AGREEMENT AND PLAN OF MERGER
BETWEEN
PINNACLE FINANCIAL SERVICES,INC.
AND
CB BANCORP, INC.
DATED AS OF MARCH 1, 1997
TABLE OF CONTENTS
Page
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ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of CB Common Stock. . . . . . . . . . . . . . . . . . . 2
1.5 Pinnacle Common Stock. . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Articles of Incorporation. . . . . . . . . . . . . . . . . . . . . 3
1.8 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Tax Consequences; Accounting Treatment . . . . . . . . . . . . . . 4
1.10 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 Headquarters of Surviving Corporation. . . . . . . . . . . . . . . 5
1.13 Bank Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
EXCHANGE OF SHARES
2.1 Pinnacle to Make Shares and Cash in Lieu of Fractional Shares
Available. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PINNACLE
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . 11
3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 14
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . 18
3.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 19
3.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . . 20
3.16 Other Activities of Pinnacle and its Subsidiaries. . . . . . . . . 20
3.17 Investment Securities. . . . . . . . . . . . . . . . . . . . . . . 21
3.18 Interest Rate Risk Management Instruments. . . . . . . . . . . . . 21
3.19 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 21
3.20 Environmental Liability. . . . . . . . . . . . . . . . . . . . . . 21
3.21 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . . 22
3.22 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . 22
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CB
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . 22
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . 24
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 26
4.7 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 27
4.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 27
4.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 27
4.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . 31
4.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . . 32
4.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . . 32
4.16 Other Activities of CB and its Subsidiaries. . . . . . . . . . . . 33
4.17 Investment Securities. . . . . . . . . . . . . . . . . . . . . . . 33
4.18 Interest Rate Risk Management Instruments. . . . . . . . . . . . . 33
4.19 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 34
4.20 Environmental Liability. . . . . . . . . . . . . . . . . . . . . . 34
4.21 State Takeover Laws and Charter Provisions . . . . . . . . . . . . 34
4.22 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. . . . . . . . . 35
5.2 Conduct of CB Businesses Prior to the Effective Time . . . . . . . 35
5.3 Forbearances of Pinnacle . . . . . . . . . . . . . . . . . . . . . 35
5.4 Forbearances of CB . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 39
6.3 Stockholders' Approvals. . . . . . . . . . . . . . . . . . . . . . 40
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . 40
6.5 Affiliates; Publication of Combined Financial Results. . . . . . . 40
6.6 Nasdaq National Market Listing . . . . . . . . . . . . . . . . . . 41
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 41
6.8 Indemnification; Directors' and Officers' Insurance. . . . . . . . 46
6.9 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . 48
6.10 Advice of Changes. . . . . . . . . . . . . . . . . . . . . . . . . 48
6.11 Negotiations with Other Parties. . . . . . . . . . . . . . . . . . 48
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger . . . . 49
7.2 Conditions to Obligation of Pinnacle . . . . . . . . . . . . . . . 50
7.3 Conditions to Obligation of CB . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 56
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.2 Nonsurvival of Representations, Warranties and Agreements. . . . . 58
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.11 Assignment; Third Party Beneficiaries. . . . . . . . . . . . . . . 60
9.12 Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . 60
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 1, 1997, by and between
PINNACLE FINANCIAL SERVICES, INC., a Michigan corporation ("Pinnacle"), and CB
BANCORP, INC., a Delaware corporation ("CB").
WITNESSETH:
WHEREAS, the Boards of Directors of Pinnacle and CB have determined that it
is in the best interests of their respective companies and their stockholders to
consummate the business combination transaction provided for herein in which CB
will, subject to the terms and conditions set forth herein, merge with and into
Pinnacle (the "Merger"), so that Pinnacle is the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") in the Merger; and
WHEREAS, as a condition to, and immediately after the execution of, this
Agreement, Pinnacle and CB are entering into a CB stock option agreement (the
"CB Option Agreement") attached hereto as Exhibit A; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, in
accordance with the Michigan Business Corporation Act, as amended (the "MBCA"),
and the Delaware General Corporation Law, as amended (the "DGCL"), at the
Effective Time (as defined in Section 1.2), CB shall merge with and into
Pinnacle. Pinnacle shall be the Surviving Corporation in the Merger, and shall
continue its corporate existence under the laws of the State of Michigan. Upon
consummation of the Merger, the separate corporate existence of CB shall
terminate.
1.2 EFFECTIVE TIME. The Merger shall become effective as set forth in
certificates of merger (each, a "Certificate of Merger"), which shall specify an
effective date and time no earlier than the filing thereof with the appropriate
authorities of the State of Michigan, and with the appropriate authorities of
the State of Delaware, on the Closing Date (as defined in Section 9.1), or as
soon thereafter as practicable. The term "Effective Time" shall be the date and
time when the Merger becomes effective, as set forth in each Certificate of
Merger having been filed in accordance with the MBCA and DGCL.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in the MBCA and the DGCL.
1.4 CONVERSION OF CB COMMON STOCK. At the Effective Time, in each case,
subject to Section 2.2(e), by virtue of the Merger and without any action on the
part of Pinnacle, CB or the holder of any of the following securities:
(a) Each share of the common stock, par value $0.01 per share, of CB
(the "CB Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares of CB Common Stock held (x) in CB's treasury
or (y) directly or indirectly by CB or Pinnacle or any of their respective
wholly-owned Subsidiaries (as defined in Section 3.1) (except for Trust Account
Shares and DPC shares, as such terms are defined in Section 1.4(c) and as set
forth in the CB Disclosure Schedule)), shall be converted into the right to
receive that number of shares of the common stock, without par value, of
Pinnacle (the "Pinnacle Common Stock") determined by dividing $35.00 (the
"Exchange Value") by the average (the "Average Price") of the daily averages of
the closing bid and the closing ask prices per share of Pinnacle Common Stock as
reported by the Nasdaq National Market for the period of fifteen (15) business
days ending on the fifth (5th) business day prior to the Closing Date; provided,
however, that (i) in the event the Average Price as determined under the
foregoing provision is $29.00 or higher, the Exchange Value shall be divided by
$29.00 (resulting in the fractional number 1.2069) rather than said Average
Price (so that, in such case, each share of CB Common Stock issued and
outstanding so converted, would be converted into the right to receive 1.2069
shares of Pinnacle Common Stock), and (ii) in the event the Average Price as
determined under the foregoing provision is $23.00 or lower, the Exchange Value
shall be divided by $23.00 (resulting in the fractional number 1.5217) rather
than said Average Price (so that, in such case, each share of CB Common Stock
issued and outstanding so converted, would be converted into the right to
receive 1.5217 shares of Pinnacle Common Stock); and provided, further, no
fractional shares of Pinnacle Common Stock shall be issued pursuant hereto and,
in lieu thereof, any said fractional shares shall be paid the cash equivalent
value thereof based on the Average Price.
(b) All of the shares of CB Common Stock converted into the right to
receive shares of Pinnacle Common Stock, and cash in lieu of fractional shares,
pursuant to this Article I shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist as of the Effective Time,
and each certificate (each a "Common Certificate") previously representing any
such shares of CB Common Stock shall thereafter represent the right to receive
(i) a certificate representing the number of whole shares, and (ii) cash in lieu
of any fractional share, of Pinnacle Common Stock into which the shares of CB
Common Stock represented by such Common Certificate have been converted pursuant
to this Section 1.4 and Section 2.2. Common Certificates previously representing
shares of CB Common Stock shall be exchanged for certificates representing
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whole shares, and cash in lieu of fractional shares, of Pinnacle Common Stock
upon the surrender of such Common Certificates in accordance with Section 2.2,
without any interest thereon. If, prior to the Effective Time, the outstanding
shares of CB Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities as a result of
a reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar change in capitalization, then an
appropriate and proportionate adjustment shall be made to the Exchange Value.
(c) At the Effective Time, all shares of CB Common Stock that are
owned by CB as treasury stock and all shares of CB Common Stock that are owned,
directly or indirectly, by CB or Pinnacle or any of their respective wholly-
owned Subsidiaries (other than shares of CB Common Stock held, directly or
indirectly, in trust accounts, managed accounts and the like or otherwise held
in a fiduciary capacity that are beneficially owned by third parties (any such
shares, and shares of Pinnacle Common Stock which are similarly held, whether
held directly or indirectly by CB or Pinnacle, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of CB
Common Stock held by CB or Pinnacle or any of their respective wholly-owned
Subsidiaries in respect of a debt previously contracted (any such shares of CB
Common Stock, and shares of Pinnacle Common Stock which are similarly held,
whether held directly or indirectly by CB or Pinnacle or any of their respective
Subsidiaries, being referred to herein as "DPC Shares") and as set forth in the
CB Disclosure Schedule) shall be cancelled and shall cease to exist and no stock
of Pinnacle or other consideration shall be delivered in exchange therefor.
1.5 PINNACLE COMMON STOCK. At and after the Effective Time, each share of
Pinnacle Common Stock issued and outstanding immediately prior to the Closing
Date shall remain an issued and outstanding share of common stock of the
Surviving Corporation and shall not be affected by the Merger. All shares of
Pinnacle Common Stock that are owned by CB or any of its wholly-owned
Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Pinnacle.
1.6 OPTIONS.
At the Effective Time, each option granted by CB to purchase shares of
CB Common Stock (including any option that has been awarded but has not yet
vested) which is outstanding and unexercised immediately prior thereto shall
cease to represent the option to acquire shares of CB Common Stock and shall be
converted automatically into the right to receive shares of Pinnacle Common
Stock in an amount determined by dividing the difference between the Exchange
Value and the exercise price of such option by the Average Price.
1.7 ARTICLES OF INCORPORATION. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Articles
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of Incorporation of Pinnacle shall be the Articles of Incorporation of the
Surviving Corporation, until thereafter amended in accordance with applicable
law.
1.8 BYLAWS. Subject to the terms and conditions of this Agreement, at the
Effective Time, the Bylaws of Pinnacle, with appropriate amendments to
incorporate the provisions of Section 1.11(d) of this Agreement, shall be the
Bylaws of the Surviving Corporation, until thereafter amended in accordance with
applicable law.
1.9 TAX CONSEQUENCES; ACCOUNTING TREATMENT. It is intended that (i) the
Merger shall constitute a reorganization within the meaning of Section
368(a)(i)(A) of the Code, (ii) this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code, and (iii) the
Merger shall qualify for "pooling of interests" accounting treatment under
Accounting Principles Board Opinion No. 16 and SEC Accounting Series Releases
130 and 135, as amended.
1.10 MANAGEMENT. At the Effective Time, those persons who are the officers
of Pinnacle immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, serving in the same officer capacities, respectively,
together with such other persons who may be appointed as officers of the
Surviving Corporation by the Board of Directors of the Surviving Corporation.
1.11 BOARD OF DIRECTORS. At the Effective Time, the persons who shall be
the directors of the Surviving Corporation shall be determined as follows:
(a) In the event that the transactions provided for under the terms
of the Agreement and Plan of Merger dated as of November 14, 1996 (the "IFC
Merger Agreement"), between Pinnacle and Indiana Federal Corporation, a Delaware
corporation ("IFC"), have been consummated and become effective, then the Board
of Directors of the Surviving Corporation shall consist of ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, as well as ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and three (3) other persons named as
directors of the Surviving Corporation on behalf of the Board of Directors of
Pinnacle, and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as well as Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and three (3)
other persons named as directors of the Surviving Corporation on behalf of the
Board of Directors of IFC, and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
(b) In the event that the transactions provided for under the terms
of the IFC Merger Agreement have not been consummated and become effective, then
the Board of Directors of the Surviving Corporation shall be comprised of those
persons who are the directors of Pinnacle immediately prior to the Effective
Time and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; provided, that, in the event that the
transactions provided for under the terms of the IFC Merger Agreement
subsequently are consummated and become effective, then the Board of Directors
of the Surviving Corporation shall consist of ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as well as
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
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three (3) other persons named as directors of the Surviving Corporation on
behalf of the Board of Directors of Pinnacle, and ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as well
as Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and three (3) other persons named as directors of the
Surviving Corporation on behalf of the Board of Directors of IFC, and ▇▇. ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇.
(c) In any case, at and following the Effective Time, under the terms
of the Standstill Agreement dated as of December 1, 1995, between Pinnacle and
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Pinnacle has certain obligations to nominate ▇▇. ▇▇▇▇▇▇ for
election as a director of Pinnacle and said agreement shall be binding on
Pinnacle as the Surviving Corporation. In the event that Pinnacle, as the
Surviving Corporation, becomes obligated to nominate ▇▇. ▇▇▇▇▇▇ as a director of
the Surviving Corporation, then the Board of Directors at that time shall be
increased in size by two (2) persons, and ▇▇. ▇▇▇▇▇▇ shall be nominated as a
director of the Surviving Corporation pursuant to the terms of the Standstill
Agreement dated as of December 1, 1995, between Pinnacle and ▇▇. ▇▇▇▇▇▇, and the
Chairman shall nominate for approval by the Board of Directors an additional
person as a director of the Surviving Corporation.
(d) Whenever the Board of Directors is comprised of ten (10) or fewer
persons, action of the Board within the meaning of Section 523 of the MBCA, and
for all other purposes, shall require the favorable vote of six (6) or more of
the directors, and whenever the Board of Directors is comprised of eleven (11)
or twelve (12) persons, action of the Board within the meaning of Section 523 of
the MBCA, and for all other purposes, shall require the favorable vote of seven
(7) or more of the directors.
1.12 HEADQUARTERS OF SURVIVING CORPORATION. At the Effective Time, the
headquarters and principal executive offices of Pinnacle immediately prior to
the Effective Time shall be the headquarters and principal executive offices of
the Surviving Corporation.
1.13 BANK MERGER. At the Bank Merger Effective Time (as hereinafter
defined), Community Bank, a federal savings bank ("CB Bank"), the wholly-owned
subsidiary of CB, shall be merged (the "Bank Merger") with and into Pinnacle
Bank, a Michigan banking corporation ("Pinnacle Bank"), the wholly-owned
subsidiary of Pinnacle, pursuant to the terms and conditions set forth herein
and in the Agreement and Plan of Merger and Consolidation substantially in the
form attached hereto as Exhibit B (the "Bank Merger Agreement"). Upon
consummation of the Bank Merger, the separate existence of CB Bank shall cease,
and Pinnacle Bank shall continue as the surviving institution of the Bank
Merger. The name of Pinnacle Bank, as the surviving institution of the Bank
Merger, shall be "Pinnacle Bank". From and after the Bank Merger Effective Time
(as hereinafter defined), Pinnacle Bank as the surviving institution of the Bank
Merger shall possess all of the properties and rights and be subject to all of
the liabilities and obligations of Pinnacle Bank and CB Bank. The Bank Merger
shall become effective at the time the Bank Merger Agreement for such merger is
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endorsed and declared effective by the Financial Institutions Bureau of the
State of Michigan (the "Bank Merger Effective Time"). The parties shall cause
the Bank Merger to become effective as soon as practical following the Merger.
At the Bank Merger Effective Time:
(a) each share of CB Bank common stock issued and outstanding
immediately prior thereto shall, by virtue of the Bank Merger, be cancelled. No
new shares of the capital stock or other securities or obligations of CB Bank
shall be issued or be deemed issued with respect to or in exchange for such
cancelled shares, and such cancelled shares of common stock of CB Bank shall not
be converted into any shares or other securities or obligations of any other
entity;
(b) each share of Pinnacle Bank common stock issued and outstanding
immediately prior thereto shall remain an issued and outstanding share of common
stock of Pinnacle Bank as the surviving institution and shall not be affected by
the Bank Merger;
(c) the charter and bylaws of Pinnacle Bank, as then in effect, shall
be the Charter and Bylaws of Pinnacle Bank as the surviving institution of the
Bank Merger, and may thereafter be amended in accordance with applicable law;
and
(d) the directors of Pinnacle Bank as the surviving institution
following the Bank Merger shall be determined as follows:
(i) In the event that the transactions provided for under the
terms of the Agreement and Plan of Merger and Consolidation to be entered
into by and between Indiana Federal Bank for Savings and Pinnacle Bank
pursuant to the IFC Merger Agreement (the "InFed Bank Merger Agreement")
have been consummated and become effective, then the Board of Directors of
Pinnacle Bank as the surviving institution shall consist of twenty-one (21)
persons with eighteen (18) persons to be named as directors as provided in
the IFC Merger Agreement and three (3) persons to be named as directors by
the Board of Directors of CB Bank (one of which persons shall be
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇).
(ii) In the event that the transactions provided for under the
terms of the InFed Bank Merger Agreement have not been consummated and
become effective, then the Board of Directors of Pinnacle Bank as the
surviving institution shall be comprised of those persons who are the
directors of Pinnacle Bank immediately prior to the Bank Merger Effective
Time and two (2) persons to be named as directors by the Board of Directors
of CB Bank (one of which persons shall be ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇);
provided, however, that in the event that the transactions provided for
under the terms of the InFed Bank Merger Agreement subsequently are
consummated and become effective, then the Board of Directors of Pinnacle
Bank as the surviving institution shall consist of twenty-one (21)
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persons with eighteen (18) persons to be named as directors as provided in
the IFC Merger Agreement and three (3) persons to be named as directors by
the Board of Directors of CB Bank.
ARTICLE II
EXCHANGE OF SHARES
2.1 PINNACLE TO MAKE SHARES AND CASH IN LIEU OF FRACTIONAL SHARES
AVAILABLE. Prior to the Effective Time, Pinnacle shall deposit, or shall cause
to be deposited, with ▇▇▇▇▇▇ Trust and Savings Bank, Chicago, Illinois, or
another bank or trust company reasonably acceptable to each of Pinnacle and CB
(the "Exchange Agent"), for the benefit of the holders of Common Certificates,
for exchange in accordance with this Article II, certificates representing the
shares of Pinnacle Common Stock and cash for payment of consideration in lieu of
fractional shares (such certificates for shares of Pinnacle Common Stock,
together with cash for payment of consideration in lieu of fractional shares,
and any dividends or distributions with respect to any whole shares of Pinnacle
Common Stock, being hereinafter referred to as the "Exchange Fund") to be issued
and paid pursuant to Section 1.4 and Section 2.2(a) in exchange for outstanding
shares of CB Common Stock.
2.2 EXCHANGE OF SHARES.
(a) As soon as practicable after the Effective Time, and in no event
later than five (5) business days thereafter, the Exchange Agent shall mail to
each holder of record of one or more Common Certificates a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Common Certificates shall pass, only upon delivery of the Common
Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Common Certificates in exchange for certificates representing
the shares of Pinnacle Common Stock and any cash in lieu of fractional shares
into which the shares of CB Common Stock represented by such Common Certificate
or Common Certificates shall have been converted pursuant to this Agreement.
Upon proper surrender of a Common Certificate for exchange and cancellation to
the Exchange Agent, together with such properly completed letter of transmittal,
duly executed, the holder of such Common Certificate shall be entitled to
receive in exchange therefor, as applicable, (i) a certificate representing that
number of whole shares of Pinnacle Common Stock, and (ii) a check representing
the amount of any cash in lieu of fractional shares, to which such holder of CB
Common Stock shall have become entitled pursuant to the provisions of Article I,
and the Common Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any cash in lieu of fractional shares or on
any unpaid dividends and distributions payable to holders of Common
Certificates.
(b) No dividends or other distributions declared with respect to
Pinnacle Common Stock with a record date following the
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Effective Time shall be paid to the holder of any unsurrendered Common
Certificate until the holder thereof shall surrender such Common Certificate in
accordance with this Article II.
(c) If any certificate representing shares of Pinnacle Common Stock
is to be issued in a name other than that in which the Common Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Common Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and otherwise
in proper form for transfer, and that the person requesting such exchange shall
pay to the Exchange Agent in advance any transfer or other taxes required by
reason of the issuance of a certificate representing shares of Pinnacle Common
Stock in any name other than that of the registered holder of the Common
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no transfers on the
stock transfer books of CB of shares of CB Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Common Certificates representing such shares are presented for transfer to
the Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of Pinnacle Common Stock and cash in lieu of fractional
shares as provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Pinnacle Common Stock
shall be issued upon the surrender for exchange of Common Certificates, no
dividend or distribution with respect to Pinnacle Common Stock shall be payable
on or with respect to any fractional share, and such fractional share interests
shall not entitle the owner thereof to vote or to any other rights of a
stockholder of CB. In lieu of the issuance of any such fractional share,
Pinnacle shall pay to each former stockholder of CB who otherwise would be
entitled to receive such fractional share an amount in cash determined by
multiplying (i) the Average Price by (ii) the fraction of a share (rounded to
the nearest thousandth when expressed as an Arabic number) of Pinnacle Common
Stock to which such holder would otherwise be entitled to receive pursuant to
Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of CB for twelve (12) months after the Effective Time shall be paid
to Pinnacle. Any stockholders of CB who have not theretofore complied with this
Article II shall thereafter look only to Pinnacle for payment of the shares of
Pinnacle Common Stock, cash in lieu of any fractional shares and any unpaid
dividends and distributions on whole shares of Pinnacle Common Stock deliverable
in respect of each share of CB Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of CB, Pinnacle, the Exchange
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Agent or any other person shall be liable to any former holder of shares of CB
Common Stock for any amount delivered in good faith to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Common Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Common Certificate to be lost, stolen or destroyed and, if
reasonably required by Pinnacle or the Exchange Agent, the posting by such
person of a bond in such amount as Pinnacle or the Exchange Agent may determine
is reasonably necessary as indemnity against any claim that may be made against
it with respect to such Common Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Common Certificate the shares of
Pinnacle Common Stock and any cash in lieu of fractional shares deliverable in
respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PINNACLE
Except as disclosed in the Pinnacle disclosure schedule delivered to CB
concurrently herewith (the "Pinnacle Disclosure Schedule"), Pinnacle hereby
represents and warrants to CB as follows:
3.1 CORPORATE ORGANIZATION.
(a) Pinnacle is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan. Pinnacle has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Pinnacle. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to CB, Pinnacle or the Surviving
Corporation, as the case may be, a material adverse effect on the on-going
business (including the continuing right and ability to conduct said business
and generate earnings therefrom), results of operations or financial condition
of such party and its Subsidiaries taken as a whole, excluding for this purpose
only, however, (i) the payment and/or incurrence of transactional expenses by CB
or Pinnacle in connection with the Merger; (ii) the effects upon Pinnacle to the
extent disclosed by the Pinnacle Disclosure Schedule delivered to CB with this
Agreement (and including the disclosure schedules of Pinnacle and IFC referenced
in the IFC Merger Agreement, copies of which have been delivered by Pinnacle to
CB, but excluding any Material Adverse Effect that may be subsequently disclosed
by a closing date disclosure schedule delivered pursuant to the IFC Merger
Agreement) of the transactions
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contemplated by, and all transactional expenses associated with the transactions
contemplated by, the IFC Merger Agreement, whether or not consummated, the
Pinnacle stock option agreement dated as of November 14, 1996 between Pinnacle
and IFC, and the IFC stock option agreement dated as of November 14, 1996
between Pinnacle and IFC (said stock option agreements being the "Pinnacle/IFC
Stock Option Agreements"), and (iii) the effects upon Pinnacle of the
transactions contemplated by, and all transactional expenses associated with the
transactions, contemplated by, the Purchase and Assumption Agreement executed,
or to be executed, between Shoreline Bank, as Seller, and Pinnacle Bank, as
Buyer, and the Purchase and Assumption Agreement executed, or to be executed,
between Pinnacle Bank, as Seller, and Shoreline Bank, as Buyer (collectively,
the "Branch Office Swap Agreements"), whether or not consummated, in any said
case to the extent having such an effect. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any bank, savings and
loan institution, corporation, partnership, limited liability company, or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes. Pinnacle is duly registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). True and complete copies of the Articles of Incorporation and
Bylaws of Pinnacle, as in effect as of the date of this Agreement, have
previously been made available by Pinnacle to CB.
(b) Each Pinnacle Subsidiary (i) is duly organized and validly
existing as a bank, savings and loan institution, corporation, partnership or
limited liability company under the laws of its jurisdiction of organization,
(ii) is duly qualified to do business and in good standing in all jurisdictions
(whether federal, state, local or foreign) where its ownership or leasing of
property or the conduct of its business requires it to be so qualified and in
which the failure to be so qualified would have a Material Adverse Effect on
Pinnacle, and (iii) has all requisite corporate power and authority to own or
lease its properties and assets and to carry on its business as now conducted.
(c) The minute books of Pinnacle accurately reflect in all material
respects all corporate actions held or taken since January 1, 1994 of its
stockholders and Board of Directors (including committees of the Board of
Directors of Pinnacle).
3.2 CAPITALIZATION.
(a) The authorized capital stock of Pinnacle consists of (i)
15,000,000 shares of Pinnacle Common Stock, of which as of February 26, 1997,
5,977,860 shares were issued and outstanding and no shares were held in
treasury. All of the issued and outstanding shares of Pinnacle Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except pursuant to the
terms of (i) those options to purchase shares of Pinnacle Common Stock issued or
issuable under Pinnacle benefit
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plans (the "Pinnacle Stock Plans"), (ii) the Pinnacle/IFC Stock Option
Agreements, and (iii) the IFC Merger Agreement, Pinnacle does not have and is
not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Pinnacle Common Stock or any other equity securities of
Pinnacle or any securities representing the right to purchase or otherwise
receive any shares of Pinnacle Common Stock or any other equity securities of
Pinnacle. As of February 26, 1997, no shares of Pinnacle Common Stock were
reserved for issuance, except for (i) 494,949 shares reserved for issuance upon
the exercise of stock options pursuant to the Pinnacle Stock Plans and
(ii) shares reserved for issuance pursuant to the Pinnacle/IFC Stock Option
Agreements and the IFC Merger Agreement. Since January 1, 1996, Pinnacle has
not issued any shares of Pinnacle Common Stock or other equity securities of
Pinnacle, or any securities convertible into or exercisable for any shares of
Pinnacle Common Stock or other equity securities of Pinnacle, other than
pursuant to (i) the exercise of employee stock options granted prior to such
date, (ii) the Pinnacle/IFC Stock Option Agreements, and (iii) the IFC Merger
Agreement. The shares of Pinnacle Common Stock to be issued pursuant to the
Merger will be duly authorized and validly issued and, at the Effective Time,
all such shares will be fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof.
(b) Pinnacle owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Pinnacle Subsidiaries, free
and clear of any liens, pledges, charges, encumbrances and security interests
whatsoever ("Liens"), and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No Pinnacle Subsidiary
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary.
3.3 AUTHORITY; NO VIOLATION.
(a) Pinnacle has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of Pinnacle. The Board of Directors of Pinnacle has directed
that this Agreement and the transactions contemplated hereby be submitted to
Pinnacle's stockholders for approval at a meeting of such stockholders and,
except for the adoption of this Agreement by the affirmative vote of the holders
of a majority of the outstanding shares of Pinnacle Common Stock, no other
corporate proceedings on the part of Pinnacle are necessary to approve this
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Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Pinnacle and
(assuming due authorization, execution and delivery by CB) constitutes a valid
and binding obligation of Pinnacle, enforceable against Pinnacle in accordance
with its terms.
(b) Neither the execution and delivery of this Agreement by Pinnacle
nor the consummation by Pinnacle of the transactions contemplated hereby, nor
compliance by Pinnacle with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws of Pinnacle or
(ii) assuming that the consents and approvals referred to in Section 3.4 are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Pinnacle or any of its
Subsidiaries or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Pinnacle or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Pinnacle or
any of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have or be reasonably likely to have
a Material Adverse Effect on Pinnacle or the Surviving Corporation.
3.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of any required applications with the
Office of Thrift Supervision (the "OTS"), (iii) the filing of any required
applications or notices with any state or foreign agencies and approval of such
applications and notices (the "State Approvals"), (iv) the filing with the
Securities and Exchange Commission (the "SEC") of a joint proxy statement in
definitive form relating to the meetings of Pinnacle's and CB's stockholders to
be held in connection with this Agreement and the transactions contemplated
hereby (and, if applicable, the meetings of Pinnacle's and IFC's stockholders to
be held in connection with the IFC Merger Agreement and the transactions
contemplated thereby) (the "Joint Proxy Statement") and the registration
statement on Form S-4 (the "S-4") in which the Joint Proxy Statement will be
included as a prospectus (which Joint Proxy Statement and S-4 may also describe
the transactions contemplated by the IFC Merger Agreement), (v) the filing of
Certificates of Merger with the appropriate authorities of the State of Michigan
pursuant to the MBCA and with the appropriate officials of the State of Delaware
pursuant to the
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DGCL, (vi) any notices to or filings with the Small Business Administration
("SBA"), (vii) any consent, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers or investment
advisers, and federal commodities laws relating to the regulation of futures
commission merchants and the rules and regulations thereunder and of any
applicable industry self-regulatory organization ("SRO"), and the rules of
Nasdaq, or which are required under consumer finance, mortgage banking and other
similar laws, (viii) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in connection
with the issuance of the shares of Pinnacle Common Stock pursuant to this
Agreement, and (ix) the approval of this Agreement by the requisite vote of the
stockholders of Pinnacle and CB, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or with
any third party are necessary in connection with (A) the execution and delivery
by Pinnacle of this Agreement and (B) the consummation by Pinnacle of the Merger
and the other transactions contemplated hereby.
3.5 REPORTS. Pinnacle and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1994 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory authority (each a "State Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the OTS,
(vi) the SEC and (vii) any SRO (collectively "Regulatory Agencies"), and all
other reports and statements required to be filed by them since January 1, 1994,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, any state, or
any Regulatory Agency and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report, registration
or statement or to pay such fees and assessments, either individually or in the
aggregate, will not have a Material Adverse Effect on Pinnacle. Except for
normal examinations conducted by a Regulatory Agency in the regular course of
the business of Pinnacle and its Subsidiaries, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of Pinnacle, investigation
into the business or operations of Pinnacle or any of its Subsidiaries since
January 1, 1994, except where such proceedings or investigation are not likely,
either individually or in the aggregate, to have a Material Adverse Effect on
Pinnacle. There is no unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of Pinnacle or any of its Subsidiaries which, in the reasonable
judgment of Pinnacle, is likely, either individually or in the aggregate, to
have a Material Adverse Effect on Pinnacle.
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3.6 FINANCIAL STATEMENTS. Pinnacle has previously made available to CB
copies of (a) the consolidated balance sheets of Pinnacle and its Subsidiaries
as of December 31, for the fiscal years 1994 and 1995, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1993 through 1995, inclusive, as reported in
Pinnacle's Annual Report on Form 10-K for the fiscal year ended December 31,
1995 filed with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in each case accompanied by the audit report of KPMG Peat
Marwick LLP, independent public accountants with respect to Pinnacle, and (b)
the unaudited consolidated balance sheet of Pinnacle and its Subsidiaries as of
September 30, 1996 and the related unaudited consolidated statements of income,
cash flows and changes in stockholders' equity for the nine-month period then
ended as reported in Pinnacle's Quarterly Report on Form 10-Q for the period
ended September 30, 1996 filed with the SEC under the Exchange Act (the
"Pinnacle September 30, 1996 Form 10-Q"). The December 31, 1995 consolidated
balance sheet of Pinnacle (including the related notes, where applicable) fairly
presents the consolidated financial position of Pinnacle and its Subsidiaries as
of the date thereof, and the other financial statements referred to in this
Section 3.6 (including the related notes, where applicable) fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
position of Pinnacle and its Subsidiaries for the respective fiscal periods or
as of the respective dates therein set forth; each of such statements (including
the related notes, where applicable) comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been prepared in all material respects in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Pinnacle and its Subsidiaries
have been, and are being, maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements. All financial
statements and reports filed by or on behalf of Pinnacle with any Regulatory
Agency shall be furnished to CB as soon as practicable after being filed with
such Regulatory Agency.
3.7 BROKER'S FEES. Neither Pinnacle nor any Pinnacle Subsidiary nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement, other than PL Capital, L.L.C. (a copy of which engagement agreement
has been disclosed by Pinnacle to CB) whose fees, commissions and expenses shall
be paid by Pinnacle.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
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(a) Except as publicly disclosed in reports filed by Pinnacle with
Regulatory Agencies (the "Pinnacle Reports") prior to the date hereof, and
except for the one-time special assessment on institutions holding deposits
subject to assessment by the Savings Association Insurance Fund ("SAIF")
pursuant to the Deposit Insurance Funds Act of 1996 ("Funds Act") intended to
increase SAIF's net worth as of October 1, 1996 to 1.25 percent of SAIF insured
deposits, since December 31, 1995, (i) Pinnacle and its Subsidiaries taken as a
whole have not incurred any material liability, except in the ordinary course of
their business, and (ii) no event has occurred which has had, individually or in
the aggregate, a Material Adverse Effect on Pinnacle or the Surviving
Corporation.
(b) Except as publicly disclosed in Pinnacle Reports filed prior to
the date hereof, since December 31, 1995, Pinnacle and its Subsidiaries have
carried on their respective businesses in all material respects in the ordinary
and usual course.
(c) Since December 31, 1995, neither Pinnacle nor any of its
Subsidiaries has (i) except for such actions as are in the ordinary course of
business consistent with past practice or except as required by applicable law,
(A) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of December 31, 1995, or (B) granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonuses in excess of Pinnacle's 1995
salary and employee benefits expenses, or (ii) suffered any strike, work
stoppage, slowdown, or other labor disturbance which, in the reasonable judgment
of Pinnacle, is likely, either individually or in the aggregate, to have a
Material Adverse Effect on Pinnacle.
3.9 LEGAL PROCEEDINGS.
(a) Neither Pinnacle nor any of its Subsidiaries is a party to any,
and there are no pending or, to the best of Pinnacle's knowledge, threatened,
material legal, administrative, arbitral or other proceedings, claims, actions
or governmental or regulatory investigations of any nature against Pinnacle or
any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement as to which there is a reasonable
probability of an adverse determination and which, if adversely determined,
would, individually or in the aggregate, have a Material Adverse Effect on
Pinnacle.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies, savings and loan holding companies banks, or savings institutions)
imposed upon Pinnacle, any of its Subsidiaries or the assets of Pinnacle or any
of its Subsidiaries which has had, or might reasonably be expected to have, a
Material Adverse Effect on Pinnacle.
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3.10 TAXES AND TAX RETURNS.
(a) Each of Pinnacle and its Subsidiaries has duly filed all federal,
state, county, foreign and, to the best of Pinnacle's knowledge, local
information returns and tax returns required to be filed by it on or prior to
the date hereof (all such returns being accurate and complete in all material
respects) and has duly paid or made provisions for the payment of all Taxes (as
defined in Section 3.10(b)) and other governmental charges which have been
incurred or are due or claimed to be due from it by federal, state, county,
foreign or local taxing authorities on or prior to the date of this Agreement
(including, without limitation, if and to the extent applicable, those due in
respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
which are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges the failure to file, pay or make provision for,
either individually or in the aggregate, are not likely, in the reasonable
judgment of Pinnacle, to have a Material Adverse Effect on Pinnacle. The income
tax returns of Pinnacle and its Subsidiaries have been examined by the Internal
Revenue Service (the "IRS") and any liability with respect thereto has been
satisfied for all years to and including 1993, and either no material
deficiencies were asserted as a result of such examination for which Pinnacle
does not have adequate reserves or all such deficiencies were satisfied. To the
best of Pinnacle's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon Pinnacle or any of its Subsidiaries for
which Pinnacle does not have adequate reserves, nor has Pinnacle or any of its
Subsidiaries given any currently effective waivers extending the statutory
period of limitation applicable to any federal, state, county or local income
tax return for any period. In addition, (A) proper and accurate amounts have
been withheld by Pinnacle and its Subsidiaries from their employees for all
prior periods in compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where failure to
do so would not have a Material Adverse Effect on Pinnacle, (B) federal, state,
county and local returns which are accurate and complete in all material
respects have been filed by Pinnacle and its Subsidiaries for all periods for
which returns were due with respect to income tax withholding, Social Security
and unemployment taxes, except where failure to do so would not have a Material
Adverse Effect on Pinnacle, (C) the amounts shown on such federal, state, local
or county returns to be due and payable have been paid in full or adequate
provision therefor has been included by Pinnacle in its consolidated financial
statements as of December 31, 1995, except where failure to do so would not have
a Material Adverse Effect on Pinnacle and (D) there are no Tax liens upon any
property or assets of Pinnacle or its Subsidiaries except liens for current
taxes not yet due or liens that would not have a Material Adverse Effect on
Pinnacle. Neither Pinnacle nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated
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by Pinnacle or any of its Subsidiaries, and the IRS has not initiated or
proposed any such adjustment or change in accounting method, in either case
which has had or is reasonably likely to have a Material Adverse Effect on
Pinnacle. Except as set forth in the financial statements described in Section
3.6, neither Pinnacle nor any of its Subsidiaries has entered into a transaction
which is being accounted for as an installment obligation under Section 453 of
the Code, which would be reasonably likely to have a Material Adverse Effect on
Pinnacle.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, county, local, and foreign income, excise, gross receipts, gross
income, ad valorem, profits, gains, property, capital, sales, transfer, use,
payroll, employment, severance, withholding, duties, intangibles, franchise,
backup withholding, and other taxes, charges, levies or like assessments
together with all penalties and additions to tax and interest thereon.
3.11 EMPLOYEES.
(a) The Pinnacle Disclosure Schedule sets forth a true and complete
list of each material employee benefit plan, arrangement or agreement that is
maintained as of the date of this Agreement (the "Pinnacle Benefit Plans") by
Pinnacle or any of its Subsidiaries or by any affiliated trade or business,
whether or not incorporated (an "ERISA Affiliate"), all of which together with
Pinnacle would be deemed a "single employer" within the meaning of Section 4001
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Pinnacle has heretofore delivered to CB true and complete copies
of each of the Pinnacle Benefit Plans and certain related documents, including,
but not limited to, (i) the actuarial report for such Pinnacle Benefit Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the Pinnacle Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Pinnacle
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified, (iii) with respect to each Pinnacle Benefit Plan which
is subject to Title IV of ERISA, the present value of accrued benefits under
such Pinnacle Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such Pinnacle
Benefit Plan's actuary with respect to such Pinnacle Benefit Plan, did not, as
of its latest valuation date, exceed the then current value of the assets of
such Pinnacle Benefit Plan allocable to such accrued benefits, (iv) no Pinnacle
Benefit Plan provides benefits, including, without limitation, death or medical
benefits (whether or not insured), with respect to current or former employees
of Pinnacle, its Subsidiaries or any ERISA Affiliate beyond their retirement or
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other termination of service, other than (A) coverage mandated by applicable
law, (B) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of Pinnacle, its Subsidiaries or
the ERISA Affiliates or (D) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) no material liability under
Title IV of ERISA has been incurred by Pinnacle, its Subsidiaries or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Pinnacle, its Subsidiaries or any ERISA Affiliate of
incurring a material liability thereunder, (vi) no Pinnacle Benefit Plan is a
"multiemployer pension plan" (as such term is defined in Section 3(37) of
ERISA), (vii) all contributions or other amounts payable by Pinnacle or its
Subsidiaries as of the Effective Time with respect to each Pinnacle Benefit Plan
in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) neither Pinnacle, its
Subsidiaries nor any ERISA Affiliate has engaged in a transaction in connection
with which Pinnacle, its Subsidiaries or any ERISA Affiliate reasonably could be
subject to either a material civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of
the Code, and (ix) to the best knowledge of Pinnacle there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Pinnacle Benefit Plans or any trusts related
thereto which are, in the reasonable judgment of Pinnacle, likely, either
individually or in the aggregate, to have a Material Adverse Effect on Pinnacle.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
employee of Pinnacle or any of its affiliates from Pinnacle or any of its
affiliates under any Pinnacle Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Pinnacle Benefit Plan or (iii)
result in any acceleration of the time of payment or vesting of any such
benefits to any material extent.
3.12 SEC REPORTS. Pinnacle has previously made available to CB an accurate
and complete copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since January 1, 1994 by Pinnacle
with the SEC pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act (the "Pinnacle Reports") and prior to the date hereof
and (b) communication mailed by Pinnacle to its stockholders since January 1,
1994 and prior to the date hereof, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be
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deemed to modify information as of an earlier date. Since January 1, 1994,
Pinnacle has timely filed all Pinnacle Reports and other documents required to
be filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Pinnacle Reports complied in all material respects with
the published rules and regulations of the SEC with respect thereto.
3.13 COMPLIANCE WITH APPLICABLE LAW. Pinnacle and each of its Subsidiaries
hold all material licenses, franchises, permits and authorizations necessary for
the lawful conduct of their respective businesses under and pursuant to all, and
have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Pinnacle or any
of its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not, individually
or in the aggregate, have a Material Adverse Effect on Pinnacle.
3.14 CERTAIN CONTRACTS.
(a) Neither Pinnacle nor any of its Subsidiaries is a party to or
bound by any contract, arrangement, commitment or understanding (whether written
or oral) (i) with respect to the employment of any directors, officers or
employees other than in the ordinary course of business consistent with past
practice, (ii) which, upon the consummation of the transactions contemplated by
this Agreement will (either alone or upon the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from CB, Pinnacle, the Surviving Corporation, or any of their
respective Subsidiaries to any officer or employee thereof, (iii) which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the Pinnacle Reports, (iv) which
materially restricts the conduct of any line of business by Pinnacle, (v) with
or to a labor union or guild (including any collective bargaining agreement) or
(vi) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. Pinnacle has previously made
available to CB true and correct copies of all employment and deferred
compensation agreements which are in writing and to which Pinnacle is a party.
Each contract, arrangement, commitment or understanding of the type described in
this Section 3.14(a), whether or not set forth in the Pinnacle Disclosure
Schedule, is referred to herein as a "Pinnacle Contract", and neither Pinnacle
nor any of its Subsidiaries knows of, or has received notice of, any violation
of the above by any of the other parties thereto which, individually or in the
aggregate, would have a Material Adverse Effect on Pinnacle.
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(b) (i) Each Pinnacle Contract is valid and binding on Pinnacle or
any of its Subsidiaries, as applicable, and in full force and effect, (ii)
Pinnacle and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each Pinnacle Contract,
except where such noncompliance, individually or in the aggregate, would not
have a Material Adverse Effect on Pinnacle, and (iii) no event or condition
exists which constitutes or, after notice or lapse of time or both, would
constitute, a material default on the part of Pinnacle or any of its
Subsidiaries under any such Pinnacle Contract, except where such default,
individually or in the aggregate, would not have a Material Adverse Effect on
Pinnacle.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Pinnacle nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1994, a recipient of any supervisory letter from, or since January 1,
1994, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the Pinnacle Disclosure Schedule, a "Pinnacle
Regulatory Agreement"), nor has Pinnacle or any of its Subsidiaries been advised
since January 1, 1994, by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any such Regulatory Agreement.
3.16 OTHER ACTIVITIES OF PINNACLE AND ITS SUBSIDIARIES.
(a) Neither Pinnacle nor any of its Subsidiaries that is neither a
bank, a bank operating subsidiary or a bank service corporation, directly or
indirectly, engages in any activity prohibited by the Federal Reserve Board or
the OTS. Without limiting the generality of the foregoing, any equity
investment of Pinnacle and each Subsidiary that is not a bank, a bank operating
subsidiary or a bank service corporation is not prohibited by the Federal
Reserve Board or the OTS.
(b) Each Pinnacle Subsidiary which is a federally insured bank or
savings institution (a "Pinnacle Bank Subsidiary") currently performs all
personal trust, corporate trust and other fiduciary activities ("Trust
Activities") with requisite authority under applicable law of Governmental
Entities and in accordance in all material respects with the agreed-upon terms
of the agreements and instruments governing such Trust Activities, sound
fiduciary principles and applicable law and regulation (specifically including,
but not limited to, Section 9 of Title 12 of the Code of Federal Regulations)
where the failure to so perform would have a Material Adverse Effect on
Pinnacle; there is no investigation or inquiry of a material nature by any
Governmental Entity pending, or to the knowledge of Pinnacle, threatened,
against or affecting
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Pinnacle, or any Significant Subsidiary thereof relating to the compliance by
Pinnacle or any such Significant Subsidiary (as such term is defined in Rule
1-02(w) of Regulation S-X of the SEC) with sound fiduciary principles and
applicable regulations; and except where any such failure would not have a
Material Adverse Effect on Pinnacle, each employee of a Pinnacle Bank Subsidiary
had the authority to act in the capacity in which he or she acted with respect
to Trust Activities, in each case, in which such employee held himself or
herself out as a representative of a Pinnacle Bank Subsidiary; and each Pinnacle
Bank Subsidiary has established policies and procedures for the purpose of
complying with applicable laws of Governmental Entities relating to Trust
Activities, has followed such policies and procedures in all material respects
and has performed appropriate internal audit reviews of, and has engaged
independent accountants to perform audits of, Trust Activities, which audits
since January 1, 1994 have disclosed no material violations of applicable laws
of Governmental Entities or such policies and procedures.
3.17 INVESTMENT SECURITIES. Each of Pinnacle and its Subsidiaries has good
and marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practices to secure
obligations of Pinnacle or any of its Subsidiaries. Such securities are valued
on the books of Pinnacle in accordance with GAAP.
3.18 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of Pinnacle or for the
account of a customer of Pinnacle or one of its Subsidiaries, were entered into
in the ordinary course of business and, to Pinnacle's knowledge, in accordance
with prudent banking practice and applicable rules, regulations and policies of
any Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and binding obligations of Pinnacle
or one of its Subsidiaries enforceable in accordance with their terms (except as
may be limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full force and effect. Pinnacle and each of its
Subsidiaries have duly performed in all material respects all of their material
obligations thereunder to the extent that such obligations to perform have
accrued; and, to Pinnacle's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
3.19 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Pinnacle
included in the Pinnacle September 30, 1996 Form 10-Q and for liabilities
incurred in the ordinary course of business consistent with past practice since
September 30, 1996,
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neither Pinnacle nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on Pinnacle.
3.20 ENVIRONMENTAL LIABILITY. Except as set forth in the Pinnacle
Disclosure Schedule, there are no legal, administrative, arbitral or other
proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that could reasonably be expected to result in the
imposition, on Pinnacle or any of the Pinnacle Subsidiaries of any liability or
obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), pending or threatened against Pinnacle or any of
the Pinnacle Subsidiaries, which liability or obligation could reasonably be
expected to have a Material Adverse Effect on Pinnacle. To the knowledge of
Pinnacle, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any material liability or
obligation that could reasonably be expected to have a Material Adverse Effect
on Pinnacle. Neither Pinnacle nor any of the Pinnacle Subsidiaries is subject
to any agreement, order, judgment, decree, letter or memorandum by or with any
court, governmental authority, regulatory agency or third party imposing any
material liability or obligation that could reasonably be expected to have a
Material Adverse Effect on Pinnacle.
3.21 STATE TAKEOVER LAWS. The Board of Directors of Pinnacle has approved
the transactions contemplated by this Agreement and taken such action such that
the provisions of Chapter 7A of the MBCA and any other provisions of any state
or local "takeover" law applicable to Pinnacle will not apply to this Agreement
or any of the transactions contemplated hereby.
3.22 POOLING OF INTERESTS. Pinnacle has no reason to believe that the
Merger will not qualify as a "pooling of interests" for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CB
Except as disclosed in the CB disclosure schedule delivered to Pinnacle
concurrently herewith (the "CB Disclosure Schedule"), CB hereby represents and
warrants to Pinnacle as follows:
4.1 CORPORATE ORGANIZATION.
(a) CB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. CB has the corporate power
and authority to own or lease all of its
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properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on CB. CB is duly registered as a
savings and loan holding company under the Home Owners' Loan Act ("HOLA"). True
and complete copies of the Certificate of Incorporation and Bylaws of CB, as in
effect as of the date of this Agreement, have previously been made available by
CB to Pinnacle.
(b) Each CB Subsidiary (i) is duly organized and validly existing as
a bank, savings and loan institution, corporation, partnership or limited
liability company under the laws of its jurisdiction of organization, (ii) is
duly qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would have a Material Adverse Effect on CB, and (iii)
has all requisite corporate power and authority to own or lease its properties
and assets and to carry on its business as now conducted.
(c) The minute books of CB accurately reflect in all material
respects all corporate actions held or taken since January 1, 1994 of its
stockholders and Board of Directors (including committees of the Board of
Directors of CB).
4.2 CAPITALIZATION.
(a) The authorized capital stock of CB consists of (i) 500,000 shares
of preferred stock, par value $0.01 per share, none of which as of February 28,
1997 were issued or outstanding; and (ii) 1,500,000 shares of CB Common Stock,
of which as of February 28, 1997, 1,161,997 shares were issued and outstanding
and 122,241 shares were held in treasury. All of the issued and outstanding
shares of CB Common Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. As of the date of this Agreement,
except pursuant to the terms of (i) those options to purchase shares of CB
Common Stock issued or issuable under CB benefit plans (the "CB Stock Plans"),
and (ii) the CB Option Agreement, CB does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of CB Common
Stock or any other equity securities of CB or any securities representing the
right to purchase or otherwise receive any shares of CB Common Stock or any
other equity securities of CB. As of February 28, 1997, no shares of CB Common
Stock were reserved for issuance, except for 94,883 shares reserved for issuance
upon the exercise of stock options pursuant to the CB Stock Plans. Since
January 1, 1996, CB has not issued any shares of CB Common Stock or other
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equity securities of CB, or any securities convertible into or exercisable for
any shares of CB Common Stock or other equity securities of CB, other than
pursuant to the exercise of employee stock options granted prior to such date.
(b) CB owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the CB Subsidiaries, free and clear of any
Liens, and all of such shares are duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No CB Subsidiary has or is bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares of
capital stock or any other equity security of such Subsidiary.
4.3 AUTHORITY; NO VIOLATION.
(a) CB has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of CB. The Board of Directors of CB has directed that this
Agreement and the transactions contemplated hereby be submitted to CB's
stockholders for approval at a meeting of such stockholders and, except for the
adoption of this Agreement by the affirmative vote of the holders of a majority
of the outstanding shares of CB Common Stock, no other corporate proceedings on
the part of CB are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by CB and (assuming due authorization, execution and
delivery by Pinnacle) constitutes a valid and binding obligation of CB,
enforceable against CB in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by CB nor
the consummation by CB of the transactions contemplated hereby, nor compliance
by CB with any of the terms or provisions hereof, will (i) violate any provision
of the Certificate of Incorporation or Bylaws of CB or (ii) assuming that the
consents and approvals referred to in Section 4.4 are duly obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to CB or any of its Subsidiaries or any of their
respective properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of CB or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note,
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bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which CB or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which, either individually or in the aggregate,
will not have or be reasonably likely to have a Material Adverse Effect on CB or
the Surviving Corporation.
4.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the filing of any required
applications with the OTS, (iii) the filing of any required applications or
notices for, and the receipt of, the State Approvals, (iv) the filing with the
SEC of the Joint Proxy Statement and the S-4 in which the Joint Proxy Statement
will be included as a prospectus, (v) the filing of Certificates of Merger with
the appropriate authorities of the State of Michigan pursuant to the MBCA and
with the appropriate officials of the State of Delaware pursuant to the DGCL,
(vi) any notices to or filings with the SBA, (vii) any consent, authorizations,
approvals, filings or exemptions in connection with compliance with the
applicable provisions of federal and state securities laws relating to the
regulation of broker-dealers or investment advisers, and federal commodities
laws relating to the regulation of futures commission merchants and the rules
and regulations thereunder and of any applicable industry SRO, and the rules of
Nasdaq, or which are required under consumer finance, mortgage banking and other
similar laws, (viii) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in connection
with the issuance of the shares of Pinnacle Common Stock pursuant to this
Agreement, and (ix) the approval of this Agreement by the requisite vote of the
stockholders of Pinnacle and CB, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with (A) the execution and delivery by CB of this Agreement and
(B) the consummation by CB of the Merger and the other transactions contemplated
hereby.
4.5 REPORTS. CB and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1994 with any of the Regulatory Agencies, and all other reports and statements
required to be filed by them since January 1, 1994, including, without
limitation, any report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, any state, or any Regulatory Agency
and have paid all fees and assessments due and payable in connection therewith,
except where the failure to file such report, registration or statement or to
pay such fees and assessments, either individually or in the aggregate, will not
have a Material Adverse Effect on CB. Except for normal examinations conducted
by a Regulatory Agency in the regular course of the business of CB and its
Subsidiaries, no Regulatory Agency has
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initiated any proceeding or, to the best knowledge of CB, investigation into the
business or operations of CB or any of its Subsidiaries since January 1, 1994,
except where such proceedings or investigation are not likely, either
individually or in the aggregate, to have a Material Adverse Effect on CB.
There is no unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
CB or any of its Subsidiaries which, in the reasonable judgment of CB, is
likely, either individually or in the aggregate, to have a Material Adverse
Effect on CB.
4.6 FINANCIAL STATEMENTS. CB has previously made available to Pinnacle
copies of (a) the consolidated balance sheets of CB and its Subsidiaries as of
March 31, for the fiscal years 1995 and 1996, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for the
fiscal years 1994 through 1996, inclusive, as reported in CB's Annual Report on
Form 10-K for the fiscal year ended March 31, 1996 filed with the SEC under the
Exchange Act, in each case accompanied by the audit report of ▇▇▇▇▇ ▇▇▇▇▇▇ &
Company, L.L.P., independent public accountants with respect to CB, and (b) the
unaudited consolidated balance sheet of CB and its Subsidiaries as of
December 31, 1996 and the related unaudited consolidated statements of income,
cash flows and changes in stockholders' equity for the nine-month period then
ended as reported in CB's Quarterly Report on Form 10-Q for the period ended
December 31, 1996 filed with the SEC under the Exchange Act (the "CB
December 31, 1996 Form 10-Q"). The March 31, 1996 consolidated balance sheet of
CB (including the related notes, where applicable) fairly presents the
consolidated financial position of CB and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this Section 4.6
(including the related notes, where applicable) fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the consolidated operations and changes in
stockholders' equity and consolidated financial position of CB and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with GAAP
consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of CB and
its Subsidiaries have been, and are being, maintained in all material respects
in accordance with GAAP and any other applicable legal and accounting
requirements. All financial statements and reports filed by or on behalf of CB
with any regulatory agency shall be furnished to Pinnacle as soon as practicable
after being filed with such Regulatory Agency.
4.7 BROKER'S FEES. Neither CB nor any CB Subsidiary nor any of their
respective officers or directors has employed any broker
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or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with the Merger or related transactions contemplated
by this Agreement, other than ▇▇▇▇▇▇▇ ▇▇▇▇ & Company, a division of ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇ & Company") (a copy of which engagement
agreement has been disclosed by CB to Pinnacle) whose fees, commissions and
expenses shall be paid by CB.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as publicly disclosed in CB Reports (as defined in Section
4.12) filed prior to the date hereof, and except for the one-time special
assessment on institutions holding deposits subject to assessment by SAIF
pursuant to the Funds Act intended to increase SAIF's net worth as of October 1,
1996 to 1.25 percent on SAIF deposits, since March 31, 1996, (i) CB and its
Subsidiaries taken as a whole have not incurred any material liability, except
in the ordinary course of their business, and (ii) no event has occurred which
has had, individually or in the aggregate, a Material Adverse Effect on CB or
the Surviving Corporation.
(b) Except as publicly disclosed in CB Reports filed prior to the
date hereof, since March 31, 1996, CB and its Subsidiaries have carried on their
respective businesses in all material respects in the ordinary and usual course.
(c) Since March 31, 1996, neither CB nor any of its Subsidiaries has
(i) except for such actions as are in the ordinary course of business consistent
with past practice or except as required by applicable law, (A) increased the
wages, salaries, compensation, pension, or other fringe benefits or perquisites
payable to any executive officer, employee, or director from the amount thereof
in effect as of March 31, 1996, or (B) granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonuses in excess of CB's 1995 salary and employee benefits expenses,
or (ii) suffered any strike, work stoppage, slowdown, or other labor disturbance
which, in the reasonable judgment of CB, is likely, either individually or in
the aggregate, to have a Material Adverse Effect on CB.
4.9 LEGAL PROCEEDINGS.
(a) Neither CB nor any of its Subsidiaries is a party to any, and
there are no pending or, to the best of CB's knowledge, threatened, material
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against CB or any of its
Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement or the CB Option Agreement as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on CB.
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(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank holding
companies, savings and loan holding companies banks, or savings institutions)
imposed upon CB, any of its Subsidiaries or the assets of CB or any of its
Subsidiaries which has had, or might reasonably be expected to have, a Material
Adverse Effect on CB.
4.10 TAXES AND TAX RETURNS.
(a) Each of CB and its Subsidiaries has duly filed all federal,
state, county, foreign and, to the best of CB's knowledge, local information
returns and tax returns required to be filed by it on or prior to the date
hereof (all such returns being accurate and complete in all material respects)
and has duly paid or made provisions for the payment of all Taxes and other
governmental charges which have been incurred or are due or claimed to be due
from it by federal, state, county, foreign or local taxing authorities on or
prior to the date of this Agreement (including, without limitation, if and to
the extent applicable, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls) other than
(i) Taxes or other charges which are not yet delinquent or are being contested
in good faith and have not been finally determined, or (ii) information returns,
tax returns, Taxes or other governmental charges the failure to file, pay or
make provision for, either individually or in the aggregate, are not likely, in
the reasonable judgment of CB, to have a Material Adverse Effect on CB. The
income tax returns of CB and its Subsidiaries have not been examined by the IRS.
No material deficiencies were asserted as a result of such examination for which
CB does not have adequate reserves or all such deficiencies were satisfied. To
the best of CB's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon CB or any of its Subsidiaries for which
CB does not have adequate reserves, nor has CB or any of its Subsidiaries given
any currently effective waivers extending the statutory period of limitation
applicable to any federal, state, county or local income tax return for any
period. In addition, (A) proper and accurate amounts have been withheld by CB
and its Subsidiaries from their employees for all prior periods in compliance in
all material respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do so would not have a Material
Adverse Effect on CB, (B) federal, state, county and local returns which are
accurate and complete in all material respects have been filed by CB and its
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes, except where failure to
do so would not have a Material Adverse Effect on CB, (C) the amounts shown on
such federal, state, local or county returns to be due and payable have been
paid in full or adequate provision therefor has been included by CB in its
consolidated financial statements as of March 31, 1996, except where failure to
do so would not have a Material Adverse Effect on CB and (D) there are no Tax
liens upon any property or assets of CB or its Subsidiaries except liens for
current taxes not yet due or
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liens that would not have a Material Adverse Effect on CB. Neither CB nor any
of its Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by CB or any of its Subsidiaries, and the IRS has
not initiated or proposed any such adjustment or change in accounting method, in
either case which has had or is reasonably likely to have a Material Adverse
Effect on CB. Except as set forth in the financial statements described in
Section 4.6, neither CB nor any of its Subsidiaries has entered into a
transaction which is being accounted for as an installment obligation under
Section 453 of the Code, which would be reasonably likely to have a Material
Adverse Effect on CB.
(b) Any amount that is reasonably likely to be received (whether in
cash or property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee, officer or director
of CB or any of its affiliates who is a "Disqualified Individual" (as such term
is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or CB Benefit Plan (as defined in Section 4.11(a)) currently in effect should
not be characterized as an "excess parachute payment" (as such term is defined
in Section 280G(b)(1) of the Code).
(c) No disallowance of a deduction under Section 162(m) of the Code
for employee remuneration of any amount paid or payable by CB or any Subsidiary
of CB under any contract, plan, program, arrangement or understanding would be
reasonably likely to have a Material Adverse Effect on CB.
4.11 EMPLOYEES.
(a) The CB Disclosure Schedule sets forth a true and complete list of
each material employee benefit plan, arrangement or agreement that, as of the
date of this Agreement, either is maintained by CB or any of its Subsidiaries or
any ERISA Affiliate, all of which together with CB would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, or if not currently
maintained under which CB or any of its Subsidiaries or any ERISA Affiliate has
any liability to any current or former employees (the "CB Benefit Plans").
(b) CB has heretofore delivered to Pinnacle true and complete copies
of each of the CB Benefit Plans and certain related documents, including, but
not limited to, (i) the actuarial report for such CB Benefit Plan (if
applicable) for each of the last five years, (ii) the most recent determination
letter from the IRS (if applicable) for such CB Benefit Plan, (iii) the annual
reports for the most recent five years (Form 5500 series including all schedules
thereto), (iv) all agreements regarding plan assets with respect to the CB
Benefit Plans, and (v) a copy of the most recent summary plan description (if
applicable) of each CB Benefit Plan, together with any modifications thereto.
To CB's knowledge, such actuarial reports fairly present the financial condition
and
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results of operations of each such CB Benefit Plan in accordance with GAAP.
(c) (i) Each of the CB Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the CB Benefit
Plans intended to be "qualified" within the meaning of Section 401(a) of the
Code is so qualified, (iii) with respect to each CB Benefit Plan which is
subject to Title IV of ERISA, and any "multiple employer pension plan" (as
defined in Section 413(e) of the Internal Revenue Code of 1986, as amended (the
"Code")), the present value of accrued benefits under such CB Benefit Plan,
(A) assuming all benefits are fully vested on a plan termination basis and based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such CB Benefit Plan's actuary with respect to such
CB Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such CB Benefit Plan allocable to such accrued
benefits, and (B) since the last valuation date for each such CB Benefit Plan
and each ERISA Affiliate, no event has occurred or circumstance exists that
would increase the amount of benefits under any such CB Benefit Plan or that
would cause the excess of CB Benefit Plan assets over benefit liabilities (as
defined in Section 4001 of ERISA) to decrease, or the amount by which benefit
liabilities exceed assets to increase, (iv) no reportable event (as defined in
Section 4043 of ERISA and in the regulations issued thereunder) has occurred,
(v) no CB Benefit Plan provides benefits, including, without limitation, death
or medical benefits (whether or not insured), with respect to current or former
employees of CB, its Subsidiaries or any ERISA Affiliate beyond their retirement
or other termination of service, other than (A) coverage mandated by applicable
law, (B) death benefits or retirement benefits under any "employee pension plan"
(as such term is defined in Section 3(2) of ERISA), (C) deferred compensation
benefits accrued as liabilities on the books of CB, its Subsidiaries or the
ERISA Affiliates or (D) benefits the full cost of which is borne by the current
or former employee (or his beneficiary), (vi) no material liability under Title
IV of ERISA has been incurred by CB, its Subsidiaries or any ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to CB, its Subsidiaries or any ERISA Affiliate of incurring a
material liability thereunder, (vii) none of CB, its Subsidiaries or any ERISA
Affiliate (A) has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any multiple employer pension plan or any "multiemployer pension
plan" (as such term is defined in Section 3(37) of ERISA) or (B) has withdrawn
from any multiple employer pension plan or any multiemployer pension plan with
respect to which there is any outstanding liability as of the date of this
Agreement, (viii) the Merger does not present a risk of, and shall not cause, or
could cause, the occurrence of any withdrawal from, or the participation,
termination, reorganization, or insolvency of, any multiple employer pension
plan or any multiemployer pension plan that could result in any liability of
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any of Pinnacle, Pinnacle's Subsidiaries, CB, its Subsidiaries, or any ERISA
Affiliate of any of the foregoing, to any multiple employer pension plan or any
multiemployer pension plan, (ix) none of CB, its Subsidiaries or any ERISA
Affiliate has received notice from any multiple employer pension plan or any
multiemployer pension plan that such multiemployer pension plan is in
reorganization or is insolvent, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of any excise tax, or that
such multiple employer pension plan or such multiemployer pension plan intends
to terminate or has terminated, (x) no multiple employer pension plan and no
multiemployer pension plan to which CB, its Subsidiaries or any ERISA Affiliate
contributes or has contributed is a party to any pending merger or asset or
liability transfer or is subject to any proceeding brought by the Pension
Benefit Guaranty Corporation, (xi) each of CB and its Subsidiaries has the right
to modify and terminate benefits to retirees (other than pensions) with respect
to both retired and active employees, (xii) all contributions or other amounts
payable by CB or its Subsidiaries as of the Effective Time with respect to each
CB Benefit Plan in respect of current or prior plan years have been paid or
accrued in accordance with GAAP and Section 412 of the Code, (xiii) neither CB,
its Subsidiaries nor any ERISA Affiliate has engaged in a transaction in
connection with which CB, its Subsidiaries or any ERISA Affiliate reasonably
could be subject to either a material civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or
4976 of the Code, and (xiv) to the best knowledge of CB there are no pending,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the CB Benefit Plans or any trusts related thereto
which are, in the reasonable judgment of CB, likely, either individually or in
the aggregate, to have a Material Adverse Effect on CB.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or any
employee of CB or any of its affiliates from CB or any of its affiliates under
any CB Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any CB Benefit Plan or (iii) result in any acceleration
of the time of payment or vesting of any such benefits to any material extent.
4.12 SEC REPORTS. CB has previously made available to Pinnacle an accurate
and complete copy of each (a) final registration statement, prospectus, report,
schedule and definitive proxy statement filed since January 1, 1994 by CB with
the SEC pursuant to the Securities Act or the Exchange Act (the "CB Reports")
and prior to the date hereof and (b) communication mailed by CB to its
stockholders since January 1, 1994 and prior to the date hereof, and no such
registration statement, prospectus, report, schedule, proxy statement or
communication contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order
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to make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date shall be deemed
to modify information as of an earlier date. Since January 1, 1994, CB has
timely filed all CB Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
CB Reports complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
4.13 COMPLIANCE WITH APPLICABLE LAW. CB and each of its Subsidiaries hold
all material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to all, and
have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to CB or any of its
Subsidiaries, except where the failure to hold such license, franchise, permit
or authorization or such noncompliance or default would not, individually or in
the aggregate, have a Material Adverse Effect on CB.
4.14 CERTAIN CONTRACTS.
(a) Neither CB nor any of its Subsidiaries is a party to or bound by
any contract, arrangement, commitment or understanding (whether written or oral)
(i) with respect to the employment of any directors, officers or employees other
than in the ordinary course of business consistent with past practice, (ii)
which, upon the consummation of the transactions contemplated by this Agreement
will (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due from
CB, Pinnacle, the Surviving Corporation, or any of their respective Subsidiaries
to any officer or employee thereof, (iii) which is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the CB Reports, (iv) which materially restricts the
conduct of any line of business by CB, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including any CB
Benefit Plan, stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. CB has previously made
available to Pinnacle true and correct copies of all employment and deferred
compensation agreements which are in writing and to which CB is a party. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.14(a), whether or not set forth in the CB Disclosure Schedule, is
referred to herein as a "CB Contract", and neither CB nor any of its
Subsidiaries knows of, or has received notice of, any violation of the above by
any of the
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other parties thereto which, individually or in the aggregate, would have a
Material Adverse Effect on CB.
(b) (i) Each CB Contract is valid and binding on CB or any of its
Subsidiaries, as applicable, and in full force and effect, (ii) CB and each of
its Subsidiaries has in all material respects performed all obligations required
to be performed by it to date under each CB Contract, except where such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect on CB, and (iii) no event or condition exists which constitutes
or, after notice or lapse of time or both, would constitute, a material default
on the part of CB or any of its Subsidiaries under any such CB Contract, except
where such default, individually or in the aggregate, would not have a Material
Adverse Effect on CB.
4.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither CB nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1994, a recipient of any supervisory letter from, or since January 1,
1994, has adopted any board resolutions at the request of any Regulatory Agency
or other Governmental Entity that currently restricts in any material respect
the conduct of its business or that in any material manner relates to its
capital adequacy, its credit policies, its management or its business (each,
whether or not set forth in the CB Disclosure Schedule, a "CB Regulatory
Agreement"), nor has CB or any of its Subsidiaries been advised since January 1,
1994, by any Regulatory Agency or other Governmental Entity that it is
considering issuing or requesting any such Regulatory Agreement.
4.16 OTHER ACTIVITIES OF CB AND ITS SUBSIDIARIES.
(a) Neither CB nor any of its Subsidiaries that is neither a bank, a
bank operating subsidiary or a bank service corporation, directly or indirectly,
engages in any activity prohibited by the OTS. Without limiting the generality
of the foregoing, any equity investment of CB and each Subsidiary that is not a
bank, a bank operating subsidiary or a bank service corporation is not
prohibited by the Federal Reserve Board or the OTS.
(b) No CB Subsidiary which is a federally insured bank or savings
institution (a "CB Bank Subsidiary") currently performs any Trust Activities.
4.17 INVESTMENT SECURITIES. Each of CB and its Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practices to secure
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obligations of CB or any of its Subsidiaries. Such securities are valued on the
books of CB in accordance with GAAP.
4.18 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. All interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of CB or for the account of a
customer of CB or one of its Subsidiaries, were entered into in the ordinary
course of business and, to CB's knowledge, in accordance with prudent banking
practice and applicable rules, regulations and policies of any Regulatory
Authority and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of CB or one of its
Subsidiaries enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies), and are in full force and effect. CB and each of its Subsidiaries
have duly performed in all material respects all of their material obligations
thereunder to the extent that such obligations to perform have accrued; and, to
CB's knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
4.19 UNDISCLOSED LIABILITIES. Except for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of CB included
in the CB December 31, 1996 Form 10-Q and for liabilities incurred in the
ordinary course of business consistent with past practice since December 31,
1996, neither CB nor any of its Subsidiaries has incurred any liability of any
nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on CB.
4.20 ENVIRONMENTAL LIABILITY. Except as set forth in the CB Disclosure
Schedule, there are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, private environmental investigations or
remediation activities or governmental investigations of any nature seeking to
impose, or that could reasonably be expected to result in the imposition, on CB
or any of the CB Subsidiaries of any liability or obligation arising under
common law or under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), pending or threatened against CB or any of the CB Subsidiaries,
which liability or obligation could reasonably be expected to have a Material
Adverse Effect on CB. To the knowledge of CB, there is no reasonable basis for
any such proceeding, claim, action or governmental investigation that would
impose any material liability or obligation that could reasonably be expected
to have a Material Adverse Effect on CB. Neither CB nor any of the CB
Subsidiaries is subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any material liability or obligation
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that could reasonably be expected to have a Material Adverse Effect
on CB.
4.21 STATE TAKEOVER LAWS AND CHARTER PROVISIONS. The Board of Directors of
CB has approved the transactions contemplated by this Agreement and taken such
action such that the provisions of the Certificate of Incorporation of CB
pertaining to certain "Business Combinations" shall not be applicable to the
transactions contemplated by this Agreement, and the provisions of Section 203
of the DGCL and any other provision of any state or local "takeover" law
applicable to CB will not apply to this Agreement or any of the transactions
contemplated hereby.
4.22 POOLING OF INTERESTS. CB has no reason to believe that the Merger
will not qualify as a "pooling of interests" for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement (including the Pinnacle Disclosure
Schedule and the CB Disclosure Schedule), and the IFC Merger Agreement
(including the disclosure schedules of Pinnacle and IFC referenced therein),
Pinnacle shall, and shall cause each of its Subsidiaries to, (a) conduct its
business in the usual, regular and ordinary course consistent with past
practice, (b) use reasonable best efforts to maintain and preserve intact its
business organization, employees and advantageous business relationships and
retain the services of its key officers and key employees; and (c) use
reasonable best efforts to avoid taking any action which would adversely affect
or delay the ability of either Pinnacle or CB to obtain any necessary approvals
of any Regulatory Agency or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and agreements
under this Agreement.
5.2 CONDUCT OF CB BUSINESSES PRIOR TO THE EFFECTIVE TIME. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement (including the CB
Disclosure Schedule), CB shall, and shall cause each of its Subsidiaries to, (a)
conduct its business in the usual, regular and ordinary course consistent with
past practice, (b) use reasonable best efforts to maintain and preserve intact
its business organization, employees and advantageous business relationships and
retain the services of its key officers and key employees, (c) use reasonable
best efforts to avoid taking any action which would adversely affect or delay
the ability of either Pinnacle or CB to obtain any necessary approvals of any
Regulatory Agency or other governmental authority required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement, and (d) in a manner consistent with past practice and prudent banking
standards, charge off or
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establish provisions for all of its loans, receivables and other assets, or
portions thereof, deemed uncollectible by CB in accordance with generally
accepted accounting principles, applicable law or regulation, or classified as
"loss" or as directed by any regulatory authority; and, in a manner consistent
with past practice and prudent banking standards, maintain its allowance for
loan losses at a level which is adequate to provide for all known and reasonably
expected losses on assets outstanding and other inherent risks in its loan
portfolio.
5.3 FORBEARANCES OF PINNACLE. During the period from the date of this
Agreement to the Effective Time, except as set forth in the Pinnacle Disclosure
Schedule and, except as expressly contemplated or permitted by this Agreement or
the IFC Merger Agreement (including the disclosure schedules of Pinnacle and IFC
referenced therein, Pinnacle shall not, without the prior written consent of CB:
(a) take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided, however,
that nothing contained herein shall limit the ability of Pinnacle to exercise
its rights under the IFC Merger Agreement, Pinnacle/IFC Stock Option Agreements
and the CB Option Agreement;
(b) amend its Articles of Incorporation or its Bylaws; or
(c) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.3.
5.4 FORBEARANCES OF CB. During the period from the date of this Agreement
to the Effective Time, except as set forth in the CB Disclosure Schedule and,
except as expressly contemplated or permitted by this Agreement, CB shall not,
and CB shall not permit any of its respective Subsidiaries to, without the prior
written consent of Pinnacle:
(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term indebtedness and indebtedness of
CB or any of its Subsidiaries to CB or any of its Subsidiaries), assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make any
loan or advance (it being understood and agreed that incurrence of indebtedness
in the ordinary course of business shall include, without limitation, the
creation of deposit liabilities, purchases of Federal funds, sales of
certificates of deposit and entering into repurchase agreements); provided,
however, that CB may continue to access lines of credit to fund the Mortgage
Loan Reverse Repurchase Program currently operated by CB Bank in such amounts as
are reasonably necessary to operate that program;
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(b) (i) adjust, split, combine or reclassify any capital stock; (ii)
make, declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock; (iii) grant any stock appreciation rights or grant
any individual, corporation or other entity any right to acquire any shares of
its capital stock (and no further or additional options to purchase stock shall
be granted pursuant to the CB Stock Plans); or (iv) issue any additional shares
of capital stock except pursuant to (A) the exercise of stock options or
warrants outstanding as of the date hereof, or (B) the CB Option Agreement;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets to any individual, corporation or other entity other
than a Subsidiary, or cancel, release or assign any indebtedness to any such
person or any claims held by any such person, except in the ordinary course of
business consistent with past practice or pursuant to contracts or agreements in
force at the date of this Agreement; provided, however, that CB may continue to
pursue workouts with the borrowers of those loans listed in Section 5.4(c) of
the CB Disclosure Schedule and such other loans as CB's management deems prudent
to workout in their reasonable judgement;
(d) except for transactions in the ordinary course of business
consistent with past practice or pursuant to contracts or agreements in force at
the date of this Agreement, make any material investment either by purchase of
stock or securities, contributions to capital, property transfers, or purchase
of any property or assets of any other individual, corporation or other entity
other than a Subsidiary thereof;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or contracts, other
than renewals of contracts and leases without material adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or welfare benefit plan
or agreement or employment agreement with or for the benefit of any employee
other than in the ordinary course of business consistent with past practice or
accelerate the vesting of any stock options or other stock-based compensation;
(g) solicit, encourage or authorize or permit any individual,
corporation or other entity to solicit from any third party any inquiries or
proposals relating to the disposition of its business or assets, or the
acquisition of its voting securities, or the merger or business combination of
it or any of its Subsidiaries
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with any corporation or other entity other than as provided by this Agreement
(and CB shall promptly notify Pinnacle of all of the relevant details relating
to all inquiries and proposals which it may receive relating to any of such
matters);
(h) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(i) take any action that would prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided, however,
that nothing contained herein shall limit the ability of Pinnacle to exercise
its rights under the CB Option Agreement;
(j) amend its Certificate of Incorporation or its Bylaws;
(k) other than in prior consultation with Pinnacle, restructure or
materially change its investment securities portfolio or its gap position,
through purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported;
(l) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time prior to the
Effective Time, or in any of the conditions to the Merger set forth in Article
VII not being satisfied or in a violation of any provision of this Agreement,
except, in every case, as may be required by applicable law; or
(m) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.4.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS.
(a) Pinnacle and CB shall promptly prepare and file with the SEC the
Joint Proxy Statement and Pinnacle shall promptly prepare and file with the SEC
the S-4, in which the Joint Proxy Statement will be included as a prospectus.
Each of Pinnacle and CB shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and Pinnacle and CB shall thereafter mail or deliver the Joint
Proxy Statement to their respective stockholders. Pinnacle shall also use all
reasonable efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement, and CB shall furnish all information concerning CB and the
holders of CB
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Common Stock as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including, without limitation,
the Merger), and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities.
Pinnacle and CB shall have the right to review in advance, and, to the extent
practicable, each will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information relating to
Pinnacle or CB, as the case may be, and any of their respective Subsidiaries,
which appear in any filing made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) Pinnacle and CB shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Joint Proxy Statement, the S-4 or any other statement,
filing, notice or application made by or on behalf of Pinnacle, CB or any of
their respective Subsidiaries to any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement.
(d) Pinnacle and CB shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval will not be obtained or that the receipt of
any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, each of Pinnacle and CB shall, and shall cause each
of their respective Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business
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hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, each of
Pinnacle and CB shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws or federal or state banking laws,
savings and loan or savings association laws (other than reports or documents
which Pinnacle or CB, as the case may be, is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as such party may reasonably request. Neither Pinnacle
nor CB nor any of their respective Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of Pinnacle's or CB's, as the case may be,
customers, jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Each of Pinnacle and CB agrees to keep confidential, and not
divulge to any other party or person (other than employees of, and attorneys,
accountants, financial advisors and other representatives for, any said party),
all non-public documents, information, records and financial statements received
from the other and, in addition, any and all reports, information and financial
information obtained through audits or other reviews conducted pursuant to this
Agreement (unless readily ascertainable from public or published information, or
trade sources, or already known or subsequently developed by a party
independently of any investigation or received from a third party not under an
obligation to the other party to keep such information confidential), and to use
the same only in connection with the transactions contemplated by this
Agreement; and if the transactions contemplated hereby are not consummated for
any reason, each party agrees to promptly return to the other party all written
materials furnished by the other party, and all copies thereof, in connection
with such investigation, and to destroy all documents and records in its
possession containing extracts or summaries of any such non-public information.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
conditions of the other set forth herein.
6.3 STOCKHOLDERS' APPROVALS. Each of Pinnacle and CB shall call a meeting
of its stockholders to be held as soon as reasonably practicable for the purpose
of voting upon the requisite stockholder approvals required in connection with
this Agreement and the Merger, and each shall use its best efforts to cause such
meetings to occur on the same date. Pinnacle and CB will, through their
respective Boards of Directors, subject to their respective
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fiduciary obligations as determined by the respective Boards of Directors,
recommend to their respective stockholders approval of this Agreement and the
Merger.
6.4 LEGAL CONDITIONS TO MERGER. Each of Pinnacle and CB shall, and shall
cause its Subsidiaries to, use their best efforts (a) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by Pinnacle or
CB or any of their respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement.
6.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS.
(a) Each of Pinnacle and CB shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" (for purposes
of Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement, and
prior to the date of the stockholders' meetings called by Pinnacle and CB to
approve this Agreement, a written agreement, in the form of Exhibit C hereto,
providing that such person will not sell, pledge, transfer or otherwise dispose
of any shares of Pinnacle Common Stock or CB Common Stock held by such
"affiliate" and, in the case of the "affiliates" of CB, the shares of Pinnacle
Common Stock to be received by such "affiliate" in the Merger: (i) in the case
of shares of Pinnacle Common Stock to be received by "affiliates" of CB in the
Merger, except in compliance with the applicable provisions of the Securities
Act and the rules and regulations thereunder; and (ii) except to the extent and
under the conditions permitted therein, during the period commencing 30 days
prior to the Merger and ending at the time of the publication of financial
results covering at least 30 days of combined operations of Pinnacle and CB.
(b) The Surviving Corporation shall use its best efforts to publish
as promptly as reasonably practical but in no event later than 90 days after the
end of the first month after the Effective Time in which there are at least 30
days of post-Merger combined operations (which month may be the month in which
the Effective Time occurs), combined sales and net income figures as
contemplated by and in accordance with the terms of SEC Accounting Series
Release No. 135.
6.6 NASDAQ NATIONAL MARKET LISTING. Pinnacle shall cause the shares of
Pinnacle Common Stock to be issued in the Merger to be approved for trading and
reporting on the Nasdaq National Market,
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subject to official notice of issuance, prior to the Effective Time.
6.7 EMPLOYEE BENEFIT PLANS.
(a) From and after the Effective Time, unless otherwise mutually
determined, the employee benefit plans, arrangements and agreements maintained
by Pinnacle (the "Pinnacle Benefit Plans") and CB Benefit Plans in effect as of
the date of this Agreement shall remain in effect with respect to employees of
Pinnacle or CB (or their Subsidiaries) covered by such plans at the Effective
Time until such time as the Surviving Corporation shall, subject to applicable
law, the terms of this Agreement and the terms of such plans, adopt new benefit
plans (the "New Benefit Plans") with respect to employees of the Surviving
Corporation and its Subsidiaries in substantial conformance with the Pinnacle
Benefit Plans in effect as of the Effective Time, in replacement and
substitution for the CB Benefit Plans (including, without limitation, non-
qualified stock option agreements, incentive stock option agreements, the
Employee Stock Ownership Plan maintained by CB Bank (the "CB Bank ESOP"),
deferred compensation plans and agreements, supplemental retirement income
agreements, severance agreements, employment agreements and stock option and
incentive plans benefitting current or former directors, officers or employees
of CB or its Subsidiaries, or their predecessors) which shall be cancelled,
terminated or frozen to the extent permitted by applicable law. Prior to the
Closing Date, Pinnacle shall review, evaluate and analyze the Pinnacle Benefit
Plans and CB Benefit Plans and shall develop and propose appropriate New Benefit
Plans for the employees covered thereby subsequent to the Merger in substantial
conformance with the Pinnacle Benefit Plans in effect as of the Effective Time,
in replacement and substitution for the CB Benefit Plans which shall be
cancelled, terminated or frozen to the extent permitted by applicable law. It
is the intention of Pinnacle and CB that Pinnacle shall develop New Benefit
Plans, effective as of the Effective Time, or as soon thereafter as permitted by
law and practicable, which, among other things, (i) treat similarly situated
employees on a substantially equivalent basis, taking into account all relevant
factors, including, without limitation, duties, geographic location, tenure,
qualifications and abilities, and (ii) do not discriminate between employees of
the Surviving Corporation who were covered by Pinnacle Benefit Plans, on the one
hand, and those covered by CB Benefit Plans, on the other, prior to the
Effective Time, but (iii) with the overall view that the CB Benefit Plans would
be cancelled, terminated or frozen, and replaced by the Pinnacle Benefit Plans
for times following the Effective Time to the extent permitted by applicable
law. The New Benefit Plans (x) shall treat CB's employees who become employees
of Pinnacle ("Continuing Employee") at the Effective Time as new employees, but
shall provide credit, in accordance with the terms of the applicable CB Benefit
Plan, for purposes of vesting and eligibility to participate (but not for
purposes of benefit accrual), for each Continuing Employee's service with CB
immediately prior to the Effective Time, and (y) shall not deprive Continuing
Employees and their covered dependents of any partial or
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complete coverage in connection with any preexisting condition or previous
medical treatments.
(b) Immediately prior to the Effective Time, CB shall make certain
payments to Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. in the amounts set forth
for each said individual, respectively, in the Acknowledgments executed and
delivered by each such individual in the forms attached hereto as Exhibits ▇-▇,
▇-▇, ▇-▇, ▇-▇, ▇-▇ and D-6, respectively (the "Acknowledgments"); and, as set
forth in and provided by said Acknowledgments, in consideration of said
payments, (i) the Employment Agreement dated as of December 23, 1992, as
amended, among CB, CB Bank and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Bank Employment
Agreement"), (ii) each of the Change in Control Agreements dated as of
December 23, 1992 between CB Bank and each of Messrs. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. (the "Bank
Change in Control Agreements"), (iii) the Employment Agreement dated as of
December 23, 1992, as amended, between CB and ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "CB
Employment Agreement"), and (iv) each of the Change in Control Agreements dated
as of December 23, 1992 between CB and each of Messrs. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. (the "CB Change
in Control Agreements"), shall be deemed to be fully satisfied and terminated
for all purposes.
(c) Upon the Effective Time, Pinnacle shall offer to employ on an "at
will" basis each of Messrs. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇, respectively, with certain terms regarding base salary
amounts, insurance coverages and severance benefits as provided in Severance
Agreements with each of said persons in the forms attached hereto as Exhibits ▇-
▇, ▇-▇, E-3 and E-4, respectively (the "Severance Agreements"). In the event
that any said person declines such employment at and following the Effective
Time and does not enter into his respective Severance Agreement with Pinnacle,
CB shall make a severance payment immediately prior to the Effective Time to
said person in the amount specified for said person in his respective
Acknowledgment and Pinnacle shall provide said person with certain continuing
insurance coverages as set forth in and provided by said person's respective
Acknowledgment.
(d) At or immediately prior to the Effective Time, and in connection
with the Merger, CB shall make payments under the Outside Directors' Emeritus
Plan (the "Directors' Emeritus Plan") to those directors of CB and CB Bank who
are eligible to receive benefits thereunder in the amounts set forth in the CB
Disclosure Schedule, which accurately sets forth all such amounts payable
thereunder. CB covenants, represents and warrants to Pinnacle (i) that the CB
Disclosure Schedule includes a true and complete list of all persons eligible to
receive benefits under the Directors' Emeritus Plan and the amount of benefits
payable to each person so listed at the Effective Time and in connection with
the Merger, (ii) that except as otherwise disclosed in such list no one is
entitled to receive any benefits under the Directors' Emeritus
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Plan, (iii) that the payment to each person so listed of the corresponding
amounts so listed shall, in each case, constitute full and complete satisfaction
of all liabilities and obligations of CB, CB Bank and Pinnacle under the
Directors' Emeritus Plan, and (iv) that upon the payment of all such amounts the
Directors' Emeritus Plan shall terminate and be of no further force or effect.
(e) On or prior to the Effective Time, CB will terminate the Board of
Directors Deferred Compensation Plan and shall pay to those directors who have
deferred board fees under such plan such balances as are then held under such
plan for such directors. CB covenants, represents and warrants to Pinnacle
(i) that the CB Disclosure Schedule includes a true and complete list of all
directors who have deferred board fees under such plan and the balances payable
to such persons under such plan, (ii) that except as otherwise disclosed in such
list no one is entitled to receive any benefits under such plan, (iii) that the
payment to each person so listed of the corresponding balance so listed shall,
in each case, constitute full and complete satisfaction of all liabilities and
obligations of CB, CB Bank and Pinnacle under such plan, and (iv) that upon the
payment of all such amounts such plan shall terminate and be of no further force
or effect.
(f) CB shall fund the secular trusts under CB's Supplemental
Retirement Plan (the "CB SERP") with the contributions required for 1997 prior
to the Effective Time, as set forth on the CB Disclosure Schedule. Pinnacle
acknowledges that the "change in control" provisions of the CB SERP will be
triggered by the Merger and that, consequently, CB will be obligated to make
certain payments under the CB SERP at the Effective Time and in the amounts set
forth in the CB Disclosure Schedule, which accurately sets forth all amounts
payable thereunder. CB may contribute to the secular trusts under the CB SERP
the minimum amount of funds necessary to satisfy all amounts so due thereunder
in connection with the Merger as set forth in the CB Disclosure Schedule and
Pinnacle agrees that after the secular trusts under the CB SERP are funded with
all amounts so due, the secular trusts may make payments at the Effective Time
to the officers set forth in the CB Disclosure Schedule in the amounts set forth
in the CB Disclosure Schedule. CB covenants, represents and warrants to
Pinnacle (i) that the CB Disclosure Schedule includes a true and complete list
of all persons eligible to receive benefits under the CB SERP and the benefits
payable to such persons under the CB SERP, (ii) that except as otherwise
disclosed in such list no one is entitled to receive any benefits under the CB
SERP, and (iii) that the payment to each person so listed of the corresponding
benefits so listed shall, in each case, constitute full and complete
satisfaction of all liabilities and obligations of CB, CB Bank and Pinnacle
under the CB SERP.
(g) During the period commencing on the date of this Agreement and
ending on the Effective Time, CB may make contributions to its Employee Stock
Ownership Plan (the "CB Bank ESOP"), including but not limited to amounts
required to make scheduled principal and interest payments with respect to the
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indebtedness of the CB Bank ESOP to CB as of the date of this Agreement during
each calendar quarter pro-rated on a daily basis for partial quarters from the
date of this Agreement through the Effective Time; provided, however, that such
contributions shall be conditioned on their being allowed as a deduction by CB
for federal income tax purposes and shall be returned to CB or its successors to
the extent that any such deduction shall be disallowed. Prior to making any
contribution to the CB Bank ESOP, CB shall deliver to Pinnacle a certified copy
of a resolution adopted by CB's Board of Directors authorizing such
contribution, stating the specific dollar amount thereof, and expressly
providing for the contingency set forth in the preceding sentence. CB shall
take such actions as are necessary to cause the termination of the CB Bank ESOP
immediately prior to the Effective Time, conditioned upon receipt from the
Internal Revenue Service of a determination letter confirming that such
termination does not adversely affect the qualification of the CB Bank ESOP
under sections 401(a) or 409 of the Code. CB shall select such counsel and
other professional advisors as it shall determine to be necessary or appropriate
to advise it in connection with the termination. All assets of the CB Bank ESOP
remaining after the satisfaction of any outstanding indebtedness and the payment
of all expenses, shall, to the extent permissible under applicable law, be
allocated to the individual accounts of eligible participants and distributed to
them as soon as practicable following the later of the date of receipt of a
favorable determination letter or the Effective Time. In the event that such a
favorable determination letter is not obtained, Pinnacle will, to the extent
reasonably practical, maintain the CB Bank ESOP until all plan assets may be
distributed on a tax-qualified basis to participants participating in the CB
Bank ESOP at the Effective Time. In the event that the CB Bank ESOP is not
completely distributed prior to the Effective Time, Pinnacle shall assume
sponsorship of the CB Bank ESOP, and shall appoint a successor plan
administrator who shall be such person as Pinnacle shall select with prior
written approval of CB (which approval shall not be unreasonably withheld), for
the purpose of completing the termination of the ESOP and the distribution of
its assets. Notwithstanding anything to the contrary herein express or applied,
neither Pinnacle nor CB, nor any of their respective Subsidiaries, shall take
any action with respect to the CB Bank ESOP that would result in a violation of
Section 415 of the Code.
(h) CB may, but shall not be required to, terminate its 401(k)
Financial Institutions Thrift Plan (the "CB 401(k) Plan") as of any date prior
to the Effective Time, conditioned upon receipt from the Internal Revenue
Service of a determination letter confirming that such termination does not
adversely affect the qualification of the CB 401(k) Plan under Section 401(a) of
the Code. CB shall select such counsel and other professional advisors as it
shall determine to be necessary or appropriate to advise it and Pinnacle in
connection with the termination. All assets of the CB 401(k) Plan remaining
after the satisfaction of any outstanding indebtedness and the payment of all
expenses, shall, to the extent permissible under applicable law and without
liability to CB or Pinnacle, be allocated to the individual accounts of eligible
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participants and distributed to them as soon as practicable following the later
of the date of receipt of a favorable determination letter or the Effective
Time. In the event that the CB 401(k) Plan is not completely distributed prior
to the Effective Time, at the Effective Time, Pinnacle shall assume sponsorship
of the CB 401(k) Plan, and shall appoint a successor plan administrator who
shall be such person as Pinnacle shall select with the prior written approval of
CB (which approval shall not be unreasonably withheld) for the purpose of
completing the termination of the 401(k) Plan and the distribution of its assets
to the extent permissible under applicable law and without liability to CB or
Pinnacle.
(i) Subject to the requirements of ERISA and the Code, prior to the
Effective Time, CB shall take all action necessary to withdraw from the
Financial Institutions Retirement Fund ("Retirement Fund"), through which CB
currently sponsors its defined benefit pension plan (the "CB Plan"). Such
withdrawal shall take place so that there is no qualified successor plan (as
defined in the Retirement Fund) in existence at any applicable time. If, and
only if, assuming all Retirement Fund benefits are vested on a plan termination
basis and are based upon the most recent actuarial assumptions prepared by the
Retirement Fund's actuary, the total of such benefits exceed, on the withdrawal
date, the then current value of the assets of such Retirement Fund, CB may
increase the CB Plan benefits to the extent of such excess, less (1) any
expenses incurred in connection with the withdrawal from participation in the
Retirement Fund and increasing CB Plan benefits; and (2) the continuing
administrative costs and expenses of retirants' benefits remaining in the
Retirement Fund. Notwithstanding the foregoing or anything to the contrary,
withdrawal from the Retirement Fund shall not occur or be permitted in the event
it would create a liability for which CB or Pinnacle would be responsible.
Prior to withdrawing from the Retirement Fund or increasing CB Plan benefits, CB
shall deliver to Pinnacle a copy of all resolutions adopted by CB's Board to
effect the withdrawal from participation in the Retirement Fund and the
amendment of the CB Plan and for the contingencies outlined in this
Section 6.7(i) and shall deliver to Pinnacle all other documentation relating to
the withdrawal from participation and amendment of the CB Plan.
(j) Subject to and except as otherwise expressly provided in the
provisions of this Section 6.7, the Surviving Corporation agrees to honor in
accordance with their terms all benefits vested as of the Effective Time under
the Pinnacle Benefit Plans or the CB Benefit Plans or under other contracts,
arrangements, commitments, or understandings described in the Pinnacle
Disclosure Schedule and the CB Disclosure Schedule.
(k) Except to the extent otherwise expressly provided in this
Agreement, nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any Pinnacle
Benefit Plans, CB Benefit Plans, or other
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contracts, arrangements, commitments or understandings, in accordance with their
terms and applicable law.
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any individual who is now, or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of CB or any of its Subsidiaries, including any
entity specified in the CB Disclosure Schedule (the "Indemnified Parties"), is,
or is threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of CB, any of the CB Subsidiaries or any entity
specified in the CB Disclosure Schedule, or any of their respective predecessors
or (ii) this Agreement, the Option Agreements or any of the transactions
contemplated hereby or thereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
best efforts to defend against and respond thereto. It is understood and agreed
that after the Effective Time, Pinnacle shall indemnify and hold harmless, as
and to the fullest extent permitted by law (and, as relates to acts or times
prior to the Effective Time, to the fullest extent permitted by law pertaining
to CB or any of its Subsidiaries at such time, including the provisions of
Section 11 of CB's Certificate of Incorporation), each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted of arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Pinnacle; provided, however, that
(A) Pinnacle shall have the right to assume the defense thereof and upon such
assumption Pinnacle shall not be liable to any Indemnified Party for any legal
expenses of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if
Pinnacle elects not to assume such defense or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues which
raise conflicts of interest between Pinnacle and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Pinnacle, and Pinnacle shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (B) Pinnacle shall be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, unless an Indemnified
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Party shall have reasonably concluded, based on the advice of counsel, that in
order to be adequately represented, separate counsel is necessary for such
Indemnified Party, in which case, Pinnacle shall be obligated to pay for such
separate counsel, (C) Pinnacle shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and (D) Pinnacle shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 6.8, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify Pinnacle thereof, provided that
the failure to so notify shall not affect the obligations of Pinnacle under this
Section 6.8 except to the extent such failure to notify materially prejudices
Pinnacle. Pinnacle's obligations under this Section 6.8 continue in full force
and effect for a period of six years from the Effective Time (or the period of
the applicable statute of limitations, if longer); provided, however, that all
rights to indemnification in respect of any claim (a "Claim") asserted or made
within such period shall continue until the final disposition of such Claim.
(b) Pinnacle shall use its best efforts to cause the individuals
serving as officers and directors of CB, its Subsidiaries or any entity
specified in the CB Disclosure Schedule immediately prior to the Effective Time
to be covered for a period of six (6) years from the Effective Time (or the
period of the applicable statute of limitations, if longer) by the directors'
and officers' liability insurance policy maintained by CB or any of the CB
Subsidiaries (provided that Pinnacle may substitute therefor policies of the
same or substantially similar coverage and amounts containing terms and
conditions which are not less advantageous in any material respect 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 Pinnacle be required to expend more
than 150% of the current amount expended by CB or any of the CB Subsidiaries
(the "Insurance Amount") to maintain or procure insurance coverage pursuant
hereto; and provided, further, that if Pinnacle is unable to maintain or obtain
the insurance called for by this Section 6.8(b), Pinnacle shall use its best
efforts to obtain as much comparable insurance as available for the Insurance
Amount.
(c) In the event Pinnacle or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Pinnacle
assume the obligations set forth in this Section 6.8.
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(d) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement (including, without limitation, any merger between a Subsidiary of
Pinnacle and a Subsidiary of CB) or to vest the Surviving Corporation with full
title to all properties, assets, rights, approvals, immunities and franchises of
any of the parties to the Merger, the proper officers and directors of each
party to this Agreement and their respective Subsidiaries shall take all such
necessary action as may be reasonably requested by, and at the sole expense of,
Pinnacle.
6.10 ADVICE OF CHANGES. Pinnacle and CB shall promptly advise the other
party of any change or event having a Material Adverse Effect on it or which it
believes would or would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties or covenants contained herein.
6.11 NEGOTIATIONS WITH OTHER PARTIES. So long as this Agreement remains in
effect and no notice of termination has been given under this Agreement, CB
shall not authorize or knowingly permit any of its representatives, directly or
indirectly, to entertain, solicit or encourage negotiations with any person or
entity or any group of persons or entities (a "Potential Acquiror") concerning
any "Acquisition Proposal" (as hereinafter defined) other than Pinnacle pursuant
to this Agreement. The preceding sentence shall not be construed to prohibit
the Board of Directors of CB from providing, or authorizing or permitting their
respective representatives to provide, to any person making an unsolicited
Acquisition Proposal, any information that is public or published information or
readily ascertainable from such information, or from discussing and considering
any such unsolicited Acquisition Proposal if it is advised in writing by legal
counsel that such actions are advisable under applicable law in order to
discharge their fiduciary duties to stockholders. As used in this Agreement,
"Acquisition Proposal" means any (i) proposal pursuant to which any corporation,
partnership, person or other entity or group, other than Pinnacle, would acquire
or participate in a merger or other business combination involving CB or any of
the CB Bank Subsidiaries, directly or indirectly; (ii) proposal by which any
corporation, partnership, person or other entity or group, other than Pinnacle,
would acquire the right to vote 10% or more of the capital stock of CB or any of
the CB Bank Subsidiaries entitled to vote thereon for the election of directors;
(iii) acquisition of 10% or more of the assets of CB or any of the CB Bank
Subsidiaries, other than in the ordinary course of business; or (iv) acquisition
in excess of 10% of the outstanding capital stock of CB or any of the CB Bank
Subsidiaries, other than as contemplated by this Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVALS. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the respective
requisite affirmative votes of the holders of Pinnacle Common Stock and CB
Common Stock entitled to vote thereon.
(b) NASDAQ LISTING. The shares of Pinnacle Common Stock which shall
be issued to the stockholders of CB upon consummation of the Merger shall have
been authorized for trading and reporting on the Nasdaq National Market, subject
to official notice of issuance.
(c) OTHER APPROVALS. All regulatory approvals required to consummate
the transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the S-4 shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger or any of the other transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, materially restricts or makes illegal consummation of the Merger.
(f) FEDERAL TAX OPINION. Pinnacle and CB each shall have received an
opinion of their respective tax counsel, addressed to Pinnacle or CB, as the
case may be, in form and substance reasonably satisfactory to Pinnacle and CB,
dated as of the Effective Time, substantially to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time:
(i) The Merger will constitute a tax free reorganization under
Section 368(a)(1)(A) of the Code and Pinnacle and CB will each be a party
to the reorganization;
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(ii) No gain or loss will be recognized by Pinnacle or CB as a
result of the Merger;
(iii) No gain or loss will be recognized by the stockholders of CB
who exchange their CB Common Stock solely for Pinnacle Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Pinnacle Common Stock);
(iv) The tax basis of the Pinnacle Common Stock received by
stockholders who exchange all of their CB Common Stock solely for Pinnacle
Common Stock in the Merger will be the same as the tax basis of the CB
Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received); and
(v) The holding period of Pinnacle Common Stock received by
stockholders of CB in the Merger will include the period during which the
shares of CB Common Stock surrendered in exchange therefor were held;
provided, such CB Common Stock was held as a capital asset by the holder of
such CB Common Stock at the Effective Time. In rendering such opinion,
counsel may require and rely upon representations contained in certificates
of officers of Pinnacle, CB and others.
(g) POOLING OF INTERESTS. Pinnacle and CB shall each have received a
letter, effective as of the Effective Time, from their respective independent
accountants addressed to Pinnacle or CB, as the case may be, to the effect that
the Merger will qualify for "pooling of interests" accounting treatment.
7.2 CONDITIONS TO OBLIGATION OF PINNACLE. The obligation of Pinnacle to
effect the Merger is also subject to the satisfaction or waiver by Pinnacle at
or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of CB set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except (i) to the extent
such representations and warranties speak as of an earlier date and (ii) for any
changes to the CB Disclosure Schedule that are disclosed by CB to Pinnacle in
the form of an updated CB disclosure schedule delivered to Pinnacle as of the
Closing Date (the "Closing Date CB Disclosure Schedule")) as of the Closing Date
as though made on and as of the Closing Date. Pinnacle shall have received a
certificate signed on behalf of CB by the Chief Executive Officer and the Chief
Financial Officer of CB to the foregoing effect, and to which any Closing Date
CB Disclosure Schedule shall be appended.
(b) PERFORMANCE OF OBLIGATIONS OF CB. CB shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Pinnacle shall have received a
certificate signed on
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behalf of CB by the Chief Executive Officer and the Chief Financial Officer of
CB to such effect.
(c) ENVIRONMENTAL MATTERS. On or before April 30, 1997, Pinnacle
shall have received, reviewed and approved an assessment report or reports of a
firm or firms of environmental engineers or consultants satisfactory to Pinnacle
concluding, in effect, that there are no present or past conditions relating to
any properties of CB or any of the CB Subsidiaries involving or resulting from a
past or present storage, spill, discharge, leak, emission, injection, escape,
dumping or release of any kind whatsoever of any substance or exposure of any
type of any workplace or to any medium, including, but not limited to, air,
land, surface waters or underground waters, or from any generation,
transportation, treatment, storage or disposal of waste materials, raw materials
or products of any kind or from the storage, use or handling of any hazardous or
toxic materials or other substances.
(d) COMFORT LETTERS. Pinnacle shall have received "comfort" letters
from ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, L.L.P., dated (x) the effective date of the S-4 and
(y) not earlier than five (5) days preceding the Closing Date, in each case
substantially to the effect that: (i) based upon a review (and audit of year-end
statements) of CB's consolidated financial statements dated as of March 31,
1996, September 30, 1996, each subsequent year-end and quarter-end and the most
recent interim month-end consolidated financial statements of CB available prior
to the date of any said letter, nothing has come to their attention that has
caused them to believe that any adjustments would be required to be made to
restate said financial statements in a manner conforming to GAAP; (ii) they are
independent public accountants with respect to CB and the CB Subsidiaries within
the meaning of the Securities Act and the Exchange Act and the applicable
published rules and regulations thereunder; (iii) in their opinion, the audited
consolidated financial statements of CB examined by them and included or
incorporated by reference in the S-4 and the prospectus and reported therein by
them, comply as to form in all material respects with the applicable accounting
requirements of the Exchange Act, the Securities Act and the applicable
published rules and regulations thereunder, as appropriate; (iv) on the basis of
certain procedures and inquiries including a reading of the latest available
unaudited interim consolidated financial statements of CB, inquiries of
officials of CB responsible for financial and accounting matters, and a reading
of the minutes of the Boards of Directors and stockholders of CB and the CB
Subsidiaries (which procedures and inquiries do not constitute an examination
made in accordance with generally accepted auditing standards and would not
necessarily reveal any material changes in the consolidated financial position
or results of operations of CB), nothing came to their attention that caused
them to believe that (A) the unaudited consolidated financial statements of CB
included or incorporated by reference in the S-4 and the prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Exchange Act and the Securities Act, as appropriate, or that
the unaudited consolidated financial statements are not in
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conformity with GAAP applied on a basis consistent with that of the audited
consolidated financial statements or that as of the most recent month-end
preceding the Closing Date there has been any material change in the capital
stock of CB, except as a result of the exercise of employee stock options
granted prior to September 30, 1996, or the CB Subsidiaries or any increase in
consolidated long-term debt of CB or the CB Subsidiaries or any reduction in
consolidated stockholders' equity as compared with the amounts of those items
set out in the audited consolidated statement of condition at March 31, 1996 and
with any subsequent unaudited consolidated statement of condition included or
incorporated by reference in the S-4 and the prospectus, except for changes and
the amount of such reduction, if any, derived from CB's accounts and records,
which are described in such letter or are set forth in the S-4 and the
prospectus, or (B) since March 31, 1996 any dividends were paid on the CB Common
Stock except as described in such letter; and (v) in addition to the limited
procedures referred to in clause (iv) above, they have carried out certain
specified procedures with respect to certain accounts or percentages and
financial information which appear in the S-4 and the prospectus and which have
been reasonably specified by Pinnacle, as described in such letter.
(e) LEGAL OPINION. CB shall have delivered to Pinnacle an opinion,
dated the Closing Date, of counsel for CB, satisfactory to Pinnacle and its
counsel, to the effect set forth on Exhibit F. In rendering their opinion,
counsel to CB may rely on certificates of officers of CB, opinions of other
counsel, the authenticity of all signatures on documents believed to be genuine
and such other evidence as they may deem necessary or desirable.
(f) FAIRNESS OPINION. Pinnacle shall have received the favorable
opinion from PL Capital, L.L.C. or other investment banking advisory firm
satisfactory to Pinnacle in connection with the deliberations of its Board of
Directors approving this Agreement and confirmed at or about the time the S-4 is
declared effective and the Joint Proxy Statement is distributed that
consummation of the Merger transaction contemplated by this Agreement upon the
terms and conditions provided in this Agreement is fair to the stockholders of
Pinnacle from a financial point of view.
(g) NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred since December 31, 1996 which has, or is likely to have, a Materially
Adverse Effect on CB or upon the right of CB or any of the CB Subsidiaries to
conduct, or the continuing successful operation of, any material or significant
part of their businesses as presently conducted, including, without limitation,
the Mortgage Loan Reverse Repurchase Program operated by CB Bank.
(h) NET WORTH. The difference between the total consolidated assets
of CB and the total consolidated liabilities of CB (the "Net Worth") as of the
last day of the calendar month immediately preceding the Closing Date (the
"Determination Date"),
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as determined in accordance with generally accepted accounting principles
consistently applied shall be not less than the Net Worth shown on the
December 31, 1996 consolidated balance sheet of CB, after taking into account
any and all dividends paid or declared or other distributions made, but
excluding any and all costs and expenses incurred by CB with respect to the
Merger transaction through and including the Closing Date. In calculating said
Net Worth it shall be assumed that the value of CB's securities held for sale
is, as of the Determination Date, equivalent to its value on December 31, 1996.
Purchaser shall have received a certificate to said effect signed by appropriate
officers of CB and by ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, L.L.P.
(i) EMPLOYMENT MATTERS. The Acknowledgments described in Section
6.7(b) shall have been executed and delivered by the respective parties
thereto as provided in Section 6.7 of this Agreement.
7.3 CONDITIONS TO OBLIGATION OF CB. The obligation of CB to effect the
Merger is also subject to the satisfaction or waiver by CB at or prior to the
Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Pinnacle set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except (i) to the
extent such representations and warranties speak as of an earlier date and
(ii) for any changes to the Pinnacle Disclosure Schedule that are disclosed by
Pinnacle to CB in the form of an updated Pinnacle disclosure schedule delivered
to CB as of the Closing Date, including copies of updated disclosure schedules
of Pinnacle and IFC delivered with respect to the IFC Merger Agreement (the
"Closing Date Pinnacle Disclosure Schedule")) as of the Closing Date as though
made on and as of the Closing Date. CB shall have received a certificate signed
on behalf of Pinnacle by the Chief Executive Officer and the Chief Financial
Officer of Pinnacle to the foregoing effect, and to which any Closing Date
Pinnacle Disclosure Schedule shall be appended.
(b) PERFORMANCE OF OBLIGATIONS OF PINNACLE. Pinnacle shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and CB shall have
received a certificate signed on behalf of Pinnacle by the Chief Executive
Officer and the Chief Financial Officer of Pinnacle to such effect.
(c) COMFORT LETTERS. CB shall have received "comfort" letters from
KPMG Peat Marwick, L.L.P., dated (x) the effective date of the S-4 and (y) not
earlier than five (5) days preceding the Closing Date, in each case
substantially to the effect that: (i) based upon a review (and audit of year-end
statements) of Pinnacle's consolidated financial statements dated as of
December 31, 1995, September 30, 1996, each subsequent year-end and quarter-end
and the most recent interim month-end consolidated financial statements of
Pinnacle available prior to the date of any
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said letter, nothing has come to their attention that has caused them to believe
that any adjustments would be required to be made to restate said financial
statements in a manner conforming to GAAP, other than such adjustments, if any,
as are specifically noted and disclosed, none of which adjustments shall be
materially adverse; (ii) they are independent public accountants with respect to
Pinnacle and the Pinnacle Subsidiaries within the meaning of the Securities Act
and the Exchange Act and the applicable published rules and regulations
thereunder; (iii) in their opinion, the audited consolidated financial
statements of Pinnacle examined by them and included or incorporated by
reference in the S-4 and the prospectus and reported therein by them, comply as
to form in all material respects with the applicable accounting requirements of
the Exchange Act, the Securities Act and the applicable published rules and
regulations thereunder, as appropriate; (iv) on the basis of certain procedures
and inquiries including a reading of the latest available unaudited interim
consolidated financial statements of Pinnacle, inquiries of officials of
Pinnacle responsible for financial and accounting matters, and a reading of the
minutes of the Boards of Directors and stockholders of Pinnacle and the Pinnacle
Subsidiaries (which procedures and inquiries do not constitute an examination
made in accordance with generally accepted auditing standards and would not
necessarily reveal material adverse changes in the consolidated financial
position or results of operations of Pinnacle), nothing came to their attention
that caused them to believe that the unaudited consolidated financial statements
of Pinnacle included or incorporated by reference in the S-4 and the prospectus
do not comply as to form in all material respects with the applicable accounting
requirements of the Exchange Act and the Securities Act, as appropriate, or that
the unaudited consolidated financial statements are not in conformity with GAAP
applied on a basis consistent with that of the audited consolidated financial
statements or that as of the most recent month-end preceding the Closing Date
there has been any material change in the capital stock of Pinnacle, except as a
result of the exercise of employee stock options granted prior to September 30,
1996, or the Pinnacle Subsidiaries or any increase in consolidated long-term
debt of Pinnacle or the Pinnacle Subsidiaries or any reduction in consolidated
stockholders' equity as compared with the amounts of those items set out in the
audited consolidated statement of condition at December 31, 1995 and with any
subsequent unaudited consolidated statement of condition included or
incorporated by reference in the S-4 and the prospectus, except for changes and
the amount of such reduction, if any, derived from Pinnacle's accounts and
records, which are described in such letter or are set forth in the S-4 and the
prospectus; and (v) in addition to the limited procedures referred to in clause
(iv) above, they have carried out certain specified procedures with respect to
certain accounts or percentages and financial information which appear in the S-
4 and the prospectus and which have been reasonably specified by CB, as
described in such letter.
(d) LEGAL OPINION. Pinnacle shall have delivered to CB an opinion,
dated the Closing Date, of counsel for Pinnacle,
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satisfactory to CB and its counsel, to the effect set forth on Exhibit G. In
rendering their opinion, counsel to Pinnacle may rely on certificates of
officers of Pinnacle, opinions of other counsel, the authenticity of all
signatures on documents believed to be genuine and such other evidence as they
may deem necessary or desirable.
(e) FAIRNESS OPINION. CB shall have received the favorable opinion
from ▇▇▇▇▇▇▇ ▇▇▇▇ & Company in connection with the deliberations of its Board of
Directors approving this Agreement and confirmed at or about the time the S-4 is
declared effective and the Joint Proxy Statement is distributed that
consummation of the Merger transaction contemplated by this Agreement upon the
terms and conditions provided in this Agreement is fair to the stockholders of
CB from a financial point of view.
(f) NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred since December 31, 1996 which has, or is likely to have, a Materially
Adverse Effect on Pinnacle or upon the right of Pinnacle or any of the Pinnacle
Subsidiaries to conduct, or the continuing successful operation of, any material
or significant part of their businesses as presently conducted.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Pinnacle or CB:
(a) by mutual consent of Pinnacle and CB in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either the Board of Directors of Pinnacle or the Board of
Directors of CB if any Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has become
final and nonappealable or any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;
(c) by either the Board of Directors of Pinnacle or the Board of
Directors of CB if the Merger shall not have been consummated on or before the
first anniversary of the date of this Agreement, unless the failure of the
Closing (as defined in Section 9.1) to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein;
(d) by either the Board of Directors of Pinnacle or the Board of
Directors of CB (provided that the terminating party is
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not then in material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach of any of
the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach is not
cured within forty-five (45) days following written notice to the party
committing such breach, or which breach, by its nature or timing, cannot be
cured prior to the Closing Date;
(e) by either Pinnacle or CB if any approval of the stockholders of
Pinnacle or CB required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of stockholders or at any adjournment or postponement thereof;
(f) by either Pinnacle or CB if any of the conditions specified by
Article VII to the obligation of the terminating party have not been satisfied
on the Closing Date (provided that the failure of satisfaction of any said
condition shall not have been caused by the material breach of the terminating
party);
(g) by Pinnacle if the Closing Date CB Disclosure Schedule discloses
any change from the CB Disclosure Schedule which has, or is likely to have, a
Material Adverse Effect on CB or any of the CB Subsidiaries; or by CB if the
Closing Date Pinnacle Disclosure Schedule (including copies of updated
disclosure schedules of Pinnacle and IFC delivered with respect to the IFC
Merger Agreement) discloses any change from the Pinnacle Disclosure Schedule
which has, or is likely to have, a Material Adverse Effect on Pinnacle or any of
the Pinnacle Subsidiaries; or
(h) by CB if prior to the Closing Date there becomes a reasonable
likelihood that the tax free reorganization treatment for federal income tax
purposes accorded to the merger of Maco Bancorp, Inc. with and into Pinnacle
effective December 1, 1995, will not be sustained.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Pinnacle or CB as provided in Section 8.1, this Agreement shall
forthwith become void and have no effect, and none of Pinnacle, CB, any of their
respective Subsidiaries or any of the officers or directors of any of them shall
have any liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that (i) Sections 6.2(b), 8.2, 9.2 and
9.3, shall survive any termination of this Agreement, and (ii) notwithstanding
anything to the contrary contained in this Agreement, neither Pinnacle nor CB
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
8.3 AMENDMENT. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of Pinnacle
or CB;
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provided, however, that after any approval of the transactions contemplated by
this Agreement by the respective stockholders of Pinnacle or CB, there may not
be, without further approval of such stockholders, any amendment of this
Agreement which changes the amount or the form of the consideration to be
delivered to the holders of CB Common Stock hereunder other than as contemplated
by this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the respective stockholders of Pinnacle or CB, there may not be, without further
approval of such stockholders, any extension or waiver of this Agreement or any
portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the holders of CB Common Stock hereunder other
than as contemplated by this Agreement. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
and at a place to be specified by the parties, which shall be no later than five
(5) business days after the satisfaction or waiver (subject to applicable law)
of the latest to occur of the conditions set forth in Article VII hereof, unless
extended by mutual agreement of the parties (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than pursuant to
the CB Option Agreement, which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
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9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense; provided, however, that two-thirds of the costs and
expenses of printing and mailing the Joint Proxy Statement in connection with
the Merger shall be borne by Pinnacle and the balance thereof, up to a maximum
amount not to exceed $25,000, shall be borne by CB.
9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Pinnacle to:
Pinnacle Financial Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Miller, Canfield, Paddock and Stone, P.L.C.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to CB, to:
CB Bancorp, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman, President
and CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained
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in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". No provision of this
Agreement shall be construed to require Pinnacle, CB or any of their respective
Subsidiaries or affiliates to take any action which would violate any applicable
law, rule or regulation.
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to any
applicable conflicts of law.
9.9 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.10 PUBLICITY. Except as otherwise required by applicable law or the
rules of NASDAQ, neither Pinnacle nor CB shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
9.11 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor any
of the rights, interests or obligations shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. Except as otherwise specifically
provided in Section 6.8, this Agreement (including the documents and instruments
referred to herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
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9.12 OTHER TRANSACTIONS. Prior to the date hereof, CB has been provided
with copies of, and CB has reviewed, the IFC Merger Agreement (including the
disclosure schedules of Pinnacle and IFC referenced therein), the Pinnacle/IFC
Stock Option Agreements and the Branch Office Swap Agreements. The entering
into and performance of the IFC Merger Agreement, the Pinnacle/IFC Stock Option
Agreements and/or the Branch Office Swap Agreements, and consummation of the
transactions contemplated thereby, by Pinnacle are hereby ratified, approved and
authorized by CB, and are and shall be deemed to be expressly permitted for all
purposes under this Agreement. Immediately after the execution of this
Agreement, Pinnacle and CB shall execute and deliver the CB Option Agreement.
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IN WITNESS WHEREOF, Pinnacle and CB have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
PINNACLE FINANCIAL SERVICES, INC.
By: _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and
Chief Executive Officer
CB BANCORP, INC.
By: _________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman, President and
Chief Executive Officer
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SCHEDULE OF EXHIBITS
Exhibit A - CB Option Agreement
Exhibit B - Bank Merger Agreement
Exhibit C - Affiliate Letter Agreement
Exhibit D - Forms of Acknowledgments (Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇
and D-6)
Exhibit E - Forms of Severance Agreements (Exhibits E-1, E-2, E-3
and E-4)
Exhibit F - Opinion of CB Counsel
Exhibit G - Opinion of Pinnacle Counsel
EXHIBIT A
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated as of March 1, 1997, between CB BANCORP,
INC., a Delaware corporation ("Issuer"), and PINNACLE FINANCIAL SERVICES, INC.,
a Michigan corporation ("Grantee").
WITNESSETH:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Stock Option Agreement
(the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 115,037
fully paid and nonassessable shares of Issuer's Common Stock, par value $ 0.01
per share ("Common Stock"), at a price of $28.50 per share (the "Option Price");
provided, however, that in no event shall the number of shares of Common Stock
for which this Option is exercisable exceed 9.9% of the Issuer's issued and
outstanding shares of Common Stock without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement) or (ii) redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Agreement,
the number of shares of Common Stock subject to the Option shall be increased or
decreased, as appropriate, so that, after an event described in either clause
(i) or (ii), such number equals 9.9% of the number of shares of Common Stock
then issued and outstanding without giving effect to any shares subject or
issued pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Agreement shall be deemed to authorize Issuer or Grantee to
breach any provision of the Merger Agreement.
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2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 60 days following such Subsequent Triggering Event. Each of
the following shall be an Exercise Termination Event: (i) the Effective Time
(as defined in the Merger Agreement) of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section 8.1(d) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is non-
volitional); or (iii) the passage of 12 months after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event or is a termination by Grantee pursuant to Section 8.1(d) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
is non-volitional) (provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such 12-month period,
the Exercise Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after such
termination). The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the rules and regulations thereunder) other than
Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or the
Board of Directors of Issuer shall have recommended that the stockholders
of Issuer approve or accept any Acquisition Transaction. For purposes of
this Agreement, "Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving Issuer or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease or other acquisition or assumption of all or
a substantial portion of the assets or deposits of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the
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voting power of Issuer, or (z) any substantially similar transaction;
provided, however, that in no event shall any merger, consolidation,
purchase or similar transaction involving only the Issuer and one or more
of its Subsidiaries or involving only any two or more of such Subsidiaries,
be deemed to be an Acquisition Transaction, provided that any such
transaction is not entered into in violation of the terms of the Merger
Agreement; and provided, further, that any transaction described in this
sentence that is expressly permitted by the Merger Agreement shall not be
deemed to be an Acquisition Transaction;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its interest to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by
the Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business (and other than any person who (a) as of the date hereof
beneficially owns 10% or more of the outstanding shares of Common Stock and
(b) would be eligible to use Schedule 13G but for the fact that such person
owns 10% or more of the outstanding shares of Common Stock) shall have
acquired beneficial ownership or the right to acquire beneficial ownership
of 10% or more of the outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction;
(v) After a bona fide proposal by public announcement or written
communication is made by a third party to Issuer or its stockholders to
engage in an Acquisition Transaction, Issuer shall have breached any
covenant or obligation contained in the Merger Agreement and such breach
(x) would entitle Grantee to terminate the Merger Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to
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which Grantee has given its prior written consent, shall have filed an
application or notice with the Federal Reserve Board, the Office of Thrift
Supervision (the "OTS"), or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of 20%
or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided that if prior
notification to or approval of the Federal Reserve Board, the OTS or any other
regulatory agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this
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Section 2, Issuer shall deliver to the Holder a certificate or certificates
representing the number of shares of Common Stock purchased by the Holder and,
if the Option should be exercised in part only, a new Option evidencing the
rights of the Holder thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this Agreement and a
letter agreeing that the Holder will not offer to sell or otherwise dispose of
such shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended (the "1933 Act"),
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy of a
letter from the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that such legend is
not required for purposes of the 1933 Act; (ii) the reference to the provisions
to this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
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(j) Notwithstanding anything to the contrary contained in this
Agreement, the Issuer shall not be obligated to issue shares of Common Stock
upon the exercise of the Option (i) in the absence of any required governmental
or regulatory approval or consent necessary for the Issuer to issue shares or
for the Grantee to exercise the Option, (ii) in the event and for so long as the
Grantee is in material breach of its representations, warranties, covenants or
obligations under the Merger Agreement (unless excused by reason of the material
breach of the Issuer of any of its representations, warranties, covenants or
obligations under the Merger Agreement), or (iii) so long as any injunction or
decree or ruling issued by a court of competent jurisdiction is in effect which
prohibits the sale or delivery of the Common Stock.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), the Change in Bank Control Act of 1978, as
amended, the Home Owners' Loan Act, as amended, the Change in Savings and Loan
Control Act of 1978, as amended, or any other federal or state banking or
savings and loan law, prior approval of or notice to the Federal Reserve Board,
the OTS or to any other federal or state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the
Federal Reserve Board, the OTS or such other federal or state regulatory
authority as they may require) in order to permit the Holder to exercise the
Option and Issuer duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
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satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5. In the event of any change in, or distributions
in respect of, the Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares, distributions on or in respect of the Common Stock that would be
prohibited under the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof and the Option
Price shall be appropriately adjusted in such manner as shall fully preserve the
economic benefits provided hereunder and proper provision shall be made in any
agreement governing any such transaction to provide for such proper adjustment
and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a shelf registration statement under the 1933 Act covering
this Option and any shares issued and issuable pursuant to this Option and shall
use its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if, at
the time of any request by Grantee for registration of the Option or Option
Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere
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with the successful marketing of the shares of Common Stock offered by Issuer,
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; and provided, however, that after
any such required reduction the number of Option Shares to be included in such
offering for the account of the Holder shall constitute at least 25% of the
total number of shares to be sold by the Holder and Issuer in the aggregate; and
provided further, however, that if such reduction occurs, then the Issuer shall
file a registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in secondary offering underwriting
agreements for the Issuer. Upon receiving any request under this Section 6 from
any Holder, Issuer agrees to send a copy thereof to any other person known to
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Grantee as a result of any assignment or division
of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the Market/Offer Price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the "Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase such number of
the Option Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the Market/Offer Price multiplied by
the number of Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any third party pursuant to an agreement with Issuer,
(iii) the highest closing price for shares of Common Stock within the
three-month period immediately preceding the date the Holder gives notice of the
required repurchase of this Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, or (iv) in the event of a sale
of all or a substantial portion of Issuer's assets, the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Issuer as determined by a nationally recognized
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investment banking firm mutually selected by the Holder or the Owner, as the
case may be, on the one hand, and the Issuer, on the other, divided by the
number of shares of Common Stock of Issuer outstanding at the time of such sale.
In determining the Market/Offer Price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking firm
mutually selected by the Holder or Owner, as the case may be, on the one hand,
and the Issuer, on the other.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter deliver
or cause to be delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option Share
Repurchase Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of repurchase pursuant to paragraph (b) of this Section 7 is prohibited
under applicable law or regulation from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, Issuer shall promptly (i) deliver to the Holder
and/or the Owner, as appropriate, that portion of the Option Repurchase Price or
the Option Share Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock Option
Agreement evidencing the right of the Holder to purchase that number of shares
of Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the
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notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock, provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or one of its Subsidiaries, and shall not be the continuing
or surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
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(2) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option
shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 9.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 9.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
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(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to (x) the amount by which (i) the Highest
Closing Price (as hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of Substitute Common Stock
for which the Substitute Option may then be exercised plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed), and
at the request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute Option Issuer
shall repurchase the Substitute Shares at a price (the "Substitute Share
Repurchase Price") equal to (x) the Highest Closing Price multiplied by the
number of Substitute Shares so designated plus (y) Grantee's reasonable Out-of-
Pocket Expenses (to the extent not previously reimbursed). The term "Highest
Closing Price" shall mean the highest closing price for shares of Substitute
Common Stock within the six-month period immediately preceding the date the
Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or, in either case, the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
following a request for repurchase
A-12
pursuant to this Section 9 shall immediately so notify the Substitute Option
Holder and/or the Substitute Share Owner and thereafter deliver or cause to be
delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited from
delivering, within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that if the
Substitute Option Issuer is at any time after delivery of a notice of repurchase
pursuant to subsection (b) of this Section 9 prohibited under applicable law or
regulation from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Common Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2, 6,
7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to
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consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board and/or the OTS approves an
application by Grantee if required under applicable law to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the purpose of conducting a widely dispersed
public distribution on Grantee's behalf, or (iv) any other manner approved by
the Federal Reserve Board or the OTS, as applicable.
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14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to cause the
shares of Common Stock issuable hereunder to be approved for trading and
reporting on the Nasdaq National Market, upon official notice of issuance and
applying to the Federal Reserve Board and/or the OTS if required under
applicable law for approval to acquire the shares issuable hereunder.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in the
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire or
to require Issuer to repurchase such lesser number of shares as may be
permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, 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, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
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21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
CB BANCORP, INC.
By: _________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman, President and
Chief Executive Officer
PINNACLE FINANCIAL SERVICES, INC.
By: _________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
A-17
EXHIBIT B
AGREEMENT AND PLAN OF MERGER AND CONSOLIDATION
COMMUNITY BANK WITH AND INTO
PINNACLE BANK
UNDER THE CHARTER OF PINNACLE BANK
THIS AGREEMENT AND PLAN OF MERGER AND CONSOLIDATION (the "Plan of Merger"),
dated as of ________________, 1997, by and between the Board of Directors of
COMMUNITY BANK, a federal savings bank ("CB Bank"), with its principal office at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and the Board of Directors
of PINNACLE BANK, a Michigan banking corporation ("Pinnacle Bank"), with its
principal office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, CB Bancorp, Inc., a Delaware corporation and the parent
corporation of CB Bank, and Pinnacle Financial Services, Inc., a Michigan
corporation and the parent corporation of Pinnacle Bank, have entered into an
Agreement and Plan of Merger dated as of ______________, 1997 (the
"Reorganization Agreement"), providing for, among other things, the merger and
consolidation of CB Bank with and into, and under the charter of, Pinnacle Bank,
with Pinnacle Bank being the Surviving Bank; and
WHEREAS, Pinnacle Bank and CB Bank have determined that it is in their
mutual best interests to merge, with CB Bank being merged and consolidated with
and into, and under the charter of, Pinnacle Bank, with Pinnacle Bank being the
Surviving Bank.
NOW, THEREFORE, the plan for the consummation of such merger and
consolidation (the "Bank Merger") is as follows:
FIRST: The Consolidating Banks are Pinnacle Bank and CB Bank. Upon the
Bank Merger Effective Time (as hereinafter defined), CB Bank shall be merged and
consolidated with and into, and under the charter of, Pinnacle Bank and Pinnacle
Bank shall be the Surviving Bank.
SECOND: As to each Consolidating Bank, the designation and number of
outstanding shares of capital stock are as follows:
A. The total authorized capital stock of Pinnacle Bank immediately
prior to the Bank Merger Effective Time shall be _____ shares of common
stock, par value $_____ per share (the "Pinnacle Bank Common Stock"), all
of which immediately prior to the Bank Merger Effective Time shall be
issued and outstanding. All of the shares of Pinnacle Bank Common Stock
which are issued and outstanding as of the effective record date may be
voted at any meeting of the shareholder of
B-1
Pinnacle Bank at which this Plan of Merger is submitted for approval.
B. The total authorized capital stock of CB Bank immediately prior
to the Bank Merger Effective Time shall be _____ shares of common stock,
par value $_____ per share (the "CB Bank Common Stock"), all of which
immediately prior to the Bank Merger Effective Time shall be issued and
outstanding. All of the shares of CB Bank Common Stock which are issued
and outstanding as of the effective record date may be voted at any meeting
of the shareholder of CB Bank at which this Plan of Merger is submitted for
approval.
THIRD: The terms and conditions of the Bank Merger are as follows:
A. The Bank Merger shall be consummated and become effective,
subject to the terms and conditions of the Reorganization Agreement and
this Plan of Merger, following the Effective Time (defined herein as in the
Reorganization Agreement), which shall be held as provided in Section 1.13
of the Reorganization Agreement following, among other things, the
requisite approval of the transactions contemplated hereby by the
shareholders of CB Bank and Pinnacle Bank, and the receipt of all requisite
approvals, consents and licenses of all regulatory and other governmental
authorities for consummation of the Bank Merger. The time of ______, local
time, on the day on which such Bank Merger shall become effective is herein
referred to as the "Bank Merger Effective Time".
B. At the Bank Merger Effective Time:
l. The Articles of Incorporation of Pinnacle Bank shall
thereupon be and constitute the Articles of Incorporation of the Surviving
Bank until the same shall thereafter be altered or amended in accordance
with applicable law.
2. The Bylaws of Pinnacle Bank shall thereupon be and
constitute the Bylaws of the Surviving Bank until the same shall thereafter
be altered, amended or repealed.
3. The directors of the Surviving Bank shall be the following
persons: ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, and ____________.
4. The officers of the Surviving Bank shall be those persons
who are appointed by the Board of Directors of the Surviving Bank promptly
following the Bank Merger Effective Time.
B-2
C. From and after the Bank Merger Effective Time, the separate
existence of the Consolidating Banks shall cease and be merged and
consolidated into one, the Surviving Bank, which shall possess all of the
rights, privileges, powers and franchises as well of a public as of a
private nature, and shall be subject to all of the restrictions,
disabilities and duties of each of the Consolidating Banks so merged and
consolidated; and all and singular the rights, privileges, powers and
franchises of each of the Consolidating Banks, and all property, real,
personal and mixed, and all debts due to either of said Consolidating Banks
on whatever account, as well for stock subscriptions as all other things in
action or belonging to each of the Consolidating Banks shall, without the
necessity of delivery of any deeds, bills of sale or other instruments of
transfer, be vested in the Surviving Bank resulting from the Bank Merger;
and all property, rights, privileges, powers and franchises, and all and
every other interest shall be thereafter as effectually the property of the
Surviving Bank as they were of the several and respective Consolidating
Banks and the title to any real estate vested by deed or otherwise, in
either of such Consolidating Banks, shall not revert or be in any way
impaired by reason of the Bank Merger.
D. From and after the Bank Merger Effective Time, all rights of
creditors and all liens upon any property of either of the Consolidating
Banks shall be preserved unimpaired and all debts, liabilities and duties
of the respective Consolidating Banks shall thenceforth attach to said
Surviving Bank, and may be enforced against the Surviving Bank to the same
extent as if said debts, liabilities and duties had been incurred or
contracted by it.
E. From and after the Bank Merger Effective Time, any action or
proceeding, whether civil, criminal or administrative, pending by or
against either Consolidating Bank shall be prosecuted as if the Bank Merger
had not taken place, or the Surviving Bank may be substituted in such
action or proceeding in place of the Consolidating Bank as a party thereto.
F. At the Bank Merger Effective Time, each share of Pinnacle Bank
Common Stock authorized, issued and outstanding immediately prior to the
Bank Merger Effective Time shall by virtue of the Bank Merger and without
any action on the part of either of the Consolidating Banks, the Surviving
Bank, or the holder thereof automatically be converted into one (1) share
of common stock, par value $_____ per share, of the Surviving Bank.
G. At the Bank Merger Effective Time, each share of CB Bank Common
Stock authorized, issued and outstanding immediately prior to the Bank
Merger Effective Time shall by virtue of the Bank Merger and without any
action on the part of either of the Consolidating Banks, the Surviving Bank
or
B-3
the holder thereof automatically be cancelled, and such cancelled share of
CB Bank Common Stock shall not be converted into any shares of capital
stock or other securities of the Surviving Bank or any other entity.
H. On the Bank Merger Effective Time, the holder of the certificate
representing shares of Pinnacle Bank Common Stock outstanding at such time
shall cease to have any rights with respect to such shares and its sole
rights shall be with respect to the shares of common stock, par value
$_____ per share, of the Surviving Bank into which its shares of Pinnacle
Bank Common Stock have been converted by the Bank Merger as hereinabove
provided.
I. As of the Bank Merger Effective Time, each certificate evidencing
shares of Pinnacle Bank Common Stock which have been converted into shares
of common stock, par value $_____ per share, of the Surviving Bank pursuant
to Subsection F of this Article Third shall by virtue of the Bank Merger
and without any action on the part of either of the Consolidating Banks,
the Surviving Bank, or the holder thereof automatically be deemed to
constitute, and shall at all times thereafter constitute, a certificate
representing the number of shares of common stock, par value $_____ per
share, of the Surviving Bank into which the shares of Pinnacle Bank Common
Stock have been converted by the Bank Merger as hereinabove provided. As
of said Bank Merger Effective Time, and at all times thereafter, each
certificate which represented issued and outstanding shares of Pinnacle
Bank Common Stock immediately prior to the Bank Merger Effective Time shall
be deemed for all purposes to evidence ownership of the shares of common
stock, par value $_____ per share, of the Surviving Bank into which such
shares of Pinnacle Bank Common Stock have been converted pursuant to the
Bank Merger.
FOURTH: This Plan of Merger will be terminated and the Bank Merger
abandoned automatically in the event of the termination or abandonment of the
Reorganization Agreement pursuant to the terms and conditions thereof.
FIFTH: Any of the terms or conditions of this Plan of Merger may be
waived at any time by whichever of the Consolidating Banks is, or the
shareholders of which are, entitled to the benefit thereof by action taken by
the Board of Directors of such Consolidating Banks or may be amended or modified
in whole or in any part at any time prior to or subsequent to the vote(s) of the
shareholder of CB Bank and/or the shareholder of Pinnacle Bank hereon by an
agreement in writing after authorization by the Boards of Directors of the
Consolidating Banks; PROVIDED, HOWEVER, that such action shall be taken by the
Board of Directors of CB Bank and/or the Board of Directors of Pinnacle Bank
only if, in the judgment of such Board, such waiver or such amendment or
modification will not have a materially adverse effect on the benefits intended
under this Plan of Merger to the shareholder of CB Bank or the shareholder of
Pinnacle Bank, as the case may be.
B-4
SIXTH: If at any time the Surviving Bank shall consider or be advised
that any further assignments, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Surviving Bank the title
to any property or rights of the Consolidating Banks or otherwise to carry out
the provisions hereof, the proper officers of the Consolidating Banks
immediately prior to the Bank Merger Effective Time shall execute and deliver
any and all proper deeds, assignments and assurances in law, and do all things
necessary or proper to vest, perfect or confirm title to such property or rights
in the Surviving Bank and otherwise to carry out the provisions hereof.
IN WITNESS WHEREOF, the respective Boards of Directors, Presidents and
Secretaries of Community Bank and Pinnacle Bank have executed this Agreement and
Plan of Merger under the respective seals thereof, all as of the day and year
first above written.
Attest: COMMUNITY BANK
By _________________________ By____________________________
Secretary President
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
B-5
The signatories above being not less than a majority of all of the Directors of
Community Bank.
[Seal of Bank]
Attest: PINNACLE BANK
By _________________________ By _____________________________
Secretary President
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
____________________________ ________________________________
The signatories above being not less than a majority of all of the Directors of
Pinnacle Bank.
[Seal of Bank]
STATE OF INDIANA )
: ss.
COUNTY OF _________ )
On this ____ day of ___________, 199_, before me, a Notary Public for the
State and County aforesaid, personally came ________________, as President, and
________________, as Secretary, of Community Bank, a federal savings bank, and
each in his said capacity acknowledged the foregoing instrument to be the act
and
B-6
deed of said corporation and the seal affixed thereto to be its seal; and came
also ____________, ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, and ____________, being not less than a majority of the entire
Board of Directors of said corporation, and each of them acknowledged said
instrument to be the act and deed of said corporation and of himself/herself as
director thereof.
WITNESS my official seal and signature this day and year aforesaid.
(Seal of Notary) ______________________________
, Notary Public
_____________ County, Indiana
My Commission Expires: _______
STATE OF MICHIGAN )
: ss.
COUNTY OF _________ )
On this ____ day of ____________, 199_, before me, a Notary Public for the
State and County aforesaid, personally came ________________, as President, and
___________________, as Secretary, of Pinnacle Bank, a Michigan banking
corporation, and each in his said capacity acknowledged the foregoing instrument
to be the act and deed of said corporation and the seal affixed thereto to be
its seal; and came also ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, ____________, ____________, ____________, ____________,
____________, ____________, and ____________, being not less than a majority of
the entire Board of Directors of said corporation, and each of them acknowledged
said instrument to be the act and deed of said corporation and of
himself/herself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
(Seal of Notary) ______________________________
, Notary Public
_____________ County, Michigan
My Commission Expires: _______
B-7
EXHIBIT C
AFFILIATE'S AGREEMENT
Pinnacle Financial Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and
CB Bancorp, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger dated as of
_____________, 1997 (the "Merger Agreement"), by and between Pinnacle Financial
Services, Inc., a Michigan corporation ("Pinnacle"), and CB Bancorp, Inc., a
Delaware corporation ("CB"), which Merger Agreement provides for the merger (the
"Merger") of CB with and into Pinnacle in a transaction in which, among other
things, shares of common stock, $0.01 par value per share, of CB ("CB Common
Stock"), will be converted into the right to receive shares of common stock,
without par value, of Pinnacle ("Pinnacle Common Stock"), as more fully provided
therein.
The undersigned has been informed (i) that the Merger constitutes a
transaction covered by Rule 145 under the Securities Act of 1933, as amended
(the "Securities Act"); (ii) that the undersigned may be deemed to be an
"affiliate" of CB and/or Pinnacle within the meaning of Rule 145; and (iii) that
the shares of CB Common Stock and/or Pinnacle Common Stock held by the
undersigned, and, if applicable, the shares of Pinnacle Common Stock which the
undersigned may acquire in connection with the Merger, may only be disposed of
in conformity with the provisions hereof. In addition, the undersigned has been
informed that the treatment of the Merger as a pooling-of-interests for
financial accounting purposes is dependent upon the accuracy of certain of the
representations and the compliance with certain of the agreements set forth
herein.
The capitalized terms used and not defined herein shall have the meaning
set forth in the Merger Agreement.
1. The undersigned, after inquiry of any agent with discretionary power
to transfer either the undersigned's shares of CB Common Stock or the
undersigned's shares of Pinnacle Common Stock, represents, warrants and
covenants to Pinnacle as follows:
(a) The undersigned has full power to execute this Affiliate's
Agreement and to make the representations,
C-1
warranties and agreements herein, and to perform his or her obligations
hereunder.
(b) The undersigned is currently the owner of that number of shares
of CB Common Stock set forth in Schedule 1 hereto (the "CB Shares") and has
held the CB Shares at all times since ___________, 1997, unless otherwise
set forth in Schedule 1.
(c) The undersigned is currently the owner of that number of shares
of Pinnacle Common Stock set forth in Schedule 2 hereto (the "Pinnacle
Shares") and has held the Pinnacle Shares at all times since ___________,
1997, unless otherwise set forth in Schedule 2.
(d) The undersigned, for a period beginning not less than thirty (30)
days prior to the Effective Time and ending on the date Pinnacle publishes
financial results covering a period of at least thirty (30) days of
combined operations of CB and Pinnacle following the Effective Time, shall
not sell, transfer or otherwise dispose of, or reduce the undersigned's
risk of ownership or investment in, (i) any of the CB Shares, (ii) any of
the Pinnacle Shares or (iii) any shares of Pinnacle Common Stock received
or acquired by the undersigned (A) pursuant to, or in connection with, the
Merger, or (B) pursuant to, or in connection with, the exercise of any
option, warrant or other instrument (collectively, the "Additional Pinnacle
Shares"); PROVIDED, HOWEVER, that the undersigned may (i) exchange the CB
Shares for shares of Pinnacle Common Stock in the Merger, and (ii) may make
bona fide gifts or distributions without consideration so long as the
recipients thereof agree not to sell, transfer or otherwise dispose of such
Pinnacle Common Stock or CB Common Stock, as the case may be, except as
provided herein.
(e) The undersigned will not sell, transfer or dispose of any shares
of Pinnacle Common Stock which the undersigned may receive or acquire in
connection with the Merger or any securities which may be paid as a
dividend or otherwise distributed thereon or with respect thereto or issued
or delivered in exchange or substitution therefor (all such shares and
other securities herein sometimes collectively referred to as "Restricted
Securities"), or any option, right or other interest with respect to any
Restricted Securities, unless such sale, transfer or disposition is
effected (i) pursuant to an exemption from the registration requirements of
the Securities Act as provided in Section 3 hereof, or (ii) pursuant to an
effective registration statement under, and in compliance with, the
Securities Act; PROVIDED, HOWEVER, that the undersigned may make bona fide
gifts or distributions without consideration so long as the recipients
thereof agree not to sell, transfer or otherwise dispose of such Pinnacle
Common Stock except as provided herein.
C-2
(f) The undersigned has not engaged in a Sale of any shares of CB
Common Stock at any time since ___________, 1997, unless otherwise set
forth in Schedule 1.
(g) The undersigned has not engaged in a Sale of any shares of
Pinnacle Common Stock at any time since ___________, 1997, unless otherwise
set forth in Schedule 2.
(h) The undersigned is not aware of or participating in any plan or
intention on the part of the shareholders of CB (a "Plan") to engage in a
sale, exchange, transfer, redemption or reduction in any way of the
undersigned's risk of ownership by short sale or otherwise, or other
disposition, directly or indirectly (such actions being collectively
referred to as a "Sale"), of Pinnacle Common Stock to be received by
shareholders of CB pursuant to the Merger that will reduce ownership of
Pinnacle Common Stock by such shareholders of CB to a number of shares
having, in the aggregate, a value at the Effective Date of Merger of less
than 50% of the total fair market value of the CB Common Stock outstanding
immediately prior to the Merger. For purposes of this representation,
shares of the CB Common Stock disposed of in a Sale prior to the Merger and
in contemplation of the Merger will be considered to be outstanding stock
of CB immediately prior to the Merger that was exchanged for Pinnacle
Common Stock in the Merger and then disposed of pursuant to a Plan.
2. Pinnacle agrees to use its best efforts to file all reports and data
with the Securities and Exchange Commission (the "Commission") necessary to
permit the undersigned to sell Restricted Securities pursuant to, and otherwise
in conformity with, Rule 145(d) under the Securities Act.
3. Pinnacle acknowledges that the provisions of Section 1(e) of this
Affiliate's Agreement will be satisfied as to any Sale by the undersigned of
Restricted Securities pursuant to Rule 145(d) under the Securities Act, as
evidenced by a broker's letter stating that the requirements of Rule 145 have
been met; PROVIDED, HOWEVER, that if counsel for Pinnacle or CB reasonably
believes that the provisions of Rule 145 have not been complied with, or if
requested by Pinnacle in connection with a proposed disposition, the undersigned
shall furnish to Pinnacle a copy of a "no action" letter or other communication
from the Commission or an opinion of counsel in form and substance satisfactory
to Pinnacle, and its counsel, to the effect that the applicable provisions of
paragraphs (c), (e), (f) and (g) of Rule 144 under the Securities Act have been
complied with or that the disposition may be otherwise effected in the manner
requested in compliance with the Securities Act.
4. The undersigned also understands that stop transfer instructions may
be given to the transfer agent for Pinnacle with respect to the Restricted
Securities, and that there may be placed on the certificates evidencing the
Restricted Securities, or any substitutions therefor, a legend stating in
substance:
C-3
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MUST BE SOLD PURSUANT TO
RULE 145(d) PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
PROVISIONS OF THE SECURITIES ACT OF 1933, OR UNDER SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, INASMUCH AS THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED IN A TRANSACTION DESCRIBED IN
RULE 145 BY PERSONS WHO MAY BE DEEMED TO BE "AFFILIATES" OF A PARTY TO THE
TRANSACTION AND THE RESALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. CURRENTLY, UNDER
RULE 145(d)(2), THIS RESTRICTION LAPSES ON __________________, 199__ (TWO (2)
YEARS FROM CLOSING) UNLESS THE HOLDER OF THIS CERTIFICATE IS AN "AFFILIATE" OF
THE ISSUER AT THE TIME OF SUCH SALE. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND PINNACLE
FINANCIAL SERVICES, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF PINNACLE FINANCIAL SERVICES, INC."
Pinnacle agrees that such stop transfer instructions and legend will be
promptly removed if the provisions of Section 3 are complied with, or if the
undersigned causes to be delivered to Pinnacle a letter from the staff of the
Commission or an opinion of counsel in form and substance satisfactory to
Pinnacle, and its counsel, to the effect that such legend is not required for
purposes of the Securities Act.
5. This Affiliate's Agreement shall be binding upon and enforceable
against administrators, executors, representatives, heirs, legatees and divisees
of the undersigned and any pledgee holding any Restricted Securities of the
undersigned as collateral.
[THIS SPACE INTENTIONALLY LEFT BLANK]
C-4
IN WITNESS WHEREOF, the undersigned has executed the foregoing Affiliate's
Agreement as of the _________ day of _________________, 1997.
Very truly yours,
___________________________________
AGREED TO AND ACCEPTED:
Pinnacle Financial Services, Inc.
______________________________
By:
Title:
C-5
SCHEDULE 1
NUMBER OF CB SHARES OWNED
CB Shares Sold Since ___________, 1997
(Description of each transaction should include date
of sale, number of shares sold and sale price.)
----------------------------------------------------
SCHEDULE 2
NUMBER OF PINNACLE SHARES OWNED
Pinnacle Shares Sold Since ___________, 1997
(Description of each transaction should include date
of sale, number of shares sold and sale price.)
----------------------------------------------------
EXHIBITS ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇ AND D-6
FORMS OF "ACKNOWLEDGMENTS"
D-1
EXHIBIT D-1
ACKNOWLEDGMENT
1. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, acknowledge that provided that either (a)
Pinnacle Financial Services, Inc. ("Pinnacle") enters into a severance agreement
with me at the effective time of merger (the "Effective Time") between CB
Bancorp, Inc. and Pinnacle providing for a severance benefit as set forth in the
Severance Agreement attached as Exhibit E-1 to the Agreement and Plan of Merger
dated as of March 1, 1997 between Pinnacle and CB Bancorp, Inc. ("Agreement"),
or (b) CB Bancorp, Inc. pays to me the severance amount described in paragraph 2
hereof and Pinnacle abides by the provisions of the last sentence of paragraph 3
hereof, the payment of $341,000 will constitute full settlement of any and all
rights which I may have pursuant to the Employment Agreements between CB
Bancorp, Inc. and me and Community Bank, a Federal Savings Bank and me, dated as
of December 23, 1992, as amended from time to time (the "Employment
Agreements").
2. I further acknowledge that if I choose not to accept employment at and
following the Effective Time with Pinnacle and do not enter into a severance
agreement with Pinnacle as set forth in Paragraph 1 hereof. CB Bancorp, Inc.
will pay me an amount of severance pay equal to $563,794 at the Effective
Time plus required gross-up.
3. I further acknowledge that if I choose to accept employment at and
following the Effective Time with Pinnacle and enter into a severance agreement
with Pinnacle, I will be provided at no cost to me with the life, medical,
dental and disability benefits provided by Pinnacle to other Pinnacle employees
and that upon my termination of service with Pinnacle, Pinnacle will cause to be
continued life, medical, dental and disability coverage substantially identical
to the coverage maintained by Pinnacle for me prior to my termination of service
with Pinnacle for a period of (36) thirty-six months following my termination of
service with Pinnacle. I further acknowledge that in the event I do not enter
into a severance agreement with Pinnacle, Pinnacle will at no cost to me cause
to be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained for me immediately prior to the Effective
Time, for 36 months from the Effective Time.
4. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ for myself and my heirs, executors,
administrators, successors and assigns, hereby irrevocably and unconditionally
release and forever discharge Pinnacle, CB Bancorp, Inc and Community Bank
("each a Releasee") of and from all actions, causes of action, suits, debts,
dues sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses! damages,
judgments, executions, claims, and demands whatsoever, in law, admiralty or
equity, which against the Releasee, I or my heirs, executors, administrators,
successors or assigns ever had, now have or hereafter can, shall or may have by
reason of any matter, cause or thing whatsoever for payment of any
D1-1
amount owed pursuant to the Employment Agreements over and above the amounts
described herein under paragraphs l, 2 and 3.
IN WITNESS WHEREOF, I have executed this Instrument this ____ day of
________________, 1997.
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇-▇
EXHIBIT D-2
ACKNOWLEDGMENT
1. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, acknowledge that provided that either (a) Pinnacle
Financial Services, Inc. ("Pinnacle") enters into a severance agreement with me
at the effective time of merger (the "Effective Time") between CB Bancorp, Inc
and Pinnacle providing for a severance benefit as set forth in the Severance
Agreement attached as Exhibit E-2 to the Agreement and Plan of Merger dated as
of March 1, 1997 between Pinnacle and CB Bancorp, Inc. ("Agreement"), or (b) CB
Bancorp, Inc. pays to me the severance amount described in paragraph 2 hereof
and Pinnacle abides by the provisions of the last sentence of paragraph 3
hereof, the payment of $96,000 will constitute full settlement of any and all
rights which I may have pursuant to the Change in Control Agreements between CB
Bancorp, Inc. and me and Community Bank, a Federal Savings Bank and me, dated as
of December 23, 1992, as amended from time to time (the "Change in Control
Agreements").
2. I further acknowledge that if I choose not to accept employment at and
following the Effective Time with Pinnacle and do not enter into a severance
agreement with Pinnacle as set forth in Paragraph 1 hereof, CB Bancorp, Inc.
will pay me an amount of severance pay equal to $181,860 at the Effective Time.
3. I further acknowledge that if I choose to accept employment at and
following the Effective Time with Pinnacle and enter into a severance agreement
with Pinnacle, I will be provided at no cost to me with the life, medical,
dental and disability benefits provided by Pinnacle to other Pinnacle employees
and that upon my termination of service with Pinnacle, Pinnacle will cause to be
continued life, medical, dental and disability coverage substantially identical
to the coverage maintained by Pinnacle for me prior to my termination of service
with Pinnacle for a period of (24) twenty-four months following my termination
of service with Pinnacle. I further acknowledge that in the event I do not enter
into a severance agreement with Pinnacle, Pinnacle will at no cost to me cause
to be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained for me immediately prior to the Effective
Time, as defined in the Agreement for 24 months from the Effective Time.
4. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ for myself and my heirs, executors, administrators,
successors and assigns, hereby irrevocably and unconditionally release and
forever discharge Pinnacle, CB Bancorp, Inc and Community Bank ("each a
Releasee") of and from all actions, causes of action, suits, debts, dues sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against the Releasee, I or my heirs, executors, administrators, successors or
assigns ever had, now have or hereafter can, shall or may have by reason of any
matter, cause or thing whatsoever for payment of any amount owed
D2-1
pursuant to the Change in Control Agreements over and above the amounts
described herein under paragraphs 1, 2 and 3.
IN WITNESS WHEREOF, I have executed this Instrument this ____ day of
_____________, 1997.
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
D2-2
EXHIBIT D-3
ACKNOWLEDGMENT
1. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, acknowledge that provided that either (a)
Pinnacle Financial Services, Inc. ("Pinnacle") enters into a severance agreement
with me at the effective time of merger (the "Effective Time") between CB
Bancorp, Inc. and Pinnacle providing for a severance benefit as set forth in the
Severance Agreement attached as Exhibit E-3 to the Agreement and Plan of Merger
dated as of March 1, 1997 between Pinnacle and CB Bancorp, Inc. ("Agreement"),
or (b) CB Bancorp, Inc. pays to me the severance amount described in paragraph 2
hereof and Pinnacle abides by the provisions of the last sentence of paragraph 3
hereof, the payment of $98,000 will constitute full settlement of any and all
rights which I may have pursuant to the Change in Control Agreements between CB
Bancorp, Inc. and me and Community Bank, a Federal Savings Bank and me, dated as
of December 23, 1992, as amended from time to time (the "Change in Control
Agreements").
2. I further acknowledge that if I choose not to accept employment at and
following the Effective Time with Pinnacle and do not enter into a severance
agreement with Pinnacle as set forth in Paragraph 1 hereof, CB Bancorp, Inc.
will pay me an amount of severance pay equal to $168,022 at the Effective Time.
3. I further acknowledge that if I choose to accept employment at and
following the Effective Time with Pinnacle and enter into a severance agreement
with Pinnacle, I will be provided at no cost to me with the life, medical,
dental and disability benefits provided by Pinnacle to other Pinnacle employees
and that upon my termination of service with Pinnacle, Pinnacle will cause to be
continued life, medical, dental and disability coverage substantially identical
to the coverage maintained by Pinnacle for me prior to my termination of service
with Pinnacle for a period of (24) twenty-four months following my termination
of service with Pinnacle. I further acknowledge that in the event I do not enter
into a severance agreement with Pinnacle, Pinnacle will at no cost to me cause
to be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained for me immediately prior to the Effective
Time, for 24 months from the Effective Time.
4. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ for myself and my heirs, executors,
administrators, successors and assigns, hereby irrevocably and unconditionally
release and forever discharge Pinnacle, CB Bancorp, Inc and Community Bank
("each a Releasee") of and from all actions, causes of action, suits, debts,
dues sums of money, accounts, reckonings, bonds. bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims, and demands whatsoever, in law, admiralty or
equity, which against the Releasee, I or my heirs, executors, administrators,
successors or assigns ever had, now have or hereafter can, shall or may have by
reason of any matter, cause or thing whatsoever for payment of any amount owed
D3-1
pursuant to the Change in Control Agreements over and above the amounts
described herein under paragraphs 1, 2 and 3.
IN WITNESS WHEREOF, I have executed this Instrument this ____ day of
______________, 1997.
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇-▇
EXHIBIT D-4
ACKNOWLEDGMENT
1. I, ▇▇▇▇▇ ▇. ▇▇▇▇, acknowledge that provided that either (a) Pinnacle
Financial Services, Inc. ("Pinnacle") enters into a severance agreement with me
at the effective time of merger (the "Effective Time") between CB Bancorp, Inc.
and Pinnacle providing for a severance benefit as set forth in the Severance
Agreement attached as Exhibit E-4 to the Agreement and Plan of Merger dated as
of March 1, 1997 between Pinnacle and CB Bancorp, Inc. ("Agreement"), or (b) CB
Bancorp, Inc. pays to me the severance amount described in paragraph 2 hereof
and Pinnacle abides by the provisions of the last sentence of paragraph 3
hereof, the payment of $135,400 will constitute full settlement of any and all
rights which I may have pursuant to the Change in Control Agreements between CB
Bancorp, Inc. and me and Community Bank, a Federal Savings Bank and me, dated as
of December 23, 1992, as amended from time to time (the "Change in Control
Agreements").
2. I further acknowledge that if I choose not to accept employment at and
following the Effective Time with Pinnacle and do not enter into a severance
agreement with Pinnacle as set forth in Paragraph 1 hereof, CB Bancorp, Inc.
will pay me an amount of severance pay equal to $230,434 at the Effective Time.
3. I further acknowledge that if I choose to accept employment at and
following the Effective Time with Pinnacle and enter into a severance agreement
with Pinnacle, I will be provided at no cost to me with the life, medical,
dental and disability benefits provided by Pinnacle to other Pinnacle employees
and that upon my termination of service with Pinnacle, Pinnacle will cause to be
continued life, medical, dental and disability coverage substantially identical
to the coverage maintained by Pinnacle for me prior to my termination of service
with Pinnacle for a period of (24) twenty-four months following my termination
of service with Pinnacle. I further acknowledge that in the event I do not enter
into a severance agreement with Pinnacle, Pinnacle will at no cost to me cause
to be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained for me immediately prior to the Effective
Time, for 24 months from the Effective Time.
4. I, ▇▇▇▇▇ ▇. ▇▇▇▇ for myself and my heirs, executors, administrators,
successors and assigns, hereby irrevocably and unconditionally release and
forever discharge Pinnacle, CB Bancorp, Inc and Community Bank ("each a
Releasee") of and from all actions? causes of action, suits, debts, dues sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against the Releasee, I or my heirs, executors, administrators, successors or
assigns ever had, now have or hereafter can, shall or may have by reason of any
matter, cause or thing whatsoever for payment of any amount owed
D4-1
pursuant to the Change in Control Agreements over and above the amounts
described herein under paragraphs 1, 2 and 3.
IN WITNESS WHEREOF, I have executed this Instrument this ____ day of
_______________, 1997.
_______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
D4-2
EXHIBIT D-5
ACKNOWLEDGMENT
1. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., acknowledge that the payment of
$113,964, will constitute full settlement of any and all rights which I may have
pursuant to the Change in Control Agreements between CB Bancorp, Inc. and me and
Community Bank, a Federal Savings Bank ("Bank"), and me, dated as of December
23, 1992, as amended from time to time (the "Change in Control Agreements").
2. I further acknowledge that upon my termination of service with CB
Bancorp. Inc. and the Bank immediately prior to the effective time of merger
(the "Effective Time") between CB Bancorp, Inc. and Pinnacle Financial Services,
Inc. ("Pinnacle"), or termination of service with Pinnacle following the
Effective Time, Pinnacle will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained for me by
CB Bancorp, Inc. or Pinnacle, as the case may be, prior to my termination of
service with CB Bancorp, Inc. or Pinnacle, as the case may be, for a period of
(24) twenty-four months following my termination of service.
3. I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., for myself and my heirs, executors,
administrators, successors and assigns, hereby irrevocably and unconditionally
release and forever discharge Pinnacle, CB Bancorp, Inc. and Community Bank
("each a Releasee") of and from all actions, causes of action, suits, debts,
dues sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, executions, claims, and demands whatsoever, in law, admiralty or
equity, which against the Releasee, I or my heirs, executors, administrators,
successors or assigns ever had, now have or hereafter can, shall or may have by
reason of any matter, cause or thing whatsoever for payment of any amount owed
pursuant to the Change in Control Agreements over and above the amounts
described herein under paragraphs 1 and 2.
IN WITNESS WHEREOF, I have executed this Instrument this ____ day of
_________________, 1997.
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
D5-1
EXHIBIT D-6
ACKNOWLEDGMENT
1. I, ▇▇▇▇▇ ▇. ▇▇▇▇▇, acknowledge that the payment of $87,152, will
constitute full settlement of any and all rights which I may have pursuant to
the Change in Control Agreements between CB Bancorp, Inc. and me and Community
Bank, a Federal Savings Bank ("Bank"), and me, dated as of December 23, 1992, as
amended from time to time (the "Change in Control Agreements").
2. I further acknowledge that upon my termination of service with CB
Bancorp, Inc. and the Bank immediately prior to the effective time of merger
(the "Effective Time") between CB Bancorp, Inc. and Pinnacle Financial Services,
Inc. ("Pinnacle"), or termination of service with Pinnacle following the
Effective Time, Pinnacle will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained for me by
CB Bancorp, Inc. or Pinnacle, as the case may be, prior to my termination of
service with CB Bancorp, Inc. or Pinnacle, as the case may be, for a period of
(24) twenty-four months following my termination of service.
3. I, ▇▇▇▇▇ ▇. ▇▇▇▇▇, for myself and my heirs, executors, administrators,
successors and assigns, hereby irrevocably and unconditionally release and
forever discharge Pinnacle, CB Bancorp, Inc. and Community Bank ("each a
Releasee") of and from all actions, causes of action, suits, debts, dues sums of
money, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims, and demands whatsoever, in law, admiralty or equity, which
against the Releasee, I or my heirs, executors, administrators, successors or
assigns ever had, now have or hereafter can, shall or may have by reason of any
matter, cause or thing whatsoever for payment of any amount owed pursuant to the
Change in Control Agreements over and above the amounts described herein under
paragraphs 1 and 2.
IN WITNESS WHEREOF, I have executed this Instrument this ____ day of
__________________, 1997.
_______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
D6-1
EXHIBITS E-1, E-2, E-3 AND E-4
FORMS OF "SEVERANCE AGREEMENTS"
E-1
EXHIBIT E-1
SEVERANCE AGREEMENT
This AGREEMENT is made effective as of ______________, 1997, by and between
Pinnacle Financial Services, Inc. ("Pinnacle"), a corporation organized under
the laws of Michigan, with its principal administrative office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Executive").
WHEREAS, Pinnacle will acquire CB Bancorp, Inc. ("CB Bancorp"), and its
wholly owned subsidiary, Community Bank, a Federal Savings Bank ("Bank")
(collectively the "Acquired Entities"), in accordance with and pursuant to the
Agreement and Plan of Merger by and between Pinnacle and CB Bancorp, dated as of
the 1st day of March, 1997 (the "Merger Agreement");
WHEREAS, the employment of the Executive with the Acquired Entities will be
terminated upon the effective time of the acquisition of such entities by
Pinnacle; and
WHEREAS, Pinnacle desires to provide assurance in the form of certain
severance benefits offered hereunder to Executive in order to retain the
services of the Executive based on his knowledge of the Acquired Entities, his
expertise in the field of financial management and his knowledge of the savings
and loan industry, including the mortgage repurchase program operated by CB
Bancorp and the Bank prior to the Effective Date, as defined in the Merger
Agreement;
THEREFORE, in consideration of the mutual promises set forth herein, it is
agreed by and between Pinnacle and Executive:
1. DESCRIPTION OF SERVICES.
Following the consummation of the Merger, Executive shall serve as an
employee of Pinnacle and/or its affiliates, in such capacity as may be mutually
agreed by Pinnacle and Executive. As an employee of Pinnacle and/or its
affiliates, Executive will provide Pinnacle and its affiliates with the benefit
of his special knowledge, skill, contacts and business experience in the savings
and loan industry, particularly as his knowledge relates to the business
previously conducted by CB Bancorp and the Bank.
2. TERMS.
(a) Executive shall be employed as an "at will " employee, and said
employment may be terminated at any time, whether for "Cause" or any reason
whatsoever, subject to the provisions of Sections 4 and 5 of this Agreement.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts
E1-1
to the faithful performance of his duties hereunder including activities and
services related to the organization, operation and management of Pinnacle and
participation in community and civic organizations; provided, however, that,
with the approval of the Board, as evidenced by a resolution of such Board, from
time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with Pinnacle, or materially affect the performance of Executive's
duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1 and 2. Pinnacle
shall pay Executive as compensation a salary of not less than $175,000 per year
("Base Salary"). Such Base Salary shall be payable bi-monthly. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Any increase in base salary shall then become the "Base
Salary" for purposes of this Agreement. In addition to the Base Salary provided
in this Section 3(a), Pinnacle shall provide Executive at no cost to Executive
with all such other benefits as are provided uniformly to permanent full-time
employees of Pinnacle and principal subsidiary, Pinnacle Bank. Base Salary
shall include any amounts of compensation deferred by Executive under a
qualified plan maintained by Pinnacle or Pinnacle Bank.
(b) Executive will be entitled to participate in or receive benefits under
any employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, medical coverage or any other employee benefit plan
or arrangement made available by Pinnacle in the future to its employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive will be entitled to
incentive compensation and bonuses as provided in any plan of Pinnacle in which
Executive is eligible to participate. Nothing paid to the Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean termination of service with Pinnacle for any reason,
including the termination by Pinnacle of Executive's full-time employment
hereunder, and termination upon the retirement, resignation or death of
Executive; provided that an Event of Termination shall not include termination
of Executive by Pinnacle for Cause as defined in Section 5.
E1-2
(b) Upon the occurrence of an Event of Termination, Pinnacle shall pay
Executive, or in the event of his death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay or liquidated damages, or both
an amount equal to the greater of $223,000 or one times Executive's then current
Base Salary and any bonuses paid or to be paid during the year of termination.
At the election of the Executive, which election is to be made within thirty
(30) days of the Date of Termination following an Event of Termination, such
payment may be made in a lump sum or paid in equal monthly installments during
the thirty-six (36) months following the Executive's termination of service. In
the event that no election is made, payment to the Executive will be made on a
monthly basis in equal installments over thirty-six (36) months.
(c) Upon an Event of Termination, Pinnacle will, at no cost to Executive,
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by Pinnacle and its
affiliates for Executive prior to his termination of service. Such coverage and
payments shall cease upon the expiration of thirty-six (36) months.
5. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" in relation to a termination
of employment shall mean termination because of the Executive's intentional or
persistent failure to perform stated duties of a material nature, personal
dishonesty which results in material loss to Pinnacle or one of its affiliates,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order which results in material loss
to Pinnacle or one of its affiliates or any material breach of this Agreement.
For purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of Pinnacle or its affiliates. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a Notice of Termination which shall include a copy of
a resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board (excluding the Executive for purposes of said
computation) at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying termination for Cause
and specifying the particulars thereof in detail. The Executive shall not have
the right to receive any payment under Section 4 of this Agreement, or any other
compensation or other benefits for any period after Termination for Cause.
6. NOTICE.
(a) Any purported termination by Pinnacle or by Executive shall be
communicated by Notice of Termination to the other party
E1-3
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
7. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 7 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to Pinnacle as may reasonably be required by Pinnacle in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
8. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of Pinnacle.
9. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and Pinnacle and their respective successors and assigns.
10. MODIFICATION.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
11. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and
E1-4
part thereof shall to the full extent consistent with law continue in full force
and effect.
12. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of Pinnacle, in accordance with the rules of
the American Arbitration Association then in effect.
16. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by Pinnacle, if Executive is successful on the merits pursuant to
a legal judgment, arbitration or settlement.
17. SUCCESSOR TO PINNACLE.
Pinnacle shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of Pinnacle, expressly and
unconditionally to assume and agree to perform Pinnacle's obligations under this
Agreement, in the same manner and to the same extent that Pinnacle would be
required to perform if no such succession or assignment had taken place.
18. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of Michigan
applicable to contracts made and wholly to be performed within such state.
E1-5
IN WITNESS WHEREOF, the parties have executed this Agreement on
_________, 1997.
Pinnacle Financial Services, Inc.
By:______________________________
[Name]
[Title]
_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive
E1-6
EXHIBIT E-2
SEVERANCE AGREEMENT
This AGREEMENT is made effective as of ________________, 1997, by and
between Pinnacle Financial Services, Inc. ("Pinnacle"), a corporation organized
under the laws of Michigan, with its principal administrative office at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
"Executive").
WHEREAS, Pinnacle will acquire CB Bancorp, Inc. ("CB Bancorp"), and its
wholly owned subsidiary, Community Bank, a Federal Savings Bank ("Bank")
(collectively the "Acquired Entities"), in accordance with and pursuant to the
Agreement and Plan of Merger by and between Pinnacle and CB Bancorp, dated as of
the 1st day of March, 1997 (the "Merger Agreement");
WHEREAS, the employment of the Executive with the Acquired Entities will be
terminated upon the effective time of the acquisition of such entities by
Pinnacle; and
WHEREAS, Pinnacle desires to provide assurance in the form of certain
severance benefits offered hereunder to Executive in order to retain the
services of the Executive based on his knowledge of the Acquired Entities, his
expertise in the field of financial management and his knowledge of the savings
and loan industry, including the mortgage repurchase program operated by CB
Bancorp and the Bank prior to the Effective Date, as defined in the Merger
Agreement;
THEREFORE, in consideration of the mutual promises set forth herein, it is
agreed by and between Pinnacle and Executive:
1. DESCRIPTION OF SERVICES.
Following the consummation of the Merger, Executive shall serve as an
employee of Pinnacle and/or its affiliates, in such capacity as may be mutually
agreed by Pinnacle and Executive. As an employee of Pinnacle and/or its
affiliates, Executive will provide Pinnacle and its affiliates with the benefit
of his special knowledge, skill, contacts and business experience in the savings
and loan industry, particularly as his knowledge relates to the business
previously conducted by CB Bancorp and the Bank.
2. TERMS.
(a) Executive shall be employed as an "at will " employee, and said
employment may be terminated at any time,whether for "Cause" or any reason
whatsoever, subject to the provisions of Sections 4 and 5 of this Agreement.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote
E2-1
substantially all his business time, attention, skill, and efforts to the
faithful performance of his duties hereunder including activities and services
related to the organization, operation and management of Pinnacle and
participation in community and civic organizations; provided, however, that,
with the approval of the Board, as evidenced by a resolution of such Board, from
time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with Pinnacle, or materially affect the performance of Executive's
duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1 and 2. Pinnacle
shall pay Executive as compensation a salary of not less than $53,000 per year
("Base Salary"). Such Base Salary shall be payable bi-monthly. During the period
of this Agreement, Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Any increase in base salary shall then become the "Base Salary" for
purposes of this Agreement. In addition to the Base Salary provided in this
Section 3(a), Pinnacle shall provide Executive at no cost to Executive with all
such other benefits as are provided uniformly to permanent full-time employees
of Pinnacle and principal subsidiary, Pinnacle Bank. Base Salary shall include
any amounts of compensation deferred by Executive under a qualified plan
maintained by Pinnacle or Pinnacle Bank.
(b) Executive will be entitled to participate in or receive benefits under
any employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, medical coverage or any other employee benefit plan
or arrangement made available by Pinnacle in the future to its employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive will be entitled to
incentive compensation and bonuses as provided in any plan of Pinnacle in which
Executive is eligible to participate. Nothing paid to the Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive' s term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean termination of service with Pinnacle for any reason,
including the termination by Pinnacle of Executive' s full-time employment
hereunder, and termination upon the retirement, resignation or death of
Executive; provided that an Event of Termination shall not include termination
of Executive by Pinnacle for Cause as defined in Section 5.
E2-2
(b) Upon the occurrence of an Event of Termination, Pinnacle shall pay
Executive, or in the event of his death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay or liquidated damages, or both
an amount equal to the greater of $85,000 or one times Executive's then current
Base Salary and any bonuses paid or to be paid during the year of termination.
At the election of the Executive, which election is to be made within thirty
(30) days of the Date of Termination following an Event of Termination, such
payment may be made in a lump sum or paid in equal monthly installments during
the twenty-four (24) months following the Executive's termination of service. In
the event that no election is made, payment to the Executive will be made on a
monthly basis in equal installments over twenty-four (24) months.
(c) Upon an Event of Termination, Pinnacle will, at no cost to Executive,
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by Pinnacle and its
affiliates for Executive prior to his termination of service. Such coverage and
payments shall cease upon the expiration of twenty-four (24) months.
5. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" in relation to a termination
of employment shall mean termination because of the Executive's intentional or
persistent failure to perform stated duties of a material nature, personal
dishonesty which results in material loss to Pinnacle or one of its affiliates,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order which results in material loss
to Pinnacle or one of its affiliates or any material breach of this Agreement.
For purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of Pinnacle or its affiliates. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a Notice of Termination which shall include a copy of
a resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board (excluding the Executive for purposes of said
computation) at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying termination for Cause
and specifying the particulars thereof in detail. The Executive shall not have
the right to receive any payment under Section 4 of this Agreement,or any other
compensation or other benefits for any period after Termination for Cause.
6. NOTICE.
(a) Any purported termination by Pinnacle or by Executive shall be
communicated by Notice of Termination to the other party
E2-3
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
7. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 7 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to Pinnacle as may reasonably be required by Pinnacle in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
8. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of Pinnacle.
9. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and Pinnacle and their respective successors and assigns.
10. MODIFICATION.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
11. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and
E2-4
part thereof shall to the full extent consistent with law continue in full force
and effect.
12. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of Pinnacle, in accordance with the rules of
the American Arbitration Association then in effect.
16. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by Pinnacle, if Executive is successful on the merits pursuant to
a legal judgment, arbitration or settlement.
17. SUCCESSOR TO PINNACLE.
Pinnacle shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of Pinnacle, expressly and
unconditionally to assume and agree to perform Pinnacle's obligations under this
Agreement, in the same manner and to the same extent that Pinnacle would be
required to perform if no such succession or assignment had taken place.
18. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of Michigan
applicable to contracts made and wholly to be performed within such state.
E2-5
IN WITNESS WHEREOF, the parties have executed this Agreement on
________________, 1997.
Pinnacle Financial Services, Inc.
By: ___________________________________
[Name]
[Title]
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Executive
E2-6
EXHIBIT E-3
SEVERANCE AGREEMENT
This AGREEMENT is made effective as of ______________, 1997, by and between
Pinnacle Financial Services, Inc. ("Pinnacle"), a corporation organized under
the laws of Michigan, with its principal administrative office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive").
WHEREAS, Pinnacle will acquire CB Bancorp, Inc. ("CB Bancorp"), and its
wholly owned subsidiary, Community Bank, a Federal Savings Bank ("Bank")
(collectively the "Acquired Entities"), in accordance with and pursuant to the
Agreement and Plan of Merger by and between Pinnacle and CB Bancorp, dated as of
the 1st day of March, 1997 (the "Merger Agreement");
WHEREAS, the employment of the Executive with the Acquired Entities will be
terminated upon the effective time of the acquisition of such entities by
Pinnacle; and
WHEREAS, Pinnacle desires to provide assurance in the form of certain
severance benefits offered hereunder to Executive in order to retain the
services of the Executive based on his knowledge of the Acquired Entities, his
expertise in the field of financial management and his knowledge of the savings
and loan industry, including the mortgage repurchase program operated by CB
Bancorp and the Bank prior to the Effective Date, as defined in the Merger
Agreement;
THEREFORE, in consideration of the mutual promises set forth herein, it is
agreed by and between Pinnacle and Executive:
1. DESCRIPTION OF SERVICES.
Following the consummation of the Merger, Executive shall serve as an
employee of Pinnacle and/or its affiliates, in such capacity as may be mutually
agreed by Pinnacle and Executive. As an employee of Pinnacle and/or its
affiliates, Executive will provide Pinnacle and its affiliates with the benefit
of his special knowledge, skill, contacts and business experience in the savings
and loan industry, particularly as his knowledge relates to the business
previously conducted by CB Bancorp and the Bank.
2. TERMS.
(a) Executive shall be employed as an "at will" employee, and said
employment may be terminated at any time, whether for "Cause" or any reason
whatsoever, subject to the provisions of Sections 4 and 5 of this Agreement.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts
E3-1
to the faithful performance of his duties hereunder including activities and
services related to the organization, operation and management of Pinnacle and
participation in community and civic organizations; provided, however, that,
with the approval of the Board, as evidenced by a resolution of such Board, from
time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with Pinnacle, or materially affect the performance of Executive's
duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1 and 2. Pinnacle
shall pay Executive as compensation a salary of not less than $53,000 per year
("Base Salary"). Such Base Salary shall be payable bi-monthly. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Any increase in base salary shall then become the "Base
Salary" for purposes of this Agreement. In addition to the Base Salary provided
in this Section 3(a), Pinnacle shall provide Executive at no cost to Executive
with all such other benefits as are provided uniformly to permanent full-time
employees of Pinnacle and principal subsidiary, Pinnacle Bank. Base Salary
shall include any amounts of compensation deferred by Executive under a
qualified plan maintained by Pinnacle or Pinnacle Bank.
(b) Executive will be entitled to participate in or receive benefits under
any employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, medical coverage or any other employee benefit plan
or arrangement made available by Pinnacle in the future to its employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive will be entitled to
incentive compensation and bonuses as provided in any plan of Pinnacle in which
Executive is eligible to participate. Nothing paid to the Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean termination of service with Pinnacle for any reason,
including the termination by Pinnacle of Executive's full-time employment
hereunder, and termination upon the retirement, resignation or death of
Executive; provided that an Event of Termination shall not include termination
of Executive by Pinnacle for Cause as defined in Section 5.
E3-2
(b) Upon the occurrence of an Event of Termination, Pinnacle shall pay
Executive, or in the event of his death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay or liquidated damages, or both
an amount equal to the greater of $70,000 or one times Executive's then current
Base Salary and any bonuses paid or to be paid during the year of termination.
At the election of the Executive, which election is to be made within thirty
(30) days of the Date of Termination following an Event of Termination, such
payment may be made in a lump sum or paid in equal monthly installments during
the twenty-four (24) months following the Executive's termination of service.
In the event that no election is made, payment to the Executive will be made on
a monthly basis in equal installments over twenty-four (24) months.
(c) Upon an Event of Termination, Pinnacle will, at no cost to Executive,
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by Pinnacle and its
affiliates for Executive prior to his termination of service. Such coverage and
payments shall cease upon the expiration of twenty-four (24) months.
5. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" in relation to a termination
of employment shall mean termination because of the Executive's intentional or
persistent failure to perform stated duties of a material nature, personal
dishonesty which results in material loss to Pinnacle or one of its affiliates,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order which results in material loss
to Pinnacle or one of its affiliates or any material breach of this Agreement.
For purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of Pinnacle or its affiliates. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a Notice of Termination which shall include a copy of
a resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board (excluding the Executive for purposes of said
computation) at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying termination for Cause
and specifying the particulars thereof in detail. The Executive shall not have
the right to receive any payment under Section 4 of this Agreement, or any other
compensation or other benefits for any period after Termination for Cause.
6. NOTICE.
(a) Any purported termination by Pinnacle or by Executive shall be
communicated by Notice of Termination to the other party
E3-3
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
7. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 7 during
the term of this Agreement and for one (l) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to Pinnacle as may reasonably be required by Pinnacle in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
8. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of Pinnacle.
9. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and Pinnacle and their respective successors and assigns.
10. MODIFICATION.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
11. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and
E3-4
part thereof shall to the full extent consistent with law continue in full force
and effect.
12. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of Pinnacle, in accordance with the rules of
the American Arbitration Association then in effect.
16. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by Pinnacle, if Executive is successful on the merits pursuant to
a legal judgment, arbitration or settlement.
17. SUCCESSOR TO PINNACLE.
Pinnacle shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of Pinnacle, expressly and
unconditionally to assume and agree to perform Pinnacle's obligations under this
Agreement, in the same manner and to the same extent that Pinnacle would be
required to perform if no such succession or assignment had taken place.
18. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of Michigan
applicable to contracts made and wholly to be performed within such state.
E3-5
IN WITNESS WHEREOF, the parties have executed this Agreement on
_______________, 1997.
Pinnacle Financial Services, Inc.
By: ___________________________________
[Name]
[Title]
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive
E3-6
EXHIBIT E-4
SEVERANCE AGREEMENT
This AGREEMENT is made effective as of _____________, 1997, by and between
Pinnacle Financial Services, Inc. ("Pinnacle"), a corporation organized under
the laws of Michigan, with its principal administrative office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇ (the "Executive").
WHEREAS, Pinnacle will acquire CB Bancorp, Inc. ("CB Bancorp"), and its
wholly owned subsidiary, Community Bank, a Federal Savings Bank ("Bank")
(collectively the "Acquired Entities"), in accordance with and pursuant to the
Agreement and Plan of Merger by and between Pinnacle and CB Bancorp, dated as of
the 1st day of March, 1997 (the "Merger Agreement");
WHEREAS, the employment of the Executive with the Acquired Entities will be
terminated upon the effective time of the acquisition of such entities by
Pinnacle; and
WHEREAS, Pinnacle desires to provide assurance in the form of certain
severance benefits offered hereunder to Executive in order to retain the
services of the Executive based on his knowledge of the Acquired Entities, his
expertise in the field of financial management and his knowledge of the savings
and loan industry, including the mortgage repurchase program operated by CB
Bancorp and the Bank prior to the Effective Date, as defined in the Merger
Agreement;
THEREFORE, in consideration of the mutual promises set forth herein, it is
agreed by and between Pinnacle and Executive:
1. DESCRIPTION OF SERVICES.
Following the consummation of the Merger, Executive shall serve as an
employee of Pinnacle and/or its affiliates, in such capacity as may be mutually
agreed by Pinnacle and Executive. As an employee of Pinnacle and/or its
affiliates, Executive will provide Pinnacle and its affiliates with the benefit
of his special knowledge, skill, contacts and business experience in the savings
and loan industry, particularly as his knowledge relates to the business
previously conducted by CB Bancorp and the Bank.
2. TERMS.
(a) Executive shall be employed as an "at will " employee, and said
employment may be terminated at any time,whether for "Cause" or any reason
whatsoever, subject to the provisions of Sections 4 and 5 of this Agreement.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including
E4-1
activities and services related to the organization, operation and management of
Pinnacle and participation in community and civic organizations; provided,
however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with Pinnacle, or materially affect the performance of Executive's
duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1 and 2. Pinnacle
shall pay Executive as compensation a salary of not less than $70,400 per year
("Base Salary"). Such Base Salary shall be payable bi-monthly. During the period
of this Agreement, Executive's Base Salary shall be reviewed at least annually;
the first such review will be made no later than one year from the date of this
Agreement. Any increase in base salary shall then become the "Base Salary" for
purposes of this Agreement. In addition to the Base Salary provided in this
Section 3(a), Pinnacle shall provide Executive at no cost to Executive with all
such other benefits as are provided uniformly to permanent full-time employees
of Pinnacle and principal subsidiary, Pinnacle Bank. Base Salary shall include
any amounts of compensation deferred by Executive under a qualified plan
maintained by Pinnacle or Pinnacle Bank.
(b) Executive will be entitled to participate in or receive benefits under
any employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, medical coverage or any other employee benefit plan
or arrangement made available by Pinnacle in the future to its employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive will be entitled to
incentive compensation and bonuses as provided in any plan of Pinnacle in which
Executive is eligible to participate. Nothing paid to the Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean termination of service with Pinnacle for any reason,
including the termination by Pinnacle of Executive's full-time employment
hereunder, and termination upon the retirement, resignation or death of
Executive; provided that an Event of Termination shall not include termination
of Executive by Pinnacle for Cause as defined in Section 5.
E4-2
(b) Upon the occurrence of an Event of Termination, Pinnacle shall pay
Executive, or in the event of his death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay or liquidated damages, or both
an amount equal to the greater of $95,000 or one times Executive's then current
Base Salary and any bonuses paid or to be paid during the year of termination.
At the election of the Executive, which election is to be made within thirty
(30) days of the Date of Termination following an Event of Termination, such
payment may be made in a lump sum or paid in equal monthly installments during
the twenty-four (24) months following the Executive's termination of service. In
the event that no election is made, payment to the Executive will be made on a
monthly basis in equal installments over twenty-four (24) months.
(c) Upon an Event of Termination, Pinnacle will, at no cost to Executive,
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by Pinnacle and its
affiliates for Executive prior to his termination of service. Such coverage and
payments shall cease upon the expiration of twenty-four (24) months.
5. TERMINATION FOR CAUSE.
The terms "Termination for Cause" or "Cause" in relation to a termination
of employment shall mean termination because of the Executive's intentional or
persistent failure to perform stated duties of a material nature, personal
dishonesty which results in material loss to Pinnacle or one of its affiliates,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order which results in material loss
to Pinnacle or one of its affiliates or any material breach of this Agreement.
For purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of Pinnacle or its affiliates. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a Notice of Termination which shall include a copy of
a resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board (excluding the Executive for purposes of said
computation) at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying termination for Cause
and specifying the particulars thereof in detail. The Executive shall not have
the right to receive any payment under Section 4 of this Agreement,or any other
compensation or other benefits for any period after Termination for Cause.
6. NOTICE.
(a) Any purported termination by Pinnacle or by Executive shall be
communicated by Notice of Termination to the other party
E4-3
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
7. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 7 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to Pinnacle as may reasonably be required by Pinnacle in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
8. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of Pinnacle.
9. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and Pinnacle and their respective successors and assigns.
10. MODIFICATION.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
11. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and
E4-4
part thereof shall to the full extent consistent with law continue in full force
and effect.
12. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of Pinnacle, in accordance with the rules of
the American Arbitration Association then in effect.
16. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by Pinnacle, if Executive is successful on the merits pursuant to
a legal judgment, arbitration or settlement.
17. SUCCESSOR TO PINNACLE.
Pinnacle shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of Pinnacle, expressly and
unconditionally to assume and agree to perform Pinnacle's obligations under this
Agreement, in the same manner and to the same extent that Pinnacle would be
required to perform if no such succession or assignment had taken place.
18. APPLICABLE LAW.
This Agreement shall be governed by the laws of the State of Michigan
applicable to contracts made and wholly to be performed within such state.
E4-5
IN WITNESS WHEREOF, the parties have executed this Agreement on
_________________, 1997.
Pinnacle Financial Services, Inc.
By: ______________________________
[Name]
[Title]
__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Executive
E4-6
EXHIBIT F
FORM OF OPINION OF COUNSEL TO CB BANCORP, INC.
____________, 1997
Pinnacle Financial Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: CB Bancorp, Inc.
Ladies and Gentlemen:
We have acted as counsel to CB Bancorp, Inc., a Delaware corporation
("CB"), in connection with the contemplated merger of CB with and into Pinnacle
Financial Services, Inc., a Michigan corporation ("Pinnacle"), pursuant to that
certain Agreement and Plan of Merger dated as of ___________, 1997, between
Pinnacle and CB (the "Agreement").
In our capacity as counsel to CB, we have examined the Proxy Statement
dated __________, 1997, filed by CB with the Securities and Exchange Commission
(the "Commission") pursuant to Rule 14a-6 of the rules and regulations of the
Commission under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have also examined signed copies of the Agreement. This opinion is
being rendered pursuant to Section 7.2(e) of the Agreement. (Capitalized terms
not otherwise defined herein shall be defined herein as in the Agreement.)
With respect to various questions of fact material to this opinion, we have
relied upon (i) the representations and warranties made by the several parties
in the Agreement and the documents referred to therein and (ii) certificates of
officers of CB. We have also examined such certificates of public officials,
documents and records of CB and other certificates, opinions and instruments and
have made such other investigations as we have deemed necessary in connection
with the opinions hereinafter set forth. In the course of our examinations and
investigations, we have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures, the legal capacity of
natural persons and conformity to originals of all documents submitted to us as
copies. We have further assumed that the Agreement and each other agreement
entered into in connection with consummation of the transactions contemplated by
the Agreement have been duly authorized by each party thereto other than CB,
have been duly executed and delivered by each such other party, and constitute
valid and binding obligations of each such other party, enforceable in
accordance with their respective terms and conditions, and each such other party
has taken all steps necessary to comply with all laws, rules, orders, rulings
and regulations applicable to it to permit such party to enter into and perform
its obligations. Our conclusions hereunder are specifically qualified by
reference to, and are based solely upon, laws, rulings and regulations in effect
on the date hereof and are subject to modification to the extent
F-1
such laws, rulings and regulations are changed in the future. Based upon and
subject to the foregoing, and subject to the qualifications, if any, that
follow, it is our opinion that:
A. CB is a corporation validly existing and in good standing under the
laws of the State of Delaware, with corporate power to carry on its business
substantially as described in the Proxy Statement, and is registered as a
savings and loan holding company under the Home Owners' Loan Act. Based upon
review of corporate records of CB and certificates of public officials and
officers of CB, CB's authorized and outstanding capital stock is as set forth in
the Agreement and the CB Disclosure Schedule and the Closing Date CB Disclosure
Schedule, and all of the shares of its outstanding capital stock are duly and
validly authorized and issued, and, except as otherwise disclosed in the
Agreement, to our knowledge, there are no outstanding options, warrants,
agreements, contracts, calls, commitments or demands of any character to which
CB is a party relating to the capital stock of CB.
B. Community Bank is a federal savings bank validly existing under the
laws of the United States, and has corporate power to carry on its business in
the State of Indiana.
C. The execution, delivery and performance of the Agreement have been
duly authorized and approved by all necessary corporate action on the part of
CB, and the Agreement has been duly executed and delivered by CB and constitutes
the valid and binding obligations of CB, enforceable in accordance with its
respective terms, subject to considerations of bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance and the like and
to general equitable principles (regardless of whether considered in a
proceeding in equity or at law), and to standards of commercial reasonableness
and good faith, and, to the best of our knowledge, the consummation by CB of the
transactions contemplated by the Agreement will not result in any breach or
violation of, or default of a material nature under any judgment, decree,
mortgage, agreement, indenture or other instrument known to us applicable to CB.
D. Based upon receipt of approvals from regulatory agencies, certificates
of public officials and officers of CB, all such approvals, consents,
authorizations or modifications as may be required to permit the performance by
CB of its obligations under the Agreement have been obtained.
E. Except as set forth in the CB Disclosure Schedule and the Closing Date
CB Disclosure Schedule to the Agreement, we do not know of any material
litigation, proceeding or governmental investigation pending against or relating
to CB or any of its subsidiaries, its properties or businesses, or the
transactions contemplated by the Agreement which will result in any material
liability to CB or any of its subsidiaries.
The opinions set forth above are limited to the Federal law of the United
States of America and the General Corporation Law of the
F-2
State of Delaware and the Business Corporation Act of the State of Michigan.
Whenever any opinion herein contained refers to the existence or absence of
facts "to the best of our knowledge", "to our knowledge", or "to our awareness"
or otherwise such existence or absence of facts is based on our knowledge,
actual knowledge or awareness, it is intended to signify that no information has
come to the attention of those attorneys who have represented CB in this
transaction (collectively, the "Designated Attorneys") which would give the
Designated Attorneys actual knowledge of the existence or absence of such facts.
Except to the extent expressly set forth herein, the Designated Attorneys have
not undertaken any independent investigation or made inquiry of any other
lawyers of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, or employees thereof, to determine the
existence or absence of such facts, and no inference as to our knowledge or of
the existence or absence of such facts should be drawn from our representation
of CB.
Our opinions are subject to generally applicable rules of law which (i)
limit the availability of a remedy under certain circumstances where another
remedy has been elected, (ii) limit the enforceability of provisions releasing,
exculpating, or exempting a party from, or requiring indemnification of a party
for, liability for its own action or inaction, to the extent the action or
inaction involves negligence, recklessness, willful misconduct, or unlawful
conduct, (iii) provide that agreements to indemnify a party for violations of
securities laws are unenforceable, (iv) may, where less than all of a contract
may be unenforceable, limit the enforceability of the balance of the contract to
circumstances in which the unenforceable portion is not an essential part of the
agreed exchange, or (v) may permit a party who has materially failed to render
or offer performance required by the contract to cure that failure unless
permitting a cure would unreasonably hinder the aggrieved party from making
substitute arrangements for performance or it was important in the circumstances
to the aggrieved party that performance occur by the date stated in the
contract.
This opinion is solely for your information. It is not to be quoted in
whole or in part or otherwise referred to (except in a list of closing
documents), nor is it to be filed with any governmental agency or other person
without our prior written consent. Other than you, no one is entitled to rely
on this opinion.
We express no opinion as to any matter not addressed herein and no opinion
as to matters addressed herein other than as expressly set forth herein.
Sincerely,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
F-3
EXHIBIT G
FORM OF OPINION OF COUNSEL TO PINNACLE FINANCIAL SERVICES, INC.
____________, 1997
CB Bancorp, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pinnacle Financial Services, Inc.
Ladies and Gentlemen:
We have acted as counsel to Pinnacle Financial Services, Inc., a Michigan
corporation ("Pinnacle"), in connection with the contemplated merger of CB
Bancorp, Inc., a Delaware corporation ("CB"), with and into Pinnacle, pursuant
to that certain Agreement and Plan of Merger dated as of ___________, 1997,
between Pinnacle and CB (the "Agreement").
In our capacity as counsel to Pinnacle, we have examined the Proxy
Statement dated __________, 1997, filed by Pinnacle with the Securities and
Exchange Commission (the "Commission") pursuant to Rule 14a-6 of the rules and
regulations of the Commission under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). We have also examined signed copies of the
Agreement. This opinion is being rendered pursuant to Section 7.3(d) of the
Agreement. (Capitalized terms not otherwise defined herein shall be defined
herein as in the Agreement.)
With respect to various questions of fact material to this opinion, we have
relied upon (i) the representations and warranties made by the several parties
in the Agreement and the documents referred to therein and (ii) certificates of
officers of Pinnacle. We have also examined such certificates of public
officials, documents and records of Pinnacle and other certificates, opinions
and instruments and have made such other investigations as we have deemed
necessary in connection with the opinions hereinafter set forth. In the course
of our examinations and investigations, we have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and conformity to originals of all documents
submitted to us as copies. We have further assumed that the Agreement and each
other agreement entered into in connection with consummation of the transactions
contemplated by the Agreement have been duly authorized by each party thereto
other than Pinnacle, have been duly executed and delivered by each such other
party, and constitute valid and binding obligations of each such other party,
enforceable in accordance with their respective terms and conditions, and each
such other party has taken all steps necessary
G-1
to comply with all laws, rules, orders, rulings and regulations applicable to it
to permit such party to enter into and perform its obligations. Our conclusions
hereunder are specifically qualified by reference to, and are based solely upon,
laws, rulings and regulations in effect on the date hereof and are subject to
modification to the extent such laws, rulings and regulations are changed in the
future. Based upon and subject to the foregoing, and subject to the
qualifications, if any, that follow, it is our opinion that:
A. Pinnacle is a corporation validly existing and in good standing under
the laws of the State of Michigan, with corporate power to carry on its business
substantially as described in the Proxy Statement, and is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended. Based
upon review of corporate records of Pinnacle and certificates of public
officials and officers of Pinnacle, Pinnacle's authorized and outstanding
capital stock is as set forth in the Agreement and the Pinnacle Disclosure
Schedule and the Closing Date Pinnacle Disclosure Schedule, and all of the
shares of its outstanding capital stock are duly and validly authorized and
issued, and, except as otherwise disclosed in the Agreement, to our knowledge,
there are no outstanding options, warrants, agreements, contracts, calls,
commitments or demands of any character to which Pinnacle is a party relating to
the capital stock of Pinnacle.
B. Pinnacle Bank is a banking corporation validly existing and in good
standing under the laws of the State of Michigan, and has corporate power to
carry on its business in the State of Michigan.
C. The execution, delivery and performance of the Agreement have been
duly authorized and approved by all necessary corporate action on the part of
Pinnacle, and the Agreement has been duly executed and delivered by Pinnacle and
constitutes the valid and binding obligations of Pinnacle, enforceable in
accordance with its respective terms, subject to considerations of bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance and
the like and to general equitable principles (regardless of whether considered
in a proceeding in equity or at law), and to standards of commercial
reasonableness and good faith, and, to the best of our knowledge, the
consummation by Pinnacle of the transactions contemplated by the Agreement will
not result in any breach or violation of, or default of a material nature under
any judgment, decree, mortgage, agreement, indenture or other instrument known
to us applicable to Pinnacle.
D. Based upon receipt of approvals from regulatory agencies, certificates
of public officials and officers of Pinnacle, all such approvals, consents,
authorizations or modifications as may be required to permit the performance by
Pinnacle of its obligations under the Agreement have been obtained.
E. Except as set forth in the Pinnacle Disclosure Schedule and the
Closing Date Pinnacle Disclosure Schedule to the Agreement,
G-2
we do not know of any material litigation, proceeding or governmental
investigation pending against or relating to Pinnacle or any of its
subsidiaries, its properties or businesses, or the transactions contemplated by
the Agreement which will result in any material liability to Pinnacle or any of
its subsidiaries.
The opinions set forth above are limited to the Federal law of the United
States of America, the General Corporation Law of the State of Delaware and the
laws of the State of Michigan.
Whenever any opinion herein contained refers to the existence or absence of
facts "to the best of our knowledge", "to our knowledge", or "to our awareness"
or otherwise such existence or absence of facts is based on our knowledge,
actual knowledge or awareness, it is intended to signify that no information has
come to the attention of those attorneys who have represented Pinnacle in this
transaction (collectively, the "Designated Attorneys") which would give the
Designated Attorneys actual knowledge of the existence or absence of such facts.
Except to the extent expressly set forth herein, the Designated Attorneys have
not undertaken any independent investigation or made inquiry of any other
lawyers of Miller, Canfield, Paddock and Stone, P.L.C., or employees thereof, to
determine the existence or absence of such facts, and no inference as to our
knowledge or of the existence or absence of such facts should be drawn from our
representation of Pinnacle.
Our opinions are subject to generally applicable rules of law which (i)
limit the availability of a remedy under certain circumstances where another
remedy has been elected, (ii) limit the enforceability of provisions releasing,
exculpating, or exempting a party from, or requiring indemnification of a party
for, liability for its own action or inaction, to the extent the action or
inaction involves negligence, recklessness, willful misconduct, or unlawful
conduct, (iii) provide that agreements to indemnify a party for violations of
securities laws are unenforceable, (iv) may, where less than all of a contract
may be unenforceable, limit the enforceability of the balance of the contract to
circumstances in which the unenforceable portion is not an essential part of the
agreed exchange, or (v) may permit a party who has materially failed to render
or offer performance required by the contract to cure that failure unless
permitting a cure would unreasonably hinder the aggrieved party from making
substitute arrangements for performance or it was important in the circumstances
to the aggrieved party that performance occur by the date stated in the
contract.
This opinion is solely for your information. It is not to be quoted in
whole or in part or otherwise referred to (except in a list of closing
documents), nor is it to be filed with any governmental agency or other person
without our prior written consent. Other than you, no one is entitled to rely
on this opinion.
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We express no opinion as to any matter not addressed herein and no opinion
as to matters addressed herein other than as expressly set forth herein.
Sincerely,
MILLER, CANFIELD, PADDOCK AND
STONE, P.L.C.
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SCHEDULES
Pinnacle Disclosure Schedule
CB Disclosure Schedule
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