consummation of the
transactions contemplated herein and shall be and remain strictly enforceable
thereafter in accordance with the terms thereof for the period of three (3)
years after the date each merger transaction is consummated. Except as
aforesaid, and except as may be otherwise explicitly provided in this Agreement,
the respective representations, warranties, obligations and other agreements of
the parties hereto shall not survive the Closings.
6.4 Individual Directors of Gateway. The Directors of Gateway have
-------------------------------
executed this Agreement solely to evidence their assent hereto and for the
express purpose of binding them, to the extent consistent with and not in
violation of their fiduciary duty, to the fulfillment of each of the terms and
conditions hereof by the respective parties and the diligent, expeditious and
good faith pursuit and timely consummation of the transaction contemplated
herein. The Directors of Gateway further agree to cooperate fully with the
parties hereto, their employees, representatives and agents, in consummating the
transaction as proposed and each agrees to vote the shares he or she
beneficially owns and the shares as to which he or she controls or exercises
voting authority or power in favor of the Merger. The Directors of Gateway agree
to take no action inconsistent with this Agreement or the consummation of the
Merger; provided, that each Director shall act at all times in a manner
consistent with his or her fiduciary responsibilities. Any shares beneficially
acquired by a Gateway Director or as to which each such Director acquires
control or the right to vote, will, without further action, be subject to the
agreements contained in this paragraph 6.4.
41
<PAGE>
Each Director further acknowledges and agrees that his or her agreement
to vote his or her shares in favor of the Merger is necessary to fulfill certain
conditions precedent to consummation of the Merger.
6.5 Amendment. This Agreement may be amended by mutual consent of the
---------
Board of Directors of Commercial and Gateway, evidenced by a majority vote of
each of their respective Boards of Directors, at any time before or after
approval thereof by the shareholders; but, after any such shareholder approval,
no amendment shall be made to this Agreement which substantially and adversely
changes the terms of the particular agreement without obtaining the further
approval of the respective shareholders of that party. This Agreement may not be
amended except by an instrument in writing duly executed by the appropriate
officers on behalf of each of the parties hereto.
6.6 Assignability. This Agreement shall inure to the benefit of and be
-------------
binding upon the parties hereto and their respective successors and assigns,
provided that this Agreement may not be assigned by any party without the prior
written consent of the other parties hereto.
6.7 Notices. Any notice or other communication required or permitted
-------
under this Agreement shall be made in writing and shall be deemed to have been
duly given or received if delivered in person or if sent by certified mail, with
postage prepaid, addressed as follows:
<TABLE>
<S> <C>
TO COMMERCIAL: TO GATEWAY:
Larry Johnson Bank of McMechen
Commercial BancShares, Inc. 700 Marshall Street
415 Market Street P. O. Box 68
P. O. Box 1427 McMechen, West Virginia 26040
Parkersburg, West Virginia 26102-1427
COPY TO: COPY TO:
Sandra M. Murphy, Esq. Evans L. King, Jr., Esq.
BOWLES RICE MCDAVID GRAFF STEPTOE & JOHNSON
& LOVE, P.L.L.C. Bank One Center
600 Quarrier Street P. O. Box 2190
P. O. Box 1386 Clarksburg, West Virginia 26302
Charleston, WV 25325-1386
</TABLE>
42
<PAGE>
6.8 Entire Agreement. This Agreement, together with all exhibits
----------------
attached hereto, constitutes the entire agreement among the parties and shall
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of the transaction contemplated
herein and may not be changed except by amendment pursuant to the provisions of
Section 6.5 of this Agreement.
6.9 Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original; but all of which shall
constitute one and the same instrument.
6.10 Governing Law. Subject to the applicable law of the United States of
-------------
America, this Agreement shall be governed and construed in all respects,
including, but not limited to, validity, interpretation and effect, pursuant to
the laws of the State of West Virginia.
6.11 Invalid Provisions. The invalidity or unenforceability of any
------------------
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
6.12 Headings and Subheadings. The headings and subheadings used in this
------------------------
Agreement are included for convenience of reference only and shall have no
effect on the construction or meaning of this Agreement.
6.13 Third-Party Beneficiaries. Nothing in this Agreement shall be
-------------------------
construed as and this Agreement shall not be deemed to be for the benefit of any
third party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their corporate officers thereunto duly authorized.
Attest: COMMERCIAL BANCSHARES, INCORPORATED
By /s/ Larry G. Johnson By /s/William E. Mildren, Jr.
-------------------- -----------------------------
Its Secretary Its President
--------- ---------
43
<PAGE>
Attest: GATEWAY BANCSHARES, INC.
By Robert E. Durig By Michael E. Moore
--------------- -------------------
As Its Chairman Its President
-------- ---------
DIRECTORS OF GATEWAY BANCSHARES, INC.*
/s/ Robert E. Durig /s/ Donald Eddy
- ------------------- ---------------
Dr. Robert E. Durig, Chairman Donald Eddy, Vice Chairman
/s/ Thomas O. Dickey /s/ Robert Munn, Jr.
- -------------------- --------------------
Dr. Thomas O. Dickey, Secretary Robert Munn, Jr.
/s/ Michael E. Moore /s/ Linda Miller
- -------------------- ----------------
Michael E. Moore Linda Miller
*[The Directors of Gateway have signed this Agreement solely to acknowledge
their individual agreements contained in Sections 4.1(h) and 6.4.]
44
<PAGE>
EXHIBIT LIST
Exhibit A - Commercial Disclosures
Exhibit B - Adoption Agreement
Exhibit C - Gateway Disclosures
Exhibit D - Form of Affiliates Agreement
45
<PAGE>
EXHIBIT A
COMMERCIAL BANCSHARES, INCORPORATED
DISCLOSURE SCHEDULE
46
<PAGE>
COMMERCIAL BANCSHARES, INCORPORATED
DISCLOSURE SCHEDULE
2.1(g)(iv) The Commercial BancShares, Incorporated Employee Stock
Ownership Plan with 401(k) provisions ("KSOP") periodically purchases Commercial
stock on behalf of participants of the KSOP.
2.1(o) Commercial has not filed its 1996 Federal income tax return,
but has been granted a six-month automatic extension of time to file. Commercial
will file its return by the extension due date.
47
<PAGE>
EXHIBIT B
ADOPTION AGREEMENT
This Adoption Agreement is made and entered into as of __________________ ,
1997, among CWV Holding Company, Inc. ("CWV"), Gateway Bancshares, Inc.
("Gateway") and Commercial BancShares, Incorporated ("Commercial").
WHEREAS, Commercial and Gateway have entered into that certain Agreement
and Plan of Merger dated July ____, 1997 (the "Merger Agreement"), the
provisions of which are incorporated herein by reference and made a part of this
Adoption Agreement;
WHEREAS, it is provided in Section 2.1 of the Merger Agreement that as soon
as possible after the chartering of CWV, Commercial shall cause CWV to execute
and enter into this Adoption Agreement to cause CWV to be bound by the
applicable terms and conditions of the Merger Agreement;
WHEREAS, the charter of CWV has now been issued;
NOW THEREFORE, for and in consideration of the premises and mutual
agreements of the parties, CWV, Gateway and Commercial do hereby agree as
follows:
1. CWV hereby joins in and agrees to be bound by the terms,
representations, warranties, covenants, conditions and other provisions of the
Merger Agreement applicable to it, to the same extent, as if it were an original
party thereto.
1
<PAGE>
2. CWV agrees that it shall use its best efforts and good faith to take or
cause to be taken as soon as practicable all actions on its part required to be
taken to permit the consummation of the Merger Agreement and the Merger, as
defined therein, and it shall cooperate fully with Gateway and Commercial to
that end.
3. CWV also represents and warrants that:
(a) CWV is a corporation, duly organized, validly existing and in
good standing under the laws of the State of West Virginia.
(b) CWV has the corporate power to execute and deliver this
Adoption Agreement and has taken all action required by law, its charter, its
bylaws or otherwise, to authorize the execution and delivery of this Adoption
Agreement, the consummation of the Merger and the transaction contemplated in
the Merger Agreement.
(c) The Merger Agreement is the valid and binding obligation of
CWV.
IN WITNESS WHEREOF, CWV, Gateway Bank, Inc. and Commercial BancShares,
Inc. have caused this Adoption Agreement to be duly executed as of the date
first written above.
CWV HOLDING COMPANY, INC.
By: ______________________________________
Its: ______________________________________
2
<PAGE>
GATEWAY BANCSHARES, INC.
By: ______________________________________
Its: ______________________________________
COMMERCIAL BANCSHARES, INCORPORATED
By: ______________________________________
Its: ______________________________________
3
<PAGE>
EXHIBIT C
GATEWAY BANCSHARES, INC. REQUIRED DISCLOSURES
1
<PAGE>
GATEWAY BANCSHARES, INC. REQUIRED DISCLOSURES
2.2(d)(vii) Gateway Bancshares, Inc. granted a two percent (2%) increase
in salaries for four of its executive officers effective July 1, 1997. The
individuals who received salary increases are: Michael E. Moore, Chief Executive
Officer; Linda Miller, Chief Operating Officer; Nancy Angalich, Vice President;
and Larry Randolph, Assistant Vice President.
2.2(f) Litigation and (h) Absence of Undisclosed Assets and of Undisclosed
Contingent Liabilities
Becker, et al. v. The Bank of McMechen
- --------------------------------------
Civil Action No. 96-C-40K
Circuit Court of Marshall County, West Virginia
Thirteen customers whose names were used in an embezzlement scheme in 1992
by a former loan officer filed a complaint against The Bank of McMechen on
counts of fraud, negligence, breach of fiduciary duty, conversion and outrage,
and they seek punitive and compensatory damages.
At a later date, nine of the plaintiffs dismissed their claims. The
attorney for the remaining plaintiffs has informed The Bank of McMechen's
attorneys that he intends to withdraw from the case. The Bank of McMechen is
informed he has filed a motion to be allowed to withdraw, but the Court has not
acted on it.
White, et al. v. Hall, et al.
- -----------------------------
Civil Action No. 95-C-104K
Circuit Court of Marshall County, West Virginia
The Bank of McMechen made a loan to Hall during November, 1994, using real
estate as collateral which was deeded to Hall by her father, Hugh White. Mr.
White is now deceased, and the executor is asking for a declaratory judgment to
split the property among five children, claiming Mr. White's reduced judgment at
the time the property was deeded to Hall. As lienholder, the Bank has been named
in the complaint. The plaintiffs seek an order voiding the deed of trust.
The Bank of McMechen (Ohio Casualty Insurance Company)
- ------------------------------------------------------
v. Progressive Casualty Company
- -------------------------------
Civil Action No. 97-C-1M
Circuit Court of Marshall County, West Virginia
2
<PAGE>
A complaint has been filed due to Progressive Casualty Company's failure to
defend The Bank of McMechen in a prior lawsuit arising from the embezzlement
referred to in the Becker case. Ohio Casualty Insurance Company is seeking
------
recovery for its disbursements in an earlier case, which has been settled.
Under certain agreements with the insurance company, The Bank of McMechen has
the right to participate, in a fractional amount, in any recovery, and The Bank
of McMechen also may have to pay, in a fractional amount, any attorney's fees
and litigation costs and expenses incurred in this civil action.
2.2(j) The Bank of McMechen owns the following real estate:
<TABLE>
<CAPTION>
Square Footage
-------------------------------------
Description Building Land Total
-------------------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1. Main Bank Lot 30 & N Pt. Lot 31 112,600 12,000 124,600
700 Marshall Doyle & Bloyd Addn.
McMechen & 1/2 abandoned E 7th
Deed Book 121 St. McMechen Corp.
page 452
2. Loan Dept. Lot 32 & Pt. Lot 31 60,400 6,700 67,100
704 Marshall Doyle & Bloyd Addn.
McMechen McMechen Corp.
Deed Book 442
page 183
3. Drive -In Pt Lts 30-31-32 108,500 3,500 122,000
613 Marshall Marshall St.
McMechen BB McM Addn.
Deed Book 463
page 295
4. Parking Lot Lots 28-29 D & B None 7,000 7,000
(between bank Addn. & 1/2 aband.
& Reilley Bldg.) E. 7th St.
& Bookkeeping McMechen Corp.
Deed Book 397
page 278
5. Benwood - Lots 1-2-3 Tappe Addn. 85,900 4,800 90,700
Banking Ctr. Benwood Corp.
43 Marshall St.
Benwood
Deed Book 520
page 379
6. Vacant Lot N 1/2 Lt. 6 Sq. 2 None 5,100 5,100
Benwood Hanlan Addn.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
25 Marshall St. Benwood Corp.
Benwood
Deed Book 554
page 474
7. Vacant Lot - Pt Lt 5 Hanlan Addn. None 4,600 4,600
Benwood Sq 2 Add
23 Marshall St. Benwood Corp.
Benwood
Deed Book 554
page 474
8. Vacant Lot - Pt Lt 5 Sq. 2 None 4,600 4,600
Benwood Hanlan Addn.
21 Marshall St. Benwood Corp.
Benwood (from Tusina)
Deed Book 555
page 378
</TABLE>
Gateway owns the following real estate:
<TABLE>
<S> <C> <C> <C> <C> <C>
1. Reilley Bldg. Lot 27 D & B Addn. 23,000 2,500 25,500
614 Marshall McMechen Corp.
McMechen (owned by Gateway Bancshares)
Deed Book 525
page 180
</TABLE>
2.2(l) Gateway is a party to a Software Maintenance Agreement dated
as of June 1, 1996 (the "Agreement") with Midwest Software, Inc. ("Midwest
Software"). Under the Agreement, Midwest Software agrees to provide to Gateway
maintenance services and updates of all enhancements and improvements and
corrections developed and/or implemented by Midwest Software for a period of one
year. Gateway believes the Agreement may be terminated with thirty (30) days
prior written notification to Midwest Software. Maintenance service charges on a
monthly basis are $440.
4
<PAGE>
EXHIBIT D
AFFILIATE'S AGREEMENT
______________________
Date
Gentlemen:
Reference is made to the Agreement and Plan of Merger (the "Plan") dated
the ________ day of ____________ , 1997 by and among Commercial BancShares,
Incorporated ("Commercial"), Gateway Bancshares, Inc. ("Gateway") and CWV
Holding Company, Inc., providing for the merger of Gateway into a wholly-owned
subsidiary of Commercial, CWV Holding Company, Inc. As a result of the merger,
Commercial will acquire all of the issued and outstanding common stock of
Gateway in exchange for shares of the common stock of Commercial. As a result of
the merger, CWV will survive the Merger. The undersigned stockholder has been
identified as one who may be an "affiliate" of Gateway for the purposes of Rule
145 of the Securities Act of 1933, as amended (the "Act"). As a result of the
transaction contemplated by the Plan, the affiliate will receive shares of
Commercial stock. In consideration for the receipt of such shares, the affiliate
represents, warrants and covenants to Commercial as follows:
(1) Until the expiration of the limitation on the transfer of the
affiliate shares as provided in Rule 145, the affiliate will not sell, assign or
transfer any of the affiliate shares except (a) within the limits and in
accordance with the applicable provisions of Rule 145 or (b) upon receipt by
Commercial of an opinion of counsel, in form and substance satisfactory to
Commercial and its counsel, to the effect that such disposition complies with
the Act.
(2) Until the expiration of the limitation on the transfer of the
affiliate shares as provided in Rule 145(d), each certificate for the affiliate
may bear a restrictive legend in substantially the following form:
The shares represented by this certificate have been issued to
the registered holder as a result of a transaction to which Rule 145
under the Securities Act of 1933, as amended (the "Act") applies.
The shares represented by this certificate may not be sold, transferred
or assigned, and the issuer shall not be required to give effect to any
attempted sale, transfer or assignment, except pursuant to (i) the
Registration Statement then in effect under the Act, (ii) a transaction
permitted by Rule 145 as to which the issuer has received evidence
of compliance with the provisions of Rule 145 reasonably
1
<PAGE>
satisfactory to it, or (iii) a transaction which, in the opinion of
counsel or as described in a "no action" or interpretive letter from the
staff of the Securities and Exchange Commission, in each case
satisfactory in form and substance to the issuer, is exempt from the
registration requirements of the Act.
Very truly yours,
___________________________________________
Accepted this ____ day of _______________, 1997, by:
COMMERCIAL BANCSHARES, INCORPORATED
By: _______________________________________
Its: _______________________________________
2
