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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 14, 1998
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COMMERCIAL FEDERAL CORPORATION
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(Exact name of registrant as specified in its charter)
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NEBRASKA 1-11515 47-0658852
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
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2120 SOUTH 72nd STREET, OMAHA, NEBRASKA 68124
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (402) 554-9200
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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COMMERCIAL FEDERAL CORPORATION
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FORM 8-K
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CURRENT REPORT
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Item 5. Other Events:
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On August 14, 1998, Commercial Federal Corporation ("Commercial Federal")
and its wholly-owned subsidiary, Commercial Federal Bank, a Federal Savings
Bank, entered into a Reorganization and Merger Agreement (the "Agreement")
with Midland First Financial Corporation ("Midland") and its subsidiary,
Midland Bank. Under the terms of the Agreement, Commercial Federal will
acquire in a taxable acquisition all of the outstanding shares of Midland's
common stock. The total purchase consideration of this pending acquisition
is $83.0 million, including cash to pay off Midland debt totaling $5.6
million, the retirement of preferred stock of both Midland and Midland Bank
totaling $11.6 million and certain other items. If under certain
conditions this pending transaction is terminated by Midland, a breakup fee
of $2.5 million would be payable to Commercial Federal by Midland.
Midland Bank is a privately-held commercial bank headquartered in Lee's
Summit, Missouri that operates eight branches in the greater Kansas City
area. At June 30, 1998, Midland had total assets of approximately $397.0
million, deposits of approximately $352.0 million and stockholders' equity
of approximately $26.0 million. Following the acquisition, the parties
intend that Midland Bank will be merged with and into Commercial Federal
Bank.
This proposed acquisition, which is subject to regulatory approvals,
Midland shareholder approvals and certain other conditions, is expected to
close on or before March 31, 1999. For additional information, see the
Agreement dated August 14, 1998, and the press release dated August 14,
1998, which are attached hereto as Exhibits 2 and 99, respectively, and
incorporated herein by reference.
Item 7. Financial Statements and Exhibits:
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(c) Exhibits:
Exhibit 2. Reorganization and Merger Agreement dated August 14,
1998, by and among Commercial Federal Corporation,
Commercial Federal Bank, a Federal Savings Bank, a to-be-
formed Missouri corporation, Midland First Financial
Corporation and Midland Bank.
Exhibit 99. Press release dated August 14, 1998.
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SIGNATURES
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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 thereunto duly authorized.
COMMERCIAL FEDERAL CORPORATION
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(Registrant)
Date: August 17, 1998 /s/ James A. Laphen
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James A. Laphen, President, Chief Operating
Officer and Chief Financial Officer (Duly
Authorized and Principal Financial Officer)
Date: August 17, 1998 /s/ Gary L. Matter
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Gary L. Matter, Senior Vice President,
Controller and Secretary
(Principal Accounting Officer)
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EXHIBIT 2
Reorganization and Merger Agreement
Dated August 14, 1998
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EXHIBIT 2
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REORGANIZATION AND MERGER AGREEMENT
BY AND AMONG
COMMERCIAL FEDERAL CORPORATION
COMMERCIAL FEDERAL BANK, A FEDERAL SAVINGS BANK,
[NEWSUB],
MIDLAND FIRST FINANCIAL CORPORATION
AND
MIDLAND BANK
DATED AS OF AUGUST 14, 1998
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TABLE OF CONTENTS
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ARTICLE I THE COMPANY MERGER AND RELATED MATTERS............................ 1
1.1 The Company Merger................................................ 1
1.2 Effective Time of the Company Merger.............................. 2
1.3 Conversion of Shares.............................................. 2
1.4 Dissenting Shares................................................. 3
1.5 Directors and Officers............................................ 3
1.6 Company Stock Options............................................. 3
1.7 Exchange of Certificates.......................................... 4
1.8 Shareholders' Approvals........................................... 5
1.9 Cooperation; Regulatory Approvals................................. 5
1.10 Closing........................................................... 5
1.11 Right to Revise the Structure of the Transaction.................. 5
1.12 Liquidation and the Bank Merger................................... 5
1.13 Midland Bank Preferred Stock...................................... 6
1.14 Directors and Officers of Midland Bank............................ 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY
AND MIDLAND BANK.................................................. 6
2.1 Organization, Good Standing, Authority, Insurance, Etc............ 6
2.2 Capitalization.................................................... 7
2.3 Ownership of Subsidiaries......................................... 7
2.4 Financial Statements and Reports.................................. 8
2.5 Absence of Undisclosed Liabilities................................ 9
2.6 Absence of Changes................................................ 9
2.7 Dividends, Distributions and Stock Purchases and Sales............ 9
2.8 Information Statement............................................. 9
2.9 No Broker's or Finder's Fees...................................... 9
2.10 Litigation and Other Proceedings.................................. 10
2.11 Compliance with Law............................................... 10
2.12 Corporate Actions................................................. 10
2.13 Authority......................................................... 11
2.14 Employment Arrangements........................................... 11
2.15 Employee Benefits................................................. 12
2.16 Information Furnished............................................. 13
2.17 Property and Assets............................................... 13
2.18 Agreements and Instruments........................................ 14
2.19 Material Contract Defaults........................................ 14
2.20 Tax Matters....................................................... 14
2.21 Environmental Matters............................................. 15
2.22 Loan Portfolio; Portfolio Management.............................. 15
2.23 Real Estate Loans and Investments................................. 16
2.24 Derivatives Contracts............................................. 16
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2.25 Insurance..........................................................16
2.26 Year 2000..........................................................17
2.27 Preferred Stock....................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMMERCIAL
AND THE BANK.......................................................18
3.1 Organization, Good Standing, Authority, Insurance, Etc.............18
3.2 Capitalization.....................................................18
3.3 Ownership of Subsidiaries..........................................18
3.4 Financial Statements and Reports...................................19
3.5 Absence of Changes.................................................20
3.6 No Broker's or Finder's Fees.......................................20
3.7 Compliance With Law................................................20
3.8 Corporate Actions..................................................20
3.9 Authority..........................................................20
3.10 Information Furnished..............................................21
3.11 Litigation and Other Proceedings...................................21
3.12 Consideration......................................................21
ARTICLE IV COVENANTS..........................................................21
4.1 Investigations; Access and Copies..................................21
4.2 Conduct of Business of the Company and the Company Subsidiaries....22
4.3 No Solicitation....................................................23
4.4 Shareholder Approval...............................................24
4.5 Filing of Regulatory Applications..................................24
4.6 Consents...........................................................24
4.7 Publicity..........................................................24
4.8 Cooperation Generally..............................................24
4.9 Additional Financial Statements and Reports........................25
4.10 Conforming Adjustments.............................................25
4.11 D&O Indemnification and Insurance..................................26
4.12 Company's Employee Plans and Benefit Arrangements..................26
4.13 Update Disclosures.................................................27
4.14 Update Year 2000 Compliance Information............................27
ARTICLE V CONDITIONS OF THE MERGER; TERMINATION OF AGREEMENT.................27
5.1 General Conditions.................................................27
5.2 Conditions to Obligations of Commercial............................28
5.3 Conditions to Obligations of Company...............................30
5.4 Termination of Agreement and Abandonment of Company Merger.........30
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ARTICLE VI TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES................... 31
6.1 Termination; Lack of Survival of Representations and Warranties... 31
6.2 Payment of Expenses............................................... 31
ARTICLE VII CERTAIN POST-MERGER AGREEMENTS.................................... 33
7.1 Employees......................................................... 33
7.2 Noncompetition Agreement.......................................... 33
ARTICLE VIII GENERAL........................................................... 33
8.1 Amendments........................................................ 33
8.2 Confidentiality................................................... 33
8.3 Governing Law..................................................... 34
8.4 Notices........................................................... 34
8.5 No Assignment..................................................... 35
8.6 Headings.......................................................... 35
8.7 Counterparts...................................................... 35
8.8 Construction and Interpretation................................... 35
8.9 Entire Agreement.................................................. 35
8.10 Severability...................................................... 35
8.11 No Third Party Beneficiaries...................................... 35
8.12 Enforcement of Agreement.......................................... 35
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Schedules:
Schedule I Disclosure Schedule for the Company and Midland Bank (furnished
separately)
Schedule II Disclosure Schedule for Commercial
and the Bank
Exhibits:
Exhibit A Form of Bank Plan of Merger
Exhibit B Form of Voting Agreement
Exhibit C Form of Noncompetition Agreement
Exhibit D Form of Opinion of Counsel for the Company
Exhibit E Form of Opinion of Counsel for Commercial
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REORGANIZATION AND MERGER AGREEMENT
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THIS REORGANIZATION AND MERGER AGREEMENT ("Agreement") is dated as of
August 14, 1998, by and among COMMERCIAL FEDERAL CORPORATION, a Nebraska
corporation ("Commercial"), COMMERCIAL FEDERAL BANK, A FEDERAL SAVINGS BANK, a
federally chartered stock savings bank (the "Bank"), a to-be-formed Missouri
corporation ("NewSub"), MIDLAND FIRST FINANCIAL CORPORATION, a Missouri
corporation ("Company") and MIDLAND BANK, a Missouri-chartered commercial bank
("Midland Bank").
WHEREAS, Company owns all of the issued and outstanding common stock of
Midland Bank, except for director qualifying shares, and Commercial owns all of
the issued and outstanding capital stock of the Bank and the Bank will own all
of the issued and outstanding capital stock of NewSub;
WHEREAS, the parties have determined that it would be desirable and in the
best interests of their respective stockholders for the Company and Midland Bank
to be acquired by Commercial and the Bank and the parties intend that such
acquisition be accomplished by merger of NewSub into the Company pursuant to
Revenue Ruling 73-427 (the "Company Merger"), and immediately following the
Company Merger, Company shall be liquidated into the Bank (the "Liquidation")
and immediately following the Liquidation, Midland Bank shall be merged with and
into the Bank (the "Bank Merger") in accordance with the Bank Plan of Merger
attached as Exhibit A hereto (the "Bank Plan of Merger");
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Commercial's willingness to enter into this
Agreement, Thomas H. Brouster has entered into a voting agreement in the form
attached hereto as Exhibit B (the "Voting Agreement").
NOW THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE I
THE COMPANY MERGER AND RELATED MATTERS
1.1 The Company Merger. At the Effective Time (as defined in Section 1.2
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hereof), NewSub shall be merged with and into the Company pursuant to the
provisions herein. The Company Merger shall be effected in accordance with any
and all applicable provisions of The General and Business Corporation Law of
Missouri ("GBCLM"). The Company shall thereafter continue as the surviving
corporation under the name of "Midland First Financial Corporation." Company
after the Effective Time is sometimes referred to in this Agreement as the
"Surviving Corporation." At and after the Effective Time:
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(1) The separate existence of NewSub shall cease.
(2) The Articles of Incorporation and the Bylaws of Company in effect
immediately prior to the Company Merger shall continue as the Articles of
Incorporation and Bylaws of the Surviving Corporation after the Company
Merger.
(3) The Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as a private nature,
and be subject to all the restrictions, disabilities and duties of each of
Company and NewSub; and possess all and singular rights, privileges, power
and franchises of each of Company and NewSub, and possess all property,
real, personal and mixed, and all debts due to either of Company and NewSub
on whatever account, as well as for stock subscriptions and all other
things in action or belonging to each of Company and NewSub, shall be
vested in the Surviving Corporation; and all property, rights, privileges,
power and franchises, and all and every other interest shall be thereafter
as effectively the property of the Surviving Corporation as they were of
Company and NewSub, and the title to any real estate vested by deed or
otherwise, in either of Company and NewSub, shall not revert or be in any
way impaired; but all rights of creditors and all liens upon any property
of either of Company or NewSub shall be preserved unimpaired, and all
debts, liabilities and duties of Company and NewSub shall thenceforth
attach to the Surviving Corporation, and may be enforced against it to the
same extent as if said debts and liabilities had been incurred by it. Any
action or proceeding, whether civil, criminal or administrative, pending by
or against either Company or NewSub shall be prosecuted as if the Company
Merger had not taken place, and the Surviving Corporation may be
substituted as a party in such action or proceeding in place of Company or
NewSub.
1.2 Effective Time of the Company Merger. As soon as practicable after
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each of the conditions set forth in Article V hereof have been satisfied or
waived, NewSub and Company will file, or cause to be filed, articles of merger
with the Secretary of State of Missouri, which articles of merger shall be in
the form required by and executed in accordance with the applicable provisions
of the GBCLM. The Company Merger shall become effective upon the issuance of a
certificate of merger by the Secretary of State of Missouri (the "Effective
Time").
1.3 Conversion of Shares. The manner and basis of the conversion of the
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respective outstanding shares of capital stock of the Company and NewSub and the
consideration which the respective record holders thereof shall be entitled to
receive pursuant to the Company Merger shall be as follows:
(a) Company Common Stock. At the Effective Time each share of the
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common stock, par value $1.00 per share, of the Company ("Company Common Stock")
issued and outstanding immediately prior to the Effective Time (except treasury
shares, Dissenting Shares (as defined in Section 1.4) and shares, if any, held
by Commercial, the Company or any of their subsidiaries other than in a
fiduciary capacity or pursuant to a debt previously contracted), shall
automatically by virtue of the effectiveness of the Company Merger and without
the necessity of any
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action on the part of the holder thereof, be canceled and converted into the
right to receive $282.794 in cash. The amount payable for each share of Company
Common Stock was determined in the manner set forth in Section 1.3(a) of
Schedule I.
(b) Company Preferred Stock. Each share of the Series 1997 Perpetual
-----------------------
Preferred Stock of the Company (the "Company Preferred Stock"), $100 designated
value, issued and outstanding immediately prior to the Effective Time shall
automatically by virtue of the effectiveness of the Company Merger and without
the necessity of any action on the part of the holder thereof, be canceled and
converted into the right to receive $100 in cash.
(c) NewSub Common Stock. Each share of common stock of NewSub issued
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and outstanding immediately prior to the Effective Time shall, automatically by
virtue of the effectiveness of the Company Merger and without necessity of any
action on the part of the holder thereof, be canceled and converted into one
share of common stock of the Surviving Corporation.
The "Merger Consideration" shall comprise those amounts provided for in
subparagraphs (a) and (b) of this Section 1.3.
1.4 Dissenting Shares. Any shares of Company Common Stock or Company
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Preferred Stock held by a holder who dissents from the Company Merger, and
becomes entitled to obtain from Commercial payment for the value of such shares
of Company Common Stock or Company Preferred Stock pursuant to the applicable
provisions of the GBCLM shall be herein called "Dissenting Shares." Any
Dissenting Shares shall not, after the Effective Time, be entitled to vote for
any purpose or receive any dividends or other distributions and shall not be
entitled to receive the Merger Consideration; provided, however, that each share
of Company Common Stock or Company Preferred Stock held by a dissenting
stockholder who subsequently withdraws a demand for payment, fails to comply
fully with the requirements of the GBCLM or otherwise fails to establish the
right of such stockholder to be paid the value of such stockholders' shares
under the GBCLM, shall be deemed to be converted into the right to receive the
Merger Consideration only and no other consideration.
1.5 Directors and Officers. The directors and officers of the Surviving
----------------------
Corporation after the Effective Time, who shall hold office until their
resignation or removal or until their successors have been elected and qualified
in accordance with law and the Surviving Corporation's Articles of Incorporation
and Bylaws, shall be those persons designated by Commercial. Unless otherwise
requested by Commercial, each of the directors and officers of the Company shall
submit his or her written resignation at the Closing to be effective at the
Effective Time.
1.6 Company Stock Options. Thomas H. Brouster, the sole holder of an
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option to purchase Company Common Stock, shall receive, at the Effective Time,
an amount in cash determined by multiplying the number of shares of Company
Common Stock subject to option by an amount equal to the difference between the
Merger Consideration and the per share exercise price
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of such option. The amount payable to Thomas H. Brouster with respect to his
options pursuant to this Section 1.6 was determined in the manner set forth in
Section 1.3 of Schedule I.
1.7 Exchange of Certificates.
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(a) At the Effective Time, Commercial shall deposit or cause to be
deposited with an exchange agent appointed by Commercial with the consent of the
Company (which consent shall not be unreasonably withheld) (the "Exchange
Agent") for the benefit of the holders of the Company Common Stock and the
Company Preferred Stock such funds as may be payable for the aggregate Merger
Consideration.
(b) After the Effective Time, holders of certificates theretofore
evidencing outstanding shares of Company Common Stock or the Company Preferred
Stock (other than Dissenting Shares and as provided in Section 1.3(a)), upon
surrender of such certificates to the Exchange Agent, shall be entitled to
receive the Merger Consideration for each share. As soon as practicable after
the Effective Time, the Exchange Agent will send a notice and transmittal form
to each Company shareholder of record at the Effective Time whose Company Common
Stock or Company Preferred Stock, shall have been converted into the Merger
Consideration advising such shareholder of the effectiveness of the Company
Merger and the procedure for surrendering to the Exchange Agent outstanding
certificates formerly evidencing such stock in exchange for the Merger
Consideration. Except with respect to Dissenting Shares, upon surrender, each
certificate evidencing Company Common Stock or Company Preferred Stock shall be
canceled.
(c) Until surrendered as provided in this Section 1.7 hereof, each
outstanding certificate which, prior to the Effective Time, represented Company
Common Stock or Company Preferred Stock (other than Dissenting Shares and shares
canceled at the Effective Time pursuant to Section 1.3(a) hereof) will be deemed
for all corporate purposes to evidence only the right to receive cash in
accordance with the provisions of this Agreement and shall not be deemed to
confer upon the holder thereof any voting, dividends or other rights of a
shareholder of the surviving corporation. After the Effective Time, there shall
be no further registration of transfers on the records of the Company of
outstanding certificates formerly representing shares of Company Common Stock or
Company Preferred Stock and, if a certificate formerly representing such shares
is presented to Commercial, it shall be forwarded to the Exchange Agent for
cancellation and exchange for the Merger Consideration.
(d) In the event any certificate for Company Common Stock or Company
Preferred Stock shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration, provided, however, that Commercial may, in its discretion and as
a condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate to deliver a bond in such sum as it may direct
as indemnity against any claim that may be made against Commercial, the Company,
the Exchange Agent or any other party with respect to the certificate alleged to
have been lost, stolen or destroyed.
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1.8 Shareholders' Approvals. The Company shall, at the earliest
-----------------------
practicable date, obtain approval to the Company Merger of its common and
preferred shareholders by consent or otherwise (the "Shareholder Approvals").
The affirmative approval of the holders of at least two-thirds of the issued and
outstanding shares of Company Common Stock and the affirmative approval of at
least a majority of the issued and outstanding shares of the Company Preferred
Stock, in each case, entitled to vote shall be required for such approval.
1.9 Cooperation; Regulatory Approvals. The parties shall cooperate and
---------------------------------
use reasonable best efforts to complete the transactions contemplated hereunder
at the earliest practicable date. Each party shall cause each of their
affiliates and subsidiaries to cooperate, in the preparation and submission by
them, as promptly as reasonably practicable, of such applications, petitions,
and other documents and materials as any of them may reasonably deem necessary
or desirable to the Board of Governors of the Federal Reserve System ("FRB"),
the Federal Deposit Insurance Corporation ("FDIC"), the Missouri Division of
Finance (the "Division"), the Office of Thrift Supervision ("OTS"), Federal
Trade Commission ("FTC"), Department of Justice ("DOJ"), applicable Secretary of
State, other regulatory authorities, holders of the voting shares of common
stock of the Company, and any other persons for the purpose of obtaining any
approvals or consents necessary to consummate the transactions contemplated by
this Agreement. At the date hereof, none of the parties is aware of any reason
that the regulatory approvals required to be obtained by it would not be
obtained.
1.10 Closing. If (i) this Agreement has been duly approved by the
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shareholders of the Company, and (ii) all relevant conditions of this Agreement
have been satisfied or waived, a closing (the "Closing") shall take place as
promptly as practicable thereafter at the principal office of Commercial at
which the parties hereto will exchange certificates, opinions, letters and other
documents as required hereby and will make the filings described in Section 1.2
hereof. Such Closing will take place as soon as practicable as agreed by the
parties, provided, however, that, except as otherwise agreed to by the parties,
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the Closing shall be no more than thirty (30) days after the satisfaction or
waiver of all conditions and/or obligations contained in Article V of this
Agreement and shall in no event be prior to December 18, 1998.
1.11 Right to Revise the Structure of the Transaction. Commercial
------------------------------------------------
shall, in its reasonable discretion, have the unilateral right to revise the
structure of the corporate reorganization contemplated by this Agreement in
order to achieve tax benefits or for any other reason which they may deem
advisable; provided, however, that Commercial and Company shall not have the
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right to make any revision to the structure of the reorganization which (i)
changes the form, time of payment or amount of the consideration payable
hereunder, (ii) would unreasonably impede or delay consummation of the
transactions contemplated herein or (iii) would result in treatment for Federal
income tax purposes of receipt by a shareholder of Company of the Merger
Consideration set forth herein as a taxable dividend.
1.12 The Liquidation and the Bank Merger. Immediately following the
-----------------------------------
Effective Time, the Bank shall cause the Company to adopt a plan of liquidation
providing for the liquidation and
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dissolution of the Company in accordance with Missouri law and immediately
following the liquidation Commercial and the Bank shall take all necessary
action to cause the Bank Merger to become effective in accordance with the Bank
Plan of Merger. The Bank Merger will be approved by the Bank immediately after
the Company Merger and the liquidation.
1.13 Midland Bank Preferred Stock. At the direction of Commercial, but no
----------------------------
earlier than twenty (20) days prior to the Closing, the Company shall provide
notice to each holder of shares of the Midland Bank Preferred Stock, in
accordance with Paragraph 11 of the Shareholders Agreement dated December 28,
1994 as amended as of November and December 1997 pursuant to separate agreements
with each of the holders of Midland Bank Preferred Stock, of exercise of the
option by the Company to purchase all of the shares of the Midland Bank
Preferred Stock owned by such holder. All shares of Midland Bank Preferred
Stock shall thereafter be delivered to the Exchange Agent free and clear of all
liens and with full stock powers or other satisfactory evidence of transfer of
title and ownership to the Company, subject to receipt of payment, on or prior
to the Closing for delivery to the Company as of the Effective Time. Commercial
shall deposit with the Exchange Agent the necessary amount to make payment for
the Midland Bank Preferred Stock in accordance with Paragraph 11 of the
Shareholders Agreement, as amended. The amount that the parties expect to be
deposited with the Exchange Agent is $100 per share of Bank Preferred Stock
based upon the expected payment of dividends on the Midland Bank Preferred Stock
immediately prior to the Effective Time.
1.14 Directors and Officers of Midland Bank. Each director and officer of
--------------------------------------
Midland Bank as of the Effective Time shall, unless otherwise requested by
Commercial, submit his/her written resignation at the Closing to be effective as
of the Effective Time. Any shares of Midland Bank Common Stock owned by any
such persons shall be repurchased by Midland Bank no later than the date of the
Closing at a price in cash equal to the amount initially paid for such stock by
such person.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
AND MIDLAND BANK
Company and Midland Bank represent and warrant to Commercial that, except
as disclosed in Schedule I attached hereto:
2.1 Organization, Good Standing, Authority, Insurance, Etc. The Company
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is a corporation duly organized, validly existing and in good standing under the
laws of the State of Missouri. Section 2.1 of Schedule I lists each direct and
indirect subsidiary of the Company and Midland Bank (individually a "Company
Subsidiary" and collectively the "Company Subsidiaries") (unless otherwise noted
herein all references to a "Company Subsidiary" or to the "Company Subsidiaries"
shall include Midland Bank). Each of the Company Subsidiaries is duly
organized, validly existing, and in good standing under the laws of the
respective jurisdiction under which it is organized, as set forth in Section 2.1
of Schedule I. Each of the Company and each Company
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Subsidiary has all requisite power and authority and is duly qualified and
licensed to own, lease and operate its properties and conduct its business as it
is now being conducted. The Company has delivered to Commercial a true, complete
and correct copy of the articles of incorporation, charter, or other organizing
document and of the bylaws, as in effect on the date of this Agreement, of
Company and each Company Subsidiary. The Company and each Company Subsidiary is
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which qualification is necessary under applicable law,
except to the extent that any failures to so qualify would not, in the
aggregate, have a material adverse effect on the business, financial condition
or results of operations of the Company and the Company Subsidiaries, taken as a
whole. All eligible accounts of Midland Bank are insured by the Bank Insurance
Fund ("BIF") to the maximum extent permitted under applicable law. The Company
is duly registered as a bank holding company under the BHCA.
The minute books of the Company and the Company Subsidiaries contain
complete and accurate records of all meetings and other corporate actions held
or taken of their respective shareholders and Boards of Directors (including the
committees of such Boards).
2.2 Capitalization. The authorized capital stock of the Company consists
--------------
of (i) 300,000 shares of Company Common Stock of which 226,000 shares were
issued and outstanding as of the date of this Agreement and (ii) 65,000 shares
of Company Preferred Stock, of which 53,118 shares were issued and outstanding
as of the date of this Agreement. All outstanding shares of Company Common
Stock and Company Preferred Stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights. Except as set forth in
Section 2.2 of Schedule I, there are no options, convertible securities,
warrants, or other rights (preemptive or otherwise) to purchase or acquire any
of the Company's capital stock from the Company and no oral or written
agreement, contract, arrangement, understanding, plan or instrument of any kind
(collectively, "Stock Contract") to which the Company or any of its affiliates
is subject with respect to the issuance, voting or sale of issued or unissued
shares of the Company's capital stock.
2.3 Ownership of Subsidiaries. The authorized capital stock of Midland
-------------------------
Bank consists of (i) 16,400 shares of Midland Bank Class A Common Stock of which
16,400 shares were issued and outstanding as of the date of this Agreement and
2,000 shares of Class B Common Stock all of which Class A shares (other than
seven director qualifying shares) are owned of record and beneficially by the
Company and (ii) 62,500 shares of Midland Bank Preferred Stock (the "Midland
Bank Preferred Stock") of which 62,500 shares were issued and outstanding as of
the date of this Agreement and are owned by 28 persons and entities, most of
which are banks and bank holding companies located in Missouri. Except as set
forth in Section 2.3 of Schedule I, all the outstanding shares of the capital
stock of the Company Subsidiaries are validly issued, fully paid, nonassessable
and owned beneficially and of record by the Company or a Company Subsidiary free
and clear of any lien, claim, charge, restriction or encumbrance (collectively,
"Encumbrance"). Except as set forth in Section 2.3 of Schedule I, all of the
outstanding capital stock or other ownership interests in all of the Company
Subsidiaries is owned by the Company. All outstanding shares of common stock and
preferred stock of the Company Subsidiaries are duly authorized, validly issued,
fully paid,
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nonassessable and free of preemptive rights. Except with respect to the
Shareholders Agreement dated as of November and December 1997 pursuant to
separate agreements with each of the holders of Midland Bank Preferred Stock and
the Company Stock Options referred to in Section 1.6 hereof, there are no
options, convertible securities, warrants, or other rights (preemptive or
otherwise) to purchase or acquire any capital stock of any Company Subsidiary
and no contracts to which the Company or any of its affiliates is subject with
respect to the issuance, voting or sale of issued or unissued shares of the
capital stock of any of the Company Subsidiaries. Neither the Company nor any
Company Subsidiary owns any of the capital stock or other equity securities
(including securities convertible or exchangeable into such securities) of or
profit participations in any company except as set forth in Section 2.3 of
Schedule I.
2.4 Financial Statements and Reports. For the past five years, the
--------------------------------
Company and the Company Subsidiaries have timely filed all reports and documents
required to be filed by them with the FRB, the Division or the FDIC under
various financial institution laws and regulations except to the extent that all
failures to so file, in the aggregate, would not have a material adverse effect
on the business, financial condition or results of operations of the Company and
the Company Subsidiaries, taken as a whole; and all such documents, as finally
amended, complied in all material respects with applicable requirements of law
and, as of their respective date or the date as amended, did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
stated therein or in Section 2.4 to Schedule I, all financial statements and
schedules included in the documents referred to in the preceding sentences (or
to be included in similar documents to be filed after the date hereof) (i) are
or will be (with respect to financial statements in respect of periods ending
after December 31, 1997) in accordance with the Company's books and records and
those of any of the Company Subsidiaries, and (ii) present (and in the case of
financial statements in respect of periods ending after December 31, 1997, will
present) fairly the consolidated balance sheet and the consolidated statements
of operations, stockholders' equity and cash flows of the Company and the
Company Subsidiaries as of the dates and for the period indicated in accordance
with generally accepted accounting principles applied on a basis consistent with
prior periods (except for the omission of notes to unaudited statements, year
end adjustments to interim results and changes to generally accepted accounting
principles). The consolidated financial statements of the Company at December
31, 1997 and for the year then ended and the consolidated financial statements
for all periods thereafter up to the Closing reflect or will reflect, as the
case may be, all liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted) of the Company and the Company Subsidiaries required to be reflected
in such financial statements according to generally accepted accounting
principles and contain or will contain adequate reserves for losses on loans and
properties acquired in settlement of loans, taxes and all other material accrued
liabilities and for all reasonably anticipated material losses, if any as of
such date. There exists no set of circumstances that could reasonably be
expected to result in any liability or obligation material to the Company or
the Company Subsidiaries, taken as a whole, except as disclosed in such
consolidated financial statements at December 31, 1997 or for transactions
8
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effected or actions occurring or omitted to be taken after December 31, 1997 (i)
in the ordinary course of business, or (ii) as permitted by this Agreement.
2.5 Absence of Undisclosed Liabilities. Except (i) as disclosed in
----------------------------------
Section 2.5 of Schedule I, (ii) as reflected, noted or adequately reserved
against in the financial statements referred to in Section 2.4 herein, or (iii)
for deposits incurred in the ordinary course of business consistent with past
practice, Company and the Company Subsidiaries do not have any material
liabilities (whether accrued, absolute, contingent or otherwise).
2.6 Absence of Changes.
------------------
(a) Since December 31, 1997 to the date hereof, Company and the
Company Subsidiaries have conducted their respective businesses in the ordinary
course of business and, there has been no material adverse change in the
business, properties, financial condition, results of operations or assets of
the Company and the Company Subsidiaries, taken as a whole. There is no
occurrence, event or development of any nature existing or, to the best
knowledge of the Company, threatened which may reasonably be expected to have a
material adverse effect upon the business, properties, financial condition,
operations or assets of Company or any Company Subsidiary.
(b) Since December 31, 1997, each of the Company and the Company
Subsidiaries has owned and operated their respective assets, properties and
businesses in the ordinary course of business and consistent with past practice.
2.7 Dividends, Distributions and Stock Purchases and Sales. Except as
------------------------------------------------------
disclosed in Section 2.7 of Schedule I, since December 31, 1997 to the date
hereof, Company has not declared, set aside, made or paid any dividend or other
distribution in respect of Company Common Stock, or purchased, issued or sold
any shares of Company Common Stock.
2.8 Information Statement. At the time the Information Statement is
---------------------
mailed to the shareholders of the Company for the approval of the Company Merger
and at all times subsequent to such mailings up to and including the times of
such approval, such Information Statement (including any supplements thereto),
with respect to all information set forth therein relating to the Company
(including the Company Subsidiaries), its shareholders and representatives,
Company Common Stock, Company Preferred Stock and all other transactions
contemplated hereby, will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements contained therein, in light of the circumstances
under which it is made, not misleading, and shall comply in all material
respects with applicable state law.
2.9 No Broker's or Finder's Fees. Except as set forth in Section 2.9 of
----------------------------
Schedule I, no agent, broker, investment banker, person or firm acting on behalf
or under authority of the Company or any of the Company Subsidiaries is or will
be entitled to any broker's or finder's fee or any other
9
<PAGE>
commission or similar fee directly or indirectly in connection with the Company
Merger or any other transaction contemplated hereby.
2.10 Litigation and Other Proceedings. Except as set forth in Section
--------------------------------
2.10 of Schedule I, (i) neither the Company nor any Company Subsidiary is a
defendant in, nor is any of its property subject to, any pending, or, to the
best knowledge of the management of the Company, threatened, claim, action,
suit, investigation, or proceeding, or subject to any judicial order, judgment
or decree (ii) there are no outstanding orders, writs, injunctions, judgments,
decrees, regulations, directives, consent agreements or memoranda of
understanding issued by any federal, state or local court or governmental
authority or arbitration tribunal issued against or with the consent of Company
or any Company Subsidiary.
2.11 Compliance with Law.
-------------------
(a) The Company and the Company Subsidiaries are in compliance in all
material respects with all laws and regulations applicable to their respective
business or operations or with respect to which compliance is a condition of
engaging in the business thereof, and neither the Company nor any Company
Subsidiary has received notice from any federal, state or local government or
governmental agency of any material violation of, and does not know of any
material violations of, any of the above.
(b) The Company and each of its Subsidiaries have all material
permits, licenses, certificates of authority, orders and approvals of, and have
made all material filings, applications and registrations with, all federal,
state, local and foreign governmental or regulatory bodies that are required in
order to permit them to carry on their respective business as they are presently
conducted.
2.12 Corporate Actions.
-----------------
(a) The Boards of Directors of the Company and Midland Bank have duly
authorized their respective officers to execute and deliver this Agreement and
to take all action necessary to consummate the Company Merger and the other
transactions contemplated hereby. The Board of Directors of the Company has
authorized and directed the submission for the Shareholders Approval of this
Agreement, together with the Company Merger and any other action requiring such
approval. All corporate authorization by the Board of Directors of the Company
required for the consummation of the Company Merger has been obtained. The
Company, in its capacity as sole shareholder of Midland Bank, has approved this
Agreement.
(b) The Company's Board of Directors has taken or will take all
necessary action to exempt this Agreement, and the transactions contemplated
hereby and thereby from, (i) any applicable state takeover laws, (ii) any
Missouri laws limiting or restricting the voting rights of shareholders, (iii)
any Missouri laws requiring a shareholder approval vote in excess of the vote
normally required in transactions of similar type not involving a "related
person," "interested shareholder" or person or entity of similar type, and (iv)
any provision in its or any of the Company
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Subsidiaries' articles/certificate of incorporation, charter or bylaws, (A)
restricting or limiting stock ownership or the voting rights of shareholders, or
(B) requiring a shareholder approval vote in excess of the vote normally
required in transactions of similar type not involving a "related person,"
interested shareholder" or person or entity of similar type.
2.13 Authority. Except as set forth in Section 2.13 of Schedule I,
---------
the execution, delivery and performance of this Agreement by the Company and
Midland Bank and the Bank Plan of Merger by Midland Bank (at the time it is to
be executed) do not violate any of the provisions of, or constitute a default
under or give any person the right to terminate or accelerate payment or
performance under (i) the articles of incorporation or bylaws of the Company,
the articles of incorporation, charter or bylaws of any Company Subsidiary, (ii)
any regulatory restraint on the acquisition of the Company or control thereof,
(iii) any law, rule, ordinance, or regulation or judgment, decree, order, award
or governmental or non-governmental permit or license to which it or any of the
Company Subsidiaries is subject or (iv) any other material agreement, material
lease, material contract, note, mortgage, indenture, arrangement or other
obligation or instrument ("Contract") to which the Company or any of the Company
Subsidiaries is a party or is subject or by which any of their properties or
assets is bound. The parties acknowledge that the consummation of the Company
Merger and the other transactions contemplated hereby are subject to various
regulatory approvals. The Company and Midland Bank have all requisite corporate
power and authority to enter into this Agreement and, with respect to Midland
Bank, the Bank Plan of Merger and to perform their respective obligations
hereunder and thereunder, except, with respect to this Agreement and the Company
Merger, the approval of the Company's shareholders required under applicable
law. Other than the receipt of Governmental Approvals (as defined in Section
5.1(c)), the approval of shareholders and the consents specified in Schedule I
with respect to the Contracts, no consents or approvals are required on behalf
of Company in connection with the consummation of the transactions contemplated
by this Agreement. This Agreement constitutes the valid and binding obligation
of the Company and Midland Bank and each is enforceable in accordance with its
terms, except as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors rights generally and general principles of
equity.
2.14 Employment Arrangements. Except as disclosed in Section 2.14 of
-----------------------
Schedule I, there are no employment, severance or other agreements, plans or
arrangements with any current or former directors, officers or employees of
Company or any Company Subsidiary which may not be terminated without penalty
(including any augmentation or acceleration of benefits) on 30 days or less
notice to such person. No payments to directors, officers or employees of the
Company or the Company Subsidiaries resulting from the transactions contemplated
hereby will cause the imposition of excise taxes under Section 4999 of the Code
or the disallowance of a deduction to the Company or any Company Subsidiary
pursuant to Sections 162, 280G or any other section of the Code.
11
<PAGE>
2.15 Employee Benefits.
-----------------
(a) Neither the Company nor any of the Company Subsidiaries maintains
any funded deferred compensation plans (including profit sharing, pension,
savings, restricted stock, phantom stock or stock bonus plans), unfunded
deferred compensation arrangements or employee benefit plans as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than any plans ("Employee Plans") set forth in Section 2.15 of
Schedule I (true and correct copies of which have been delivered to Commercial).
None of Company or any of the Company Subsidiaries has incurred or reasonably
expects to incur any liability to the Pension Benefit Guaranty Corporation
except for required premium payments which, to the extent due and payable, have
been paid. The Employee Plans intended to be qualified under Section 401(a) of
the Code are so qualified, and Company is not aware of any fact which would
adversely affect the qualified status of such plans. Except as disclosed in
Section 2.15 of Schedule I, neither the Company nor any of the Company
Subsidiaries (a) provides health, medical, death or survivor benefits to any
former employee or beneficiary thereof (except in accordance with COBRA
requirements under applicable employment laws), or (b) maintains any form of
current (exclusive of base salary and base wages) or deferred compensation,
bonus, stock option, stock appreciation right, benefit, severance pay,
retirement, incentive, group or individual health insurance, welfare or similar
plan or arrangement for the benefit of any single or class of directors,
officers or employees, whether active or retired (collectively "Benefit
Arrangements").
(b) Except as disclosed in Section 2.15 to Schedule I, all Employee
Plans and Benefit Arrangements which are in effect were in effect for
substantially all of calendar year 1997 and there has been no material amendment
thereof (other than amendments required to comply with applicable law) or no
material increase in the cost thereof or benefits payable thereunder on or after
January 1, 1997.
(c) Each Employee Plan and Benefit Arrangement (i) has been
administered to date, and will be administered until the Closing, in accordance
with the requirements prescribed by any and all statutes, governmental or court
orders, or rules or regulations currently in effect, including but not limited
to ERISA and the Code, applicable to such Employee Plans or Benefit
Arrangements, (ii) has, in a timely, accurate, and proper manner, both filed all
required government reports and made all required employee communications, and
(iii) between the date of this Agreement and the Closing, will complete and file
all such required reports. No condition exists that could constitute grounds
for the termination of any Employee Plan under Section 4042 of ERISA; no
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975 of
the Code, has occurred with respect to any Employee Plan, or any other employee
benefit plan maintained by Company or any Company Subsidiary which is covered by
Title I of ERISA, which could subject any person to liability under Title I of
ERISA or to the imposition of any tax under Section 4975 of the Code which could
have an adverse effect on the business, assets, financial condition, results of
operations or prospects of Company or any Company Subsidiary; nor to the best
knowledge of Company has any Employee Plan subject to Part III of Subtitle B of
Title I of ERISA or Section 412 of the Code, or both, incurred any "accumulated
funding deficiency," as defined in Section 412 of
12
<PAGE>
the Code, whether or not waived; nor has Company or any Company Subsidiary
failed to make any contribution or pay any amount due and owing as required by
the terms of any Employee Plan or Benefit Arrangement. Neither Company nor any
Company Subsidiary has incurred or expects to incur, directly or indirectly, any
liability under Title IV of ERISA arising in connection with the termination of,
or a complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA which could constitute a liability of Commercial, or any of
its affiliates at or after the Effective Time.
(d) On or before 30 days after execution hereof, the Company will
provide Commercial with true and complete copies of the following documents
where applicable to any Employee Plan or Benefit Arrangement: (i) each plan
document or agreement, and any amendments thereto, and related trust agreements,
insurance contracts and policies, annuity contracts, and any other funding
arrangement; (ii) the most recent summary plan description and summary of
material modifications; (iii) for the three most recent plan years, Form 5500
Annual Return/Report and all actuarial and financial reports and appraisals;
and (iv) the most recent determination letter received from the Internal Revenue
Service, plus any open requests and all other rulings received from any
governmental agency. Within 60 days of the date hereof, the Company or Midland
Bank shall provide Commercial with documentation, reasonably satisfactory to
Commercial, demonstrating that the requirements of Sections 401(k), 401(m), 404,
410, 412, 415, and 416 of the Code have been satisfied by each Employee Plan
that is intended to qualify under Section 401 of the Code.
2.16 Information Furnished. No statement contained in any schedule,
---------------------
certificate or other document furnished (whether prior to or subsequent to the
date of this Agreement) or to be furnished in writing by or on behalf of Company
to Commercial pursuant to this Agreement contains or will contain any untrue
statement of a material fact or any material omission. No information material
to the Company Merger and which is necessary to make the representations and
warranties not misleading, to the best knowledge of the Company, has been
withheld from Commercial.
2.17 Property and Assets. The Company and the Company Subsidiaries
-------------------
have good and marketable title to all of their real property reflected in the
financial statements at December 31, 1997, referred to in Section 2.4 hereof, or
acquired subsequent thereto, free and clear of all Encumbrances, except for (a)
such items shown in such financial statements or in the notes thereto, (b) liens
for current real estate taxes not yet delinquent, (c) customary title exceptions
that have no material adverse effect upon the value of such property, (d)
property sold or transferred in the ordinary course of business since the date
of such financial statements, (e) pledges or liens incurred in the ordinary
course of business and (f) as otherwise specifically indicated in Section 2.17
of Schedule I. Company and the Company Subsidiaries enjoy peaceful and
undisturbed possession under all material leases for the use of real property
under which they are the lessee; all of such leases are valid and binding and in
full force and effect and neither Company nor any Company Subsidiary is in
default in any material respect under any such lease. Copies of all leases to
which the Company or any Company Subsidiary is party and copies of all deeds and
other ownership documents relating to all real property owned by the Company or
any Company Subsidiary have
13
<PAGE>
been or will be provided to Commercial. No consent of the lessor of any material
real property or material personal property lease is required for consummation
of the Company Merger except as set forth in Section 2.17 of Schedule I. Except
as set forth in Section 2.17 of Schedule I, there has been no material physical
loss, damage or destruction, whether or not covered by insurance, affecting the
real properties of Company and the Company Subsidiaries since December 31, 1997.
All property and assets material to their business and currently used by Company
and the Company Subsidiaries are, in all material respects, in good operating
condition and repair, normal wear and tear excepted.
2.18 Agreements and Instruments. Except as set forth in Section 2.18
--------------------------
of Schedule I, neither the Company nor any Company Subsidiary is a party to (a)
any material agreement, arrangement or commitment not made in the ordinary
course of business, (b) any agreement, indenture or other instrument relating to
the borrowing of money by the Company or any Company Subsidiary or the guarantee
by the Company or any Company Subsidiary of any such obligation, (c) any
agreements to make loans or for the provision, purchase or sale of goods,
services or property between Company or any Company Subsidiary and any director
or officer of Company, or any member of the immediate family or affiliate of any
of the foregoing, (d) any agreements with or concerning any labor or employee
organization to which Company or any Company Subsidiary is a party, (e) any
agreements between Company or any Company Subsidiary and any five percent or
more shareholder of Company, and (f) any agreements, directives, orders, or
similar arrangements between or involving the Company or any Company Subsidiary
and any state or federal regulatory authority. The Shareholders Agreement dated
as of November and December 1997 pursuant to separate agreements with each of
the holders of Midland Bank Preferred Stock is a legal, valid and binding
agreement of the Company and each of the parties enforceable in accordance with
its terms.
2.19 Material Contract Defaults. Neither the Company nor any Company
--------------------------
Subsidiary nor the other party thereto is in default in any respect under any
contract, agreement, commitment, arrangement, lease, insurance policy, or other
instrument to which the Company or a Company Subsidiary is a party or by which
its respective assets, business, or operations may be bound or affected or under
which it or its respective assets, business, or operations receives benefits,
and which default is reasonably expected to have either individually or in the
aggregate a material adverse effect on the Company or any Company Subsidiary,
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default.
2.20 Tax Matters.
-----------
(a) The Company and each of the Company Subsidiaries have duly and
properly filed all federal, state, local and other tax returns required to be
filed by them and have made timely payments of all taxes due and payable,
whether disputed or not; the current status of audits of such returns by the
Internal Revenue Service ("IRS") and other applicable agencies is as set forth
in Section 2.20 of Schedule I; and, except as set forth in Section 2.20 of
Schedule I, there is no agreement by the Company or any Company Subsidiary for
the extension of time or for the assessment or payment of any taxes payable.
Except as set forth in Section 2.20 of Schedule I, neither the IRS nor any other
taxing authority is now asserting or, to the best knowledge of
14
<PAGE>
Company, threatening to assert any deficiency or claim for additional taxes (or
interest thereon or penalties in connection therewith), nor is Company aware of
any basis for any such assertion or claim. The Company and each of the Company
Subsidiaries have complied in all material respects with applicable IRS backup
withholding requirements and, in all material respects, have filed all
appropriate information reporting returns for all tax years for which the
statute of limitations has not closed. The Company and each Company Subsidiary
have complied in all material respects with all applicable state law sales and
use tax collection and reporting requirements.
(b) Adequate provision for any federal, state, local, or foreign taxes
due or to become due for the Company or any of the Company Subsidiaries for any
period or periods through and including December 31, 1997, has been made and is
reflected on the December 31, 1997 audited Company consolidated financial
statements and has been or will be made with respect to periods ending after
December 31, 1997.
2.21 Environmental Matters. Except as set forth in Section 2.21 of
---------------------
Schedule I, neither the Company nor any Company Subsidiary owns or leases any
properties affected by toxic waste, radon gas or other hazardous conditions or
constructed in part with the use of asbestos. Except as set forth in Section
2.21 of Schedule I, neither the Company nor any Company Subsidiary has knowledge
of, nor has the Company or any Company Subsidiary received written notice from
any governmental or regulatory body of, any conditions, activities, practices or
incidents which is reasonably likely to interfere with or prevent compliance or
continued compliance with hazardous substance laws or any regulation, order,
decree, judgment or injunction, issued, entered, promulgated or approved
thereunder, or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, suit, proceeding, hearing or
investigation based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant or chemical, or industrial, toxic or hazardous substance or waste.
There is no civil, criminal or administrative claim, action, suit, proceeding,
hearing or investigation pending or, to Company's knowledge, threatened against
Company or any Company Subsidiary relating in any way to such hazardous
substance laws or any regulation, order, decree, judgment or injunction issued,
entered, promulgated or approved thereunder.
2.22 Loan Portfolio; Portfolio Management.
------------------------------------
(a) All evidences of indebtedness reflected as assets in the
consolidated balance sheet of Company as of December 31, 1997, or acquired since
such date, are (except with respect to those assets which are no longer assets
of the Company or any Company Subsidiary) binding obligations of the respective
obligers named therein except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors rights
generally, and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding may be brought, and the payment of no material amount thereof (either
individually or in the aggregate with other evidences of indebtedness) is
subject to any defenses which have been threatened or asserted against the
15
<PAGE>
Company or any Company Subsidiary. All such indebtedness which is secured by an
interest in real property is secured by a valid and perfected mortgage lien
having the priority specified in the loan documents. All loans originated or
purchased by the Company or a Company Subsidiary were at the time entered into
and at all times since in compliance in all material respects with all
applicable laws (including, without limitation, all consumer protection laws)
and regulations. The Company and the Company Subsidiaries administer their
respective loan and investment portfolios (including, but not limited to,
adjustments to adjustable mortgage loans) in accordance with all applicable laws
and regulations and the terms of applicable instruments. The records of the
Company and the Company Subsidiaries regarding all loans outstanding on their
books are accurate in all material respects and the risk classification system
has been established in accordance with the applicable regulatory requirements.
(b) Section 2.22 of Schedule I sets forth a list, accurate and
complete in all material respects, of the aggregate amounts of loans, extensions
of credit and other assets of the Company and the Company Subsidiaries that have
been adversely designated, criticized or classified by it as of June 30, 1998,
separated by category of classification or criticism (the "Asset
Classification"); and no amounts of loans, extensions of credit or other assets
that have been adversely designated, classified or criticized as of the date
hereof by any representative of any government entity as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import are excluded from
the amounts disclosed in the Asset Classification, other than amounts of loans,
extensions of credit or other assets that were charged off by it or any of its
Subsidiaries before the date hereof.
(c) Section 2.22 of Schedule I sets forth a list of all participation
loans as of June 30, 1998.
2.23 Real Estate Loans and Investments. Except for properties
---------------------------------
acquired in settlement of loans, there are no facts, circumstances or
contingencies known to the Company or any Company Subsidiary which exist which
would require a material reduction under generally accepted accounting
principles in the present carrying value of any of the real estate investments,
joint ventures, construction loans, other investments or other loans of the
Company or any Company Subsidiary (either individually or in the aggregate with
other loans and investments).
2.24 Derivatives Contracts. Neither the Company nor any of the
---------------------
Company Subsidiaries is a party to or has agreed to enter into an exchange-
traded or over-the-counter swap, forward, future, option, swap, floor or collar
financial contract or any other contract not included on its Balance Sheet which
is a derivatives contract (including various combinations thereof) (each, a
"Derivatives Contract") or owns securities that are identified in Thrift
Bulletin No. 65 or otherwise referred to as structured notes (each, a
"Structured Note"), except for those Derivatives Contracts and Structured Notes
set forth in Section 2.24 of Schedule I, including a list, as applicable, of any
of its or any of the Company Subsidiaries' assets pledged as security for a
Derivatives Contract.
2.25 Insurance. Except as set forth in Section 2.25 of Schedule I,
---------
the Company and the Company Subsidiaries have in effect insurance coverage with
reputable insurers which, in respect
16
<PAGE>
to amounts, types and risks insured, is reasonably adequate for the business in
which the Company and the Company Subsidiaries are engaged. A schedule of all
insurance policies in effect as to the Company and the Company Subsidiaries (the
"Insurance Policies") is as set forth on Section 2.25 of Schedule I (other than
policies pertaining to mortgage loans made in the ordinary course of business).
Except as set forth on Section 2.25 of Schedule I, all Insurance Policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date of this Agreement have been paid, such premiums
covering all periods from the date hereof up to and including the Effective Time
shall have been paid on or before the Effective Time, to the extent then due and
payable (other than retrospective premiums which may be payable with respect to
worker's compensation insurance policies, adequate reserves for which are
reflected in the Company's financial statements). The Insurance Policies are
valid, outstanding and enforceable in accordance with their respective terms and
will not in any way be affected by, or terminated or lapsed solely by reason of,
the transactions contemplated by this Agreement. Except as set forth on Section
2.25 of Schedule I, neither the Company nor any Company Subsidiary has been
refused any insurance with respect to any material properties, assets or
operations, nor has any coverage been limited or terminated by any insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
2.26 Year 2000. Company and Midland Bank represent and warrant to
---------
Commercial and the Bank that: (a) Company and Midland Bank's computer hardware
and software systems used for the storage and processing of data (as used in
this Section 2.26, "Systems") are or will be, Millennium Compliant as required
by all FFIEC Year 2000 compliance guidelines, specifically including all FFIEC-
mandated interim deadlines for testing and other Year 2000 compliance
activities; (b) to the Company's knowledge, none of Company's or any Company's
Subsidiary's Systems, operations or business functions will be materially
adversely affected by the failure of any third party with whom Company has
consistent dealings to be Millennium Compliant; (c) to the best of Company and
Midland Bank's knowledge after due inquiry, all of its suppliers, customers and
third party providers are Millennium Compliant; and (d) Company and Midland Bank
have taken, all necessary and appropriate action to address and remedy any
deficiencies in Company and Midland Bank's Systems from becoming Millennium
Compliant. As used herein, "Millennium Compliant" shall mean the ability of
Systems to provide the following functions, without human intervention,
individually and in combination with other products or systems: (i) consistently
handle data information before, during and after January 1, 2000, including but
not limited to accepting data input, providing data output and performing
calculations on dates or portions of dates; (ii) function accurately and without
interruption before, during and after January 1, 2000 (including leap year
computations), without any change in operations associated with the advent of a
new century; (iii) respond to two-digit input in a way that resolves any
ambiguity as to century in a disclosed, defined and predetermined manner; and
(iv) store and provide output of date information in ways that are unambiguous
as to century.
2.27 Preferred Stock. Neither the Company nor Midland Bank is in
---------------
default or in arrears on dividends with respect to the issued and outstanding
shares of Company Preferred Stock and Bank Preferred Stock, respectively, and
(ii) neither the Company nor Midland Bank is in default or
17
<PAGE>
in arrears with respect to the mandatory or optional redemption, purchase or
other acquisition, retirement or other requirement of, or with respect to, any
sinking or other similar fund or agreement for the redemption, purchase or other
acquisition, retirement or other requirement of, or with respect to, any shares
of Company Preferred Stock or Midland Bank Preferred Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMMERCIAL
AND THE BANK
Commercial and the Bank represent and warrant to Company that, except as
disclosed in Schedule II attached hereto:
3.1 Organization, Good Standing, Authority, Insurance, Etc. Commercial is
------------------------------------------------------
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Nebraska. Each of the subsidiaries of Commercial within
the meaning of Section 10(a)(1)(G) of the Home Owners' Loan Act, as amended
("HOLA") (individually a "Commercial Subsidiary" and collectively the
"Commercial Subsidiaries") is duly organized, validly existing, and in good
standing under the laws of the respective jurisdiction under which it is
organized. Commercial and each Commercial Subsidiary have all requisite power
and authority and are duly qualified and licensed to own, lease and operate
their respective properties and conduct their respective business as they are
now being conducted. Commercial and each Commercial Subsidiary are qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which qualification is necessary under applicable law, except to
the extent that any failures to so qualify would not, in the aggregate, have a
material adverse effect on the business, financial condition or results of
operations of Commercial and the Commercial Subsidiaries, taken as a whole.
3.2 Capitalization. The authorized capital stock of Commercial consists
--------------
of 120,000,000 shares of Commercial common stock, par value $.01 per share, of
which 42,091,912 shares were issued and outstanding as of the date of this
Agreement (excluding shares issued as of the date hereof pursuant to
Commercial's acquisition of First Colorado Bancorp, Inc.) and 10,000,000 shares
of serial preferred stock, par value of $.01 per share, of which no shares were
outstanding as of the date of this Agreement. All outstanding shares of
Commercial common stock are duly authorized, validly issued and non-assessable.
3.3 Ownership of Subsidiaries. All the outstanding shares of the capital
-------------------------
stock of the Commercial Subsidiaries are validly issued, fully paid,
nonassessable and owned beneficially and of record by Commercial or a Commercial
Subsidiary free and clear of any Encumbrance. All of the outstanding capital
stock or other ownership interests in all of the Commercial Subsidiaries is
owned either by Commercial or the Bank. There are no options, convertible
securities, warrants, or other rights (preemptive or otherwise) to purchase or
acquire any capital stock of any Commercial Subsidiary and no contracts to which
Commercial or any of its affiliates is subject with respect to
18
<PAGE>
the issuance, voting or sale of issued or unissued shares of the capital stock
of any of the Commercial Subsidiaries.
3.4 Financial Statements and Reports. No registration statement, proxy
--------------------------------
statement, schedule or report filed by Commercial or any Commercial Subsidiary
with the SEC or the OTS under the 1933 Act, or the 1934 Act, on the date of
effectiveness in the case of such registration statements, or on the date of
filing in the case of such reports or schedules, or on the date of mailing in
the case of such proxy statements, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. For the past five years, Commercial and
the Commercial Subsidiaries have timely filed all documents required to be filed
by them with the SEC, the OTS, or the FDIC under various securities and
financial institution laws and regulations, except to the extent that all
failures to so file, in the aggregate, would not have a material adverse effect
on the business, financial condition or results of operations of Commercial and
the Commercial Subsidiaries, taken as a whole; and all such documents, as
finally amended, complied in all material respects with applicable requirements
of law and, as of their respective date or the date as amended, did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except
to the extent stated therein and except as set forth at Section 3.4 of Schedule
II, all financial statements and schedules included in the documents referred to
in the preceding sentences (or to be included in similar documents to be filed
after the date hereof) (i) are or will be (with respect to financial statements
in respect of periods ending after March 31, 1998) in accordance with
Commercial's books and records and those of any of its Subsidiaries, and (ii)
present (and in the case of financial statements in respect of periods ending
after March 31, 1998 will present) fairly the consolidated statement of
financial condition and the consolidated statements of operations, stockholders'
equity and cash flows of Commercial and its Subsidiaries as of the dates and for
the periods indicated in accordance with generally accepted accounting
principles (except for the omission of notes to unaudited statements, year end
adjustments to interim results and changes in generally accepted accounting
principles). The consolidated financial statements of Commercial as of June 30,
1997 and for the year then ended and the consolidated financial statements for
all periods thereafter up to the Closing disclose or will disclose, as the case
may be, all liabilities (including contingent liabilities) as of such date of
Commercial and the Commercial Subsidiaries, other than liabilities which are
not, in the aggregate, material to Commercial and the Commercial Subsidiaries,
taken as a whole, and contain or will contain in the opinion of management
adequate reserves for losses on loans and properties acquired in settlement of
loans, taxes and all other material accrued liabilities and for all reasonably
anticipated material losses, if any as of such date. There exists no set of
circumstances that could reasonably be expected to result in any liability or
obligation material to Commercial or the Commercial Subsidiaries, taken as a
whole, except as disclosed in such consolidated financial statements at June 30,
1997, or for transactions effected or actions occurring or omitted to be taken
after June 30, 1997, (i) in the ordinary course of business, (ii) as permitted
by this Agreement, or (iii) resulting from the consummation of acquisitions
consummated since June 30, 1997.
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3.5 Absence of Changes. Since June 30, 1997, there has been no material
------------------
adverse change in the business, properties, financial condition, results of
operations or assets of Commercial and the Commercial Subsidiaries, taken as a
whole. Since June 30, 1997, there is no occurrence, event or development of any
nature existing or, to the best knowledge of Commercial, threatened which may
reasonably be expected to have a material adverse effect upon the business,
properties, financial condition, operations or assets of Commercial or any
Commercial Subsidiary.
3.6 No Broker's or Finder's Fees. No agent, broker, investment banker,
----------------------------
person or firm acting on behalf or under authority of Commercial or any of the
Commercial Subsidiaries is or will be entitled to any broker's or finder's fee
or any other commission or similar fee directly or indirectly in connection with
the Company Merger or any other transaction contemplated hereby, except
Commercial has engaged Merrill Lynch & Co., an investment banking firm, to
provide financial advisory services whose fees and reasonable out-of-pocket
expenses will be paid by Commercial.
3.7 Compliance With Law.
-------------------
(a) Commercial and the Commercial Subsidiaries are in compliance in
all material respects with all material laws and regulations applicable to their
respective business or operations or with respect to which compliance is a
condition of engaging in the business thereof, and neither Commercial nor any
Commercial Subsidiary has received notice from any federal, state or local
government or governmental agency of any material violation of, and does not
know of any material violations of, any of the above.
(b) Commercial and each of it Subsidiaries have all material permits,
licenses, certificates of authority, orders and approvals of, and have made all
material filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its respective business as it is presently conducted.
3.8 Corporate Actions. The Boards of Directors of Commercial and the Bank
-----------------
have duly authorized its officers to execute and deliver this Agreement and to
take all action necessary to consummate the Company Merger and the other
transactions contemplated hereby. All corporate authorizations by the Boards of
Directors of Commercial and the Bank required for the consummation of the
Company Merger have been obtained. The shareholders of Commercial are not
required to approve either the Company Merger, the Bank Merger or any of the
other transactions contemplated by this Agreement. In its capacity as sole
shareholder of NewSub, the Bank will approve the Company Merger and in its
capacity as sole shareholder of the Bank, Commercial will approve the Bank
Merger.
3.9 Authority. The execution, delivery and performance of this Agreement
---------
by Commercial, the Bank and NewSub and the Bank Plan of Merger by the Bank (at
the time it is to be executed) do not violate any of the provisions of, or
constitute a default under or give any person the right to accelerate payment or
performance under (i) the articles of incorporation or bylaws of Commercial or
the charter or articles of incorporation or bylaws or of any other Commercial
20
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Subsidiary, (ii) any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or license to which
Commercial or any of the Commercial Subsidiaries is subject or (iii) any other
Contract to which Commercial or any of the Commercial Subsidiaries is a party or
is subject to or by which any of their properties or assets is bound which
default, termination or acceleration would have a material adverse effect on the
financial condition, business or results of operations of Commercial and the
Commercial Subsidiaries, taken as a whole. The parties acknowledge that the
consummation of the Company Merger and the other transactions contemplated
hereby is subject to various regulatory approvals. Commercial has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. Other than the receipt of Government Approvals, no
consents or approvals are required on behalf of Commercial or any Commercial
Subsidiary in connection with the consummation of the transactions contemplated
by this Agreement. This Agreement constitutes the valid and binding obligations
of Commercial and the Bank and are enforceable in accordance with their terms,
except as enforceability may be limited by applicable laws relating to
bankruptcy, insolvency or creditors' rights generally and general principles of
equity.
3.10 Information Furnished. No statement contained in any schedule,
---------------------
certificate or other document furnished (whether prior to or subsequent to the
date of this Agreement) or to be furnished in writing by or on behalf of
Commercial to Company pursuant to this Agreement contains or will contain any
untrue statement of a material fact or any material omission. No information
material to the Company Merger and which is necessary to make the
representations and warranties not misleading, to the best knowledge of
Commercial, has been withheld from the Company.
3.11 Litigation and Other Proceedings. Except for matters which would
--------------------------------
not have a material adverse effect on the business, financial condition or
results of operations of Commercial and the Commercial Subsidiaries taken as a
whole, neither Commercial nor any Commercial Subsidiary is a defendant in, nor
is any of its property subject to, any pending, or, to the best knowledge of the
management of Commercial, threatened, claim, action, suit, investigation, or
proceeding, or subject to any judicial order, judgment or decree.
3.12 Consideration. At the Effective Time, Commercial will have sufficient
-------------
cash on hand to pay an aggregate of $83.0 million, consisting of the items
described in Section 1.3(a) of Schedule I.
ARTICLE IV
COVENANTS
4.1 Investigations; Access and Copies. Between the date of this Agreement
---------------------------------
and the Effective Time, each party agrees to give to the other party and its
respective representatives and agents full access (to the extent lawful) to all
of the premises, books, records and employees of it and its subsidiaries at all
reasonable times, and to furnish and cause its subsidiaries to furnish to the
other party and its respective agents or representatives access to and true and
complete copies of such
21
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financial and operating data, all documents with respect to matters to which
reference is made in Articles II or III of this Agreement or on any list,
schedule or certificate delivered or to be delivered in connection herewith, and
such other documents, records, or information with respect to the business and
properties of it and its subsidiaries as the other party or its respective
agents or representative shall from time to time reasonably request;
provided, however, that any such inspection (a) shall be conducted in such
- -------- -------
manner as not to interfere unreasonably with the operation of the business of
the entity inspected and (b) shall not affect any of the representations and
warranties hereunder. Each party will also give prompt written notice to the
other party of any event or development (x) which, had it existed or been known
on the date of this Agreement, would have been required to be disclosed under
this Agreement, (y) which would cause any of its representations and warranties
contained herein to be inaccurate or otherwise materially misleading, or (z)
which materially relate to the satisfaction of the conditions set forth in
Article V of this Agreement.
4.2 Conduct of Business of the Company and the Company Subsidiaries.
---------------------------------------------------------------
Between the date of this Agreement and the Effective Time, the Company and
Midland Bank agree:
(a) That the Company and the Company Subsidiaries shall conduct their
business only in the ordinary course, and maintain their books and records in
accordance with past practices and not to take any action that would (i)
adversely affect the ability to obtain the Governmental Approvals or (ii)
adversely affect the Company's or Midland Bank's ability to perform its
obligations under this Agreement;
(b) That neither the Company nor Midland Bank shall, without the prior
written consent of Commercial: (i) declare, set aside or pay any dividend or
make any other distribution with respect to Company's or Midland Bank's capital
stock, other than the accrued dividends required to be paid on the Company
Preferred Stock and the Midland Bank Preferred Stock or from Midland Bank to the
Company in an amount necessary to pay interest on the Company's outstanding
$5.55 million loan or dividends on the Company preferred stock and operating
expenses of the Company and expenses relating to the Company Merger as set forth
in Section 4.2 of Schedule I; (ii) reacquire any of Company's outstanding shares
of capital stock; (iii) issue or sell or buy any shares of capital stock of the
Company or any Company Subsidiary; (iv) effect any stock split, stock dividend
or other reclassification of Company's common stock; or (v) grant any options or
issue any warrants exercisable for or securities convertible or exchangeable
into capital stock of Company or any Company Subsidiary or grant any stock
appreciation or other rights with respect to shares of capital stock of Company
or of any Company Subsidiary. It is intended that the Company and Midland Bank
will declare and pay preferred dividends accrued through the Closing immediately
prior to the Closing ;
(c) That Company and the Company Subsidiaries shall not, without the
prior written consent of Commercial: (i) sell or dispose of any significant
assets of the Company or of any Company Subsidiary other than in the ordinary
course of business consistent with past practices; (ii) merge or consolidate the
Company or any Company Subsidiary with or otherwise acquire any other entity, or
file any applications or make any contract with respect to branching by any
22
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Company Subsidiary (whether de novo, purchase, sale or relocation) or acquire or
construct, or enter into any agreement to acquire or construct, any interest in
real property (other than with respect to security interests in properties
securing loans and properties acquired in settlement of loans in the ordinary
course) or improvements to real property except as set forth in Section 4.2(c)
of Schedule I; (iii) change the articles of incorporation, charter documents or
other governing instruments of the Company or any Company Subsidiary, except as
provided in this Agreement; (iv) grant to any executive officer, director or
employee of the Company or any Company Subsidiary (A) any increase in annual
compensation, except in a manner and amount consistent with past practice, or
(B) any bonus type payment except pursuant to existing bonus plans described in
Section 4.2 of Schedule I; (v) adopt any new or amend or terminate any existing
Employee Plans or Benefit Arrangements of any type or employment arrangements of
the type contemplated in Section 2.15 herein, except as specifically
contemplated in this Agreement; (vi) authorize severance pay or other benefits
for any officer, director or employee of Company or any Company Subsidiary;
(vii) incur any material indebtedness or obligation or enter into or extend any
material agreement or lease, except in the ordinary course of business
consistent with past practices; (viii) engage in any lending activities other
than in the ordinary course of business consistent with past practices; (ix)
form any new subsidiary or cause or permit a material change in the activities
presently conducted by any Company Subsidiary or make additional investments in
subsidiaries; (x) purchase any debt securities or derivative securities,
including CMO or REMIC products, that are defined as "high risk mortgage
securities" under OTS Thrift Bulletin No. 52 dated January 10, 1992 as revised
or purchase any Derivatives Contracts or Structured Notes; (xi) purchase any
equity securities; (xii) make any loan (other than loans in process as of the
date hereof, as set forth in Section 4.2(c) of Schedule I) with a principal
balance in excess of $2,000,000 or not in the ordinary course of business (even
if less than $2,000,000 principal balance) (provided however, that Company shall
furnish Commercial with written summaries of pertinent information regarding all
of loans made in excess of $1,000,000); (xiii) authorize capital expenditures
other than in the ordinary course of business; (xiv) adopt or implement any
change in its accounting principles, practices or methods other than as may be
required by generally accepted accounting principles or adopt or implement any
change in its methods of accounting for Federal income tax purposes; or (xv)
make any loan in which participation interests therein are to be sold to other
persons or entities other than to the Company or any Company Subsidiary or
acquire a participation interest in a loan originated by another person or
entity other than to the Company or Company Subsidiaries. The limitations
contained in this Section 4.2(c) shall also be deemed to constitute limitations
as to the making of any commitment with respect to any of the matters set forth
in this Section 4.2(c).
4.3 No Solicitation. The Company will not authorize any officer,
---------------
director, employee, investment banker, financial consultant, attorney,
accountant or other representative of Company or any Company Subsidiary,
directly or indirectly, to initiate contact with any person or entity in an
effort to solicit, initiate or encourage any "Takeover Proposal" (as such term
is defined below). The Company will not authorize any officer, director,
employee, investment banker, financial consultant, attorney, accountant or other
representative of the Company or any Company Subsidiary, directly or indirectly,
(A) to cooperate with, or furnish or cause to be furnished any non-public
information concerning its business, properties or assets to, any person or
entity in connection with any Takeover
23
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Proposal; (B) to negotiate any Takeover Proposal with any person or entity; or
(C) to enter into any agreement, letter of intent or agreement in principle as
to any Takeover Proposal. The Company will promptly give written notice to
Commercial upon becoming aware of any Takeover Proposal, such notice to contain,
at a minimum, the identity of the persons submitting the Takeover Proposal, a
copy of any written inquiry or other communication, the terms of any Takeover
Proposal, any information requested or discussions sought to be initiated and
the status of any requests, negotiations or expressions of interest. As used in
this Agreement with respect to the Company, "Takeover Proposal" shall mean any
proposal, other than as contemplated by this Agreement, for a merger or other
business combination involving the Company or any Company Subsidiary or for the
acquisition of a ten percent (10%) or greater equity interest in Company or any
Company Subsidiary, or for the acquisition of a substantial portion of the
assets of Company or any Company Subsidiary.
4.4 Shareholder Approvals. The Company shall use its best efforts to
---------------------
obtain the Shareholder Approvals upon consent or otherwise of this Agreement and
the Company Merger and related matters as soon as practicable but in no event
later than 60 days after the date hereof. In connection with such meeting, the
Company Board of Directors shall recommend approval of the Company Merger.
4.5 Filing of Regulatory Applications. Commercial shall use its best
---------------------------------
efforts to prepare, submit and file such required regulatory applications for
acquisition of control of Company and any other applications required to be
filed with any regulatory authorities in connection with the transactions
contemplated hereby, including the Bank Merger within 45 days of the date
hereof.
4.6 Consents. Company and Company Subsidiaries will use their best
--------
efforts to obtain the consent or approval of each person whose consent or
approval shall be required in order to permit Company or Company Subsidiaries,
as the case may be, to consummate the Company Merger.
4.7 Publicity. Between the date of this Agreement and the Effective Time,
---------
neither Commercial, the Bank, Company or any Company Subsidiary shall, without
the prior approval of the other, issue or make, or permit any of its directors,
employees, officers or agents to issue or make, any press release, disclosure or
statement to the press or any third party (except general informational
communications to the shareholders of the Company and Midland Bank) with respect
to the Company Merger or the transactions contemplated hereto, except as
required by law or applicable requirements of the New York Stock Exchange. The
parties shall cooperate when issuing or making any press release, disclosure or
statement with respect to Company Merger or the transactions contemplated
hereby, except as required by law or applicable requirements of the New York
Stock Exchange.
4.8 Cooperation Generally. Between the date of this Agreement and the
---------------------
Effective Time, Commercial, Company and their subsidiaries shall use their best
efforts, and take all actions necessary or appropriate, to consummate the
Company Merger and the other transactions contemplated by this Agreement at the
earliest practicable date. If, at any time after the Effective Time, the
Surviving Corporation or Commercial shall consider or be advised that any
further deeds,
24
<PAGE>
assignments or assurances or any other acts are necessary or desirable to vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation or
Commercial its right, title or interest in, to or under any of the rights,
properties or assets of Company or Midland Bank or otherwise carry out the
purposes of this Agreement, Company and Midland Bank and each of their
respective officers and directors shall be deemed to have granted to the
Surviving Corporation and Commercial an irrevocable power of attorney to execute
and deliver all such deeds, assignments or assurances and to do all acts
necessary or desirable to vest, perfect or confirm title and possession to such
rights, properties or assets in the Surviving Corporation or Commercial and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of the Surviving Corporation and Commercial are authorized in the name
of Company, Midland Bank or otherwise to take any and all such action.
4.9 Additional Financial Statements and Reports. As soon as reasonably
-------------------------------------------
practicable after they become publicly available, the Company shall furnish to
Commercial and Commercial shall furnish to the Company, respectively, its
balance sheet and related statements of operations, cash flows and stockholders'
equity for all periods prior to the Closing. Except as specifically described
therein, such financial statements will be prepared in conformity with generally
accepted accounting principles applied on a consistent basis and fairly present
the financial condition, results of operations and cash flows of the Company or
Commercial, as the case may be (subject, in the case of unaudited financial
statements, to (a) normal year-end adjustments, (b) any other adjustments
described therein and (c) the absence of notes which, if presented, would not
differ materially from those included in its most recent consolidated balance
sheet). As soon as reasonably practicable, Company and Midland Bank shall
provide to Commercial copies of all monthly boards of directors packages and
minutes.
4.10 Conforming Adjustments. At the request of Commercial and in an
----------------------
amount specified by Commercial, prior to the Effective Time, the Company and
such of the Company Subsidiaries as Commercial shall direct shall establish such
additional accruals and reserves ("Conforming Adjustments") as may be necessary
in the sole determination of Commercial to conform the Company's and the Company
Subsidiaries' accounting practices and policies as well as to conform their
interest rate risk position to those of Commercial(as such accounting practices
and policies are to be applied to Company and the Company Subsidiaries from and
after the Effective Time); provided, however, that Company and the Company
Subsidiaries shall not be required to take such action until: (i) Company
provides to Commercial a written statement dated the date of Closing certified
by the Chairman of the Board, the President and the Chief Financial Officer of
the Company, that the conditions in Sections 5.1 and 5.3 to be satisfied by the
Company or the Company Subsidiaries or both of them have been satisfied or,
alternatively, setting forth in detail the circumstances that have prevented
such conditions from being satisfied (the "Reliance Certificate") and Commercial
provides to the Company a Reliance Certificate relating to the conditions in
Section 5.1 and 5.2; and (ii) Commercial, after reviewing the Reliance
Certificate, provides the Company a written waiver of any right it may have to
terminate the Agreement which waiver shall contain an express condition
precedent that Company and the Company Subsidiaries have established such
additional Conforming Adjustments as requested by Commercial pursuant to this
Section 4.10.
25
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No additional Conforming Adjustments taken by the Company and the Company
Subsidiaries pursuant to this Section 4.10 shall be deemed in and of itself to
be a breach or violation of any representation, warranty, covenant, condition or
other provision of this Agreement.
4.11 D&O Indemnification and Insurance. For a period of three (3) years
---------------------------------
following the Effective Time, Commercial agrees that the Company Merger shall
not affect or diminish any of the Company's duties and obligations of
indemnification existing as of the Effective Time in favor of employees, agents,
directors or officers of the Company or the Company Subsidiaries arising by
virtue of its Articles of Incorporation or Bylaws in the form in effect at the
date of this Agreement or arising by operation of law. Commercial shall cause
the persons serving as officers and directors of the Company immediately prior
to the Effective Time to be covered for a period of eighteen (18) months from
the Effective Time by the directors' and officers' liability insurance policy
maintained by the Company (provided that Commercial may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are not materially less advantageous than such policy) with
respect to acts or omissions occurring prior to the Effective Time which were
committed by such officers and directors in their capacity as such; provided,
however, that in no event shall Commercial be required to expend more than 150%
of the amount currently expended by the Company to maintain or procure insurance
coverage for such eighteen (18) month period pursuant hereto.
4.12 Company's Employee Plans and Benefit Arrangements
-------------------------------------------------
(a) If Commercial so requests, the Company and any Company Subsidiary
shall develop a plan and timetable for terminating each Employee Plan and
Benefit Arrangement as of the date of Closing, and, with the advance written
consent of Commercial, shall be prepared to proceed with the implementation of
said termination plan and timetable immediately prior to the Effective Time.
The Company shall be solely responsible for all costs, expenses, and other
obligations whatsoever arising out of or resulting from termination of any
Employee Plan or Benefit Arrangement. Neither the Company nor any Company
Subsidiary will establish any new benefit plan or arrangement for directors,
officers, or employees, or amend (or commit to distribute any assets from) any
Employee Plan or Benefit Arrangement without Commercial's prior written
approval, except as otherwise provided herein.
(b) With respect to any Employee Plans or Benefit Arrangements that
provide for vesting of benefits, there shall be no discretionary acceleration of
vesting without Commercial's prior written consent or consent to the termination
of a tax qualified retirement plan.
(c) The Company's 401(k) Profit Sharing Plan ("401(k) Plan") shall be
terminated effective one day prior to the Effective Time to the extent legally
permissible. In connection with such termination, Commercial shall apply to the
IRS for a favorable determination letter on the tax-qualified status of the
401(k) Plan on termination under Code Section 401(a). Any and all distributions
from the 401(k) Plan after its termination shall be made in a manner consistent
26
<PAGE>
with the 401(k) Plan and after receipt of the determination letter issued by the
IRS relating to such termination.
(d) Immediately prior to the Effective Time, the existing Employment
Agreement between Mr. Thomas Brouster and the Company shall be terminated and
Commercial and Mr. Brouster will enter into a non-competition agreement
substantially in the form attached hereto as Exhibit C.
(e) Commercial agrees to honor the terms of all other written
employment agreements listed in Section 2.14 of Schedule I in accordance with
their terms.
(f) Notwithstanding any other provision of this Agreement to the
contrary, in no event may any payments be made to directors, officers or
employees of the Company or the Company Subsidiaries resulting from the
transactions contemplated hereby to the extent that such payments will cause the
imposition of excise taxes under Section 4999 of the Code or the disallowance of
a deduction to Commercial, the Bank, the Company or any Company Subsidiary
pursuant to Sections 162, 280G or any other section of the Code.
4.13 Update Disclosures. From and after the date hereof until the
------------------
Effective Time, Company shall promptly, but not less frequently than monthly,
update Schedule I hereto by notice to Commercial to reflect any matters which
have occurred from and after the date hereof which, if existing on the date
hereof, would have been required to be described therein and which, in the case
of all such updates other than the last such update prior to the Effective Time,
reflect a material change from the information provided in Schedule I as of the
date hereof; provided, however, that no such update shall affect the conditions
to the obligation of Company to consummate the transactions contemplated hereby,
and any and all changes reflected in any such update shall be considered in
determining whether such conditions have been satisfied.
4.14 Update Year 2000 Compliance Information. After the date hereof,
---------------------------------------
Company shall keep Commercial fully informed as to the status of its efforts to
be Millennium Compliant, specifically including its success or failure in
complying with FFIEC Year 2000 compliance guidelines, including FFIEC-mandated
interim deadlines and other Year 2000 compliance activities.
ARTICLE V
CONDITIONS OF THE MERGER;
TERMINATION OF AGREEMENT
5.1 General Conditions. The obligations of Commercial and the Company to
------------------
effect the Company Merger shall be subject to the following conditions:
(a) Shareholder Approvals. The holders of the outstanding shares of
---------------------
Company Common Stock and Company Preferred Stock shall have approved this
Agreement and the Company Merger as specified in Section 1.8 hereof or as
otherwise required by applicable law.
27
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(b) No Proceedings. No order shall have been entered and remain in
--------------
force restraining or prohibiting the Company Merger in any legal,
administrative, arbitration, investigatory or other proceedings (collectively,
"Proceedings") by any governmental or judicial or other authority.
(c) Government Approvals. To the extent required by applicable law or
--------------------
regulation, all approvals of or filings with any governmental authority
(collectively, "Governmental Approvals"), including without limitation those of
the FRB, the OTS, the FDIC, the Division, the FTC and the DOJ, shall have been
obtained or made and any waiting periods shall have expired in connection with
the consummation of the Company Merger and the Bank Merger. All other statutory
or regulatory requirements for the valid consummation of the Company Merger and
related transactions shall have been satisfied.
5.2 Conditions to Obligations of Commercial. The obligations of
---------------------------------------
Commercial to effect the Company Merger and the transactions contemplated herein
shall be subject to the following additional conditions:
(a) Opinion of Counsel for Company. Commercial shall have received
------------------------------
from Suelthaus & Walsh, P.C., counsel to Company, an opinion dated as of the
Closing covering the matters to be set forth in Exhibit 5.2(a).
(b) Required Consents. In addition to Governmental Approvals, Company
-----------------
and the Company Subsidiaries shall have obtained all necessary third party
consents or approvals in connection with the Company Merger or the Bank Merger,
the absence of which would materially and adversely affect Company and the
Company Subsidiaries, taken as a whole; in this connection, the Company and the
Company Subsidiaries shall obtain consents from all lessors to their respective
real estate leases that may be required for consummation of the Company Merger
or the Bank Merger.
(c) No Material Adverse Change. Between the date of this Agreement
--------------------------
and the date of Closing, there shall not have occurred any material adverse
change in the financial condition, business or results of operations of Company
and the Company Subsidiaries, taken as a whole, other than any such change
attributable to or resulting from any change in law, regulation or generally
accepted accounting principles which impair both the Company and Commercial in a
substantially similar manner.
(d) Representations and Warranties to be True; Fulfillment of
---------------------------------------------------------
Covenants and Conditions. The representations and warranties of the Company and
- ------------------------
Midland Bank shall be true in all material respects at the Effective Time with
the same effect as though made at the Effective Time (or on the date when made
in the case of any representation or warranty which specifically relates to an
earlier date); Company and Midland Bank shall have performed all obligations and
complied with each covenant, in all material respects, and all conditions under
this Agreement on their part to be performed or complied with at or prior to the
Effective Time; and Company and Midland Bank shall have delivered to Commercial
a certificate, dated the Effective Time and signed by its chief
28
<PAGE>
executive officer and chief financial officer, to such effect. For purposes of
this Section 5.2(d), materiality shall be determined with respect to the Company
and the Company Subsidiaries, taken as a whole.
(e) No Litigation. Neither the Company nor any Company Subsidiary
-------------
shall be a party to any pending litigation (other than existing litigation or
claims described in Schedule I as it or they existed at the date hereof, the
amount or nature of which has not been changed after the date hereof),
reasonably probable of being determined adversely to the Company or any Company
Subsidiary, which would have a material adverse effect on the business,
financial condition or results of operations of the Company and the Company
Subsidiaries, taken as a whole.
(f) Regulatory Approval. All Governmental Approvals required
-------------------
hereunder to consummate the transactions contemplated hereby shall have been
obtained without the imposition of any conditions which Commercial reasonably
and in good faith determines to be unduly burdensome upon the conduct of the
business of Commercial or the Bank.
(g) Acceptance of Legal Matters. The form and substance of all legal
---------------------------
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Housley Kantarian & Bronstein, P.C., special counsel to
Commercial and the Bank.
(h) Environmental Reports. Commercial, at its expense, shall have
---------------------
received a Phase I Environmental Risk Report (as contemplated in OTS Thrift
Bulletin #16) on (i) all commercial real estate owned of, (ii) all offices and
premises used as facilities by, and (iii) all properties which serve as security
for any commercial real estate loan having an original principal balance of
$1,000,000 or more of, the Company or any Company Subsidiary, such reports or
other reports derived therefrom or supplemental thereto to be satisfactory to
Commercial. Commercial's right to terminate this Agreement due to failure of
the condition set forth in this Section 5.2(j) shall only be applicable if the
costs to cleanup, remove, remediate, or take any other action to bring such
property or properties into material compliance with environmental laws exceed
$250,000 in the aggregate and shall expire unless exercised by Commercial on or
prior to three months from the date of this Agreement.
(i) Dissenting Shareholders. None of the shareholders of the Company
-----------------------
shall have elected their dissenter and appraisal rights pursuant to GBCLM.
(j) Year 2000. Receipt of a certificate from the Company evidencing
---------
(i) that Company's and Midland Bank's computer hardware and software systems
used for the storage and processing of data and the systems of all third party
providers are Millennium Compliant, (ii) none of Company or any Company
Subsidiary's Systems, operations or business functions will be materially
adversely affected by the failure of any third party with whom Company has
consistent dealings to be Millennium Compliant; (iii) Company and Midland Bank
have taken all necessary and appropriate action to address and remedy any
deficiencies in Company and Midland Bank's systems from becoming Millennium
Compliant.
29
<PAGE>
(k) Receipt of Midland Bank Preferred Stock. All of the outstanding
---------------------------------------
shares of the Midland Bank Preferred Stock shall have been delivered to the
Exchange Agent on or prior to the Closing as provided in Section 1.13 hereof.
5.3 Conditions to Obligations of Company. The obligation of Company to
------------------------------------
effect the Company Merger and the transactions contemplated herein shall be
subject to the following additional conditions:
(a) Opinion of Counsel for Commercial. Company shall have received
---------------------------------
from Housley Kantarian & Bronstein, P.C., special counsel to Commercial, and
Fitzgerald, Schorr, Barmettler & Brennan, P.C. an opinion dated as of the
Closing covering the matters to be set forth in Exhibit E.
(b) Representations and Warranties to be True; Fulfillment of
---------------------------------------------------------
Covenants and Conditions. The representations and warranties of Commercial
- ------------------------
shall be true in all material respects at the Effective Time with the same
effect as though made at the Effective Time (or on the date when made in the
case of any representation or warranty which specifically relates to an earlier
date); Commercial shall have performed all obligations and complied with each
covenant, in all material respects, and all conditions under this Agreement on
their parts to be performed or complied with at or prior to the Effective Time;
and Commercial shall have delivered to Company a certificate, dated the
Effective Time and signed by its chief executive officer and chief financial
officer, to such effect.
(c) Acceptance of Legal Matters. The form and substance of all legal
---------------------------
matters contemplated hereby and all papers delivered hereunder shall be
reasonably acceptable to Suelthaus & Walsh, P.C., counsel to the Company.
5.4 Termination of Agreement and Abandonment of Company Merger. This
----------------------------------------------------------
Agreement may be terminated at any time before the Effective Time, whether
before or after approval thereof by shareholders of Company, as provided below:
(a) Mutual Consent. By mutual consent of the parties, evidenced by
--------------
their written agreement.
(b) Closing Delay. At the election of either party, evidenced by
-------------
written notice, if the Closing shall not have occurred on or before March 31,
1999, or such later date as shall have been agreed to in writing by the parties;
provided, however, that the right to terminate under this Section 5.4(b) shall
- -------- -------
not be available to any party whose failure to perform an obligation hereunder
has been the cause of, or has resulted in, the failure of the Closing to occur
on or before such date.
(c) Conditions to Commercial Performance Not Met. By Commercial upon
--------------------------------------------
delivery of written notice of termination to Company if any event occurs which
renders impossible of satisfaction in any material respect one or more of the
conditions to the obligations of Commercial
30
<PAGE>
to effect the Company Merger set forth in Sections 5.1 and 5.2 and noncompliance
is not waived by Commercial, provided, however, that the right to terminate
-------- -------
under this Section 5.4(c) shall not be available to Commercial where
Commercial's failure to perform an obligation hereunder has been the cause of,
or has resulted in, the failure of the Closing to occur on or before such date.
(d) Conditions to Company Performance Not Met. By the Company upon
-----------------------------------------
delivery of written notice of termination to Commercial if any event occurs
which renders impossible of satisfaction in any material respect one or more of
the conditions to the obligations of Company to effect the Company Merger set
forth in Sections 5.1 and 5.3 and noncompliance is not waived by Company,
provided, however, that the right to terminate under this Section 5.4(d) shall
- -------- -------
not be available to the Company where the Company's failure to perform an
obligation hereunder has been the cause of, or has resulted in, the failure of
the Closing to occur on or before such date.
ARTICLE VI
TERMINATION OF OBLIGATIONS; PAYMENT OF EXPENSES
6.1 Termination; Lack of Survival of Representations and Warranties. In
---------------------------------------------------------------
the event of the termination and abandonment of this Agreement pursuant to
Section 5.4 of this Agreement, this Agreement shall become void and have no
effect, except that (i) the provisions of Sections 2.9 and 3.6 (Brokers and
Finders), 4.7 (Publicity), 6.2 (Payment of Expenses) and 8.2 (Confidentiality)
of this Agreement shall survive any such termination and abandonment, and (ii) a
termination pursuant to Sections 5.4(c) or 5.4(d) of this Agreement shall not
relieve the breaching party from liability for an uncured intentional and
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination.
The representations, warranties and agreements of the parties set forth in
this Agreement shall not survive the Effective Time, and shall be terminated
and extinguished at the Effective Time, and from and after the Effective Time
none of the parties hereto shall have any liability to the other on account of
any breach or failure of any of those representations, warranties and
agreements; provided, however, that the foregoing clause shall not (i) apply to
-----------------
agreements of the parties which by their terms are intended to be performed
after the Effective Time, and (ii) shall relieve any person for liability for
fraud, deception or intentional misrepresentation.
6.2 Payment of Expenses.
-------------------
(a) Each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder.
(b) Notwithstanding any provision in this Agreement to the contrary,
in order to induce Commercial to enter into this Agreement and as a means of
compensating Commercial for the substantial direct and indirect monetary, and
other costs incurred and to be incurred in connection
31
<PAGE>
with this Agreement and the transactions contemplated hereby, the Company agrees
that if this Agreement is terminated in accordance with its terms and, prior to
such termination, a Termination Event, as defined in paragraph (c) below, shall
have occurred, then in that event the Company will upon demand pay to Commercial
in immediately available funds the sum of Two Million Five Hundred Thousand
Dollars ($2,500,000) (the "Termination Fee"); provided that such amounts shall
represent the exclusive remedy of Commercial with respect to a Termination
Event.
(c) For purposes of this Agreement, a Termination Event shall mean any
of the following:
(i) The Company or any Company Subsidiary or any shareholder of the
Company shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for purposes
of this Agreement having the meaning assigned thereto in Section 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, and the rules and regulations
thereunder) other than Commercial or any affiliate of Commercial (the term
"affiliate" for purposes of this Agreement having the meaning assigned thereto
in Rule 405 under the Securities Act of 1933). For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation, or any
similar transaction, involving the Company or any Company Subsidiary, (y) a
purchase, lease, or other acquisition of all or substantially all of the assets
of the Company or any Company Subsidiary or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of 10%
or more of any class of equity securities of the Company or any Company
Subsidiary; or
(ii) The making of a proposal which is communicated to the Company
itself, the Board of Directors of the Company, or to all of its shareholders by
any person other than Commercial or any affiliate of Commercial to engage in an
Acquisition Transaction and, either (A) Company or Midland Bank shall have
willfully breached any covenant or obligation contained in this Agreement and
such breach would entitle Commercial to terminate this Agreement, (B) the
shareholders of the Company shall not have approved the Company Merger at the
meeting held for that purpose or any adjournment thereof (or through
solicitation of consents), (C) such meeting shall not have been held or shall
have been canceled prior to termination of this Agreement (unless consents shall
have been solicited and received in lieu of such meeting) or no consents are
solicited or (D) the Board of Directors of the Company shall have recommended
that the shareholders of the Company approve or accept any Acquisition
Transaction with any person other than Commercial or any affiliate of
Commercial, or (E) Company's Board of Directors shall have withdrawn or modified
in a manner adverse to Commercial the recommendation of Company's Board of
Directors with respect to this Agreement.
32
<PAGE>
ARTICLE VII
CERTAIN POST-MERGER AGREEMENTS
7.1 Employees.
---------
(a) Employees of the Company who become employees of Commercial or the
Bank after the Effective Time shall be eligible to participate in all benefit
plans sponsored by Commercial or the Bank to the same extent as other similarly
situated Commercial or Bank employees, with full credit for prior service with
the Company or Company Subsidiaries for purposes of vesting, eligibility for
participation and co-payments and deductibles, but not benefit accruals under
401(k) plans sponsored by Commercial or the Bank. Commercial shall honor all
accrued vacation leave for the employees of Company and the Company Subsidiaries
following the Effective Time to the extent listed in Section 7.1 of Schedule I
but subject to expiration within one year of the Effective Time and with respect
to accruals after the Effective Time, subject to Commercial's policies
applicable to the accrual of vacation pay.
(b) Commercial shall provide to the employees of the Company and
Company Subsidiaries full credit for prior service with the Company and with the
Company Subsidiaries for purposes of severance benefits under Commercial's
guidelines in respect of such matters, which guidelines currently provide a
severance benefit equivalent to one week's salary for each year of service, with
a maximum aggregate entitlement equal to eight weeks of salary.
7.2 Noncompetition Agreement. Commercial and Thomas H. Brouster shall
------------------------
enter into a Noncompetition Agreement providing for compensation by Commercial
to Mr. Brouster of $500,000, in the form attached hereto as Exhibit C.
ARTICLE VIII
GENERAL
8.1 Amendments. Subject to applicable law, this Agreement may be amended,
----------
whether before or after any relevant approval of shareholders, by an agreement
in writing executed in the same manner as this Agreement and authorized or
ratified by the Boards of Directors of the parties hereto, provided that, after
-------------
the adoption of the Agreement by the shareholders of the Company, no such
amendment without further shareholder approval may change the amount or form of
the consideration to be received by the Company shareholders in the Company
Merger.
8.2 Confidentiality. All information disclosed hereafter by any party to
---------------
this Agreement to any other party to this Agreement, including, without
limitation, any information obtained pursuant to Sections 4.1 or 4.09 hereof,
shall be kept confidential by such other party and shall not be used by such
other party otherwise than as herein contemplated except to the extent that (i)
it was known by such other party when received, (ii) it is or hereafter becomes
lawfully obtainable for other sources, (iii) it is necessary or appropriate to
disclose to any regulatory authority having jurisdiction
33
<PAGE>
over the parties or their subsidiaries or as may otherwise be required by law,
or (iv) to the extent such duty as to confidentiality is waived by the other
party. In the event of the termination of this Agreement, each party shall use
all reasonable efforts to return upon request to the other parties all documents
(and reproductions thereof) received from such other parties (and, in the case
of reproductions, all such reproductions made by the receiving party) that
include information not within the exceptions contained in the first sentence of
this Section 8.2.
8.3 Governing Law. This Agreement and the legal relations between the
-------------
parties shall be governed by and construed in accordance with the laws of the
State of Nebraska without taking into account a provision regarding choice of
law, except to the extent certain matters may be governed by federal law by
reason of preemption.
8.4 Notices. Any notices or other communications required or permitted
-------
hereunder shall be sufficiently given if sent by registered mail or certified
mail, postage prepaid, addressed, if to Commercial or Company, to
Commercial Federal Corporation
2120 South 72nd Street
Omaha, Nebraska 68124
Attention: James A. Laphen, President
with a copy to:
Housley Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, DC 20036
Attention: Cynthia R. Cross, Esq.
and
Midland First Financial Corporation
740 Northwest Blue Parkway
Lee's Summit, Missouri 64086
Attention: Mr. Thomas Brouster, Chairman
with a copy to:
Suelthaus & Walsh, P.C.
7733 Forsyth Boulevard
12 Floor,
St. Louis, Missouri 63105
Attention: Kenneth H. Suelthaus, Esquire
34
<PAGE>
or such other address as shall be furnished in writing by any such party, and
any such notice or communication shall be deemed to have been given two business
days after the date of such mailing (except that the notice of change of address
shall not be deemed to have been given until received by the addressee).
Notices may also be sent by telegram, telex, facsimile transmission or hand
delivery and in such event shall be deemed to have been given as of the date
received.
8.5 No Assignment. This Agreement may not be assigned by any of the
-------------
parties hereto, by operation of law or otherwise, except as contemplated hereby.
8.6 Headings. The description heading of the several Articles and
--------
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
8.7 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to each of the other parties hereto.
8.8 Construction and Interpretation. Except as the context otherwise
-------------------------------
requires, (a) all references herein to any state or federal regulatory agency
shall also be deemed to refer to any predecessor or successor agency, and (b)
all references to state and federal statutes or regulations shall also be deemed
to refer to any successor statute or regulation.
8.9 Entire Agreement. This Agreement, together with the schedules, lists,
----------------
exhibits and certificates required to be delivered hereunder, and any amendment
hereafter executed and delivered in accordance with Section 8.1, constitutes the
entire agreement of the parties, and supersedes any prior written or oral
agreement or understanding among any of the parties hereto pertaining to the
Company Merger. This Agreement is not intended to confer upon any other persons
any rights or remedies hereunder except as expressly set forth herein.
8.10 Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of the Agreement.
8.11 No Third Party Beneficiaries. Nothing in this Agreement shall
----------------------------
entitle any person (other than the Company, Commercial and their respective
successors and assigns permitted hereby) to any claim, cause of action, remedy
or right of any kind, except as otherwise expressly provided herein.
8.12 Enforcement of Agreement. The parties hereto agree that
------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
35
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunder duly authorized, all as of the
date set forth above.
COMMERCIAL FEDERAL MIDLAND FIRST FINANCIAL
CORPORATION CORPORATION
By: By:
----------------------------------- ------------------------------------
Name: Name:
--------------------------------- ----------------------------------
Title: Title:
-------------------------------- ---------------------------------
COMMERCIAL FEDERAL BANK, MIDLAND BANK
A FEDERAL SAVINGS BANK
By: By:
----------------------------------- ------------------------------------
Name: Name:
--------------------------------- ----------------------------------
Title: Title:
-------------------------------- ---------------------------------
[NEWSUB]
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
36
<PAGE>
Exhibit 99
Press Release Dated August 14, 1998
<PAGE>
Date: August 14, 1998
Contact: Larry R. Goddard
Investor Relations Department
(402) 390-6553
FOR IMMEDIATE RELEASE
- ---------------------
Omaha, Nebraska (August 14, 1998)--Commercial Federal Corporation (NYSE:
CFB) today announced that it has entered into a definitive agreement to acquire
Midland First Financial Corporation (Midland), parent company of Midland Bank, a
Missouri-based, privately held, commercial bank, headquartered in Lee's Summit,
Missouri. Midland Bank operates eight offices in the Kansas City metropolitan
area. Following the acquisition, the parties intend that Midland Bank will be
merged with and into Commercial Federal Bank, a wholly-owned subsidiary of
Commercial Federal Corporation.
Under the terms of the agreement, Commercial Federal will acquire through a
taxable acquisition all of the outstanding shares of Midland First Financial
Corporation's common stock. The total purchase consideration is $83 million in
cash (includes proceeds used to pay off Midland debt, and Midland Bank and
Midland preferred stock aggregating $17 million and certain other items).
At June 30, 1998, Midland had assets of approximately $397 million,
deposits of approximately $352 million and stockholders' equity of approximately
$26 million.
"This acquisition of Midland expands our presence in the very attractive
Kansas City market," said William A. Fitzgerald, chairman of the board and chief
executive officer. "We will be able to expand our existing franchise into other
areas of this metropolitan market. It will also enhance our community banking
expertise and extend those services to our customers."
<PAGE>
This pending acquisition is subject to regulatory approvals and certain
other conditions. It is expected that the transaction will close in the first
calendar quarter of 1999.
Commercial Federal Corporation is the parent company of Commercial Federal
Bank, a federal savings bank which currently operates 243 branches, located in
Iowa (76), Colorado (48), Kansas (41), Nebraska (40), Oklahoma (19), Missouri
(8), Arizona (7), Minnesota (3), and South Dakota (1), including the First
Colorado acquisition completed today. Upon completion of the Midland
acquisition, Commercial Federal will operate 251 branches. In addition to
retail banking, Commercial Federal operations include mortgage banking, consumer
and business financing, insurance, trust and investment services.
Commercial Federal has assets of approximately $11.7 billion and deposits
of approximately $7.5 billion. Commercial Federal shares are traded on the New
York Stock Exchange under the symbol "CFB."
