Projected Financial Information
In connection with PrivateBancorp's regular strategic planning process and with the merger, PrivateBancorp's management prepared
financial projections of revenue, net income and EPS for fiscal years 2016 through 2022 (such projections, the "projections"). These projections were provided to PrivateBancorp's board of directors
and Goldman Sachs and Sandler, in connection with their respective analyses of the merger. PrivateBancorp does not as a matter of course make public long-term projections as to future revenues,
earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. A summary of the projections is included below to give PrivateBancorp's stockholders
access to certain nonpublic information provided to Goldman Sachs and Sandler for purposes of their respective financial analyses summarized above under "Opinions of PrivateBancorp's Financial
Advisors." The inclusion of the projections should not be regarded as an indication that PrivateBancorp or its board of directors, Goldman Sachs, Sandler or any
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other
recipient of this information considered, or now considers, it to be an assurance of the achievement of future results.
PrivateBancorp
advised the recipients of the projections that its internal financial forecasts upon which the projections were based are subjective in many respects. The projections
reflect numerous assumptions with respect to company performance, industry performance, general business, economic, market and financial conditions and other matters, many of which are difficult to
predict, subject to significant economic and competitive uncertainties and beyond PrivateBancorp's control. As a result, there can be no assurance that the projections will be realized or that actual
results will not be significantly higher or lower than projected.
The
projections were not prepared with a view toward public disclosure or toward compliance with United States generally accepted accounting principles ("GAAP"), published guidelines of
the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial
information included in this proxy statement (including the projections) has been prepared by, and is the responsibility of, PrivateBancorp's management. Ernst & Young LLP ("E&Y"),
PrivateBancorp's independent registered public accounting firm, has neither examined, compiled nor performed any procedures with respect to the accompanying prospective financial information
(including the projections), and accordingly, E&Y does not express an opinion or any other form of assurance with respect thereto. The E&Y report incorporated by reference in this proxy statement
relates to PrivateBancorp's historical financial information. It does not extend to the prospective financial information contained herein and should not be read to do so.
Projections
of this type are based on estimates and assumptions that are inherently subject to factors such as company performance, industry performance, general business, economic,
regulatory, market and financial conditions, as well as changes to the business, financial condition or results of operations of PrivateBancorp, including the factors described under
"
Cautionary Statement Concerning Forward-Looking Statements
," which factors may cause the projections or the underlying assumptions to be inaccurate. In
addition, the projections are based on certain assumptions regarding PrivateBancorp's ongoing business activities. Since the projections cover multiple years, such information by its nature becomes
less reliable with each successive year.
The
following is a summary of the projections:
Summary of the Projections
(dollars in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected Periods
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Revenue
|
|
$
|
716.1
|
|
$
|
769.1
|
|
$
|
840.0
|
|
$
|
912.1
|
|
$
|
991.1
|
|
$
|
1,077.5
|
|
$
|
1,170.8
|
|
Net Income Available to Common Stockholders
|
|
$
|
209.3
|
|
$
|
208.9
|
|
$
|
223.1
|
|
$
|
246.4
|
|
$
|
272.4
|
|
$
|
298.3
|
|
$
|
324.8
|
|
Diluted Earnings Per Share
|
|
$
|
2.59
|
|
$
|
2.54
|
|
$
|
2.66
|
|
$
|
2.88
|
|
$
|
3.13
|
|
$
|
3.36
|
|
$
|
3.59
|
|
Net Interest Margin
|
|
|
3.28
|
%
|
|
3.19
|
%
|
|
3.23
|
%
|
|
3.26
|
%
|
|
3.30
|
%
|
|
3.34
|
%
|
|
3.37
|
%
|
Efficiency Ratio
|
|
|
49.2
|
|
|
49.4
|
|
|
48.5
|
|
|
47.9
|
|
|
47.2
|
|
|
47.0
|
|
|
47.0
|
|
Return on Average Assets (ROAA)
|
|
|
1.13
|
|
|
1.04
|
|
|
1.03
|
|
|
1.07
|
|
|
1.09
|
|
|
1.11
|
|
|
1.12
|
|
Total Assets
|
|
$
|
19,191
|
|
$
|
20,653
|
|
$
|
22,255
|
|
$
|
23,981
|
|
$
|
25,841
|
|
$
|
27,846
|
|
$
|
30,006
|
|
Tangible Common Equity
|
|
|
1,808
|
|
|
2,013
|
|
|
2,192
|
|
|
2,376
|
|
|
2,567
|
|
|
2,776
|
|
|
3,003
|
|
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Readers
of this proxy statement are cautioned not to place undue reliance on the projections set forth above. No one has made or makes any representation to any stockholder regarding the
information included in the projections.
For
the foregoing reasons, as well as the basis and assumptions on which the projections were compiled, the inclusion of specific portions of the projections in this proxy statement
should not be regarded as an indication that such projections will be an accurate prediction of future events, and they should not be relied on as such. Except as required by applicable securities
laws, PrivateBancorp does not intend to update or otherwise revise the projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the
occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.
In addition, the projections have not been updated or revised to
reflect information or results after the date the projections were prepared or as of date of this proxy statement.
PrivateBancorp
stockholders are urged to review PrivateBancorp's most recent SEC filings for a description of its results of operations and financial condition, including "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in PrivateBancorp's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that are incorporated by
reference into this proxy statement/prospectus. Please see the section entitled "Where You Can Find More Information."
Certain Unaudited Prospective Financial Information of CIBC
Neither CIBC nor PrivateBancorp, as a matter of course, makes public projections as to future earnings or other results due to, among
other reasons, the uncertainty of the underlying assumptions and estimates. In connection with the proposed transaction, however, PrivateBancorp prepared and provided to Goldman Sachs and Sandler
O'Neill certain unaudited prospective financial analyses and forecasts with respect to CIBC on a stand-alone basis reflecting a consensus of equity analysts' estimates for 2016 and 2017, as
extrapolated by management of PrivateBancorp for periods thereafter. That information is included below in this proxy statement/prospectus. Goldman Sachs and Sandler O'Neill reviewed this unaudited
prospective financial information in connection with preparing their analyses of the fairness, from a financial point of view, of the merger consideration to PrivateBancorp's stockholders, as
described above under "The
MergerOpinions of PrivateBancorp's Financial Advisors." The unaudited prospective information set forth below was prepared by PrivateBancorp for PrivateBancorp's internal use and is
subjective in many respects. This information was not prepared by CIBC or with any involvement on the part of CIBC. The inclusion of this information in this proxy statement/prospectus should not be
regarded as an indication that any of CIBC, PrivateBancorp, Goldman Sachs or Sandler O'Neill, their respective representatives or any other recipient of this information considered, or now considers,
it to be predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on as such.
While
presented with numeric specificity, the unaudited prospective financial information below reflects certain estimates and assumptions made by PrivateBancorp with respect to CIBC's
business, all of which are difficult to predict and many of which are beyond CIBC's control. This unaudited prospective financial information includes assumptions as to certain macroeconomic
conditions, such as future growth rates and interest rate variations, that are subject to change and subjective judgment, and thus is susceptible to multiple interpretations. CIBC was not involved in
the preparation of the unaudited prospective financial information and gives no assurance that such information or the underlying estimates and assumptions will be realized. CIBC and PrivateBancorp do
not intend to, and each disclaims any obligation to, make publicly available any update or other revisions regarding the unaudited prospective financial information to correct any information or
assumptions with which CIBC does not agree, or to update such information to reflect circumstances arising after its preparation or to reflect changes in general economic or industry conditions.
Importantly, neither the unaudited prospective financial information with respect to CIBC nor the consensus of equity analysts' estimates
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for
2016 and 2017 used by PrivateBancorp in preparing that information, contemplated completion of the proposed transaction. Accordingly, the unaudited prospective financial information does not give
effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the potential synergies that
may be achieved by the combined company as a result of the merger or the effect of any business or strategic decisions or actions which would likely have been taken if the merger agreement had not
been executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger.
Actual
results will differ from those set forth below, and the differences may be material. Important factors that may affect actual results and cause the unaudited prospective financial
information to be inaccurate include, but are not limited to, risks and uncertainties relating to CIBC's business, industry performance, general business and economic conditions, customer
requirements, competition and adverse changes in applicable laws, regulations or rules. For other factors that could cause actual results to differ, please see the sections entitled "Risk Factors" and
"Cautionary Statement Regarding Forward-Looking Statements" in this proxy statement/prospectus and in CIBC's Annual Report on
Form 40-K filed for the fiscal year ended October 31, 2015, as filed December 3, 2015, and the other reports filed by CIBC with the SEC.
The
unaudited prospective financial information does not take into account any circumstances or events occurring after the date it was prepared. There can be no assurance that, had the
unaudited prospective financial information been prepared as of the date of this proxy statement/prospectus, similar estimates and assumptions would be used. In addition, since the unaudited
prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year.
None
of CIBC, PrivateBancorp, Goldman Sachs or Sandler O'Neill, or their respective affiliates, officers, directors, advisors or other representatives has made, makes or is authorized in
the future to make any representation to any shareholder of CIBC or PrivateBancorp or other person regarding CIBC's ultimate performance compared to the information contained in the unaudited
prospective financial information or that the forecasted results will be achieved. The summary of the unaudited prospective financial information included below is being provided solely because it was
made available to the financial advisors to the PrivateBancorp board of directors in connection with the merger.
The
following table presents prospective financial analyses and forecasts with respect to CIBC on a stand-alone basis reflecting a consensus of equity analysts' estimates for 2016 and
2017, as extrapolated by management of PrivateBancorp for periods thereafter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
|
|
(US$) (in millions, except per share information)
|
|
Total Revenue
|
|
|
11,360
|
|
|
11,642
|
|
|
12,224
|
|
|
12,835
|
|
|
13,477
|
|
|
14,151
|
|
|
14,858
|
|
Net Income to Common Stockholders
|
|
|
2,866
|
|
|
2,958
|
|
|
3,189
|
|
|
3,406
|
|
|
3,636
|
|
|
3,881
|
|
|
4,140
|
|
Diluted EPS
|
|
|
7.25
|
|
|
7.49
|
|
|
8.07
|
|
|
8.62
|
|
|
9.20
|
|
|
9.82
|
|
|
10.48
|
|
Diluted Cash EPS
|
|
|
7.28
|
|
|
7.52
|
|
|
8.10
|
|
|
8.65
|
|
|
9.23
|
|
|
9.85
|
|
|
10.51
|
|
Net Interest Margin
|
|
|
1.90
|
%
|
|
1.91
|
%
|
|
1.91
|
%
|
|
1.91
|
%
|
|
1.91
|
%
|
|
1.91
|
%
|
|
1.91
|
%
|
Efficiency Ratio
|
|
|
59.8
|
|
|
61.0
|
|
|
60.5
|
|
|
60.0
|
|
|
59.5
|
|
|
59.0
|
|
|
58.5
|
|
Return on Average Assets (ROAA)
|
|
|
0.76
|
|
|
0.76
|
|
|
0.78
|
|
|
0.80
|
|
|
0.81
|
|
|
0.82
|
|
|
0.84
|
|
Total Assets
|
|
$
|
376,024
|
|
$
|
397,738
|
|
$
|
417,625
|
|
$
|
438,507
|
|
$
|
460,432
|
|
$
|
483,453
|
|
$
|
507,626
|
|
Tangible Common Equity
|
|
$
|
14,580
|
|
$
|
16,061
|
|
$
|
17,656
|
|
$
|
19,359
|
|
$
|
21,176
|
|
$
|
23,114
|
|
$
|
25,181
|
|
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The
unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with GAAP, IFRS, published
guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither CIBC's
independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited prospective financial
information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. The independent registered public accountant reports included
in this proxy statement/prospectus relate to CIBC's historical financial information. They do not extend to the unaudited prospective financial information and should not be read to do so.
In
light of the foregoing, and considering that PrivateBancorp's special meeting will be held after the unaudited prospective financial information was prepared, as well as the
uncertainties inherent in any forecasted information, PrivateBancorp and CIBC stockholders are cautioned not to place unwarranted reliance on such information, and CIBC and PrivateBancorp urge all
PrivateBancorp and CIBC stockholders to review CIBC's most recent SEC filings for a description of CIBC's reported financial results. See section titled "Where You Can Find More Information."
CIBC's Reasons for the Merger
On June 28, 2016, the CIBC board of directors approved the merger and authorized certain executive officers to sign and deliver
the merger agreement on CIBC's behalf. In the course of making its decision to approve the merger, the CIBC board of directors consulted with CIBC's management and internal legal counsel, as well as
its financial advisors, CIBC World Markets Inc. and J.P. Morgan Securities LLC, and considered a number of factors.
CIBC
has been seeking opportunities to expand its existing U.S. commercial and private banking businesses as part of its overall strategy of creating a financially strong,
technologically innovative, and relationship-oriented bank, while also providing important business, geographic and earnings diversification for CIBC. Combined with CIBC's existing U.S. capital
markets, corporate banking and wealth management franchise, CIBC's management believes that the merger will create a strong platform to serve all of the combined enterprises' client needs throughout
North America as well as add the capability of accepting deposits in the United States. In addition, CIBC's management believes that CIBC's financial strength, broad suite of products and services,
and scalable technology platform will help accelerate PrivateBancorp's growth profile in an important segment of the U.S. banking market.
Management and Board of Directors of CIBC After the Merger
The current directors and senior officers of CIBC are expected to continue in their current positions upon completion of the merger,
other than as may be publicly announced by CIBC in the normal course. The President & Chief Executive Officer of PrivateBancorp, Larry D. Richman, is expected to join the executive committee of
CIBC, reporting directly to the President & Chief Executive Officer of CIBC, and to assume the role of Head of CIBC's U.S. region, which will include PrivateBank and certain of CIBC's current
U.S. businesses. In addition, subject to certain conditions, the merger agreement entitles PrivateBancorp to appoint one independent director on CIBC's board of directors and to nominate such person
for election as a director of CIBC at CIBC's first annual meeting of shareholders following the effective date of the merger.
Information
about the current CIBC directors and executive officers can be found in the documents listed under "Where You Can Find More Information."
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Interests of PrivateBancorp's Directors and Executive Officers in the Merger
In considering the recommendation of PrivateBancorp's board of directors that you vote to approve the merger agreement proposal, you
should be aware that some of PrivateBancorp's directors and executive officers have economic interests in the merger that are different from, or in addition to, those of PrivateBancorp's stockholders
generally. PrivateBancorp's board of directors was aware of these interests and considered them, among other matters, in reaching its decisions to (i) approve the merger agreement and the
transactions contemplated thereby and (ii) recommend that the stockholders of PrivateBancorp approve the merger agreement proposal. The transactions contemplated by the merger agreement will
constitute a "change in control" for purposes of the PrivateBancorp employment agreements and compensation and benefit plans described below.
Certain Assumptions
Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the
following assumptions were used:
-
-
The relevant price per share of PrivateBancorp common stock is $43.81, which is the average closing price per share of
PrivateBancorp's common stock as quoted on the NASDAQ over the first five business days following the first public announcement of the merger on June 29, 2016;
-
-
The effective time is August 11, 2016, which is the assumed date of the closing of the merger solely for purposes of the
disclosure in this section; and
-
-
Each executive officer of PrivateBancorp is terminated by PrivateBancorp without "cause" or resigns for "good reason" (as such terms
are defined in the relevant PrivateBancorp plans and agreements), in either case immediately following the assumed effective time of August 11, 2016.
The
description included below, including quantification of potential payments and benefits, takes into account that PrivateBancorp may amend outstanding equity award agreements to
provide that change in control termination protection will continue through the final vesting date (i.e., be extended beyond the second anniversary of the completion of the merger), but does not take
into account certain other compensation actions that PrivateBancorp is permitted to take prior to the completion of the merger, as described in the section entitled "The Merger
AgreementCovenants and AgreementsConduct of Businesses Prior to the Completion of the Merger" beginning on page 109 of this proxy statement/prospectus.
Equity Compensation
Treatment of Stock Options
At the effective time, each PrivateBancorp option that is outstanding and unexercised immediately prior to the effective time shall be
converted automatically into an option to purchase CIBC shares on the terms specified in the merger agreement (including that such CIBC option will have the same vesting terms as the corresponding
PrivateBancorp option). Each converted, unvested PrivateBancorp option will vest in full upon the holder's termination without cause or resignation for good reason at any time after the effective time
of the merger.
Treatment of Restricted Stock Units
At the effective time, each PrivateBancorp restricted stock unit award that is outstanding immediately prior to the effective time
shall (i) if unvested, be converted automatically
into a cash-settled CIBC restricted stock unit award on the terms specified in the merger agreement (including that such CIBC restricted stock unit award shall have the same vesting terms as the
corresponding PrivateBancorp restricted stock unit award), and (ii) if vested (including all restricted
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Table of Contents
stock
units held by non-employee directors, whether vested or unvested as of the date of the merger agreement, which shall be vested and settled within 10 days after the effective time), be
cancelled and converted automatically into the right to receive a cash payment equivalent in value to the merger consideration, as determined in accordance with the merger agreement, in respect of
each share underlying such award plus a cash payment equal to accumulated but unpaid dividend equivalents; provided, that any such vested award that does not provide for settlement upon a change in
control shall instead be converted pursuant to clause (i) above. Each converted PrivateBancorp restricted stock unit award will vest in full upon the holder's termination without cause or
resignation for good reason at any time after the effective time of the merger.
Treatment of Performance Share Units
At the effective time, each PrivateBancorp performance share unit award that is outstanding immediately prior to the effective time
shall (i) if unvested, be converted automatically into a CIBC cash-settled restricted stock unit award on the terms specified in the merger agreement (including that such CIBC restricted stock
unit award will have the same time-based vesting terms as the corresponding PrivateBancorp performance share unit award and shall not be subject to performance-based vesting conditions), and
(ii) if vested, be cancelled and converted automatically into the right to receive a cash payment equivalent in value to the merger consideration, as determined in accordance with the merger
agreement, in respect of each share underlying such award plus a cash payment equal to accumulated but unpaid dividend equivalents; provided, that any such vested award that does not provide for
settlement upon a change in control shall instead be converted pursuant to clause (i) above. For purposes of the foregoing, the number of shares of PrivateBancorp common stock underlying each
performance share unit award shall be determined by assuming that the applicable performance goals are achieved at the maximum level. Each converted PrivateBancorp performance share unit award will
vest in full upon the holder's termination without cause or resignation for good reason at any time after the effective time of the merger.
Treatment of Deferred Stock Units
At the effective time, each stock unit credited to an account that is deemed invested in PrivateBancorp common stock as of immediately
prior to the effective time under PrivateBancorp's deferred compensation plan shall be converted automatically into a deemed investment in CIBC common shares. Such deemed investment in CIBC common
shares will be cash-settled based on a valuation methodology specified in the merger agreement and at the time or times set forth in the original deferral elections made by participants.
See
the section entitled "Interests of PrivateBancorp's Directors and Executive Officers in the MergerQuantification of Potential Payments and Benefits to PrivateBancorp's
Named Executive Officers in Connection with the Merger" beginning on page 85 of this proxy statement/prospectus for an estimate of the value of the unvested equity awards held by each of
PrivateBancorp's named executive officers that would become vested upon a qualifying termination following the effective time. Based on the assumptions described above under "Interests of
PrivateBancorp's Directors and Executive Officers in the MergerCertain Assumptions", (i) the estimated aggregate value of the unvested equity awards held by PrivateBancorp's four
executive officers who are not named executive officers that would become vested upon a qualifying termination immediately following the effective time is $6,535,800 and (ii) the estimated
aggregate value of the PrivateBancorp restricted stock unit awards held by PrivateBancorp's ten non-employee directors that would become vested at the effective time is $535,796. For more information
on equity holdings of PrivateBancorp non-employee directors and executive officers, see the table entitled "Beneficial Ownership of PrivateBancorp Common Stock" on page 120 of this proxy
statement/prospectus.
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Employment and Retention Agreements
Larry D. Richman
Concurrently with the execution of the merger agreement, Mr. Richman entered into a new employment agreement with CIBC, which
will become effective, and supersede his existing employment agreement with PrivateBancorp, upon the closing of the merger.
CIBC Employment Agreement with Larry D. Richman
. The new employment agreement between CIBC and Mr. Richman
provides for his service as Senior Executive Vice-President, CIBC, President & CEO of each of PrivateBank and Holdco, and Head of CIBC U.S. Region for a term of three years following the
closing date. Following the initial three-year term, Mr. Richman will continue to serve as Executive Chairman of the board of directors of each of PrivateBank and Holdco for a term of two
years. Under the agreement, during the initial three-year term, Mr. Richman will have an annual base salary of $1,030,000 (which may be increased but not decreased) and annual target total
incentive compensation of $3,720,000 (which may be increased but not decreased). During Mr. Richman's service as Executive Chairman under the agreement, his annual base salary and annual target
total incentive compensation will be, in each case, 50% of that in effect immediately prior to the end of the initial three-year term. During the entire term of the agreement, provided that he meets
applicable eligibility requirements, Mr. Richman will be entitled to receive his existing PrivateBancorp benefits package, as amended from time to time, or such other benefits that are no less
favorable in the aggregate than such PrivateBancorp benefits package.
As
described below under "Superseded Employment Agreement with Larry D. Richman," under Mr. Richman's existing employment agreement, he would have the right to resign for any
reason during the 90-day period beginning on the first anniversary of a change in control and receive a cash severance payment (calculated assuming the qualifying termination occurred on the date of
the merger agreement) of $8,190,000. The right to resign for any reason and receive severance was not preserved in the severance provisions in the new employment agreement (which are described below).
The new agreement provides that an amount equal to a total of $8,200,000 consisting of $2,050,000 in deferred cash and $6,150,000 in deferred share units shall be credited to a deferred compensation
account for Mr. Richman's benefit. The deferred cash award will vest, subject to continued employment, on the date that is three months following the closing date and the deferred share unit
award will vest, subject to continued employment, with respect to one-third of the award, on the date that is nine months following the closing date and, with respect to the remaining two-thirds of
the award, on the date that is eighteen months following the closing date, or, with respect to both the deferred cash and deferred share units, upon a termination of Mr. Richman's employment
prior to the scheduled vesting date for any reason other than voluntary resignation without good reason and subject to the execution and effectiveness of a release of claims. This vesting schedule is
generally consistent with the vesting schedule for retention awards made to other PrivateBancorp executive officers, as described below under "Interests of PrivateBancorp's Directors and Executive
Officers in the MergerRetention Arrangements with PrivateBancorp Executive Officers". Both awards, if and to the extent vested, shall be payable to Mr. Richman upon his future
separation from service. Mr. Richman will also be provided with a supplementary executive retirement arrangement.
If
Mr. Richman's employment is terminated without "cause" or for "good reason" during the term of the new employment agreement, he will be entitled to receive, subject to his
execution and the effectiveness of a general release, (i) cash severance in an amount equal to 1.5 multiplied by the sum of (A) base salary and (B) an amount equal to the average
of the annual cash bonus amounts paid to Mr. Richman in relation to the three years following the closing date and prior to the year in which termination occurs (or, if less than three, the
number of annual performance periods actually completed prior to the termination date) or, in the case of a termination occurring prior to an annual cash bonus being awarded, the greater of
(x) the most recent annual incentive awarded to Mr. Richman
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by
PrivateBancorp prior to the closing date and (y) 30% of Mr. Richman's annual target total incentive compensation as a CIBC employee; (ii) payment of a prorated annual incentive
compensation amount based on the total incentive compensation earned by Mr. Richman for the year prior to termination, with proration based on the portion of the year of termination during
which he was employed; and (iii) a lump sum payment equal to 18 months of the applicable employer portion of healthcare premium contributions. Mr. Richman will also be covered by
CIBC's Change of Control Policy, as amended from time to time, and to the extent that Mr. Richman becomes entitled to the payment of benefits pursuant to such policy upon a termination of
employment, the terms of such policy will govern and Mr. Richman will not be entitled to the payment of benefits described in the preceding sentence in connection with such termination of
employment.
Consistent
with Mr. Richman's existing employment agreement with PrivateBank and PrivateBancorp, as described below, Mr. Richman will be entitled to receive a full gross-up
for any excise tax imposed on the payments and benefits to Mr. Richman in connection with the merger (including any such payments and benefits relating to his termination of employment) by
reason of Sections 4999 and 280G of the U.S. Internal Revenue Code.
The
agreement also includes an indefinite confidentiality covenant and non-competition and non-solicitation covenants that apply during employment and for one year following termination
of employment.
Superseded PrivateBancorp Employment Agreement with Larry D. Richman
. Mr. Richman is party to an existing
employment agreement with PrivateBank and PrivateBancorp. As described above, this existing employment agreement will be superseded by the new employment agreement that Mr. Richman has entered
into with CIBC when it becomes effective at the effective time.
Under
the existing agreement, upon a termination of Mr. Richman's employment without "cause" or for "good reason" (including Mr. Richman's resignation for any reason during
the ninety day period beginning on the first anniversary of the change in control) during the period beginning six months prior to, and ending on the second anniversary of, a change in control,
Mr. Richman would be entitled to the following payments and benefits, subject to the execution and effectiveness of a general release of claims: (i) cash severance in an amount equal to
300% of sum of (a) base salary, plus (b) the greater of (x) the prior year's actual bonus and (y) the average of the sum of the bonus amounts earned with respect to the
three calendar years immediately preceding the calendar year of termination, (ii) 36 months of group health plan coverage at the active employee rate; (iii) outplacement services
for 24 months; and (iv) a prorated bonus based on the prior year's actual bonus and the portion of the year of termination during which Mr. Richman was employed.
The
existing agreement provides that Mr. Richman will be entitled to a full gross-up if the payments and benefits to Mr. Richman in connection with a change in control
would be subject to an excise tax by reason of Sections 4999 and 280G of the U.S. Internal Revenue Code.
The
existing agreement also includes an indefinite confidentiality covenant and non-competition and non-solicitation covenants that apply during employment and for one year following
termination of employment.
Employment Agreements with Named Executive Officers other than Mr. Richman
Each named executive officer other than Mr. Richman is also party to an existing employment agreement with PrivateBank. Under
the existing agreements, upon a termination of the officer's employment without "cause" or for "good reason" during the period beginning six months prior to, and ending on the second anniversary of, a
change in control, the officer would be entitled to the following payments and benefits, subject to the execution and effectiveness of a general release of claims: (i) cash severance in an
amount equal to 200% of the sum of (a) base salary, plus (b) the greater of (x) the
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prior
year's actual bonus and (y) the average of the sum of the bonus amounts earned with respect to the three calendar years immediately preceding the calendar year of termination,
(ii) 24 months of group health plan coverage at the active employee rate; (iii) outplacement services for 12 months; and (iv) a prorated bonus based on the prior
year's actual bonus and the portion of the year of termination during which the officer was employed.
Each
existing agreement includes a modified gross-up provision providing that the officer will be entitled to a full gross-up if the payments and benefits to the officer in connection
with a change in control would be subject to an excise tax by reason of Sections 4999 and 280G of the U.S. Internal Revenue Code and exceed the threshold level for application of such tax by
more than 10%; if such excess equals or is less than 10%, the payments will instead be reduced below the threshold.
The
existing agreements also include an indefinite confidentiality covenant and non-competition and non-solicitation covenants that apply during employment and for one year following
termination of employment.
See
the section entitled "Interests of PrivateBancorp's Directors and Executive Officers in the MergerQuantification of Potential Payments and Benefits to PrivateBancorp's
Named Executive Officers in Connection with the Merger" beginning on page 85 of this proxy statement/prospectus for an estimate of the value of the severance benefits payable to
PrivateBancorp's named executive officers upon a qualifying termination following the effective time.
Employment Agreements with Other Executive Officers
The four executive officers who are not named executive officers are party to existing employment agreements with PrivateBank, the
terms of which are the same in all material respects as the terms of the existing employment agreements with the named executive officers (other than Mr. Richman) as described above, except
that (i) the cash severance percentage is 250% for one of the officers and 150% for the other three officers and (ii) the number of months of group health plan coverage at the active
employee rate is 24 for two of the officers and 18 for the other two officers.
Two
of the existing agreements provide that if the payments and benefits to the officer under the agreement in connection with a change in control would be subject to an excise tax by
reason of Sections 4999 and 280G of the U.S. Internal Revenue Code then such payments and benefits will be reduced to one dollar below the threshold level for application of the tax, unless
such reduced amount is less than the net amount of such payments and benefits after payment of the excise tax, in which case no reduction will be made. The other existing agreements include the same
modified gross-up provision described above with respect to named executive officers other than Mr. Richman.
The
existing agreements also include an indefinite confidentiality covenant and non-competition and non-solicitation covenants that apply during employment and for one year following
termination of employment.
Based
on the assumptions described above under "Interests of PrivateBancorp's Directors and Executive Officers in the MergerCertain Assumptions", the estimated aggregate
cash severance (including prorated bonus) payable to PrivateBancorp's four executive officers who are not named executive officers upon a qualifying termination following the effective time is
$6,251,749.
Retention Arrangements with PrivateBancorp Executive Officers
Messrs. Killips, Hague, Lubin and Ms. Case (our named executive officers, other than Mr. Richman) have each been
granted a retention award in the amount of $1,200,000, $1,000,000, $1,000,000 and $900,000, respectively, from the retention pool established by PrivateBancorp and CIBC in connection with the merger.
In addition, the four executive officers who are not named executive officers have been granted retention awards in the aggregate amount of $3,575,000. Each retention
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award
is in the form of 25% cash and 75% cash-settled CIBC restricted stock units. The cash portion of each award vests, subject to continued employment, through the date that is three months
following the closing date and the restricted stock unit portion of the award vests, subject to continued employment, with respect to one-third of the units, on the date that is nine months following
the closing date and, with respect to the remaining two-thirds of the units, on the date that is eighteen months following the closing date, or, with respect to both parts of the award, upon a
termination of employment without cause or for good reason or due to death or disability on or after the closing date and prior to the scheduled vesting date.
Indemnification and Insurance
Pursuant to the terms of the merger agreement, PrivateBancorp directors, officers and employees will be entitled to certain ongoing
indemnification and coverage under directors' and officers' liability insurance policies following the merger. Such indemnification and insurance coverage is further described in the section entitled
"The Merger AgreementCovenants and AgreementsIndemnification and Directors' and Officers' Insurance" beginning on page 115 of this proxy statement/prospectus.
Quantification of Potential Payments and Benefits to PrivateBancorp's Named Executive Officers
in Connection with the Merger
The information set forth in the table below is being provided in order to comply with Item 402(t) of the SEC's
Regulation S-K, which requires disclosure of information about certain compensation for each "named executive officer" of PrivateBancorp that is based on, or otherwise relates to, the merger
("merger-related compensation"). As described under the caption "Interests of PrivateBancorp's Directors and Executive Officers in the Merger" above, Mr. Richman has entered into a new
employment arrangement with CIBC that will become effective upon the closing of the merger. The merger-related compensation described below is based on the named executive officers' existing
employment agreements with PrivateBancorp and/or PrivateBank, existing PrivateBancorp equity award plans and agreements, retention agreements entered into with named executive officers other than
Mr. Richman in connection with the merger and the merger agreement. It does not include amounts payable to Mr. Richman under the new employment agreement with CIBC following the closing
of the merger (including (i) post-closing salary, annual incentive compensation, and other compensation and benefits to be provided under Mr. Richman's new employment agreement with
CIBC, and (ii) severance payable to Mr. Richman upon a qualifying termination pursuant to his new employment agreement with CIBC). For additional details regarding the terms of the
payments and benefits that Mr. Richman will be entitled to receive under his new employment arrangement with CIBC, as well as terms of the payments and benefits described below, see the
discussion under the caption "Interests of PrivateBancorp's Directors and Executive Officers in the Merger" above.
The
amounts shown in the table below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date, including the assumptions
described below and in the footnotes to the table, and do not reflect certain compensation actions that may occur before completion of the merger, including certain compensation actions that
PrivateBancorp is permitted to take prior to the completion of the merger, as described in the section entitled "The Merger AgreementCovenants and AgreementsConduct of
Businesses Prior to the Completion of the Merger" beginning on page 109 of this proxy statement/prospectus. For purposes of calculating such amounts, the following assumptions were
used:
-
-
The relevant price per share of PrivateBancorp common stock is $43.81, which is the average closing price per share of
PrivateBancorp's common stock as quoted on the NASDAQ over the first five business days following the first public announcement of the merger on June 29, 2016;
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-
-
The effective time is August 11, 2016, which is the assumed date of the closing of the merger solely for purposes of the
disclosure in this section; and
-
-
Each executive officer of PrivateBancorp is terminated by PrivateBancorp without "cause" or resigns for "good reason" (as such terms
are defined in the relevant PrivateBancorp plans and agreements), in either case immediately following the assumed effective time of August 11, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Cash ($)(1)
|
|
Equity($)(2)
|
|
Benefits($)(3)
|
|
Tax
Reimbursement
($)(4)
|
|
Other ($)(5)
|
|
Total ($)
|
|
Larry D. Richman
|
|
|
9,225,792
|
|
|
7,985,955
|
|
|
61,770
|
|
|
7,621,154
|
|
|
N/A
|
|
|
24,894,671
|
|
Kevin M. Killips
|
|
|
2,711,667
|
|
|
2,313,890
|
|
|
35,722
|
|
|
2,570,998
|
|
|
1,200,000
|
|
|
8,832,277
|
|
Bruce R. Hague
|
|
|
2,525,342
|
|
|
1,837,009
|
|
|
46,180
|
|
|
|
|
|
1,000,000
|
|
|
5,408,531
|
|
Bruce S. Lubin
|
|
|
2,585,574
|
|
|
2,060,331
|
|
|
46,180
|
|
|
2,330,725
|
|
|
1,000,000
|
|
|
8,022,810
|
|
Karen B. Case
|
|
|
2,139,413
|
|
|
1,691,089
|
|
|
46,180
|
|
|
2,059,736
|
|
|
900,000
|
|
|
6,836,418
|
|
-
(1)
-
Cash
. Consists of (a) cash severance in an amount equal to 200% (300% for
Mr. Richman) of the sum of (i) base salary, plus (ii) greater of (x) the prior year's actual bonus and (y) average of the sum of the bonus amounts earned with
respect to the three calendar years immediately preceding the calendar year of termination, and (b) a prorated bonus based on the prior year's actual bonus and the portion of the year of
termination during which the officer was employed. All such amounts are "double trigger" and payable only upon a termination without cause or resignation for good reason (in the case of
Mr. Richman, including resignation for any reason during the ninety-day period following the first anniversary of the effective time) during the period beginning six months prior to, and ending
on the second anniversary of, the effective time. The estimated amount of such payments is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Severance ($)
|
|
Prorated Bonus ($)
|
|
Total ($)
|
|
Larry D. Richman
|
|
|
8,190,000
|
|
|
1,035,792
|
|
|
9,225,792
|
|
Kevin M. Killips
|
|
|
2,340,000
|
|
|
371,667
|
|
|
2,711,667
|
|
Bruce R. Hague
|
|
|
2,175,000
|
|
|
350,342
|
|
|
2,525,342
|
|
Bruce S. Lubin
|
|
|
2,220,000
|
|
|
365,574
|
|
|
2,585,574
|
|
Karen B. Case
|
|
|
1,850,000
|
|
|
289,413
|
|
|
2,139,413
|
|
-
(2)
-
Equity
. Consists of unvested stock options, unvested restricted stock units and unvested
performance stock units that are converted into unvested Parent awards at the effective time. All such awards are "double trigger" and would vest upon a termination of employment without cause or for
good reason at any time following the effective time. The amounts reflected in the table exclude the estimated value of PrivateBancorp equity awards held by named executive officers who are retirement
eligible as of the assumed date of closing of August 11, 2016 ($1,133,357, $394,367, $355,054, $380,927 and $299,759 for Messrs. Richman, Killips, Hague, Lubin and Ms. Case,
respectively) that would vest upon retirement in the ordinary course and independent of the acquisition, pursuant to the terms of such awards as in effect on the grant date. For further details
regarding the treatment of PrivateBancorp equity awards in connection with the merger, see
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"Interests
of PrivateBancorp's Directors and Executive Officers in the MergerEquity Compensation". The estimated value of such awards is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Stock
Options ($)
|
|
Restricted
Stock
Units ($)
|
|
Performance
Share
Units ($)
|
|
Total ($)
|
|
Larry D. Richman
|
|
|
778,407
|
|
|
1,024,555
|
|
|
6,182,993
|
|
|
7,985,955
|
|
Kevin M. Killips
|
|
|
243,042
|
|
|
272,272
|
|
|
1,798,576
|
|
|
2,313,890
|
|
Bruce R. Hague
|
|
|
191,851
|
|
|
217,916
|
|
|
1,427,242
|
|
|
1,837,009
|
|
Bruce S. Lubin
|
|
|
216,442
|
|
|
242,896
|
|
|
1,600,993
|
|
|
2,060,331
|
|
Karen B. Case
|
|
|
177,092
|
|
|
200,047
|
|
|
1,313,950
|
|
|
1,691,089
|
|
-
(3)
-
Benefits
. Consists of (a) 24 months (36, in the case of Mr. Richman) of
group medical coverage at the active employee rate; and (b) outplacement services for 12 months (24 months in the case of Mr. Richman). All such benefits are "double
trigger" and are provided only on a termination without cause or resignation for good reason (in the case of Mr. Richman, including resignation for any reason during the ninety-day period
following the first anniversary of the effective time) during the period beginning six months prior to, and ending on the second anniversary of, the effective time. The estimated value of the group
medical coverage and outplacement services is shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Group
Health
Coverage ($)
|
|
Outplacement
Services ($)
|
|
Total ($)
|
|
Larry D. Richman
|
|
|
31,770
|
|
|
30,000
|
|
|
61,770
|
|
Kevin M. Killips
|
|
|
10,722
|
|
|
25,000
|
|
|
35,722
|
|
Bruce R. Hague
|
|
|
21,180
|
|
|
25,000
|
|
|
46,180
|
|
Bruce S. Lubin
|
|
|
21,180
|
|
|
25,000
|
|
|
46,180
|
|
Karen B. Case
|
|
|
21,180
|
|
|
25,000
|
|
|
46,180
|
|
-
(4)
-
Tax Reimbursements
. Includes the estimated amount of the gross-up payment due, if any, for the
excise tax imposed on the payments and benefits to each named executive officer in connection with a change in control by reason of Sections 4999 and 280G of the U.S. Internal Revenue Code.
-
(5)
-
Retention Awards
. Includes the value of retention awards granted from the retention pool
established by PrivateBancorp in connection with the merger. Such awards have "double trigger" vesting and would vest upon a termination of employment without cause or for good reason or due to death
or disability on or after the closing date and prior to the scheduled vesting date. For further details regarding the retention awards, see "Interests of PrivateBancorp's Directors and Executive
Officers in the MergerEmployment and Retention AgreementsRetention Arrangements with PrivateBancorp Executive Officers."
Material United States Federal Income Tax Consequences
The following is a summary of the material United States federal income tax consequences of the merger to U.S. holders (as defined
below) of PrivateBancorp common stock and the ownership of CIBC common shares received in the merger. The below discussion applies to you only if you exchange your PrivateBancorp common stock for CIBC
common shares in the merger and you hold your PrivateBancorp common stock and CIBC common shares as capital assets for tax purposes. This section does not apply to you if you are a member of a special
class of holders subject to special rules, including:
-
-
a holder who acquired PrivateBancorp common stock pursuant to the exercise of employee stock options or otherwise as compensation,
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-
-
a dealer in securities,
-
-
a financial institution;
-
-
a dealer or broker in stocks and securities, or currencies,
-
-
a trader in securities that elects to use a mark-to-market method of accounting for securities holdings,
-
-
a tax-exempt organization,
-
-
an S corporation or other pass-through entity (or an investor in an S corporation or other pass-through entity),
-
-
a life insurance company,
-
-
a mutual fund,
-
-
a person liable for alternative minimum tax,
-
-
a person that actually or constructively owns 5% or more of the voting stock of PrivateBancorp or CIBC,
-
-
a person that holds shares of PrivateBancorp common stock or CIBC common shares as part of a straddle or a hedging or conversion
transaction,
-
-
a U.S. holder (as defined below) whose functional currency is not the U.S. dollar, or
-
-
a United States expatriate.
This
section is based on the Code, its legislative history, existing and proposed regulations, and published rulings and court decisions, all as currently in effect, as well as the
Canada-United States Income Tax Convention (1980) as amended, referred to as the "Treaty." These laws are subject to change, possibly on a retroactive basis. We have not and will not seek any rulings
from the United States Internal Revenue Service ("IRS") regarding the matters discussed below. There can be no assurance that the IRS will not take positions concerning the tax consequences of the
merger that are different from those discussed below. In addition, the discussion does not address any alternative minimum tax or any state, local or non-U.S. tax consequences of the merger, nor does
it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010. Determining the actual tax
consequences of the merger to you may be complex. They will depend on your specific situation and on factors that are not within the control of CIBC or PrivateBancorp. You should consult with your own
tax advisor as to the tax consequences of the merger in your particular circumstances.
If
a partnership holds CIBC common shares or PrivateBancorp common stock, the tax treatment of a partner will generally depend on the status of the partners and the tax treatment of the
partnership. If you are a partner of a partnership holding CIBC common shares or PrivateBancorp common stock, you should consult your tax advisors.
For
purposes of this discussion, we use the term "U.S. holder" to mean a beneficial owner of PrivateBancorp common stock or CIBC common shares, as relevant, that
is:
-
-
an individual citizen or resident of the United States for United States federal income tax purposes,
-
-
a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or
under the laws of the United States, any U.S. state or the District of Columbia,
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-
-
an estate the income of which is subject to United States federal income taxation regardless of its source, or
-
-
a trust which either (1) is subject to the primary supervision of a court within the United States and one or more United
States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a
United States person.
The Merger
General Tax Consequences of the Merger
The merger is intended to qualify as a reorganization for United States federal income tax purposes, and it is a condition to the
parties' respective obligations to complete the merger that each of CIBC and PrivateBancorp receive a legal opinion from Mayer Brown LLP and Wachtell, Lipton, Rosen & Katz, respectively,
to the effect that (i) the merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code and (ii) the merger will not result in gain recognition to
the holders of PrivateBancorp common stock pursuant to Section 367(a) of the Code (assuming that, in the case of any such holder who would be treated as a "five-percent transferee shareholder"
within the meaning of Treasury Regulations Section 1.367(a)-3(c)(5)(ii), such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations
Section 1.367(a)-8, as provided for in Treasury Regulations Section 1.367(a)-3(c)(1)(iii)(B), and complies with the requirements of that agreement and Treasury Regulations
Section 1.367(a)-8 for avoiding the recognition of gain). These opinions will be based on assumptions, representations, warranties and covenants, including those contained in the merger
agreement and in tax representation letters, to be provided by CIBC and PrivateBancorp. The accuracy of such assumptions, representations and warranties, and compliance with such covenants, could
affect the conclusions set forth in such opinions.
Provided
the merger qualifies as a "reorganization" within the meaning of Section 368(a) of the Code, a PrivateBancorp common stockholder, upon exchanging the holder's
PrivateBancorp common stock for CIBC common shares and cash (other than cash received in lieu of a fractional share),generally will recognize gain (but not loss) in an amount equal to the lesser of
(i) the amount of gain realized (i.e., the excess of the sum of the amount of cash and the fair market value of the CIBC common shares received pursuant to the merger over that holder's
adjusted tax basis in its shares of PrivateBancorp common stock surrendered) and (ii) the amount of cash received pursuant to the merger (excluding any cash received in lieu of a fractional
share). If a holder acquired different blocks of PrivateBancorp common stock at different times or different prices, such holder should consult its tax advisor regarding the manner in which gain or
loss should be determined. Any recognized gain generally will be long-term capital gain if, as of the effective date of the merger, the holder's holding period with respect to the PrivateBancorp
common stock surrendered exceeds one year. If, however, the cash received has the effect of the distribution of a dividend, the gain will be treated as a dividend to the extent of the holder's ratable
share of accumulated earnings and profits as calculated for United States federal income tax purposes. See "Possible Treatment of Cash as a Dividend" below.
The
aggregate tax basis in the shares of CIBC common shares that a PrivateBancorp common stockholder receives in the merger, including any fractional share interests deemed received and
sold as described below, will equal the holder's aggregate adjusted tax basis in the PrivateBancorp common stock the holder surrenders, reduced by the amount of cash received (excluding any cash
received in lieu of a fractional share) and increased by the amount of gain, if any recognized by the holder (excluding any gain recognized with respect to cash received in lieu of a fractional share)
on the
exchange. A PrivateBancorp common stockholder's holding period for the shares of CIBC common shares that the holder receives in the merger (including a fractional share interest deemed received and
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sold
as described below) will include the holder's holding period for the shares of PrivateBancorp common stock that the holder surrenders in the exchange.
Possible Treatment of Cash as a Dividend
In general, the determination of whether the gain recognized in the exchange will be treated as capital gain or has the effect of a
distribution of a dividend depends upon whether and to what extent the exchange reduces the holder's deemed percentage stock ownership of CIBC. For purposes of this determination, the holder is
treated as if it first exchanged all of its shares of PrivateBancorp common stock solely for CIBC common shares and then CIBC immediately redeemed, which we refer to in this document as the "deemed
redemption," a portion of the CIBC common shares in exchange for the cash the holder actually received. The gain recognized in the deemed redemption will be treated as capital gain if the deemed
redemption is (i) "substantially disproportionate" with respect to the holder or (ii) "not essentially equivalent to a dividend."
The
deemed redemption will generally be "substantially disproportionate" with respect to a holder if the percentage described in (ii) below is less than 80% of the percentage
described in (i) below. Whether the deemed redemption is "not essentially equivalent to a dividend" with respect to a holder will depend upon the holder's particular circumstances. At a
minimum, however, in order for the deemed redemption to be "not essentially equivalent to a dividend," the deemed redemption must result in a "meaningful reduction" in the holder's deemed percentage
stock ownership of CIBC. In general, that determination requires a comparison of (i) the percentage of the outstanding stock of CIBC that the holder is deemed actually and constructively to
have owned immediately before the deemed redemption and (ii) the percentage of the outstanding stock of CIBC that is actually and constructively owned by the holder immediately after the deemed
redemption. In applying the above tests, a holder may, under the constructive ownership rules, be deemed to own stock that is owned by other persons or stock underlying a holder's option to purchase
in addition to the stock actually owned by the holder.
The
Internal Revenue Service has ruled that a shareholder in a publicly held corporation whose relative stock interest is minimal (e.g., less than 1%) and who exercises no control with
respect to corporate affairs is generally considered to have a "meaningful reduction" if that shareholder has a relatively minor (e.g., approximately 3%) reduction in its percentage stock ownership
under the above analysis;
accordingly, the gain recognized in the exchange by such a shareholder would be treated as capital gain.
These
rules are complex and dependent upon the specific factual circumstances particular to each holder. Consequently, each holder that may be subject to these rules should consult its
tax advisor as to the application of these rules to the particular facts relevant to such holder.
Cash in Lieu of Fractional Shares
A U.S. holder of PrivateBancorp common stock who receives cash in lieu of a fractional share of CIBC common shares in the merger
generally will be treated as having received such fractional share in the merger and then as having received cash in redemption of such fractional share. Gain or loss generally will be recognized
based on the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder's aggregate tax basis in the PrivateBancorp common stock surrendered
which is allocable to the fractional share. This gain or loss generally will be capital gain or loss, and long-term capital gain or loss if the holding period for the PrivateBancorp common stock is
more than one year at the effective time of the merger. Long-term capital gain of non-corporate U.S. holders is generally taxed at preferential rates. The deductibility of capital losses is subject to
limitations.
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Backup Withholding and Information Reporting on the Merger
Payments of cash made to a U.S. holder and exchanges of shares by a U.S. holder for which gain or loss is recognized in connection with
the merger may be subject to information reporting and, in the case of payments of cash, "backup withholding" unless the U.S. holder of PrivateBancorp common
stock:
-
-
provides a correct taxpayer identification number and any other required information to the exchange agent, or
-
-
is a corporation or comes within certain exempt categories and otherwise complies with applicable requirements of the backup
withholding rules.
Backup
withholding does not constitute an additional tax, but merely an advance payment of tax, which may be refunded to the extent it results in an overpayment of tax if the required
information is supplied to the IRS.
Ownership and Disposition of CIBC Common Shares by U.S. Holders
Passive Foreign Investment Company
CIBC does not believe that it is, for U.S. federal income tax purposes, a passive foreign investment company, or PFIC, and expects to
operate in such a manner so as not to become a PFIC, but this conclusion is a factual determination that is made annually and thus may be subject to change. If CIBC is or becomes a PFIC, you could be
subject to additional United States federal income taxes on gains recognized with respect to CIBC common shares and on certain distributions, plus an interest charge on certain taxes treated as having
been deferred under the PFIC rules. The remainder of this discussion assumes that CIBC will not be treated as a PFIC for U.S. federal income tax purposes.
Taxation of Dividends to U.S. Holders
Distributions on a U.S. holder's CIBC common shares (including amounts withheld to reflect Canadian withholding taxes) will be taxable
as dividends to the extent paid out of CIBC's current or accumulated earnings and profits, as determined under United States federal income tax principles. If you are a non-corporate U.S. holder,
dividends paid to you that constitute qualified dividend income will be taxable to you at the preferential rates applicable to long-term capital gains provided that you meet certain holding period
requirements. Dividends we pay with respect to CIBC common shares generally will be qualified dividend income.
A
dividend is taxable to you when you receive the dividend, actually or constructively. The dividend will not be eligible for the dividends-received deduction generally allowed to U.S.
corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S.
dollar value of payments made (including amounts withheld to reflect Canadian withholding taxes). The U.S. dollar value of any Canadian dollar payments made will be determined at the spot Canadian
dollar/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss
resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as
ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United
States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated
as a non-taxable return of capital to the extent of your tax basis in your CIBC common shares and thereafter as capital gain.
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Subject
to certain limitations, the Canadian tax withheld in accordance with the Treaty and paid over to Canada will be creditable or deductible against your United States federal income
tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. To the extent a refund of the tax withheld
is available to you under Canadian law or under the Treaty, the amount of tax withheld that is refundable will not be eligible for credit against your U.S. federal income tax liability.
For
foreign tax credit purposes, dividends will generally be income from sources outside the United States and will, depending on your circumstances, be either "passive" or "general"
income for purposes of computing the foreign tax credit allowable to you.
Taxation of Dividends to Non-U.S. Holders
If you are a non-U.S. holder, dividends paid to you in respect of CIBC common shares will not be subject to United States federal
income tax unless the dividends are "effectively connected" with your conduct of a trade or business within the United States, and the dividends are attributable to a permanent establishment that you
maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis. In such cases you generally will be taxed
in the same manner as a U.S. holder. If you are a corporate non-U.S. holder, "effectively connected" dividends may, under certain circumstances, be subject to an additional "branch profits tax" at a
30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
Taxation of Capital Gains to U.S. Holders
If you are a U.S. holder and you sell or otherwise dispose of your CIBC common shares, you will recognize capital gain or loss for
United States federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your shares. Capital
gain of a non-corporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The gain or loss will generally be income or loss from sources within
the United States for foreign tax credit limitation purposes.
Taxation of Capital Gains to Non-U.S. Holders
If you are a non-U.S. holder, you will not be subject to U.S. federal income tax on gain recognized on the sale or other disposition of
your CIBC common shares unless (i) the gain is "effectively connected" with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment
that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis, or (ii) you are an
individual, you are present in the United States for 183 or more days in the taxable year of the sale and certain other conditions exist. If you are a corporate non-U.S. holder, "effectively
connected" gains that you recognize may also, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
Backup Withholding and Information Reporting
If you are a non-corporate U.S. holder, information reporting requirements, on IRS Form 1099, generally will apply
to:
-
-
dividend payments or other taxable distributions made to you within the United States, and
-
-
the payment of proceeds to you from the sale of CIBC common shares effected at a U.S. office of a broker.
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Additionally,
backup withholding may apply to such payments if you are a non-corporate U.S. holder that:
-
-
fails to provide an accurate taxpayer identification number,
-
-
is notified by the IRS that you have failed to report all interest and dividends required to be shown on your federal income tax
returns, or
-
-
in certain circumstances, fails to comply with applicable certification requirements.
If
you are a non-U.S. holder, you are generally exempt from backup withholding and information reporting requirements with respect to:
-
-
dividend payments made to you outside the United States by us or another non-U.S. payor,
-
-
other dividend payments and the payment of the proceeds from the sale of CIBC common shares effected at a U.S. office of a broker, as
long as the income associated with such payments is otherwise exempt from United States federal income tax, and
-
-
the payor or broker does not have actual knowledge or reason to know that you are a U.S. person and you have furnished the payor or
broker:
-
-
an IRS Form W-8BEN or W-8BEN-E or an acceptable substitute form upon which you certify, under penalties of perjury, that you
are a non-United States person,
-
-
other documentation upon which it may rely to treat the payments as made to a non-United States person in accordance with U.S.
Treasury regulations, or
-
-
you otherwise establish an exemption.
Payment
of the proceeds from the sale of CIBC common shares effected at a foreign office of a broker generally will not be subject to information reporting or backup withholding.
However, a sale of CIBC common shares or that is effected at a foreign office of a broker will be subject to information reporting and backup withholding
if:
-
-
the proceeds are transferred to an account maintained by you in the United States,
-
-
the payment of proceeds or the confirmation of the sale is mailed to you at a U.S. address, or
-
-
the sale has some other specified connection with the United States as provided in U.S. Treasury regulations,
unless
the broker does not have actual knowledge or reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an
exemption.
In
addition, a sale of CIBC common shares effected at a foreign office of a broker will be subject to information reporting if the broker
is:
-
-
a U.S. person,
-
-
a controlled foreign corporation for U.S. tax purposes,
-
-
a foreign person 50% or more of whose gross income is effectively connected with the conduct of a U.S. trade or business for a
specified three-year period, or
-
-
a foreign partnership, if at any time during its tax year:
-
-
one or more of its partners are "U.S. persons," as defined in U.S. Treasury regulations, who in the aggregate hold more than 50% of
the income or capital interest in the partnership, or
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-
-
such foreign partnership is engaged in the conduct of a U.S. trade or business, unless the broker does not have actual knowledge or
reason to know that you are a United States person and the documentation requirements described above are met or you otherwise establish an exemption. Backup withholding will apply if the sale is
subject to information reporting and the broker has actual knowledge that you are a U.S. person.
You
generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by filing a refund claim with the IRS.
Information with Respect to Foreign Financial Assets
Owners of "specified foreign financial assets" with an aggregate value in excess of $50,000 (and in some circumstances a higher
threshold) may be required to file an information report with respect to such assets with their tax returns. "Specified foreign financial assets" may include financial accounts maintained by foreign
financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons,
(ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties, and (iii) interests in foreign entities. Holders are urged to consult their tax
advisors regarding the application of this reporting requirement to their ownership of the CIBC common shares.
Foreign Account Tax Compliance Withholding
Pursuant to an intergovernmental agreements with the United States, CIBC and other non-U.S. financial institutions may be required to
report information to our local governments regarding the holders of CIBC common shares (with subsequent transmission of that information by the local government to the IRS). In the future we may be
required to withhold on a portion of dividend payments to holders of CIBC common shares if the indirect holders of those shares fail to comply with certain information reporting requirements. However,
such withholding will not apply to payments made before the later of January 1, 2019 or the date on which final regulations are issued. The rules for implementation of this withholding have not
yet been fully finalized, so it is impossible to determine at this time what impact, if any, such rules will have on holders of CIBC common shares.
This discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. Moreover, it only addresses U.S. federal
income tax and does not address any non-income tax or any foreign, state or local tax consequences. You should consult your own tax advisors concerning the U.S. federal income tax consequences of the
merger and the ownership of CIBC common shares in light of your particular situation, as well as any consequences arising under the laws of any other taxing jurisdiction.
Certain Canadian Federal Income Tax Consequences
The following summary describes the principal Canadian federal income tax considerations under the Income Tax Act (Canada) and the
Income Tax Regulations, or collectively, the "Canadian Tax Act," of the disposition of PrivateBancorp common stock pursuant to the merger and the ownership of CIBC common shares received in
consideration for the disposition of PrivateBancorp common stock pursuant to the merger, generally applicable to a beneficial owner of PrivateBancorp common stock who, for purposes of the Canadian Tax
Act and at all relevant times, (1) is not and is not deemed to be resident in Canada; (2) deals at arm's length with CIBC and Holdco; (3) is not affiliated with CIBC and Holdco;
(4) holds shares of PrivateBancorp common stock and CIBC common shares as capital property; and (5) does not use or hold, and is not deemed to use or hold, PrivateBancorp common stock or
CIBC common shares in a business carried on in Canada, referred to as a "non-resident holder." Special rules, which are not discussed in this summary, may apply to certain holders that are insurers
carrying on an insurance business in Canada and elsewhere.
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Generally,
PrivateBancorp common stock and CIBC common shares will be capital property to a non-resident holder provided the non-resident holder does not hold those shares in the course
of carrying on a business or as part of an adventure or concern in the nature of trade.
This
summary is based on the current provisions of the Canadian Tax Act and CIBC's understanding of the current administrative policies and assessing practices of the Canada Revenue
Agency published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Canadian Tax Act publicly announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof, referred to as the "Proposed Amendments," and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the
Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by
legislative, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed
herein.
This
discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. This summary is not exhaustive of all Canadian federal income tax
considerations. You should consult your own tax advisors concerning the Canadian federal income tax consequences of the
merger and the ownership of CIBC common shares in light of your particular situation, as well as any consequences arising under the laws of any other taxing jurisdiction.
For
the purposes of the Canadian Tax Act, any amount relating to the acquisition, holding or disposition of CIBC common shares must generally be converted into Canadian dollars using the
noon exchange rate quoted by the Bank of Canada for the day on which the amount arose.
Disposition of PrivateBancorp Common Stock Pursuant to the Merger
A non-resident holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on the disposition of
PrivateBancorp common stock pursuant to the merger, unless the PrivateBancorp common stock is "taxable Canadian property" to the non-resident holder for purposes of the Canadian Tax Act at the time of
the disposition and the non-resident holder is not entitled to relief under an applicable income tax convention between Canada and the country in which the non-resident holder is resident. See the
section below entitled "Taxable Canadian Property."
Dividends on CIBC Common Shares
Dividends paid or credited or deemed to be paid or credited on the CIBC common shares to a non-resident holder will be subject to
Canadian withholding tax at the rate of 25%, subject to any reduction in the rate of withholding to which the non-resident holder is entitled under any applicable income tax convention. Under the
Canada-U.S. Income Tax Convention (1980), referred to as the "Treaty," where dividends on the CIBC common shares are considered to be paid to or derived by a non-resident holder that is the beneficial
owner of the dividends and is a U.S. resident for the purposes of, and is entitled to benefits in accordance with, the provisions of the Treaty, the applicable rate of Canadian withholding tax is
generally reduced to 15%.
Disposition of CIBC Common Shares
A non-resident holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition or deemed
disposition of CIBC common shares, unless
the CIBC common shares are "taxable Canadian property" to the non-resident holder for purposes of the Canadian Tax Act at the time of the disposition and the non-resident holder is not entitled to
relief under an applicable income tax convention between Canada and the country in which the non-resident holder is resident. See the section below entitled "Taxable Canadian Property."
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Taxable Canadian Property
Generally, PrivateBancorp common stock or CIBC common shares, as the case may be, will not constitute taxable Canadian property to a
non-resident holder at a particular time provided that the applicable shares are listed at that time on a designated stock exchange (which includes the NYSE, the NASDAQ and the TSX), unless at any
particular time during the 60-month period that ends at that time (1) one or any combination of (i) the non-resident holder, (ii) persons with whom the non-resident holder does
not deal at arm's length, and (iii) partnerships in which the non-resident holder or a person described in (ii) holds a membership interest directly or indirectly through one or more
partnerships, owned 25% or more of the issued shares of any class or series of the capital stock of PrivateBancorp or CIBC, as the case may be, and (2) more than 50% of the fair market value of
the PrivateBancorp common stock or CIBC common shares, as the case may be, was derived directly or indirectly from one or any combination of: (i) real or immovable properties situated in
Canada, (ii) "Canadian resource properties" (as defined in the Canadian Tax Act), (iii) "timber resource properties" (as defined in the Canadian Tax Act), and (iv) options in
respect of, or interests in, or for civil law rights in, any of the foregoing property whether or not the property exists. Notwithstanding the foregoing, in certain circumstances set out in the
Canadian Tax Act, PrivateBancorp common stock or CIBC common shares, as the case may be, could be deemed to be taxable Canadian property to a particular non-resident holder. Non-resident holders whose
PrivateBancorp common stock or CIBC common shares may constitute taxable Canadian property should consult their own tax advisors.
Even
if PrivateBancorp common stock or CIBC common shares are taxable Canadian property to a non-resident holder, the Treaty will generally exempt a non-resident holder that is a U.S.
resident for the purposes of, and is entitled to benefits in accordance with, the provisions of the Treaty from tax under the Canadian Tax Act on any capital gain arising on the disposition of
PrivateBancorp common stock or CIBC common shares, as the case may be, unless the value of the PrivateBancorp common stock or CIBC common shares, as the case may be, at the time of disposition is
derived principally from real property situated in Canada.
Accounting Treatment
The merger will be accounted for by CIBC as a business combination applying the acquisition method of accounting for IFRS purposes.
Accordingly, the aggregate fair value of the consideration paid by CIBC in connection with the merger will be allocated to PrivateBancorp's net assets based on their fair values as of the close of the
transaction. The excess of the total purchase consideration over the fair value of the identifiable assets acquired, liabilities assumed and any non-controlling interest in PrivateBancorp will be
allocated to goodwill. The results of operations of PrivateBancorp will be included in CIBC's consolidated results of operations only for periods subsequent to the completion of the merger.
Stock Exchange Listings
CIBC common shares are currently listed on the TSX and the NYSE. The CIBC common shares to be issued in connection with the merger will
be listed on the TSX and the NYSE upon completion of the merger. Shares of PrivateBancorp common stock will be delisted from the NASDAQ promptly following completion of the merger.
Regulatory Matters Related to the Merger
Completion of the merger is subject to the receipt of all required regulatory approvals from the Federal Reserve Board, the
Superintendent of Financial Institutions (Canada) and the Illinois Department, the receipt of all other required approvals or consents, including those the failure of which to obtain would reasonably
be expected to have a material adverse effect on CIBC or
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PrivateBancorp,
and the expiration of any applicable statutory waiting period. CIBC and PrivateBancorp have agreed to use their reasonable best efforts to obtain all the required regulatory approvals.
We have made such filings for approvals with the Federal Reserve Board, the Superintendent of Financial Institutions (Canada) and the Illinois Department.
We
believe that we will be able to obtain all required regulatory approvals on a timely basis. However, we cannot make any assurances as to whether or when the required regulatory
approvals will be obtained, or whether any such approval will contain any materially burdensome condition. If any material regulatory approval imposes a materially burdensome condition, the parties
will not be required to complete the merger. The approval of an application means only that the regulatory criteria for approval have been satisfied or waived. It does not mean that the approving
authority has determined that the consideration to be received by PrivateBancorp common stockholders in the merger is fair. Regulatory approval does not constitute an endorsement or recommendation of
the merger.
Federal Reserve Board Approval
Completion of the merger is subject, among other things, to approval by the Federal Reserve Board pursuant to Section 3 of the
Bank Holding Company Act of 1956, as amended, referred to as the "BHC Act."
The
Federal Reserve Board may not grant that approval if it determines that the merger:
-
-
would result in a monopoly or be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States; or
-
-
would substantially lessen competition in any part of the United States, or tend to create a monopoly or result in a restraint of
trade,
unless
the Federal Reserve Board finds that the anti-competitive effects of the merger are clearly outweighed in the public interest by the probable effect of the merger in meeting the convenience and
needs of the communities to be served.
Additionally,
the Federal Reserve Board may not grant approval if it determines that CIBC is not subject to comprehensive supervision or regulation on a consolidated basis by the
appropriate authorities in Canada, or if CIBC does not provide the Federal Reserve Board with adequate assurances that CIBC will make information available to the Federal Reserve Board as appropriate
to determine compliance with applicable banking laws and regulations.
In
reviewing the merger, the Federal Reserve Board will consider, among other things:
-
-
the financial and managerial resources of both companies and PrivateBank both currently and after giving effect to the merger;
-
-
the capital adequacy of CIBC after the merger;
-
-
the convenience and needs of the communities to be served;
-
-
applicable overall capital and safety and soundness standards;
-
-
the effectiveness of both companies in combating money laundering activities;
-
-
each company's regulatory status, including legal and regulatory compliance; and
-
-
the extent to which the proposed acquisition would result in greater or more concentrated risks to the stability of the United States
banking or financial system.
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Under
the Community Reinvestment Act of 1977, as amended, referred to as the "CRA," the Federal Reserve Board will take into account PrivateBancorp's records of performance in meeting
the credit needs of its communities, including low-and moderate-income neighborhoods. PrivateBancorp has one insured depository institution subsidiary required to have ratings under the CRA and such
institution has received a satisfactory CRA rating in its most recent CRA examinations by its federal regulators.
Furthermore,
the BHC Act and Federal Reserve Board regulations require published notice of, and the opportunity for public comment on, our application, and authorize the Federal Reserve
Board to hold a public hearing or meeting if the Federal Reserve Board determines that a hearing or meeting would be appropriate. Any hearing or meeting or comments provided by third parties could
prolong the period during which the application is under review by the Federal Reserve Board.
The
BHC Act requires a waiting period of 30 days after Federal Reserve Board approval is received before the merger may be completed, during which time the DOJ may challenge the
merger on antitrust grounds. With the approval of the Federal Reserve Board and the concurrence of the DOJ, such waiting period may be reduced to no less than 15 days. The commencement of an
antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the merger, the DOJ could analyze the merger's effect on competition
differently than the Federal Reserve Board, and thus it is possible that the DOJ could reach a different conclusion than the Federal Reserve Board does regarding the merger's effects on competition. A
determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by private persons or state attorneys general.
If
Federal Reserve approval is obtained and the merger is completed, then CIBC and CIBC Holdco will each become a bank holding company under the BHC Act. CIBC is a foreign banking
organization that is already treated as a bank holding company under the BHC Act. Generally, the operations of a foreign banking organization and its U.S. subsidiaries and offices are subject to the
same comprehensive regulatory regime that governs the operations of U.S. domestic banking organizations, although there are certain differences. If the merger is completed, CIBC Holdco will become
subject to supervision and regulation by the Federal Reserve as a domestic U.S. bank holding company. CIBC will also continue to be subject to supervision and regulation by the Federal Reserve, and
would be required to comply with certain additional requirements under the BHC Act and Federal Reserve regulations.
Illinois Department Approval
Completion of the merger is subject, among other things, to approval by the Secretary of the Illinois Department (the "Commissioner")
under the Illinois BHC Act and Illinois Banking Act.
To
approve the merger, the Commissioner must make certain findings, including among others that:
-
-
the general character of the proposed management is such as to assure reasonable promise of successful, safe and sound operation;
-
-
depositors' interest will not be jeopardized;
-
-
future earnings prospects of CIBC after the merger are favorable;
-
-
any prior involvement of CIBC or proposed management personnel with any other financial institution, whether as stockholder, director,
officer or customer, was conducted in a safe and sound manner; and
-
-
the acquisition is authorized under the Illinois BHC Act.
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The
Commissioner also shall not approve the merger if upon consummation of the transaction CIBC and its affiliates would control 30% or more of the total amount of deposits which are
located in Illinois at insured depository institutions.
CIBC
is required to effect change in control within 180 days of Commissioner's approval of the merger and to notify the Commissioner of the date when the change in control is
finally effected.
Canadian Approvals
Under the Bank Act, the approval of the Superintendent of Financial Institutions (Canada) is required in order for CIBC to complete the
acquisition.
Holdco
is a permitted investment under paragraph 468(2)(b) of the Bank Act. Under the Bank Act, CIBC will be considered to have acquired an indirect beneficial interest in each of
the subsidiaries of PrivateBancorp upon the merger of PrivateBancorp with and into Holdco. As a result, the approval of the Superintendent of Financial Institutions (Canada) is required in respect of
PrivateBank, since it is an entity referred to in paragraph 468(1)(j) of the Bank Act, which requires approval pursuant to Section 468(6) of the Bank Act.
Under
subsection 65(1) of the Bank Act, no share of any class of shares of a bank shall be issued until it is fully paid for in money or, with the approval of the Superintendent
of Financial Institutions (Canada), in property. Pursuant to the merger agreement, if the merger is completed, holders of PrivateBancorp common stock will have the right to receive the merger
consideration for each share of PrivateBancorp common stock held immediately prior to the merger. The consideration for the issuance by CIBC of its common shares as part of the merger consideration
will be shares of PrivateBancorp. As a result, approval of the Superintendent of Financial Institutions (Canada) is required for CIBC to issue common shares in consideration for shares of
PrivateBancorp.
Other Regulatory Filings
Applications and notifications will be filed with other regulatory authorities, including the Delaware Secretary pursuant to Delaware
law.
Dissenters' Rights of Appraisal for Holders of PrivateBancorp Common Stock
The following discussion summarizes certain terms of the law pertaining to appraisal rights under Delaware law and is qualified in its
entirety by the full text of Section 262 of Delaware law, referred to as "Section 262," which Section 262 (in effect as of the date of this proxy statement/prospectus) is attached
to this document as Appendix D. The following summary does not constitute legal or other advice, nor does it constitute a recommendation that stockholders exercise their appraisal rights under
Section 262.
Under
Section 262, record holders of shares of PrivateBancorp's common stock who have neither voted in favor of, nor consented in writing to, the adoption of the merger agreement,
who continuously hold such shares through the effective time of the merger and who otherwise follow the procedures set forth in Section 262 will be entitled to have their shares appraised by
the Delaware Court of Chancery and to receive payment in cash of the "fair value" of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, as
determined by the Court, together with interest, if any, to be paid upon the amount determined to be the fair value.
Under
Section 262, where a merger agreement relating to a proposed merger is to be submitted for approval at a meeting of stockholders, the corporation, not less than
20 days prior to the meeting, must notify each of its stockholders who was a stockholder on the record date set by the board of directors
for such notice (or if no such record date is set, on the close of business on the day next preceding the day on which notice is given), with respect to such shares for which appraisal rights are
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available,
that appraisal rights are so available, and must include in each such notice a copy of Section 262. This document constitutes such notice to the holders of PrivateBancorp's common
stock and a copy of Section 262 (in effect as of the date of this proxy statement/prospectus) is attached to this document as Appendix D.
ANY HOLDER OF PRIVATEBANCORP'S COMMON STOCK WHO WISHES TO EXERCISE APPRAISAL RIGHTS, OR WHO WISHES TO PRESERVE SUCH HOLDER'S RIGHT TO DO SO, SHOULD CAREFULLY
REVIEW THE FOLLOWING DISCUSSION AND APPENDIX D BECAUSE FAILURE TO TIMELY AND PROPERLY COMPLY WITH THE PROCEDURES SPECIFIED WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS. MOREOVER, BECAUSE OF THE
COMPLEXITY OF THE PROCEDURES FOR EXERCISING THE RIGHT TO SEEK APPRAISAL OF SHARES OF PRIVATEBANCORP COMMON STOCK, PRIVATEBANCORP BELIEVES THAT, IF A STOCKHOLDER CONSIDERS EXERCISING SUCH RIGHTS, SUCH
STOCKHOLDER SHOULD SEEK THE ADVICE OF LEGAL COUNSEL.
Filing Written Demand
Holders of shares of PrivateBancorp's common stock who decide to exercise their appraisal rights must make a demand, in writing, for
appraisal of their shares of common stock prior to the taking of the vote on the merger at the stockholders meeting. A demand for appraisal will be sufficient if it reasonably informs PrivateBancorp
of the identity of the stockholder and that such stockholder intends thereby to demand appraisal of such stockholder's shares of common stock. If you wish to exercise your appraisal rights you must be
the record holder of such shares of PrivateBancorp's common stock on the date the written demand for appraisal is made and you must continue to hold such shares through the closing of the merger.
Accordingly, a stockholder who is the record holder of shares of common stock on the date the written demand for appraisal is made, but who thereafter transfers such shares prior to the closing of the
merger, will lose any right to appraisal in respect of such shares. A stockholder's failure to make the written demand prior to the taking of the vote on the merger will constitute a waiver of
appraisal rights.
Only
a holder of record of shares of PrivateBancorp's common stock is entitled to demand an appraisal of the shares registered in that holder's name. A demand for appraisal in respect of
shares of capital
stock should be executed by or on behalf of the holder of record, fully and correctly, as the holder's name appears on the holder's stock certificates, should specify the holder's name and mailing
address and the number of shares registered in the holder's name and must state that the person intends thereby to demand appraisal of the holder's shares in connection with the merger. If the shares
are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of the demand should be made in that capacity, and if the shares are owned of record by more than
one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an agent for two or more joint owners, may
execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as
agent for the record owner or owners. If the shares are held in "street name" by a broker, bank or nominee, the broker, bank or nominee may exercise appraisal rights with respect to the shares held
for one or more beneficial owners while not exercising the rights with respect to the shares held for other beneficial owners; in such case, however, the written demand should set forth the number of
shares as to which appraisal is sought and where no number of shares is expressly mentioned the demand will be presumed to cover all shares of capital stock held in the name of the record owner. If a
stockholder holds shares of PrivateBancorp common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for
appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record holder. Stockholders who hold their shares in brokerage accounts or
other nominee forms and who
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wish
to exercise appraisal rights should consult with their brokers to determine the appropriate procedures for the making of a demand for appraisal by such a nominee.
All
written demands for appraisal pursuant to Section 262 should be sent or delivered to PrivateBancorp at:
PrivateBancorp, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
Attention: Corporate Secretary
At
any time within 60 days after the effective date of the merger, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party may
withdraw his, her or its demand for appraisal and accept the consideration offered pursuant to the merger agreement by delivering to CIBC, a written withdrawal of the demand for appraisal. However,
any such attempt to withdraw the demand made more than 60 days after the effective date of the merger will require written approval of CIBC. No appraisal proceeding in the Delaware Court of
Chancery will be dismissed as to
any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Court deems just; provided, however, that any stockholder who has
not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its demand for appraisal and accept the merger consideration offered pursuant to the merger
agreement within 60 days after the effective date of the merger. If CIBC does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to
any stockholder who withdraws such stockholder's demand in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an
appraisal proceeding with respect to a stockholder, the stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than,
equal to or more than the consideration being offered pursuant to the merger agreement.
From
and after the effective date of the merger, any stockholder who has duly demanded appraisal in compliance with Section 262 will not be entitled to vote for any purpose the
shares of common stock subject to appraisal or to receive payment of dividends or other distributions on such shares except for dividends or distributions payable to stockholders of record at a date
prior to the effective date of the merger.
Notice of the Effective Date
Within 10 days after the effective date of the merger, CIBC must notify each holder of PrivateBancorp's common stock entitled to
appraisal rights of the effective date of the merger. Such notice may also be given by CIBC to each holder of PrivateBancorp's common stock who is entitled to appraisal rights before the effective
date of the merger.
Filing a Petition for Appraisal
Within 120 days after the effective date of the merger, but not thereafter, CIBC or any holder of PrivateBancorp's common stock
who has complied with Section 262 and is entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery
demanding a determination of the fair value of the shares held by all dissenting holders. CIBC is under no obligation to and has no present intention to file a petition and holders should not assume
that CIBC will file a petition. Accordingly, it is the obligation of the holders of capital stock to initiate all necessary action to perfect their appraisal rights in respect of shares of capital
stock within the time prescribed in Section 262. Within 120 days after the effective date of the merger, any holder of capital stock who has complied with the requirements for exercise
of appraisal rights will be entitled, upon written request, to receive from CIBC a statement setting forth the aggregate number of shares
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not
voted in favor of the approval of the merger agreement and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be
mailed within ten days after a written request therefor has been received by CIBC or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later.
Notwithstanding the foregoing, a person who is the beneficial owner of shares of capital stock held either in a voting trust or by a nominee on behalf of such person may, in such person's own name,
file a petition or request to receive from CIBC the statement described in this paragraph.
If
a petition for an appraisal is timely filed by a holder of shares of PrivateBancorp's common stock and a copy thereof is served upon CIBC, CIBC will then be obligated within
20 days to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares and with whom
agreements as to the value of their shares have not been reached. After notice to the stockholders as required by the Court, the Delaware Court of Chancery is empowered to conduct a hearing on the
petition to determine those stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the
stockholders who demanded payment for their shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceeding; and if any
stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to the stockholder. The Delaware Court of Chancery shall dismiss the proceedings unless
(i) the total number of shares entitled to appraisal exceeds 1% of the outstanding common stock eligible for appraisal or (ii) the value of the consideration provided in the merger for
such total number of common stock exceeds $1 million.
Determination of Fair Value
After the Delaware Court of Chancery determines the holders of capital stock entitled to appraisal, the appraisal proceeding shall be
conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Court shall determine the "fair
value" of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the
fair value. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided below, interest from the effective date of the merger through the date of payment of
the judgment shall be compounded quarterly and shall accrue at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between
the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the Holdco may pay to each stockholder entitled to appraisal an
amount in cash, in which case interest shall accrue
thereafter as provided herein only upon the sum of (i) the difference, if any, between the amount so paid and the fair market value of the shares as determined by the Delaware Court of
Chancery, and (ii) interest theretofore accrued, unless paid at the time.
In
determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In
Weinberger
v.
UOP, Inc
., the Supreme Court of
Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating
that "proof of value by any techniques or methods that are generally considered acceptable in the financial community and otherwise admissible in court" should be considered, and that "fair price
obviously requires consideration of all relevant factors involving the value of a company." The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider
market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. Section 262 provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the merger." In
Cede & Co.
v.
Technicolor, Inc.
, the
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Delaware
Supreme Court stated that such exclusion is a "narrow exclusion that does not encompass known elements of value," but which rather applies only to the speculative elements of value arising
from such accomplishment or expectation. In
Weinberger
, the Supreme Court of Delaware also stated that "elements of future value, including the nature
of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered."
Stockholders
considering seeking appraisal should be aware that the fair value of their shares as so determined may be more than, the same as or less than the consideration they would
receive pursuant to the merger if they did not seek appraisal of their shares and that an investment banking opinion as to the fairness, from a financial point of view, of the consideration payable in
a sale transaction, such as the merger, is not an opinion as to, and does not otherwise address, fair value under Section 262. Although PrivateBancorp believes that the merger consideration is
fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result
in a determination of a value higher or lower than, or the same as, the merger consideration. Neither CIBC nor PrivateBancorp anticipates offering more than the applicable merger consideration to any
stockholder of PrivateBancorp exercising appraisal rights, and each of CIBC and PrivateBancorp reserves the right to assert, in any appraisal proceeding, that for purposes of Section 262, the
"fair value" of a share of capital stock is less than the applicable merger consideration.
If
a petition for appraisal is not timely filed, then the right to an appraisal will cease. The costs of the action (which do not include attorneys' fees or the fees and expenses of
experts) may be determined by the Court and taxed upon the parties as the Court deems equitable under the circumstances. Upon application of a stockholder, the Court may order all or a portion of the
expenses incurred by a
stockholder in connection with an appraisal proceeding, including, without limitation, reasonable attorneys' fees and the fees and expenses of experts utilized in the appraisal proceeding, to be
charged pro rata against the value of all the shares entitled to be appraised.
If
any stockholder who demands appraisal of shares of capital stock under Section 262 fails to perfect, successfully withdraws or loses such holder's right to appraisal, the
stockholder's shares of capital stock will be deemed to have been converted at the effective date of the merger into the right to receive the merger consideration pursuant to the merger agreement. A
stockholder will fail to perfect, or effectively lose, the stockholder's right to appraisal if no petition for appraisal is filed within 120 days after the effective date of the merger. In
addition, as indicated above, a stockholder may withdraw his, her or its demand for appraisal in accordance with Section 262 and accept the merger consideration offered pursuant to the merger
agreement.
Resale of CIBC Common Shares
U.S. Resale Restrictions
The CIBC common shares issued under the terms of the merger agreement will not be subject to any restrictions on transfer arising under
the Securities Act of 1933, as amended, referred to as the "Securities Act."
Canadian Resale Restrictions
The CIBC common shares issued under the terms of the merger agreement will not be subject to any restrictions on transfer under
applicable Canadian provincial or territorial securities laws. To the extent Canadian provincial or territorial securities laws apply, however, the first trade in the CIBC common shares issued under
the terms of the merger agreement must be made in accordance with customary conditions, including that such trade is not a control distribution, that no unusual effort is made to prepare the market or
to create a demand for such shares and that
no extraordinary commission or consideration is paid in respect of the trade. In addition, when selling the CIBC
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common
shares, holders who engage in the business of trading in securities, or hold themselves out as engaging in the business of trading in securities may also be subject to dealer registration
requirements of applicable Canadian provincial or territorial securities laws. If a holder requires advice on the application of Canadian provincial or territorial securities laws to the trade of CIBC
common shares, the holder should consult its own legal advisor.
Litigation Related to the Merger
Following the announcement of the transaction, three putative class actions were filed on behalf of PrivateBancorp stockholders in the
Circuit Court of Cook County, Illinois:
Solak v. Richman, et al.,
No. 2016-CH-08949;
Parshall v.
PrivateBancorp, Inc., et al.
, No. 2016-CH-09135; and
Griffin v. PrivateBancorp, Inc., et al.
,
No. 2016-CH-09435. The three actions have been consolidated and styled
In re PrivateBancorp, Inc. Shareholder Litigation
, 2016-CH-08949.
All of the actions name as defendants PrivateBancorp and the members of its board of directors, and assert that the directors breached their fiduciary duties in connection with the transaction. One
such case (
Griffin
) further asserts that PrivateBancorp aided and abetted its directors' alleged breaches. Two of the actions
(
Parshall
and
Griffin
) also name as defendants CIBC and Holdco, and assert that they, too, aided and
abetted the directors' purported breaches. The actions broadly allege that the transaction was the result of a flawed process, that the price is unfair, and that certain provisions of the merger
agreement might dissuade a potential suitor from making a competing offer, among other things. The plaintiffs in the
Parshall
action have filed an
amended complaint, adding a claim alleging breaches of the fiduciary duty of disclosure by the directors. Plaintiffs seek injunctive and other relief, including damages.
The
plaintiffs in the three actions have agreed in principle not to pursue the actions as a result of the inclusion of certain additional disclosures in this proxy statement/prospectus.
PrivateBancorp and CIBC believe the demands and complaints are without merit, there are substantial legal and factual defenses to the claims asserted, and this proxy statement/prospectus disclosed all
material information prior to the inclusion of these additional disclosures.
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THE MERGER AGREEMENT
The following summary discusses certain material terms of the merger agreement. You should also read in its
entirety the section entitled "The Merger" for a discussion of other material information about the merger and the merger agreement. The following description of the merger agreement is subject to,
and is qualified in its entirety by reference to, the merger agreement, a copy of which is attached as Appendix A to this proxy statement/prospectus and incorporated herein by reference. We
urge you to read the merger agreement in its entirety, as it is the legal document governing the merger. In the event of any discrepancy between the terms of the merger agreement and the following
summary, the merger agreement will control.
Explanatory Note Regarding the Merger Agreement
The following summary of the merger agreement, and the copy of the merger agreement attached as Annex A to this proxy statement,
are intended to provide information regarding the terms of the merger agreement. The merger agreement contains representations and warranties by and covenants of PrivateBancorp, CIBC and Holdco, which
were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the
merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk
between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to contractual standards of materiality or material adverse effect applicable to the
contracting parties that generally differ from those applicable to investors. Investors are not third-party beneficiaries under the merger agreement and should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates.
Moreover, the description of the merger agreement below does not purport to describe all of the terms of such agreement and is qualified in its entirety by reference to the full text of such
agreement, a copy of which is attached hereto as Annex A and is incorporated herein by reference.
Additional
information about PrviateBancorp may be found elsewhere in this proxy statement and PrivateBancorp's other public filings. See the section entitled "Where You Can Find More
Information."
Effects of the Merger
At the effective time of the merger, PrivateBancorp will merge with and into Holdco, a direct wholly-owned subsidiary of CIBC, with
Holdco surviving the merger. PrivateBank, which is currently a wholly-owned subsidiary of PrivateBancorp, will become a wholly-owned subsidiary of Holdco at the effective time of the merger.
As
a result of the merger, there will no longer be any publicly held shares of PrivateBancorp common stock. PrivateBancorp stockholders will no longer have any direct interest in the
surviving company. PrivateBancorp common stockholders will only participate in the surviving company's future earnings and potential growth through their ownership of CIBC common shares after
receiving CIBC common
shares as merger consideration. All of the other incidents of direct stock ownership in PrivateBancorp, such as the right to vote on certain corporate decisions, to elect directors and to receive
dividends and distributions from PrivateBancorp, will be extinguished upon completion of the merger. Upon completion of the merger, shares of PrivateBancorp common stock will represent the right to
receive the merger consideration. See the section entitled "The MergerMerger Consideration."
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Effective Time of the Merger
The closing of the merger will occur no later than three business days after the satisfaction or waiver of all closing conditions,
unless extended by mutual agreement of the parties. The merger will be completed and become effective as of the date and time specified in the certificate of merger to be filed with the Secretary of
State of the State of Delaware on or before the closing date. As of the date of this document, the parties expect that the merger will be effective during the first calendar quarter of 2017. However,
there can be no assurance as to when or if the merger will occur.
Treatment of PrivateBancorp Equity Awards
Stock Options
At the effective time, each PrivateBancorp option that is outstanding and unexercised immediately prior to the effective time shall be
converted automatically into a CIBC option to purchase, on the same terms and conditions as were applicable immediately prior to the effective
time, the number of CIBC common shares (rounded down to the nearest whole number of shares) equal to the product of (i) the number of shares of PrivateBancorp common stock subject to such
option immediately prior to the effective time, multiplied by (ii) the sum of (A) the exchange ratio and (B) the quotient (rounded to four decimal places) obtained by dividing
(1) the per share cash consideration by (2) the CIBC share closing price (as defined above in the section titled "Merger Consideration") (clause (ii), the "equity award exchange
ratio"), with an exercise price per share equal to the quotient (rounded up to the nearest whole cent) obtained by dividing (x) the exercise price per share of PrivateBancorp common stock
subject to such option immediately prior to the effective time, by (y) the equity award exchange ratio.
Restricted Stock
At the effective time, each award of restricted PrivateBancorp common stock that is outstanding and unvested immediately prior to the
effective time shall be cancelled and replaced with an award of restricted CIBC common shares with the same terms and conditions as were applicable under such award immediately prior to the effective
time, and relating to the number of CIBC common shares equal to the product of the number of shares of PrivateBancorp common stock subject to such award immediately prior to the effective time,
multiplied by the equity award exchange ratio, with any fractional shares rounded to the next whole number of shares.
Restricted Stock Units
At the effective time, each PrivateBancorp restricted stock unit award that is outstanding immediately prior to the effective time
shall (i) if unvested, be converted automatically into a cash-settled CIBC restricted stock unit award that is subject to the same terms and conditions as were applicable immediately prior to
the effective time (except that settlement shall be in cash, with the cash payment due on settlement equal to the fair market value of CIBC common shares to which the restricted stock unit award
relates) relating to the number of CIBC common shares equal to the product (taken to four decimal places) of the number of shares of PrivateBancorp common stock subject to such award immediately prior
to the effective time, multiplied by the equity award exchange ratio, or (ii) if vested (including all restricted stock units held by non-employee directors, whether vested or unvested as of
the date of the merger agreement, which shall be vested and settled within 10 days after the effective time), be cancelled and converted automatically into the right to receive a cash payment
equal to the sum of (A) the per share cash consideration plus (B) the product of the exchange ratio multiplied by the CIBC share closing price (such sum, the "per unit total
consideration"), without interest and less taxes, and a cash payment (not later than 10 days after the effective time) equal to all accumulated dividend equivalents with respect to such
restricted stock unit
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award
that are unpaid as of the effective time; provided, that any award that does not provide for settlement upon a change in control shall instead be converted pursuant to clause (i) above.
Any PrivateBancorp restricted stock unit award for which settlement was delayed to avoid a loss of deduction pursuant to Section 162(m) of the Code will be treated as providing for settlement
upon a change in control.
Performance Share Units
At the effective time, each PrivateBancorp performance share unit award that is outstanding immediately prior to the effective time
shall (i) if unvested, be converted automatically into a cash-settled CIBC restricted stock unit award that is subject to the same terms and conditions as were applicable immediately prior to
the effective time (except that settlement shall be in cash, with the cash payment due on settlement equal to the fair market value of CIBC common shares to which the performance share unit award
relates, and that such award shall be subject solely to time based vesting) relating to the number of CIBC common shares equal to the product (taken to four decimal places) of the number of shares of
PrivateBancorp common stock subject to such award immediately prior to the effective time, multiplied by the equity award exchange ratio, or (ii) if vested, be cancelled and converted
automatically into the right to receive (not later than 10 days after the effective time) a cash payment equal to the per unit total consideration, without interest and less taxes, in respect
of each share of PrivateBancorp common stock underlying such award and a cash payment equal to all accumulated dividend equivalents with respect to such performance share unit award that are unpaid as
of the effective time; provided, that any award that does not provide for settlement upon a change in control shall instead be converted pursuant to clause (i) above. For each performance share
unit award granted in 2014, 2015 or 2016 that is outstanding as of the effective time, the number of shares subject to such award will be determined assuming that applicable performance goals were
achieved at the maximum level.
PrivateBancorp Deferred Units
At the effective time, each stock unit credited to an account that is deemed invested in PrivateBancorp common stock as of immediately
prior to the effective time under PrivateBancorp's deferred compensation plan, shall be converted automatically into a deemed investment in CIBC common shares that will be cash-settled (with the cash
payment due on settlement equal to the fair market value of CIBC common shares to which the deferred stock units relate), with the number of CIBC common shares subject to the deferred stock units in a
participant's account as of
the effective time to be equal to the product (taken to four decimal places) of (i) the number of shares of PrivateBancorp common stock subject to such deferred stock units as of immediately
prior to the effective time, and (ii) the equity award exchange ratio. Following the effective time, the deferred compensation plan will otherwise continue to have the same terms, including
payment terms and investment alternatives, that were applicable immediately prior to the effective time, with the PrivateBancorp common stock fund to be replaced with a CIBC common shares fund, and
subject to all rights of PrivateBancorp and its successor to amend or terminate the deferred compensation plan.
Representations and Warranties
The merger agreement contains representations and warranties made by PrivateBancorp to CIBC, subject to certain exceptions in the
merger agreement, in the disclosure schedules delivered in connection with the merger agreement and in PrivateBancorp's public filings, as to, among other
things:
-
-
corporate organization, good standing and qualification to do business;
-
-
capitalization;
-
-
corporate authority;
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-
-
consents and approvals relating to the execution, delivery and performance of the merger agreement;
-
-
the reports, forms, documents and statements of PrivateBancorp required by regulatory agencies;
-
-
financial statements filed by PrivateBancorp with the SEC and internal controls over financial reporting;
-
-
broker's and finder's fees related to the merger;
-
-
the absence of certain material changes or events in the business if PrivateBancorp, including the absence of a material adverse
effect since December 31, 2015;
-
-
legal and regulatory proceedings;
-
-
tax matters;
-
-
employee compensation and benefits matters;
-
-
compliance with applicable law;
-
-
material contracts;
-
-
agreements with regulatory agencies;
-
-
risk management instruments;
-
-
environmental matters;
-
-
investment securities;
-
-
properties;
-
-
intellectual property;
-
-
related party transactions;
-
-
state takeover laws;
-
-
reorganization;
-
-
opinions from financial advisors;
-
-
accuracy of PrivateBancorp information provided in this proxy statement/prospectus;
-
-
loan portfolio;
-
-
insurance; and
-
-
books and records.
The
merger agreement also contains representations and warranties made by CIBC and Holdco to PrivateBancorp, subject to certain exceptions in the merger agreement, in the disclosure
schedules delivered in connection with the merger agreement and in CIBC's public filings, as to, among other things:
-
-
corporate organization, good standing, qualification to do business and financial holding company status;
-
-
capitalization;
-
-
corporate authority;
-
-
consents and approvals relating to the execution, delivery and performance of the merger agreement;
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-
-
the reports, forms, documents and statements of CIBC required by regulatory agencies;
-
-
financial statements filed by CIBC with the SEC and internal controls over financial reporting;
-
-
broker's and finder's fees related to the merger;
-
-
the absence of a material adverse effect since October 31, 2015;
-
-
legal and regulatory proceedings;
-
-
compliance with applicable law;
-
-
reorganization;
-
-
accuracy of CIBC and its subsidiaries information provided in this proxy statement/prospectus;
-
-
financing;
-
-
agreements with regulatory agencies; and
-
-
books and records.
Certain
of these representations and warranties are qualified as to "materiality" or "material adverse effect."
For
purposes of the merger agreement, a "material adverse effect" with respect to CIBC, PrivateBancorp or Holdco, as the case may be, means (i) a material adverse effect on the
business, properties, assets, liabilities, results of operations or financial condition of that party and its subsidiaries taken as a whole or (ii) a material adverse effect on the ability to
consummate the merger on a timely basis, other than, with respect to (i) above, to the extent that effect results from: (A) changes in U.S. GAAP (or, with respect to CIBC, IFRS)
or applicable regulatory accounting requirements, (B) changes in laws, rules or regulations of general applicability to companies in the industries in which such party and its subsidiaries
operate, or interpretations thereof by courts or Governmental Entities, (C) changes in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or
in economic or market conditions affecting the financial services industry generally and not specifically relating to such party or its subsidiaries, including changes in prevailing interest rates,
credit availability and liquidity, currency exchange rates and price levels or trading volumes in U.S. or foreign securities markets or any change in the credit markets, (D) failure, in and of
itself, to meet earnings projections or internal financial forecasts, but not including the underlying causes thereof (unless otherwise excluded pursuant to another subclause hereunder),
(E) changes attributable to disclosure of the transactions contemplated hereby or to actions expressly required by the merger agreement in contemplation of the transactions contemplated hereby,
or (F) actions or omissions taken pursuant to the written consent of CIBC, in the case of PrivateBancorp, or PrivateBancorp, in the case of CIBC; except, with respect to (A), (B), or (C), to
the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such party and
its subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its subsidiaries operate.
Except
in limited cases, the representations and warranties in the merger agreement do not survive the effective time of the merger and, as described below under
"Termination," if the merger agreement is validly terminated, there will be no liability under the representations and warranties of the parties, or otherwise under the merger agreement,
except in the case of a party's willful and material breach of the merger agreement.
Covenants and Agreements
Conduct of Businesses Prior to the Completion of the Merger.
PrivateBancorp has agreed that, prior to the effective time of the merger,
it will
conduct its business, and cause its subsidiaries to conduct
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their
business, in the ordinary course in all material respects and use reasonable best efforts to maintain and preserve intact its business organization, employees and advantageous business
relationships. PrivateBancorp and CIBC have agreed to, and cause their subsidiaries to, take no action or, to the extent feasible, fail to prevent an action, that is intended to or would reasonably be
expected to adversely affect or delay the ability to obtain any necessary approvals required for the completion of the merger or to perform its respective covenants and agreements in the merger
agreement or to consummate the merger on a timely basis.
Additionally,
PrivateBancorp has agreed that prior to the effective time of the merger, except as expressly contemplated or permitted by the merger agreement or as required by law, it
will not and will not permit any of its subsidiaries to, without the prior written consent of CIBC:
-
-
other than in the ordinary course of business, incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any other person, other than any PrivateBancorp subsidiary;
-
-
adjust, split, combine or reclassify any capital stock;
-
-
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 (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or
exchangeable for any shares of its capital stock, except (A) regular quarterly cash dividends by PrivateBancorp (and dividend equivalents to the extent provided by the terms of any
PrivateBancorp equity awards or deferred units) at a rate not in excess of $0.01 per share of PrivateBancorp common stock, (B) dividends paid by any PrivateBancorp subsidiary to PrivateBancorp
or any of its wholly owned subsidiaries, (C) any required dividends on the preferred stock of any PrivateBancorp subsidiary or (D) the withholding or acceptance of shares of
PrivateBancorp common stock in connection with the vesting, exercise and/or settlement of PrivateBancorp equity awards or deferred units, in each case in accordance with past practice and the terms of
the applicable award agreements;
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grant any stock options, stock appreciation rights, performance shares, restricted stock units, restricted shares or other
equity-based awards or interests, or grant any individual, corporation or other entity any right to acquire any shares of its capital stock;
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issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable
into, or exercisable for, any shares of its capital stock or any options, warrants or other rights of any kind to acquire any shares of capital stock, except for the issuance of shares upon the
exercise of PrivateBancorp stock options or the vesting or settlement of PrivateBancorp equity awards (and dividend equivalents thereon, if any);
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sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets to any individual, corporation or
other entity other than a wholly owned subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary
course of business;
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except for transactions in the ordinary course of business, 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 in a wholly owned PrivateBancorp subsidiary;
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other than in the ordinary course of business, terminate, materially amend, or waive any material provision of, any Company Contract
(as defined in the merger agreement), or make any change in any instrument or agreement governing the terms of any of its securities, or (ii) enter into any
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Article VII
of the merger agreement not being satisfied or in a violation of any provision of the merger agreement, except, in every case, as may be required by applicable law;
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implement or adopt any change in its accounting principles, practices or methods, other than as may be required by US GAAP or
by applicable laws, regulations, guidelines or policies imposed by any governmental entity;
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enter into any material new line of business or change in any material respect its lending, investment, underwriting, risk and asset
liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure
applicable with respect to its loan portfolio or any segment thereof), except as required by such policies or applicable law, regulation or policies imposed by any governmental entity or make any
loans or extensions of credit except in the ordinary course of business consistent with past practice and in conformity with PrivateBancorp's ordinary course lending policies and guidelines
(including, in each case, with respect to loan amounts, security, collateral, loan terms, single name exposure limits and portfolio mix) in effect as of the date of the merger agreement;
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make any material changes in its policies and practices with respect to (i) underwriting, pricing, originating, acquiring,
selling, servicing or buying or selling rights to service loans or (ii) its hedging practices and policies, in each case except as may be required by such policies and practices or by any
applicable laws, regulations, guidelines or policies imposed by any governmental entity;
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make, or commit to make, any capital expenditures in excess of the amounts specified in the capital expenditure budget made available
to CIBC prior to the date of the merger agreement plus 10%;
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other than in the ordinary course of business consistent with past practice, make, change or revoke any material tax election, change
an annual tax accounting period, adopt or materially change any tax accounting method, file any amended tax return, enter into any closing agreement with respect to taxes, or settle any material tax
claim, audit, assessment or dispute or surrender any right to claim a refund of a material amount of taxes;
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make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office
or other significant office or operations facility of itself or its subsidiaries;
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terminate, or fail to maintain, the material insurance policies of PrivateBancorp and its subsidiaries, including any policies of
directors' and officers' liability insurance, of at least the same coverage and amounts and on terms and conditions not less advantageous to the insured as currently maintained by PrivateBancorp and
its subsidiaries; or
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agree to take, make any commitment to take, or adopt any resolutions of its board of directors or similar governing body in support
of, any of the above prohibited actions.
Each
of CIBC and Holdco has agreed to a more limited set of restrictions on its business prior to the completion of the merger. Specifically, each of CIBC and Holdco has agreed that
prior to the effective time of the merger, except as expressly permitted by the merger agreement, it will not and will not permit any of its subsidiaries to, without the prior written consent of
PrivateBancorp:
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amend CIBC's by-laws or the governing documents of any of its subsidiaries in a manner that would materially and adversely affect the
economic benefits of the merger to the holders of PrivateBancorp common stock or adversely affect the holders of PrivateBancorp common stock relative to holders of CIBC common shares or that would
materially impede CIBC's ability to consummate the transactions contemplated by the merger agreement;
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except as would not (i) reasonably be expected to have a material adverse effect on CIBC or (ii) adversely affect the
tax treatment of the merger with respect to PrivateBancorp's stockholders or the value of the merger consideration, merge or consolidate itself or any of its subsidiaries with any other person, or
restructure, reorganize or completely or partially liquidate or dissolve it or any of its subsidiaries;
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take, or omit to take, any action that would or is reasonably likely to prevent or impede the merger from qualifying as a tax-free
reorganization or to cause the stockholders of PrivateBancorp to recognize gain or take any action to prevent, materially impede or materially delay the consummation of the merger, or take, or omit to
take, any action that is reasonably likely to result in any of the conditions to the merger not being satisfied; or
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agree to take, make any commitment to take, or adopt any resolutions of its board of directors in support of, any of the above
prohibited actions.
Regulatory Matters.
CIBC and PrivateBancorp have agreed to promptly prepare and file with the SEC a registration statement on
Form F-4, of
which this proxy statement/prospectus is a part. CIBC and PrivateBancorp have agreed to use reasonable best efforts to have the Form F-4 declared effective under the Securities Act as promptly
as practicable after such filing, and to mail or deliver the proxy statement/prospectus to PrivateBancorp's stockholders. CIBC has also agreed to use its reasonable best efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to consummate the merger, and PrivateBancorp has agreed to furnish all information concerning PrivateBancorp and the holders
of PrivateBancorp common stock as may be reasonably requested in connection with any such action.
CIBC
and PrivateBancorp have agreed to cooperate with each other and use their respective reasonable 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 that are necessary
or advisable to consummate the merger.
Moreover,
each of CIBC and PrivateBancorp has agreed to use its reasonable best efforts to avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the closing.
Additionally,
each of CIBC and PrivateBancorp has agreed to furnish to the other all information concerning itself, its subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection with this proxy statement/prospectus, the Form F-4 or any other statement, filing, notice or application made by or on behalf
of CIBC, PrivateBancorp or any of their respective subsidiaries to any governmental entity in connection with the merger.
Furthermore,
CIBC and PrivateBancorp have agreed to 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 the merger agreement that 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.
CIBC
has agreed to execute and deliver, or cause to be executed and delivered by or on behalf of Holdco, at or prior to the effective time of the merger, any supplements, amendments or
other instruments required for the due assumption of PrivateBancorp's outstanding Company Debentures (as defined by the merger agreement) to the extent required.
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Stockholder Approval.
PrivateBancorp's board of directors has resolved to recommend to the PrivateBancorp common stockholders that they
approve the
merger agreement and the transactions contemplated thereby and to submit to the PrivateBancorp common stockholders the merger agreement and any other matters required to be approved by the
PrivateBancorp common stockholders in order to carry out the intentions of the merger agreement.
TSX and NYSE Listing.
CIBC will cause the CIBC common shares to be issued in the merger to be authorized for listing on the TSX and
NYSE.
Employee Matters.
During the period commencing at the effective time of the merger and ending on October 31, 2018 (which we refer
to as the
"Continuation Period"), CIBC shall cause the surviving
corporation to provide each employee of PrivateBancorp or any of its subsidiaries as of the effective time of the merger who remains employed by CIBC or any of its affiliates (including the surviving
corporation and its subsidiaries) following the effective time of the merger (which we refer to as a "continuing employee") with (i) an annual base salary or base wage rate that is no less than
that provided to such employee by PrivateBancorp and its subsidiaries immediately prior to the effective time of the merger, (ii) a total incentive compensation opportunity that is no less than
the aggregate total incentive compensation opportunity (whether relating to annual or any other type of incentive compensation) provided to such employee by PrivateBancorp and its subsidiaries
immediately prior to the effective time of the merger, and (iii) employee benefits that are substantially comparable in the aggregate to those provided to such employees by PrivateBancorp and
its subsidiaries immediately prior to the effective time of the merger. CIBC and PrivateBancorp have also agreed to certain terms and conditions that will apply to the long-term incentive awards
granted to continuing employees in respect of calendar year 2016, the 2017 annual short-term incentive awards for continuing employees and, to the extent applicable, the mandatory 2016 annual bonus
deferrals for continuing employees. During the period commencing at the effective time of the merger and ending on the second anniversary of the effective time of the merger, CIBC shall continue to
maintain or cause to be maintained, without amendment, PrivateBancorp's severance plan applicable to continuing employees immediately prior to the effective time of the merger, and shall provide, or
cause to be provided, to each continuing employee whose employment is terminated during the continuation period without "cause", as such term is defined or concept is used for purposes of the
PrivateBancorp severance plan, or who otherwise experiences a severance-qualifying termination under the PrivateBancorp severance plan, with the severance benefits specified in the PrivateBancorp
severance plan.
With
respect to any employee benefit plans of CIBC or its subsidiaries in which any employees of PrivateBancorp or its subsidiaries become eligible to participate on or after the
effective time of the merger (which we refer to as "new plans"), CIBC shall or shall cause the surviving corporation to: (i) use commercially reasonable efforts to (A) waive all
pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to each such employee and his or her eligible dependents under any new plans,
except to the extent such pre-existing conditions, exclusions or waiting periods would apply under the analogous PrivateBancorp benefit plan, and (B) provide each such employee and his or her
eligible dependents with credit for any co-payments or deductibles paid prior to the effective time of the merger under a PrivateBancorp benefit plan (to the same extent that such credit was given
under the analogous PrivateBancorp benefit plan prior to the effective time of the merger) in satisfying any applicable deductible or out-of-pocket requirements under any new plans; and
(ii) recognize all service of each such employee with PrivateBancorp and its subsidiaries (and their respective predecessors, if applicable) for all purposes in any new plan; provided that the
foregoing service recognition shall not apply (A) to the extent it would result in duplication of benefits for the same period of services, (B) for purposes of any defined benefit
pension plan or benefit plan that provides retiree welfare benefits, or (C) to any benefit plan that is a frozen plan or provides grandfathered benefits.
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CIBC
and PrivateBancorp have agreed to the establishment of a cash retention pool which may be awarded in the form of cash and cash-settled CIBC restricted stock units to employees of
PrivateBancorp and its subsidiaries, including executive officers.
Indemnification and Directors' and Officers' Insurance.
From and after the effective time of the merger, CIBC shall cause Holdco (the
surviving
entity in the merger) to indemnify and hold harmless each present and former director, officer or employee of PrivateBancorp and its subsidiaries or fiduciaries of PrivateBancorp or any of its
subsidiaries under PrivateBancorp benefit plans (in each case, when acting in such capacity) (collectively, the "PrivateBancorp Indemnified Parties") against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, damages or liabilities incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, whether arising before or after the effective time of the merger, arising in whole or in part out of (i) the fact that such person is or was a
director, officer or employee of PrivateBancorp or any PrivateBancorp subsidiary or is or was a fiduciary of PrivateBancorp or any of its subsidiaries under PrivateBancorp benefit plans or
(ii) matters, acts or omissions existing or occurring at or prior to the effective time of the merger, including the transactions contemplated thereby to the same extent as such persons are
indemnified as of the date of the merger agreement by PrivateBancorp pursuant to PrivateBancorp's certificate of incorporation, by-laws, governing or organizational documents of any PrivateBancorp
subsidiary and any indemnification agreements in existence as of the date of the merger agreement; and CIBC will also cause the surviving corporation to advance expenses as incurred by such
PrivateBancorp Indemnified Party to the same extent as such persons are entitled to advancement of expenses as of the date of the merger agreement by PrivateBancorp pursuant to the PrivateBancorp's
certificate of incorporation, by-laws, governing or organizational documents of any PrivateBancorp subsidiary and any indemnification agreements in existence as of the date of the merger agreement;
provided that the PrivateBancorp Indemnified Party to whom expenses are advanced provides an undertaking (in a reasonable and customary form) to repay such advances if it is ultimately determined that
such PrivateBancorp Indemnified Party is not entitled to indemnification.
CIBC
has agreed to provide directors' and officers' liability insurance that serves to reimburse the present and former officers and directors of PrivateBancorp or any of its
subsidiaries with respect to claims against such directors and officers arising from facts or events occurring at or before the effective time of the merger for a period of six years following the
effective time of the merger. The insurance will contain terms and conditions that are not less advantageous than the current coverage provided by PrivateBancorp, except that CIBC is not required to
incur annual premium expense greater than 300% of PrivateBancorp's current aggregate annual directors' and officers' liability insurance premium. At or prior to the effective time of the merger and in
lieu of the foregoing, PrivateBancorp, in consultation with CIBC, may purchase and pay for a tail policy for directors' and officers' liability insurance on the terms described in this paragraph.
No Solicitation.
The merger agreement precludes PrivateBancorp and its subsidiaries and their respective officers, directors, agents,
advisors and
affiliates from initiating, soliciting, encouraging or knowingly facilitating inquiries or proposals with respect to, or engaging in any negotiations concerning, or providing any confidential or
nonpublic information or data to, or having any discussions with, any
person relating to, any Acquisition Proposal (defined below). However, if PrivateBancorp, prior to receipt of the requisite affirmative vote of the PrivateBancorp common stockholders, receives an
unsolicited bona fide Acquisition Proposal and PrivateBancorp's board of directors concludes in good faith that such Acquisition Proposal constitutes or is more likely than not to result in a Superior
Proposal (defined below), PrivateBancorp may, and may permit its subsidiaries and its and its subsidiaries' representatives to, furnish or cause to be furnished nonpublic information or data and
participate in such negotiations or discussions to the extent that its board of directors concludes in good faith (after receiving the advice of its outside counsel, and with respect to financial
matters, its
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financial
advisors) that failure to take such actions would result in a violation of its fiduciary duties under applicable law. PrivateBancorp has also agreed to advise CIBC within 24 hours
following receipt of any Acquisition Proposal and of the substance of the Acquisition Proposal (including the identity of the person making such Acquisition Proposal), and will keep CIBC promptly
apprised of any developments.
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As used in the merger agreement, "Acquisition Proposal" means, other than the transactions contemplated by the merger agreement, any
offer, proposal, inquiry or indication of interest relating to (i) any acquisition or purchase, direct or indirect, of 20% or more of the consolidated assets of PrivateBancorp and its
subsidiaries or 20% or more of any class of voting securities of PrivateBancorp or its subsidiaries whose assets, individually or in the aggregate, constitute more than 20% of the consolidated assets
of PrivateBancorp, (ii) any tender offer or exchange offer that, if consummated, would result in such third party beneficially owning 20% or more of any class of equity or voting securities of
PrivateBancorp or its subsidiaries whose assets, individually or in the aggregate, constitute more than 20% of the consolidated assets of PrivateBancorp, or (iii) a merger, consolidation, share
exchange, other business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving PrivateBancorp or its subsidiaries whose assets, individually or
in the aggregate, constitute more than 20% of the consolidated assets of PrivateBancorp, except, in each case, any sale of whole loans and securitizations in the ordinary course of business and any
bona fide internal reorganization.
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As used in the merger agreement, "Superior Proposal" means a bona fide written Acquisition Proposal that the board of directors of
PrivateBancorp concludes in good faith to be more favorable from a financial point of view to its stockholders than the merger and the other transactions contemplated by the merger agreement,
(i) after receiving the advice of its financial advisors (who must be a nationally recognized investment banking firm), (ii) after taking into account the likelihood of consummation of
such transaction on the terms set forth therein and (iii) after taking into account all legal (with the advice of outside counsel), financial (including the financing terms of any such
proposal), regulatory and other aspects of such proposal (including any expense reimbursement provisions and conditions to closing) and any other relevant factors permitted under applicable law;
provided, that for purposes of the definition of "Superior Proposal," the references to "20%" in the definition of Acquisition Proposal shall be deemed to be references to "a majority."
Change of Methods.
CIBC may at any time change the method of effecting the transactions contemplated in the merger agreement, provided
that no such
change or amendment (i) alters or changes the amount or kind of the merger consideration, (ii) adversely affects the tax treatment of the merger with respect to PrivateBancorp's
stockholders or (iii) be reasonably likely to cause the closing to be materially delayed or the receipt of the requisite regulatory approvals to be prevented or materially delayed.
Restructuring Efforts.
If the PrivateBancorp stockholders do not approve the merger at the special meeting or at any adjournment or
postponement
thereof, CIBC and PrivateBancorp have agreed to use reasonable best efforts to negotiate a restructuring of the merger and/or to resubmit the merger to PrivateBancorp's stockholders for approval;
however, neither CIBC nor PrivateBancorp will be required to alter any material terms of the merger agreement or adversely affect the tax treatment of the merger with respect to PrivateBancorp
stockholders in any such negotiations.
Corporate Governance.
CIBC has agreed to take all appropriate action so that, as of the effective time of the merger, subject to CIBC's
organizational documents, policies and applicable law and regulation, one individual designated by PrivateBancorp and reasonably acceptable to CIBC (the "Company Director") shall be appointed as an
independent director of CIBC. The Company Director
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shall
thereafter be nominated for election as a director of CIBC, subject to the approval of the board of directors of CIBC, at CIBC's first annual meeting of shareholders after the closing.
Moreover,
CIBC has agreed to take all appropriate action so that, as of the effective time of the merger, subject to CIBC's organizational documents, policies and applicable law and
regulation, the board of directors of Holdco (and any successor thereto) will be comprised of nine directors, of whom three independent directors and one non-independent director (who is expected to
be Mr. Richman) will be individuals designated by PrivateBancorp and reasonably acceptable to CIBC, subject to Holdco's organizational documents, policies and applicable law and regulation.
CIBC
has also agreed to take all appropriate action so that, as of the effective time of the merger, subject to CIBC's organizational documents, policies and applicable law and
regulation, the board of directors of PrivateBank (and any successor thereto) will be comprised of nine directors, of whom three independent directors and one non-independent director (who is expected
to be Mr. Richman) will be individuals designated by PrivateBancorp and reasonably acceptable to CIBC, subject to PrivateBank's organizational documents, policies and applicable law and
regulation.
The
parties have agreed that, at the effective time of the merger, PrivateBank will be headquartered in Chicago, Illinois, and Holdco and PrivateBank will constitute the primary banking,
lending and wealth management platform of CIBC in the United States.
Conditions to the Merger
Conditions to Each Party's Obligations.
The respective obligations of each of CIBC and PrivateBancorp to complete the merger are
subject to the
satisfaction of the following conditions:
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receipt of the requisite affirmative vote of the PrivateBancorp common stockholders on the merger agreement;
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the CIBC common shares to be issued in the merger must have been authorized for listing on the NYSE and TSX;
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the effectiveness of the registration statement on Form F-4, of which this proxy statement/prospectus is a part, and the
absence of a stop order or proceeding initiated or threatened by the SEC for the purpose of suspending or withdrawing the effectiveness of the Form F-4;
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the absence of any injunction or other legal prohibition or restraint against the merger; and
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receipt of required regulatory approvals, and the requirement that no regulatory approval required for the merger result in the
imposition of a condition or restriction that would reasonably be likely to have a material and adverse effect on CIBC and its subsidiaries, taken as a whole (with such materiality measured on a scale
relative to PrivateBancorp and its subsidiaries, taken as a whole).
Conditions to Obligations of CIBC.
The obligation of CIBC and Holdco to complete the merger is also subject to the satisfaction, or
waiver by CIBC,
of the following conditions:
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the accuracy of the representations and warranties of PrivateBancorp as of the date of the merger agreement and as of the closing date
of the merger, other than, in most cases, those failures to be true and correct that would not reasonably be expected to result in a material adverse effect on PrivateBancorp;
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performance in all material respects by PrivateBancorp of the obligations required to be performed by it at or prior to the closing
date of the merger; and
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receipt by CIBC of an opinion of Mayer Brown LLP as to the effect that (i) the merger will qualify as a "reorganization"
within the meaning of Section 368(a) of the Code and (ii) that the
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Conditions to Obligations of PrivateBancorp.
The obligation of PrivateBancorp to complete the merger is also subject to the
satisfaction, or waiver
by PrivateBancorp, of the following conditions:
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the accuracy of the representations and warranties of CIBC as of the date of the merger agreement and as of the closing date of the
merger, other than, in most cases, those failures to be true and correct that would not reasonably be expected to result in a material adverse effect on CIBC;
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performance in all material respects by CIBC of the obligations required to be performed by it at or prior to the closing date of the
merger; and
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receipt by PrivateBancorp of an opinion of Wachtell, Lipton, Rosen & Katz as to the effect that (i) the merger will
qualify as a "reorganization" within the meaning of Section 368(a) of the Code and (ii) that the merger will not result in gain recognition to the holders of PrivateBancorp common stock
pursuant to Section 367(a) of the Code.
Termination
The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after approval of the
merger by PrivateBancorp stockholders:
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by mutual written consent of CIBC and PrivateBancorp;
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by either PrivateBancorp or CIBC, if any of the required regulatory approvals are denied or completion of the merger has been
prohibited or made illegal by a governmental entity (and the denial or prohibition is final and non-appealable);
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by either PrivateBancorp or CIBC, if the merger has not been completed by June 29, 2017 (the "Termination Date"), unless the
failure to complete the merger by that date is due to the terminating party's failure to abide by the merger agreement;
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by either PrivateBancorp or CIBC, if there is a breach by the other party that would result in the failure of the conditions of the
terminating party's obligation to complete the merger, unless the breach is capable of being, and is, cured within 60 days of written notice of the breach (provided that the terminating party
is not then in material breach of the merger agreement); or
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by CIBC, if (a) PrivateBancorp or its board of directors (i) submits the merger agreement to its stockholders without a
recommendation for approval, or otherwise withdraws or materially and adversely modifies (or discloses its intention to withdraw or materially and adversely modify) its recommendation for approval, or
recommends to its stockholders an Acquisition Proposal other than the merger, or (ii) materially breaches its obligation to call a stockholder meeting or prepare and mail its stockholders the
proxy statement/prospectus pursuant to the merger agreement; or (b) if a tender or exchange offer for 20% or more of the outstanding shares of PrivateBancorp common stock is commenced (other
than by CIBC), and PrivateBancorp's board of directors recommends that the PrivateBancorp stockholders tender their shares in such tender or exchange offer or otherwise fails to recommend that such
stockholders reject such tender or exchange offer within 10 business days.
Effect of Termination and Termination Fee
If the merger agreement is validly terminated, the agreement will become void without any liability on the part of any of the parties
unless a party has willfully and materially breached the merger agreement. However, the provisions of the merger agreement relating to authority, fees and expenses
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and
the confidentiality obligations of the parties will continue in effect notwithstanding termination of the merger agreement.
In
the event that (i) after the date of the merger agreement, a
bona fide
Acquisition Proposal is made known to senior management
of PrivateBancorp or is made directly to its stockholders generally or any person has publicly announced (and not withdrawn) an Acquisition Proposal with respect to PrivateBancorp and thereafter
(x) the merger agreement is terminated by either CIBC or PrivateBancorp due to the merger not being completed by the Termination Date without the requisite stockholder vote having been obtained
or (y) the merger agreement is terminated by CIBC due to a breach by PrivateBancorp of any of the covenants or agreements or any of the representations or warranties pursuant to
Section 8.1(d) of the merger agreement, and (ii) prior to the date that is 15 months after the date of any applicable termination referred to in sub clauses (x) or (y),
PrivateBancorp enters into a definitive agreement or consummates a transaction with respect to an
Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to above), then PrivateBancorp will pay CIBC a termination fee equal to $150,000,000 (the "Termination Fee");
provided, that for this purpose all references in the definition of Acquisition Proposal to "20%" shall instead refer to "50%."
The
Termination Fee would also be payable by PrivateBancorp to CIBC if the merger is terminated by CIBC because (a) PrivateBancorp or PrivateBancorp's board of directors
(i) submits the merger agreement to its stockholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or discloses its intention to withdraw
or materially and adversely modify) its recommendation for approval, or recommends to its stockholders an Acquisition Proposal other than the merger, or (ii) materially breaches its obligation
to call a stockholder meeting or prepare and mail its stockholders the proxy statement/prospectus pursuant to the merger agreement; or (b) if a tender or exchange offer for 20% or more of the
outstanding shares of PrivateBancorp common stock is commenced (other than by CIBC), and PrivateBancorp's board of directors recommends that the PrivateBancorp stockholders tender their shares in such
tender or exchange offer or otherwise fails to recommend that such stockholders reject such tender or exchange offer within 10 business days. In response to a specific request from the Federal Reserve
Board relating to CIBC's application under the Bank Holding Company Act in connection with the merger, CIBC has committed to the Federal Reserve Board that it will only require PrivateBancorp to pay
the Termination Fee applicable in these circumstances in respect of the 12 month period (rather than the 15 month period) after the date of the applicable termination.
Amendments, Extensions and Waivers
The merger agreement may be amended by the parties, by action taken or authorized by their respective boards of directors, at any time
before or after approval of the merger agreement by the PrivateBancorp stockholders, in writing signed on behalf of each of the parties, subject to applicable law.
At
any time prior to the effective time of the merger, the parties, by action taken or authorized by their respective boards of directors, may, to the extent permitted by law,
(a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in the
merger agreement or (c) waive compliance with any of the agreements or conditions contained in the merger agreement. Any agreement on the part of a party to any extension or waiver must be in
writing.
Fees and Expenses
Except with respect to costs and expenses of printing and mailing this proxy statement/prospectus and all filing and other fees paid to
the SEC in connection with the merger, which will be borne equally by CIBC and PrivateBancorp, all fees and expenses incurred in connection with the merger, the merger agreement, and the transactions
contemplated by the merger agreement will be paid by the party incurring such fees or expenses, whether or not the merger is consummated.
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BENEFICIAL OWNERSHIP OF PRIVATEBANCORP COMMON STOCK
The following table sets forth the beneficial ownership of PrivateBancorp's common stock as of September 30, 2016, with respect
to (1) each director; (2) each of its named executive officers identified in its proxy statement filed with the SEC on April 8, 2016; (3) all of its directors and executive
officers as a group; and (4) each beneficial owner of more than 5% of its common stock, which is the only class of voting securities outstanding.
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Number of
Common
Shares
Beneficially
Owned (#)
|
|
Vested but
Unsettled
Restricted
Stock
Units (#)(1)
|
|
Restricted
Stock (#)(2)
|
|
Vested but
Unsettled
PSUs(#)(1)
|
|
Exercisable
Options (#)
|
|
Total
Amount of
Beneficial
Ownership (#)(3)
|
|
Total
Percentage
Ownership(3)(4)
|
5% or Greater Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
|
|
|
7,827,443
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,827,443
|
|
9.83%
|
55 East 52nd Street
New York, New York 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC
|
|
|
5,014,546
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,014,546
|
|
6.30%
|
245 Summer Street
Boston, Massachusetts 02210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group
|
|
|
5,993,280
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,993,280
|
|
7.53%
|
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry D. Richman**
|
|
|
328,101
|
(8)
|
|
89,709
|
(16)
|
|
|
|
|
23,073
|
|
|
288,680
|
|
|
729,563
|
|
*
|
Diane M. Aigotti
|
|
|
277
|
|
|
1,306
|
|
|
|
|
|
|
|
|
|
|
|
1,583
|
|
*
|
Norman R. Bobins
|
|
|
92,966
|
|
|
21,097
|
|
|
|
|
|
|
|
|
62,500
|
|
|
176,563
|
|
*
|
Michelle L. Collins
|
|
|
|
|
|
2,368
|
|
|
|
|
|
|
|
|
|
|
|
2,368
|
|
*
|
James M. Guyette
|
|
|
132,010
|
(9)
|
|
20,638
|
|
|
|
|
|
|
|
|
6,000
|
|
|
158,648
|
|
*
|
Cheryl Mayberry McKissack
|
|
|
5,300
|
|
|
20,638
|
|
|
|
|
|
|
|
|
6,000
|
|
|
31,938
|
|
*
|
James B. Nicholson
|
|
|
38,715
|
(10)
|
|
19,303
|
|
|
|
|
|
|
|
|
|
|
|
58,018
|
|
*
|
Richard S. Price
|
|
|
|
|
|
1,306
|
|
|
|
|
|
|
|
|
|
|
|
1,306
|
|
*
|
Edward W. Rabin, Jr.
|
|
|
65,047
|
(11)
|
|
20,638
|
|
|
|
|
|
|
|
|
6,000
|
|
|
91,685
|
|
*
|
William R. Rybak
|
|
|
21,875
|
(12)
|
|
20,638
|
|
|
|
|
|
|
|
|
6,000
|
|
|
48,513
|
|
*
|
Alejandro Silva
|
|
|
29,750
|
(13)
|
|
20,638
|
|
|
|
|
|
|
|
|
6,000
|
|
|
56,388
|
|
*
|
Total Directors
|
|
|
714,041
|
|
|
238,279
|
|
|
|
|
|
23,073
|
|
|
381,180
|
|
|
1,356,573
|
|
1.69%
|
Non-director Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin M. Killips
|
|
|
112,568
|
|
|
5,126
|
(17)
|
|
|
|
|
9,005
|
|
|
91,146
|
|
|
217,845
|
|
*
|
Bruce R. Hague
|
|
|
106,272
|
(14)
|
|
4,162
|
(17)
|
|
|
|
|
10,184
|
|
|
|
|
|
120,618
|
|
*
|
Bruce S. Lubin
|
|
|
99,734
|
|
|
4,686
|
(17)
|
|
|
|
|
8,131
|
|
|
122,790
|
|
|
235,341
|
|
*
|
Karen B. Case
|
|
|
65,505
|
(15)
|
|
3,741
|
(17)
|
|
|
|
|
6,286
|
|
|
121,000
|
|
|
196,532
|
|
*
|
Total Directors and Executive Officers (20 persons)
|
|
|
1,278,436
|
|
|
267,953
|
(18)
|
|
573
|
|
|
80,993
|
|
|
1,026,375
|
|
|
2,654,330
|
|
3.28%
|
-
*
-
Less
than 1%
-
**
-
Denotes
person who serves as a director and who is also a named executive officer.
-
(1)
-
Excludes
unvested restricted stock units ("RSUs") and performance share units ("PSUs") and includes (1) RSUs that have vested but not yet settled and
(2) PSUs that have vested but not yet settled. While recipients of RSUs and PSUs have no voting power with respect to the underlying shares until the units settle (and no executive's RSUs or
PSUs are scheduled to settle within 60 days of the date of this table), they are included because the structure of the Company's director and executive compensation programs places significant
emphasis on the use of RSUs and PSUs with delayed settlement features. To exclude vested RSUs and PSUs (which the recipient has a legal right to receive in the future) solely because there are no
current voting rights would not accurately reflect their financial interest in the Company. With respect to directors, the table includes (1) all vested RSUs that have not yet settled because
the director may receive the underlying shares upon leaving the board at any time and (2) those unvested RSUs that are subject to vesting on the basis of continued board service between
September 30, 2016 and November 30, 2016.
-
(2)
-
Reflects
shares subject to vesting on various dates within the next three years on the basis of continued service for which the holder has voting power
prior to vesting.
-
(3)
-
Beneficial
ownership is determined in accordance with Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, subject to
footnote (1) above.
-
(4)
-
Based
upon 79,640,004 total shares outstanding as of September 30, 2016.
-
(5)
-
Based
on information included in a Schedule 13G/A filed on January 27, 2016 by BlackRock, Inc.
-
(6)
-
Based
on information included in a Schedule 13G/A filed on February 12, 2016 by FMR LLC.
-
(7)
-
Based
on information included in a Schedule 13G/A filed on February 10, 2016 by The Vanguard Group.
-
(8)
-
Includes
292 shares allocated to Mr. Richman's account in the KSOP.
-
(9)
-
Includes
7,300 shares held by Mr. Guyette's spouse and 8,910 shares held in the Company's deferred compensation plan.
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Table of Contents
-
(10)
-
Includes
10,098 shares held in the Company's deferred compensation plan.
-
(11)
-
Includes
4,935 shares held in the Company's deferred compensation plan.
-
(12)
-
Includes
2,610 shares held by Mr. Rybak's spouse.
-
(13)
-
Includes
16,338 shares held in the Company's deferred compensation plan.
-
(14)
-
Includes
1,300 shares held by Mr. Hague's spouse, 4,593 shares allocated to Mr. Hague's account in the KSOP, and 5,613 shares in the
Company's deferred compensation plan.
-
(15)
-
Includes
963 shares held in the Company's deferred compensation plan.
-
(16)
-
Excludes
45,843 unvested RSUs for Mr. Richman, which will vest over the next three years on the basis of continued employment.
-
(17)
-
Excludes
the following unvested RSUs which will vest over the next three years on the basis of continued employment: Mr. Killips (14,280);
Mr. Hague (12,333); Mr. Lubin (13,408); and Ms. Case (10,724).
-
(18)
-
Excludes
a total of 126,032 unvested RSUs granted to executive officers which will vest over the next three years on the basis of continued employment.
121
Table of Contents
DESCRIPTION OF CIBC SHARE CAPITAL
Set forth below is a summary of the material terms of CIBC's share capital and material provisions of the Bank
Act and CIBC's by-laws as they relate to CIBC's share capital. The following summary is not complete and is qualified in its entirety by the Bank Act, CIBC's by-laws and the actual terms and
conditions of such shares. We urge you to read the provisions of the Bank Act (in particular, Sections 372-408 and the definitions in Sections 2.2 and 8) and CIBC's by-laws, which are
relevant to a full understanding of CIBC's share capital. Copies of CIBC's by-laws are available, without charge, to any person by following the instructions listed in the section entitled "Where You
Can Find More Information." For more information on the provisions of the Bank Act and CIBC's by-laws, see also section entitled "Comparison of Rights of CIBC Shareholders and PrivateBancorp
Stockholders."
CIBC Share Capital
CIBC's authorized share capital consists of (i) an unlimited number of common shares, without nominal or par value,
(ii) an unlimited number of Class A preferred shares, without nominal or par value, provided that the maximum aggregate consideration for all outstanding Class A preferred shares
at any time may not exceed C$10 billion and (iii) an unlimited number of Class B preferred shares, without nominal or par value, provided that the maximum aggregate consideration
for all outstanding Class B preferred shares at any time may not exceed C$10 billion. As at the end of the fiscal year, October 31, 2015, CIBC had issued and outstanding
397,284,577 common shares, 40,000,000 Class A preferred shares (Series 39, 41 and 43) and no Class B preferred shares.
CIBC Common Shares
Shareholder Meetings and Voting
A holder of common shares is entitled to notice of and to attend all shareholders' meetings, except meetings at which only holders of a
specified class or series of shares are entitled to vote, and for all purposes will be entitled to one vote for each common share held.
Size of Board of Directors
The Bank Act requires that the number of directors on CIBC's board of directors be at least seven. All directors of CIBC are elected
annually. The Bank Act also requires that at least a majority of the directors on CIBC's board of directors must be, at the time of each director's election or appointment, resident Canadians.
Dividends
The holders of common shares are entitled to receive dividends as and when declared by the board of directors of CIBC, subject to the
preference of holders of preferred shares.
Liquidation Rights
In the event of liquidation, dissolution or winding up of CIBC, after payment of all outstanding deposits and debts and subject to the
preference of any shares ranking senior to the common shares, the holders of common shares will be entitled to a pro rata distribution of the remaining assets of CIBC.
Preemptive, Subscription, Redemption and Conversion Rights
The holders of common shares have no pre-emptive, subscription, redemption or conversion rights. The rights, preferences and privileges
of the common shares are subject to the rights of the holders of preferred shares.
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Table of Contents
CIBC Preferred Shares
Class A preferred shares and Class B preferred shares are issuable in series with such rights, privileges, restrictions
and conditions as the board of directors of CIBC, subject to the provisions of the Bank Act, may determine from time to time.
The
Bank Act requires that banks maintain adequate capital in relation to their operations. The Superintendent of Financial Institutions (Canada) establishes capital adequacy
requirements for issuances of regulatory capital by banks. These requirements include that all regulatory capital must be able to absorb losses in a failed financial institution. Effective
January 1, 2013, in accordance with capital adequacy requirements adopted by the Superintendent of Financial Institutions (Canada), non-common capital instruments issued after January 1,
2013, including preferred shares, must include
non-viability contingent capital provisions, providing for the full and permanent automatic conversion (an "NVCC Automatic Conversion") of such non-common capital instruments into common shares upon
the occurrence of certain trigger events relating to financial viability (the "NVCC Provisions") in order to qualify as regulatory capital.
Certain Conditions of the Class A Preferred Shares as a Class
Priority
Each series of Class A preferred shares rank on a parity with every other series of Class A preferred shares and rank in
priority to the Class B preferred shares and the common shares of CIBC with respect to the payment of dividends and on the distribution of assets in the event of the liquidation, dissolution or
winding-up of CIBC, provided that an NVCC Automatic Conversion as contemplated under the NVCC Provisions applicable to a series of Class A preferred shares has not occurred.
Restrictions on Creation of Additional Class A Preferred Shares
In addition to any shareholder approvals required by applicable law, including the Bank Act, the approval of the holders of the
Class A preferred shares given in the manner described under the section titled "Modification" below, is required for any increase in the maximum aggregate consideration for which the
Class A preferred shares may be issued and for the creation of any shares ranking prior to or on a parity with the Class A preferred shares.
Modification
Approval of amendments to the provisions of the Class A preferred shares as a class and any other authorization required to be
given by the holders of Class A preferred shares may be given by a resolution carried by an affirmative vote of not less than 66
2
/
3
% of the votes cast at a meeting at which the
holders of 10% of the outstanding Class A preferred shares are present or represented by proxy or, if no quorum is present at such meeting, at an adjourned meeting at which the shareholders
then present would form the necessary quorum.
Rights on Liquidation
In the event of the liquidation, dissolution or winding-up of CIBC, provided that a NVCC Automatic Conversion as contemplated under the
NVCC Provisions applicable to a series of Class A preferred shares has not occurred, the holders of the Class A preferred shares will be entitled to receive an amount equal to the price
at which such shares are issued together with such premium, if any, as shall have been provided for with respect to the Class A preferred shares of any series, together with all declared and
unpaid dividends, before any amount is paid or any assets of CIBC are distributed to the holders of any shares ranking junior to the Class A preferred shares. Upon payment
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to
the holders of the Class A preferred shares of the amounts so payable to them, they will not be entitled to share in any further distribution of the assets of CIBC. If an NVCC Automatic
Conversion as contemplated under the NVCC Provisions applicable to a series of Class A preferred shares has occurred, all of the Class A preferred shares of such series shall have been
converted into common shares of CIBC in accordance with a pre-determined conversion formula specified at the time of issuance of the Class A preferred shares of such series and will rank on
parity with all other common shares of CIBC.
Voting Rights
Subject to the provisions of the Bank Act, the directors of CIBC are empowered to set voting rights, if any, for each series of
Class A preferred shares.
Contingent Conversion of Certain Series of Class A Preferred Shares
All of CIBC's currently outstanding Class A preferred shares (Series 39, 41 and 43) were issued after
January 1, 2013 and, accordingly, contain NVCC Provisions in their respective share terms and conditions. The number of common shares into which such Class A preferred shares would be
converted upon an NVCC Automatic Conversion will be determined in accordance with a pre-determined conversion formula specified at the time of issuance of such Class A preferred shares.
Bank Act Restrictions Related to Share Ownership
The Bank Act contains restrictions on the issue, transfer, acquisition, beneficial ownership and voting of all shares of a chartered
bank. By way of summary, no person, or persons acting jointly or in concert, shall be a major shareholder of a bank if the bank has equity of C$12 billion or more (which would include CIBC). A
person is a major shareholder of a bank where (i) the aggregate of the shares of any class of voting shares beneficially owned by that person, by entities controlled by that person and by any
person associated or acting jointly or in concert with that person (as contemplated by the Bank Act) is more than 20% of that class of voting shares or (ii) the aggregate of the shares of any
class of non-voting shares beneficially owned by that person, by entities controlled by that person and by any person associated or acting jointly or in concert with that person (as contemplated by
the Bank Act) is more than 30% of that class of non-voting shares. No person, or persons acting jointly or in concert, shall have a significant interest in any class of shares of a bank, including
CIBC, unless the person first receives the approval of the Minister of Finance (Canada). For purposes of the Bank Act, a person has a significant interest in a class of shares of a bank where the
aggregate of any shares of the class beneficially owned by that person, by entities controlled by that person and by any person associated or acting jointly or in concert with that person (as
contemplated by the Bank Act) exceeds 10% of all of the outstanding shares of that class of shares of such bank. If a person contravenes any of these restrictions, the Minister of Finance may, by
order, direct that person to dispose of all or any portion of those shares.
In
addition, the Bank Act prohibits a bank, including CIBC, from recording in its securities register the transfer or issuance of shares of any class to Her Majesty in right of Canada or
of a province, an agent or agency of Her Majesty, a government of a foreign country or any political subdivision of a foreign country, or an agent or agency of a foreign government. The Bank Act also
suspends the exercise of any voting rights attached to any share of a bank, including CIBC, that is beneficially owned by Her Majesty in right of Canada or of a province, an agency of Her Majesty, a
government of a foreign country or any political subdivision of a foreign country, or any agency thereof.
Under
the Bank Act, CIBC cannot purchase any of its shares, including its common shares, or redeem any of its redeemable shares unless the prior consent of the Superintendent of
Financial Institutions (Canada) has been obtained. In addition, the Bank Act prohibits a bank from purchasing
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any
of its shares or redeeming any of its redeemable shares or paying any dividends if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in
contravention of the Bank Act's requirement to maintain, in relation to the bank's operations, adequate capital and appropriate forms of liquidity and to comply with any regulations or directions of
the Superintendent of Financial Institutions (Canada) in relation thereto.
Bank Act Implications for the Amendments to the Rights, Privileges, Restrictions and Conditions of CIBC's Share Capital
Under the Bank Act, the rights of holders of CIBC's shares can be changed by the board of directors of CIBC by making, amending or
repealing the by-laws of CIBC. The board of directors of CIBC must submit such by-law, or amendment to or repeal of a by-law, to the shareholders of CIBC in accordance with the procedures of the Bank
Act and the by-laws of CIBC, and the shareholders must approve the by-law, amendment to or repeal of the by-law, by special resolution to be effective. Under the Bank Act, a special resolution is a
resolution passed by not less than two-thirds of the votes cast by or on behalf of the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that
resolution. In some circumstances, the Bank Act mandates that holders of shares of a class or a series are entitled to vote separately as a class or series on a proposal to amend the by-laws of the
bank.
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Table of Contents
COMPARISON OF RIGHTS OF CIBC SHAREHOLDERS AND PRIVATEBANCORP STOCKHOLDERS
Upon completion of the merger, PrivateBancorp stockholders that receive CIBC shares as part of their merger consideration will become
CIBC shareholders. CIBC is a Canadian bank chartered under the Bank Act and, accordingly, the rights and privileges of CIBC shareholders will be governed principally by the Bank Act, which is CIBC's
charter, and by CIBC's by-laws. PrivateBancorp is incorporated under the laws of the State of Delaware and, accordingly, the rights and privileges of PrivateBancorp stockholders will be governed
principally by the laws of the State of Delaware, particularly the Delaware General Corporation Law, referred to as the "DGCL," PrivateBancorp's restated certificate of incorporation, referred to as
its "certificate of incorporation", and PrivateBancorp's amended and restated by-laws.
The
following is a summary of the key differences among the rights of PrivateBancorp stockholders and the rights of CIBC shareholders.
While CIBC and PrivateBancorp believe that the following summary describes the key differences among the rights of PrivateBancorp stockholders as of the date of
this proxy statement/prospectus and the rights of CIBC shareholders as of the date of this proxy statement/prospectus, it may not contain all of the information that is important to you and it is not
meant to be relied upon as an exhaustive list. We urge you to read the governing instruments of each company and the provisions of the DGCL and the Bank Act, which are relevant to a full understanding
of the governing instruments, fully and in their entirety. Copies of the governing instruments are available, without charge, to any person by following the instructions listed in the section entitled
"Where You Can Find More Information."
Authorized Capital Stock
PrivateBancorp's certificate of incorporation authorizes the issuance of up to 174,000,000 shares of PrivateBancorp common
stock, without par value, up to 5,000,000 shares of non-voting common stock, without par value, and up to 1,000,000 shares of PrivateBancorp preferred stock, without par value.
PrivateBancorp preferred stock is issuable in series, each series having such designations, terms, limitations, rights and preferences as the board of directors may fix and determine.
CIBC's by-laws permit CIBC to issue an unlimited number of common shares without nominal or par value and an unlimited number of
Class A preferred shares and Class B preferred shares, without nominal or par value, which classes of preferred shares may be issued for a maximum aggregate consideration not to exceed
C$10 billion for each class of preferred shares (subject to certain exceptions in the event of liquidation, dissolution or winding up of CIBC).
Number, Classification and Election of Directors
PrivateBancorp's certificate of incorporation and by-laws provide that the number of directors will be 15 directors; provided, however,
that the number of directors may be increased or decreased from time to time by resolution of the board of directors. Directors are elected by the stockholders at the annual meeting of stockholders by
a plurality of the votes cast. The holders of PrivateBancorp common stock are not entitled to cumulative voting rights in director elections. There are currently 11 directors of PrivateBancorp.
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Table of Contents
The Bank Act requires that the number of directors on CIBC's board be at least seven. CIBC's by-laws provide that the maximum number of
directors on the board is 35. Currently, CIBC's board consists of 17 directors who are elected annually. At every meeting of shareholders, every question, including the election of the board of
directors, unless otherwise required by the Bank Act or the by-laws, is to be determined by a majority of the votes cast on the question. If there is an equality of votes cast by the shareholders, the
chairman of the meeting shall be entitled to a second or casting vote, except, however, for the election of directors. The holders of Class A preferred shares and Class B preferred
shares are not entitled to vote at any meeting of shareholders of CIBC nor are they entitled to receive any notice of or attend shareholders' meetings except as provided in the Bank Act or in the
rights, privileges, restrictions and conditions attached to the applicable series of such class of shares. The Bank Act also requires that no more than two-thirds of the directors may be affiliated
with CIBC, and no more than 15% of the directors may be employees of CIBC or a subsidiary of CIBC, except that up to four persons who are employees of CIBC or a subsidiary may be directors if they
constitute not more than 50% of the directors of CIBC. Additionally, under the Bank
Act, a majority of the directors of CIBC must be resident Canadians and, except in limited circumstances, directors may not transact business at a meeting of directors at which a majority of the
directors present are not resident Canadians. The Bank Act also requires the directors of a bank to appoint from their members a chief executive officer who must be ordinarily resident in Canada.
Filling Vacancies on the Board of Directors and Removing Directors
Section 141(k) of the DGCL provides that any director or the entire board of directors may be removed, with or without cause, by
the holders of a majority of the shares then entitled to vote at an election of directors. PrivateBancorp's certificate of incorporation do not provide for any limitations to this rule.
The
by-laws of PrivateBancorp allow for vacancies (including by reason of an increase in the number of authorized directors) to be filled by the majority of the directors then in office
or by the sole remaining director.
Under the Bank Act, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the
by-laws by which the minimum or maximum number of directors is increased or from a failure to elect the minimum number of directors provided for in the by-laws.
Additionally,
CIBC's by-laws allow the directors to appoint one or more additional directors, within the maximum number permitted by CIBC's by-laws, to hold office for a term expiring
not later than the close of the next annual meeting of shareholders; but, pursuant to the Bank Act, the total number of
directors so appointed may not exceed one-third of the number of directors elected at the previous annual meeting of shareholders.
At
any meeting of CIBC's board of directors, a majority of the directors, or such greater number as the board may from time to time determine, shall constitute a quorum for the
transaction of business providing that not more than one of such directors is a full-time officer of CIBC. The Bank Act provides that the directors of a bank will not transact business at a meeting of
directors unless at least one of the directors who is not affiliated with the bank is present and a majority of the directors present are resident Canadians.
Regarding
directors removal, under the Bank Act, the shareholders of CIBC may remove any director or all the directors from office by a majority of votes cast at a special meeting of
shareholders.
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Table of Contents
Voting Rights Generally
Under the DGCL and the PrivateBancorp certificate of incorporation, each share of PrivateBancorp common stock is entitled to one vote
per share on all matters submitted to stockholders.
Under the Bank Act, if voting rights are attached to any share of a bank, the voting rights may confer only one vote in respect of that
share. The CIBC by-laws provide that holders of CIBC common shares are entitled to vote at all meetings of shareholders, except where only holders of a specified class of shares are entitled to vote.
The holders of Class A preferred shares and Class B preferred shares are not entitled to vote at any meeting of shareholders of CIBC nor are they entitled to receive any notice of or
attend shareholders' meetings except as provided in the Bank Act or in the rights, privileges, restrictions and conditions attached to the applicable series of such class of shares.
Exculpation of Liability
Under PrivateBancorp's certificate of incorporation, directors are not liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of Delaware law (which concerns unlawful dividends, stock
purchases, and redemptions); or (iv) for any transaction from which the director derived an improper personal benefit.
Under the Bank Act, a bank may not, by contract, resolution or by-law, limit the liability of its directors for breaches of their duty
to act in accordance with the Bank Act. However, under the Bank Act, directors and officers are not liable in respect of certain of their duties imposed under the Bank Act, including their duty of
care, if they relied in good faith (a) on financial
statements represented to the directors or officers by an officer of the bank or in a written report of the bank's auditors to reflect fairly the financial condition of the bank or (b) on a
report of a person whose profession lends credibility to a statement made by the professional.
Director and Officer Indemnification
Under Delaware law, a corporation may indemnify its directors and officers if a director or officer acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the corporation. Furthermore, Delaware law allows for a corporation to indemnify its directors and officers with respect to any
criminal action, suit or proceeding when the director or officer had no reasonable cause to believe his or her conduct was unlawful. Indemnification generally is not allowed under Delaware law if a
director or officer has been adjudged liable to the corporation.
PrivateBancorp's
certificate of incorporation provides that directors and officers of the corporation shall be indemnified to the fullest extent permissible under Delaware law and not
prohibited by other law or regulation, subject to certain conditions.
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Subject to the limitations contained in the Bank Act, but without limit to the right of CIBC to indemnify or advance amounts to any
person under the Bank Act or otherwise,
CIBC's by-laws provide that CIBC will indemnify a director or officer of CIBC, a former director or officer of CIBC, or another person who acts or acted at CIBC's request as a director or officer of
or in a similar capacity to another entity, and such person's heirs and personal representatives (the "indemnified persons"), against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by such person in respect of any civil, criminal, administrative, investigative or other proceeding to which such person is involved because
of that association with CIBC or an other entity; provided: (i) the indemnified person acted honestly and in good faith with a view to the best interests of, as the case may be, CIBC or the
other entity for which they acted at CIBC's request as a director or officer in a similar capacity; and (ii) in the case of a criminal or administrative action or proceeding that is enforced by
a monetary penalty, such person had reasonable grounds for believing their conduct was lawful. CIBC's by-laws further provide that nothing in its by-laws shall limit the right of any person entitled
to indemnity to claim indemnity apart from the provisions of CIBC's by-laws.
Under
the Bank Act, the indemnified persons referred to above are entitled to indemnity from CIBC in respect of all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by the person in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the person is subject
because of their association with CIBC or another entity, if the person seeking indemnity:
-
-
was not judged by the court or other competent authority to have committed any fault or omitted to do anything they ought to have
done; and
-
-
fulfils the conditions set out in (i) and (ii) above.
CIBC
has obtained director's and officer's liability insurance coverage, which, subject to policy terms and limitations, provides coverage for directors and officers of CIBC, acting as
directors and officers of CIBC and its subsidiaries, in certain circumstances where CIBC is unable to provide indemnification to such directors and officers.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Special Meetings of Shareholders
PrivateBancorp's bylaws provide that special meetings of stockholders may be called by the Chairman of the Board, the President or the
Secretary, and shall be called by the Chairman of the Board, the Chief Executive Officer or the Secretary at the request in writing of a majority of PrivateBancorp's board of directors.
Under the Bank Act, special meetings of shareholders may be called at any time by the board of directors. In addition, subject to
certain provisions of the Bank Act, the holders of not less than 5% of the issued and outstanding shares of CIBC that carry the right to vote at a meeting may request that the directors call a meeting
of shareholders for the purpose stated in the request and may call the special meeting if the directors do not do so within 21 days after receiving the request.
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Table of Contents
Quorum Requirements
PrivateBancorp's by-laws provide that the holders of a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at any annual or special meeting of stockholders.
The Bank Act permits a bank to establish by by-law the quorum requirement for meetings of shareholders. CIBC's by-laws provide that, a
quorum for the transaction of business at any meeting of shareholders shall be at least two persons present in person, each being a shareholder entitled to vote thereat or a duly appointed proxyholder
or representative for a shareholder so entitled, holding at least 25% of the shares entitled to vote at the meeting.
OTHER MATTERS
As of the date of this proxy statement/prospectus, PrivateBancorp's board of directors knows of no matters that will be presented for
consideration at the special meeting other than as described in this proxy statement/prospectus. If any other matters properly come before stockholders at the special meeting, or any adjournment or
postponement of the meeting, and are voted upon, the enclosed proxy will be deemed to confer discretionary authority on the individuals that it names as proxies to vote the shares represented by the
proxy as to any of these matters. The individuals named as proxies intend to vote in accordance with the recommendation of PrivateBancorp's board of directors.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
PrivateBancorp does not anticipate holding a 2017 annual meeting of shareholders if the merger is completed in the first calendar
quarter of 2017, as currently expected. In the event that the merger is not completed on the expected time frame, or at all, PrivateBancorp may hold a 2017 annual meeting. Any shareholder nominations
or proposals for other business intended to
be presented at PrivateBancorp's next annual meeting must be submitted to PrivateBancorp as set forth below.
If
a stockholder seeks to have a proposal considered for inclusion in the Company's proxy statement and proxy card for our 2017 annual meeting pursuant to Rule 14a-8 under the
Securities Exchange Act, the required notice under Rule 14a-8 must be received by December 9, 2016 by our Corporate Secretary at our executive offices at 120 South LaSalle Street,
Chicago, Illinois 60603. Any such proposal will be subject to the requirements of Rule 14a-8.
PrivateBancorp's
by-laws establish advance notice procedures as to (i) business to be brought before an annual meeting of stockholders other than by or at the direction of the
PrivateBancorp board of directors, and (ii) the nomination, other than by or at the direction of the PrivateBancorp board of directors, of candidates for election as directors. Under the
Company's by-laws, nominations for director or other business proposals to be addressed at PrivateBancorp's 2017 annual meeting may have been made by a stockholder entitled to vote who delivered a
notice to the Chairman of the Board, Chief Executive or Secretary of PrivateBancorp that was received no later than 120 days prior to the meeting; provided, however, that if less than
130 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, to be timely a stockholder's notice must be received by the close of business on the
tenth day following the day on which notice of the day of the annual meeting was mailed or such public disclosure was made. The notice must have contained the information and followed the procedures
required by the by-laws. Copies of PrivateBancorp's by-laws may be obtained by written request addressed to the Secretary at PrivateBancorp's principal executive offices.
Any CIBC shareholder who intends to submit a proposal for inclusion in the management proxy circular for the 2017 annual meeting of
CIBC must submit the proposal to the Corporate Secretary of CIBC by November 18, 2016 at CIBC's head office located at 199 Bay Street, Commerce Court West, Suite 4460, Toronto, Ontario
M5L 1A2. Any CIBC shareholder who intended to submit a proposal for inclusion in the management proxy circular for the 2016 annual meeting of CIBC must have already submitted such a proposal to
CIBC by November 28, 2016.
Proposals
by shareholders of a bank may be made by certain registered or beneficial holders of shares that are entitled to vote at an annual meeting of shareholders. To be eligible to
submit any shareholder proposal, a shareholder must satisfy certain eligibility criteria set forth in the Bank Act. Under the Bank Act, shareholder proposals may only be submitted at annual meetings
of shareholders.
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A
shareholder eligible to submit a proposal and entitled to vote at an annual meeting of shareholders may submit to CIBC notice of any matter that the shareholder proposes to raise at the meeting
provided that, among other things, the proposal is submitted to CIBC at least 90 days before the anniversary date of the notice of meeting that was sent to shareholders in respect of CIBC's
previous annual meeting of shareholders. The written proposal must contain certain information about the proposal and the shareholder making the proposal and otherwise comply with the procedures set
forth in the Bank Act.
Under
the Bank Act, in order for a shareholder proposal to include nominations of candidates for election to CIBC's board of directors, it must be signed by holders of not less than 5%
of the issued and outstanding shares or 5% of the issued and outstanding shares of a class of shares entitled to vote at the meeting at which the proposal is to be presented, and such shareholders
must have held such shares for at least the six-month period immediately preceding the day on which the proposal was submitted.
WHERE YOU CAN FIND MORE INFORMATION
PrivateBancorp files reports, proxy statements and other information with the SEC as required under the Exchange Act. CIBC files or
furnishes annual reports, current reports and other information with the SEC under the Exchange Act. As CIBC is a "foreign private issuer," under the rules adopted under the Exchange Act it is exempt
from certain of the requirements of the Exchange Act, including the proxy and information provisions of Section 14 of the Exchange Act and the reporting and liability provisions applicable to
officers, directors and significant shareholders under Section 16 of the Exchange Act.
You
may read and copy any reports, statements or other information filed by CIBC or PrivateBancorp at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. You may also obtain copies of this information by mail from the Public Reference
Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates, or from commercial document retrieval services.
The
SEC maintains a website that contains reports, proxy statements and other information, including those filed by CIBC and PrivateBancorp, at
www.sec.gov
. You may also access the SEC filings and obtain
other information about CIBC and PrivateBancorp through the websites maintained by CIBC and
PrivateBancorp at www.cibc.com and www.theprivatebank.com, respectively. The information
contained in those websites is not incorporated by reference in, or in any way part of, this proxy statement/prospectus.
CIBC
files reports, statements and other information with the Canadian provincial and territorial securities administrators. CIBC filings are also electronically available to the public
from the Canadian System for Electronic Document Analysis and Retrieval, the Canadian equivalent of the SEC's EDGAR system, at www.sedar.com.
CIBC
has filed a registration statement on Form F-4 to register with the SEC the CIBC common shares to be issued in connection with the merger. This document is a part of that
registration statement and constitutes the prospectus of CIBC in addition to being a proxy statement for the PrivateBancorp common stockholders.
Incorporation of Certain Documents by Reference
As allowed by SEC rules, this proxy statement/prospectus does not contain all the information you can find in the registration
statement on Form F-4 filed by CIBC and the exhibits to the registration statement. In addition, the SEC allows CIBC and PrivateBancorp to "incorporate by reference"
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Table of Contents
information
into this proxy statement/prospectus, which means that CIBC and PrivateBancorp can disclose important information to you by referring you to other documents filed separately with the SEC.
The information incorporated by reference is deemed to be part of this proxy statement/prospectus, except for any information superseded by information included directly in this proxy
statement/prospectus. This proxy statement/prospectus incorporates by reference the documents set forth below that CIBC and PrivateBancorp have previously filed with the SEC, in each case to the
extent filed and not furnished. These documents contain important information about the companies and their financial condition.
|
|
|
CIBC Filings with the SEC
(File No. 1-14678)
|
|
Period and/or Filing Date
|
Annual Report on Form 40-F
|
|
Year ended October 31, 2015, as filed December 3, 2015
|
Report of Foreign Private Issuer on Form 6-K
|
|
Quarter ended July 31, 2016 as filed August 25, 2016
|
Report of Foreign Private Issuer on Form 6-K
|
|
Filed July 6, 2016
|
Report of Foreign Private Issuer on Form 6-K
|
|
Filed June 29, 2016
|
Report of Foreign Private Issuer on Form 6-K
|
|
Quarter ended April 30, 2016, as filed May 26, 2016
|
Report of Foreign Private Issuer on Form 6-K
|
|
Filed May 26, 2016
|
Report of Foreign Private Issuer on Form 6-K
|
|
Quarter ended January 31, 2016, as filed February 25, 2016
|
Report of Foreign Private Issuer on Form 6-K
|
|
Filed February 25, 2016
|
|
|
|
PrivateBancorp Filings with the SEC
(File No. 001-34066)
|
|
Period and/or Filing Date
|
Annual Report on Form 10-K
|
|
Year ended December 31, 2015, as filed February 26, 2016
|
Quarterly Report on Form 10-Q
|
|
Quarter ended March 31, 2016, as filed May 5, 2016
|
Quarterly Report on Form 10-Q
|
|
Quarter ended June 30, 2016, as filed August 8, 2016
|
Current Report on Form 8-K
|
|
Filed July 6, 2016
|
Current Report on Form 8-K
|
|
Filed May 29, 2016
|
Current Report on Form 8-K*
|
|
Filed May 19, 2016
|
-
*
-
with
respect to Item 5.07 only.
Notwithstanding
the foregoing, information furnished by PrivateBancorp or CIBC on any Current Report on Form 8-K or Report of Foreign Private Issuer on Form 6-k, including
the related exhibits, that, pursuant to and in accordance with the rules and regulations of the SEC, is deemed furnished and not filed for purposes of the Exchange Act will not be deemed to be
incorporated by reference into this proxy statement/prospectus.
All
documents filed by CIBC and PrivateBancorp under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this proxy statement/prospectus to the completion of
the offering will also be deemed to be incorporated into this proxy statement/prospectus by reference other than the portions of those documents not deemed to be filed. These documents include
periodic reports, such as
Annual Reports on Form 10-K and 40-F, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and, to the extent, if any, CIBC designates therein that they
are so incorporated, Reports of Foreign Private Issuer on Form 6-K that CIBC furnishes to the SEC.
In
addition, the description of CIBC common shares contained in CIBC's registration statements under Section 12 of the Exchange Act is incorporated by reference.
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Table of Contents
You
may also obtain copies of any document incorporated in this proxy statement/prospectus, without charge, by requesting them in writing or by telephone from the appropriate company at
the following addresses.
PRIVATEBANCORP, INC.
120 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
ATTENTION: CORPORATE SECRETARY
TELEPHONE: (312) 564-2000
CANADIAN IMPERIAL BANK OF COMMERCE
COMMERCE COURT
TORONTO, ONTARIO
CANADA, M5L 1A2
ATTENTION: CORPORATE SECRETARY
TELEPHONE: (416) 980-2211
If you would like to request documents, please do so by December 1, 2016 to receive them before the special meeting. If you request any incorporated
documents from us, we will mail them to you by first class mail, or another equally prompt means, within one business day after we receive your request.
140
Table of Contents
AGREEMENT AND PLAN OF MERGER
by and among
CANADIAN IMPERIAL BANK OF COMMERCE,
PRIVATEBANCORP, INC.
and
CIBC HOLDCO INC.
Dated as of June 29, 2016
Table of Contents
TABLE OF CONTENTS
A-i
Table of Contents
A-ii
Table of Contents
A-iii
Table of Contents
A-iv
Table of Contents
INDEX OF DEFINED TERMS
|
|
|
|
|
Acquisition Proposal
|
|
|
52
|
|
Adjusted Performance Share Unit Award
|
|
|
4
|
|
Adjusted Restricted Stock Award
|
|
|
4
|
|
Adjusted Restricted Stock Unit Award
|
|
|
4
|
|
Adjusted Stock Option
|
|
|
3
|
|
affiliate
|
|
|
64
|
|
Agreement
|
|
|
1
|
|
Anti-Corruption Laws
|
|
|
23
|
|
Anti-Money Laundering Laws
|
|
|
23
|
|
BHC Act
|
|
|
10
|
|
business day
|
|
|
64
|
|
Canadian GAAP
|
|
|
35
|
|
Certificate of Merger
|
|
|
2
|
|
Chosen Courts
|
|
|
65
|
|
Closing
|
|
|
1
|
|
Closing Date
|
|
|
2
|
|
Code
|
|
|
1
|
|
Company
|
|
|
1
|
|
Company Bank
|
|
|
23
|
|
Company Benefit Plans
|
|
|
19
|
|
Company Bylaws
|
|
|
11
|
|
Company Certificate
|
|
|
11
|
|
Company Common Stock
|
|
|
2
|
|
Company Contract
|
|
|
24
|
|
Company Debentures
|
|
|
54
|
|
Company Director
|
|
|
55
|
|
Company Disclosure Schedule
|
|
|
9
|
|
Company Equity Awards
|
|
|
6
|
|
Company ERISA Affiliate
|
|
|
19
|
|
Company Indemnified Parties
|
|
|
49
|
|
Company Meeting
|
|
|
46
|
|
Company Performance Share Unit Award
|
|
|
4
|
|
Company Qualified Plans
|
|
|
20
|
|
Company Regulatory Agreement
|
|
|
25
|
|
Company Restricted Stock Award
|
|
|
4
|
|
Company Restricted Stock Unit Award
|
|
|
4
|
|
Company SEC Reports
|
|
|
15
|
|
Company Severance Plan
|
|
|
48
|
|
Company Stock Option
|
|
|
3
|
|
Company Stock Plans
|
|
|
3
|
|
Company Subsidiary
|
|
|
11
|
|
Confidentiality Agreement
|
|
|
46
|
|
Continuation Period
|
|
|
48
|
|
Continuing Employee
|
|
|
48
|
|
Copyrights
|
|
|
28
|
|
Deferred Compensation Plan
|
|
|
5
|
|
Deferred Unit
|
|
|
5
|
|
Delaware Secretary
|
|
|
2
|
|
Derivative Contracts
|
|
|
25
|
|
A-v
Table of Contents
|
|
|
|
|
DGCL
|
|
|
1
|
|
Dissenting Shares
|
|
|
7
|
|
Dissenting Stockholder
|
|
|
7
|
|
dollars
|
|
|
64
|
|
Effective Time
|
|
|
2
|
|
Enforceability Exceptions
|
|
|
13
|
|
Environmental Laws
|
|
|
26
|
|
Equity Award Exchange Ratio
|
|
|
3
|
|
ERISA
|
|
|
19
|
|
Exception Shares
|
|
|
2
|
|
Exchange Act
|
|
|
14
|
|
Exchange Agent
|
|
|
6
|
|
Exchange Fund
|
|
|
6
|
|
Exchange Ratio
|
|
|
2
|
|
F-4
|
|
|
14
|
|
FDIC
|
|
|
11
|
|
Federal Reserve Board
|
|
|
14
|
|
GAAP
|
|
|
10
|
|
Governmental Entity
|
|
|
14
|
|
Holdco
|
|
|
1
|
|
HSR Act
|
|
|
14
|
|
IFRS
|
|
|
10
|
|
Intellectual Property
|
|
|
28
|
|
IRS
|
|
|
18
|
|
knowledge
|
|
|
64
|
|
Leased Properties
|
|
|
27
|
|
Liens
|
|
|
13
|
|
Loans
|
|
|
30
|
|
made available
|
|
|
64
|
|
Material Adverse Effect
|
|
|
10
|
|
Materially Burdensome Regulatory Condition
|
|
|
45
|
|
Merger
|
|
|
1
|
|
Merger Consideration
|
|
|
2
|
|
Multiemployer Plan
|
|
|
21
|
|
Multiple Employer Plan
|
|
|
21
|
|
New Certificates
|
|
|
6
|
|
New Plans
|
|
|
48
|
|
NYSE
|
|
|
14
|
|
Old Certificate
|
|
|
2
|
|
OSFI
|
|
|
14
|
|
Owned Properties
|
|
|
27
|
|
Parent
|
|
|
1
|
|
Parent Capitalization Date
|
|
|
32
|
|
Parent Common Shares
|
|
|
2
|
|
Parent Disclosure Schedule
|
|
|
31
|
|
Parent Preferred Shares
|
|
|
32
|
|
Parent Regulatory Agreement
|
|
|
38
|
|
Parent SEC Reports
|
|
|
34
|
|
Parent Share Closing Price
|
|
|
9
|
|
Parent Stock Plans
|
|
|
32
|
|
Patents
|
|
|
28
|
|
A-vi
Table of Contents
|
|
|
|
|
Per Share Cash Consideration
|
|
|
2
|
|
Per Unit Total Consideration
|
|
|
4
|
|
Permitted Encumbrances
|
|
|
27
|
|
Premium Cap
|
|
|
50
|
|
Proxy Statement
|
|
|
14
|
|
Real Property
|
|
|
27
|
|
Registered Intellectual Property
|
|
|
28
|
|
Registered Owned Intellectual Property
|
|
|
28
|
|
Regulatory Agencies
|
|
|
14
|
|
Representatives
|
|
|
51
|
|
Requisite Company Vote
|
|
|
13
|
|
Requisite Regulatory Approvals
|
|
|
56
|
|
Sanctioned Country
|
|
|
23
|
|
Sanctions
|
|
|
23
|
|
Sarbanes-Oxley Act
|
|
|
16
|
|
SEC
|
|
|
14
|
|
Securities Act
|
|
|
15
|
|
Severance Continuation Period
|
|
|
48
|
|
SRO
|
|
|
14
|
|
Subsidiary
|
|
|
11
|
|
Superior Proposal
|
|
|
52
|
|
Surviving Corporation
|
|
|
1
|
|
Systems
|
|
|
27
|
|
Takeover Statutes
|
|
|
29
|
|
Tax
|
|
|
19
|
|
Tax Return
|
|
|
19
|
|
Taxes
|
|
|
19
|
|
Termination Date
|
|
|
59
|
|
Termination Fee
|
|
|
60
|
|
Trademarks
|
|
|
28
|
|
TSX
|
|
|
14
|
|
A-vii
Table of Contents
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 29, 2016 (this "
Agreement
"), by
and among CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian chartered bank ("
Parent
"), PRIVATEBANCORP, INC., a Delaware corporation
("
Company
"), and CIBC HOLDCO INC., a Delaware corporation and a direct, wholly owned subsidiary of Parent
("
Holdco
").
W I T N E S S E T H:
WHEREAS,
the Boards of Directors of Parent, Company and Holdco have determined that it is in the best interests of their respective companies and their
shareholders to consummate the strategic business combination transaction provided for herein, pursuant to which Company will, subject to the terms and conditions set forth herein, merge with and into
Holdco (the "
Merger
"), so that Holdco is the surviving corporation (hereinafter sometimes referred to in such capacity as the
"
Surviving Corporation
") in the Merger;
WHEREAS,
for Federal income tax purposes, it is intended that the Merger shall qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "
Code
"), and this Agreement is intended to be and is adopted as a plan of reorganization for purposes of Sections 354 and
361 of the Code;
WHEREAS,
as an inducement to and condition of Parent's willingness to enter into this Agreement, concurrently with the entry of the parties into this Agreement, Larry D. Richman is
entering into an employment agreement with Parent; 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 Delaware
General Corporation Law (the
"
DGCL
"), at the Effective Time, Company shall merge with and into Holdco. Holdco shall be the Surviving Corporation in the Merger, and shall continue
its corporate existence under the laws of the State of Delaware. Upon consummation of the Merger, the separate corporate existence of Company shall terminate.
1.2
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., New York City time, at the offices of Mayer Brown LLP, on a date which shall be no later than three (3) 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 (other than those conditions that by their nature can only be satisfied at the Closing, but subject to
the satisfaction or waiver thereof) unless another date, time or place is agreed to in writing by Parent and Company. The date on which the Closing occurs is referred to in this Agreement as the
"
Closing Date
".
1.3
Effective Time.
Subject to the terms and conditions of this Agreement, on or before the Closing
Date, Parent shall cause to be filed with the Secretary of State of the State of
Delaware (the "
Delaware Secretary
") a certificate of merger (the "
Certificate of Merger
"), as provided
in Section 251 of the DGCL. The Merger shall become effective as of the date and time specified in the Certificate of Merger (such date and time, the "
Effective
Time
").
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1.4
Effects of the Merger.
At and after the Effective Time, the Merger shall have the effects set
forth in the applicable provisions of the DGCL.
1.5
Conversion of Company Common Stock.
At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Holdco, Company or the holder of any of the following securities:
(a) Each
share of the common stock, without par value, of Company issued and outstanding immediately prior to the Effective Time (the "
Company Common
Stock
") (except for (x) shares of Company Common Stock owned by Company as treasury stock or owned by Company or Parent (in each case other than shares of Company Common
Stock (A) held in any Company Benefit Plans or related trust accounts, managed accounts, mutual funds and the like, or otherwise held in a fiduciary or agency capacity or (B) held,
directly or indirectly, in respect of a debt previously contracted (collectively, the "
Exception Shares
")), (y) Dissenting Shares and
(z) Company Restricted Share Awards) shall be converted, in accordance with the procedures set forth in this Agreement, into the right to receive without interest, (i) 0.3657 common
shares (the "
Exchange Ratio
") of Parent (the "
Parent Common Shares
") and (ii) $18.80 in cash (the
"
Per Share Cash Consideration
") (the consideration described in clauses (i) and (ii), the "
Merger
Consideration
").
(b) All
the shares of Company Common Stock converted into the right to receive the Merger Consideration 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, an "
Old Certificate
", it being
understood that any reference herein to "Old Certificate" shall be deemed to include reference to book-entry account statements relating to the ownership of shares of Company Common Stock) previously
representing any such shares of Company Common Stock shall thereafter represent only the right to receive (i) the Merger Consideration, (ii) cash in lieu of fractional shares which the
shares of Company Common Stock represented by such Old Certificate have been converted into the right to receive pursuant to this Section 1.5 and Section 2.3(e), without any interest
thereon, and (iii) any dividends or distributions which the holder thereof has the right to receive pursuant to Section 2.3(b). If, prior to the Effective Time, the outstanding Parent
Common Shares shall have been increased, decreased, or changed into or exchanged for a different number or kind of shares or securities, in any such case as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, or there shall be any extraordinary dividend or distribution, an
appropriate and proportionate adjustment shall be made to the Merger Consideration to give holders of Company Common Stock the same economic effect as contemplated by this Agreement prior to such
event.
(c) Notwithstanding
anything in this Agreement to the contrary, at the Effective Time, all shares of Company Common Stock that are owned by Company or Parent (in each case
other than the Exception Shares) shall be cancelled and shall cease to exist and neither the Merger Consideration nor any other consideration shall be delivered in exchange therefor.
1.6
Parent Common Shares.
At and after the Effective Time, each Parent Common Share issued and
outstanding immediately prior to the Effective Time shall remain an issued and outstanding
share of common stock of the Parent and shall not be affected by the Merger.
1.7
Surviving Corporation Common Stock.
At and after the Effective Time, each share of the common
stock of Holdco issued and outstanding immediately prior to the Effective Time shall remain an issued
and outstanding share of common stock of the Surviving Corporation and shall not be affected by the Merger.
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1.8
Treatment of Company Equity Awards
.
(a) At
the Effective Time, each option to purchase shares of Company Common Stock granted by Company under a Company Stock Plan (as defined below) that is outstanding and
unexercised immediately prior to the Effective Time (a "
Company Stock Option
") shall be converted automatically into an option (an
"
Adjusted Stock Option
") to purchase, on the same terms and conditions as were applicable under such Company Stock Option immediately prior to the
Effective Time (including vesting terms), the number of Parent Common Shares (rounded down to the nearest whole number of shares) equal to the product of (i) the number of shares of Company
Common Stock subject to such Company Stock Option immediately prior to the Effective Time, multiplied by (ii) the sum of (A) the Exchange Ratio and (B) the quotient (rounded to
four decimal places) obtained by dividing (x) the Per Share Cash Consideration by (y) the Parent Share Closing Price (clause (ii) hereof, the "
Equity Award
Exchange Ratio
"), which Adjusted Stock Option shall have an exercise price per Parent Common Share equal to the quotient (rounded up to the nearest whole cent) obtained by
dividing (1) the exercise price per share of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time, by (2) the Equity Award Exchange Ratio.
For purposes of this Agreement, "
Company Stock Plans
" means the Company Incentive Compensation Plan, the Company Strategic Long-Term Incentive Plan, the
Company 2007 Long-Term Incentive Compensation Plan, and the Company Amended and Restated 2011 Incentive Compensation Plan.
(b) At
the Effective Time, each award of shares of Company Common Stock subject to vesting, repurchase or other lapse restriction granted under a Company Stock Plan that is
outstanding and unvested immediately prior to the Effective Time (a "
Company Restricted Stock Award
") shall be cancelled and replaced with a restricted
stock award of Parent Common Shares (an "
Adjusted Restricted Stock Award
") with the same terms and conditions as were applicable under such Company
Restricted Stock Award immediately prior to the Effective Time (including vesting terms), and relating to the number of Parent Common Shares equal to the product of (i) the number of shares of
Company Common Stock subject to such Company Restricted Stock Award immediately prior to the Effective Time, multiplied by (ii) the Equity Award Exchange Ratio, with any fractional shares
rounded to the next whole number of shares.
(c) At
the Effective Time, each restricted stock unit award in respect of shares of Company Common Stock granted under a Company Stock Plan that is outstanding immediately
prior to the Effective Time (a "
Company Restricted Stock Unit Award
") shall (i) if unvested, be converted automatically into a cash-settled
restricted stock unit award (an "
Adjusted Restricted Stock Unit Award
") with the same terms and conditions as were applicable under such Company
Restricted Stock Unit Award immediately prior to the Effective Time (including vesting terms), except that settlement shall be in the form of a cash payment equal to the fair market value (determined
under the methodology used by Parent for
determining fair market value for employee equity awards generally) of the Parent Common Shares to which the award relates, and relating to the number of Parent Common Shares equal to the product
(taken to the fourth decimal place) of (A) the number of shares of Company Common Stock subject to such Company Restricted Stock Unit Award immediately prior to the Effective Time, multiplied
by (B) the Equity Award Exchange Ratio, or (ii) if vested (including for this purpose all Company Restricted Stock Unit Awards held by non-employee directors, whether or not vested as of
date hereof, all of which shall be vested and settled within ten (10) days after the Effective Time pursuant to this clause (ii)), be cancelled and converted automatically into the right
to receive, as soon as reasonably practicable (but not later than ten (10) days) after the Effective Time, (A) a cash payment equal to the sum of (1) the Per Share Cash
Consideration plus (2) the product of the Exchange Ratio multiplied by the Parent Share Closing Price (such sum, the "
Per Unit Total
Consideration
") (without interest and less applicable Tax withholding) in respect of each share of Company Common Stock underlying
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such
Company Restricted Stock Unit Award and (B) a cash payment equal to all dividend equivalents accumulated with respect to such Company Restricted Stock Unit Award that have not been paid
prior to the Effective Time;
provided
, that if the terms of any such vested Company Restricted Stock Unit Award do not provide for settlement upon a
change in control, such vested Company Restricted Stock Unit Award shall instead be converted into an Adjusted Restricted Stock Unit Award pursuant to clause (i) above and shall be settled at
the earliest time provided by its terms as is consistent with Section 409A of the Code. For purposes of the preceding sentence, each vested Company Restricted Stock Unit Award for which
settlement was delayed for the purpose of avoiding a loss of deduction pursuant to Section 162(m) of the Code shall be treated as providing for settlement upon a change in control.
(d) At
the Effective Time, each performance share unit award in respect of shares of Company Common Stock granted under a Company Stock Plan that is outstanding immediately
prior to the Effective Time (a "
Company Performance Share Unit Award
") shall (i) if unvested, be converted automatically into a cash-settled
restricted stock unit award (an "
Adjusted Performance Share Unit Award
") with the same terms and conditions as were applicable under such Company
Performance Share Unit Award immediately prior to the Effective Time (except that such Adjusted Performance Share Unit Award shall be subject solely to time based vesting and settlement shall be in
the form of a cash payment equal to the fair market value (determined under the methodology used by Parent for determining fair market value for employee equity awards generally) of the Parent Common
Shares to which the award relates), and relating to the number of Parent Common Shares equal to the product (taken to the fourth decimal place) of (A) the number of shares of Company Common
Stock subject to such Company Performance Share Unit Award immediately prior to the Effective Time, multiplied by (B) the Equity Award Exchange Ratio, or (ii) if vested, be cancelled and
converted automatically into the right to receive, as soon as reasonably practicable (but not later than ten (10) days) after the Effective Time, (A) a cash payment equal to the Per Unit
Total Consideration (without interest and less applicable Tax withholding) in respect of each share of Company Common Stock underlying such
Company Performance Share Unit Award and (B) a cash payment equal to all dividend equivalents accumulated with respect to such Company Performance Share Unit Award that have not been paid prior
to the Effective Time;
provided
, that if the terms of any such vested Company Performance Share Unit Award do not provide for settlement upon a change
in control, such vested Company Performance Share Unit Award shall instead be converted into an Adjusted Performance Share Unit Award pursuant to clause (i) above and shall be settled at the
earliest time provided by its terms as is consistent with Section 409A of the Code. For all purposes of this Section 1.8(d), the number of shares of Company Common Stock subject to each
Performance Share Unit Award that was granted in 2014, 2015 or 2016 that is outstanding immediately prior to the Effective Time shall be determined by assuming that the applicable performance goals
have been achieved at the maximum level.
(e) At
the Effective Time, each stock unit (each, a "
Deferred Unit
") credited to an account that is deemed invested in
Company Common Stock as of immediately prior to the Effective Time under Company's Deferred Compensation Plan (the "
Deferred Compensation Plan
") shall
be converted automatically into a deemed investment relating to Parent Common Shares that will be cash-settled (with the cash payment due on settlement equal to the fair market value (determined under
the methodology used by Parent for determining fair market value for employee equity awards generally) of the Parent Common Shares to which the Deferred Units relate), with the number of Parent Common
Shares subject to the Deferred Units in a participant's account under the Deferred Compensation Plan as of the Effective Time to be equal to the product (taken to the fourth decimal place) of
(i) the number of shares of Company Common Stock subject to such Deferred Units as of immediately prior to the Effective Time, and (ii) the Equity Award Exchange Ratio. Following the
Effective Time, the Deferred Compensation Plan will otherwise continue to
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be
maintained by the Surviving Corporation with the same terms, including payment terms and investment alternatives that were applicable immediately prior to the Effective Time, with the Company
Common Stock fund to be replaced with a Parent Common Shares fund, subject to all rights of the Company (and the Surviving Corporation as its successor) to amend or terminate the Deferred Compensation
Plan.
(f) At
or prior to the Effective Time, Company, the Board of Directors of the Company and its Compensation Committee, and Parent, the Board of Directors of Parent and its
Compensation Committee, as applicable, shall adopt any resolutions that are necessary to effectuate the provisions of this Section 1.8, including, in the case of the Board of Directors of
Company and its Compensation Committee, a resolution providing that the Adjusted Stock Options, Adjusted Restricted Stock Awards, Adjusted Restricted Stock Unit Awards and Adjusted Performance Share
Unit Awards constitute a "Replacement Award" as defined in the Company Amended and Restated 2011 Incentive Compensation Plan and the award agreements issued thereunder, and, in the case of the Board
of
Directors of Parent and its Compensation Committee, the reservation, issuance and listing of the shares of Parent Common Stock as is necessary to effectuate the treatment of the Company Equity Awards
(as defined below) contemplated herein and the assumption by Parent of the Company Stock Plans and the award agreement thereunder. As of the Effective Time, Parent shall file a post-effective
amendment to the Form F-4 or an effective registration statement on Form S-8 (or other applicable form) with respect to the Parent Common Shares subject to Adjusted Stock Options and
Adjusted Restricted Stock Awards and shall distribute a prospectus relating to such Form S-8, if applicable, and Parent shall use reasonable commercial efforts to maintain the effectiveness of
such registration statement for so long as such Adjusted Stock Options and Adjusted Restricted Stock Awards remain outstanding.
(g) As
used herein, the phrase the "
Company Equity Awards
" means the Company Performance Share Unit Awards, the Company Stock
Options, the Company Restricted Stock Awards, and the Company Restricted Stock Unit Awards.
1.9
Certificate of Incorporation and Bylaws of the Surviving Corporation.
The certificate of
incorporation and bylaws of the Surviving Corporation shall be the certificate of incorporation and bylaws of Holdco as in effect immediately
prior to the Effective Time, until duly amended in accordance with the respective terms thereof and applicable law.
1.10
Tax Consequences.
It is intended that the Merger shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Code, and that this Agreement is intended to
be and is adopted as a "plan of reorganization" for the purposes of Sections 354 and 361 of the Code.
ARTICLE II
DELIVERY OF MERGER CONSIDERATION
2.1
Exchange Agent.
Prior to the Effective Time, Parent shall deposit, or shall cause to be deposited by
Holdco, with a bank or trust company designated by Parent and reasonably
acceptable to Company (the "
Exchange Agent
"), for the benefit of the holders of Old Certificates, for exchange in accordance with this
Article II, (a) certificates, or at Parent's option, evidence of shares in book entry form, representing the Parent Common Shares ("
New
Certificates
"), to be delivered to the holders of Company Common Stock pursuant to Section 1.5 and this Article II in exchange for outstanding shares of such
Company Common Stock, and (b) cash in an amount sufficient to allow the Exchange Agent to make all payments required pursuant to this Article II (such New Certificates and cash, together
with any dividends or distributions with respect thereto, being hereinafter referred to as the "
Exchange Fund
"). The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by Parent, provided that no such investment or losses thereon shall affect the amount of Merger
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Consideration
payable to the holders of Old Certificates. Any interest and other income resulting from such investments shall be paid to Parent or Holdco, or as otherwise directed by Parent.
2.2
Appraisal Rights.
Each issued and outstanding share of Company Common Stock the holder of which
has perfected his right to dissent under the DGCL and has not effectively withdrawn
or lost such right as of the Effective Time (the "
Dissenting Shares
") shall not be converted into or represent a right to receive the Merger
Consideration hereunder, and the holder thereof shall be entitled only to such rights as are granted by the DGCL. Company shall give Parent prompt notice upon receipt by Company of any such demands
for payment of the fair value of such shares of Company Common Stock, any withdrawals of such notice and any other instruments provided pursuant to applicable law (any stockholder duly making such
demand being hereinafter called a "
Dissenting Stockholder
"). Company shall not, except with the prior written consent of Parent, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for payment, or waive any failure to timely deliver a written demand for appraisal or the taking of any other action by such
Dissenting Stockholder as may be necessary to perfect appraisal rights under the DGCL. Company shall give Parent the opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. Any payments made in respect of Dissenting Shares shall be made by the Surviving Corporation. If any Dissenting Stockholder shall effectively withdraw or lose (through
failure to perfect or otherwise) his, her or its right to such payment at or prior to the Effective Time, such holder's shares of Company Common Stock shall be converted into a right to receive the
Merger Consideration in accordance with Section 1.5(a).
2.3
Exchange Procedures
.
(a) As
promptly as practicable after the Effective Time, but in no event later than ten (10) days thereafter, Parent shall cause the Exchange Agent to mail to
each person who was, immediately prior to the Effective Time, a holder of record of one or more Old Certificates representing shares of Company Common Stock, a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the Old Certificates shall pass, only upon proper delivery of the Old Certificates to the Exchange Agent) and instructions
for use in effecting the surrender of the Old Certificates in exchange for certificates representing the number of whole Parent Common Shares, any cash in lieu of fractional shares and the cash
portion of the Merger Consideration which the shares of Company Common Stock represented by such Old Certificate or Old Certificates shall have been converted into the right to receive pursuant to
this Agreement as well as any dividends or distributions to be paid in respect thereof pursuant to Section 2.3(b). From and after the Effective Time, upon proper surrender of an Old Certificate
or Old Certificates for exchange and cancellation to the Exchange Agent, together with such properly completed letter of transmittal, duly executed, the holder of such Old Certificate or Old
Certificates shall be entitled to receive in exchange therefor, subject to Section 2.2, (i) a New Certificate representing that number of whole Parent Common Shares to which such holder
of Company Common Stock shall have become entitled pursuant to the provisions of Article I and (ii) a check representing the amount of (A) the cash portion of the Merger
Consideration which such holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered pursuant to the provisions of this Article II, (B) any cash in
lieu of a fractional share which such holder has the right to receive in respect of the Old Certificate or Old Certificates surrendered pursuant to the provisions of this Article II, and
(C) and dividends or distributions that the holder presenting such Old Certificates is entitled to, as provided in this Article II, and the Old Certificate or Old Certificates so
surrendered shall forthwith be cancelled. No interest will be paid or accrued with respect to any property to be delivered upon surrender of Old Certificates. Until surrendered as contemplated by this
Section 2.3, each Old Certificate shall be deemed at any time after the Effective Time to represent only the right to receive, upon surrender, the Merger
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Consideration
and any cash in lieu of fractional shares or in respect of dividends or distributions as contemplated by this Section 2.3.
(b) No
dividends or other distributions declared with respect to Parent Common Shares shall be paid to the holder of any unsurrendered Old Certificate until the holder
thereof shall surrender such Old Certificate in accordance with this Article II. After the surrender of an Old Certificate in accordance with this Article II, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to the whole Parent Common Shares which the
shares of Company Common Stock represented by such Old Certificate have been converted into the right to receive.
(c) If
any New Certificate representing Parent Common Shares is to be issued in a name other than that in which the Old Certificate or Old Certificates surrendered in
exchange therefor is or are registered, it shall be a condition of the issuance thereof that the Old Certificate or Old Certificates 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 similar
Taxes required by reason of the issuance of a New Certificate representing Parent Common Shares in any name other than that of the registered holder of the Old Certificate or Old Certificates
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 Company of the shares of Company Common Stock that were issued and outstanding
immediately prior to the Effective Time.
(e) Notwithstanding
anything to the contrary contained herein, no New Certificates or scrip representing fractional Parent Common Shares shall be issued upon the surrender
for exchange of Old Certificates, no dividend or distribution with respect to Parent Common Shares 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 shareholder of Parent. In lieu of the issuance of any such fractional share, Parent shall pay to each former stockholder of
Company who otherwise would be entitled to receive such fractional share an amount in cash (rounded to the nearest cent) determined by multiplying (i) the volume-weighted average trading price
of one Parent Common Share for the ten (10) day period in which both the Canadian and U.S. Markets are open for trading ending on the last such day immediately preceding the Closing Date,
calculated using both Canadian and U.S. trading prices and volumes during normal market hours and assuming in respect of such trading prices on the TSX, for each trading day, the Bank of Canada daily
noon Canada/U.S. exchange rate for the Canadian calculations (the "
Parent Share Closing Price
") by (ii) the fraction of a Parent Common Share
(rounded to the nearest thousandth when expressed in decimal form) to which such holder would otherwise be entitled (after taking into account all shares of Company Common Stock owned by such holder
as of immediately prior to the Effective Time).
(f) Any
portion of the Exchange Fund that remains unclaimed by the stockholders of Company for one (1) year after the Effective Time shall be paid to the Surviving
Corporation. Any former stockholders of Company who have not theretofore exchanged their Old Certificates pursuant to this Article II shall thereafter look only to the Surviving Corporation for
payment of the Merger Consideration, cash in lieu of any fractional shares and any unpaid dividends and distributions on the Parent Common Shares deliverable in respect of each former share of Company
Common Stock such stockholder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Notwithstanding the foregoing, none of Parent, Company, the Surviving
Corporation, the Exchange Agent or any other person shall be liable to any former holder of shares of Company Common Stock for any amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or similar laws.
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(g) Parent
shall be entitled to deduct and withhold, or cause Holdco, Company or the Exchange Agent to deduct and withhold, from the cash portion of the aggregate Merger
Consideration, any cash in lieu of fractional Parent Common Shares, cash dividends or distributions payable pursuant to this Section 2.3 or any other cash amounts otherwise payable pursuant to
this Agreement to any holder of Company Common Stock such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or
foreign Tax law. To the extent that amounts are so withheld by Parent, Holdco, Company or the Exchange Agent, as the case may be, and paid over to the appropriate governmental authority, the withheld
amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of which the deduction and withholding was made by Parent, Holdco,
Company or the Exchange Agent, as the case may be.
(h) In
the event any Old Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Old Certificate to
be lost, stolen or destroyed and, if required by Parent, the posting by such person of a bond in such amount as Parent may determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such Old Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Old Certificate the Merger Consideration and any cash in lieu of
fractional shares and dividends or distributions deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except
(i) as disclosed in the disclosure schedule delivered by Company to Parent prior to the execution hereof (the "
Company
Disclosure Schedule
") (
provided
, that (a) no such item is required to be set forth as an exception to a representation or
warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect, (b) the mere inclusion of an item in the Company Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by Company that such item represents a material exception or fact, event or circumstance or that such item is reasonably
likely to result in a Material Adverse Effect and (c) any disclosures made with respect to a section of this Article III shall be deemed to qualify (1) any other section of this
Article III specifically referenced or cross-referenced and (2) other sections of this Article III to the extent it is reasonably apparent on its face (notwithstanding the absence
of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections) or (ii) as disclosed in any Company SEC Reports filed prior to the date
hereof (but disregarding risk factor disclosures contained under the heading "Risk Factors," or disclosures of risks set forth in any "forward-looking statements" disclaimer or any other statements
that are similarly non-specific or cautionary, predictive or forward-looking in nature), Company hereby represents and warrants to Parent and Holdco as follows:
3.1
Corporate Organization
.
(a) Company
is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is a bank holding company duly registered
under the Bank Holding Company Act of 1956, as amended (the "
BHC Act
"). Company 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. Company 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, either individually or in the aggregate, reasonably
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be
likely to have a Material Adverse Effect on Company. As used in this Agreement, the term "
Material Adverse Effect
" means, with respect to Parent,
Company or the Surviving Corporation, as the case may be, a material adverse effect on (i) the business, properties, assets, liabilities, results of operations or financial condition of such
party and its Subsidiaries taken as a whole (
provided
,
however
, that, with respect to this
clause (i), Material Adverse Effect shall not be deemed to include the impact of (A) changes, after the date hereof, in U.S. generally accepted accounting principles
("
GAAP
") (or, with respect to Parent, International Financial Reporting Standards ("
IFRS
")) or
applicable regulatory accounting requirements, (B) changes, after the date hereof, in laws, rules or regulations of general applicability to companies in the industries in which such party and
its Subsidiaries operate, or interpretations thereof by courts or Governmental Entities, (C) changes, after the date hereof, in global, national or regional political conditions (including the
outbreak of war or acts of terrorism) or in economic or market conditions affecting the financial services industry generally and not specifically relating to such party or its Subsidiaries, including
changes in prevailing interest rates, credit availability and liquidity, currency exchange rates and price levels or trading volumes in U.S. or foreign securities markets or any change in the credit
markets, (D) failure, in and of itself, to meet earnings projections or internal financial forecasts, but not including the underlying causes thereof (unless otherwise excluded hereunder),
(E) changes attributable to disclosure of the transactions contemplated hereby or to actions expressly required by this Agreement in contemplation of the transactions contemplated hereby, or
(F) actions or omissions taken pursuant to the written consent of Parent, in the case of Company, or Company, in the case of Parent; except, with respect to subclauses (A), (B), or (C),
to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such party and
its Subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its Subsidiaries operate) or (ii) the ability of such party to timely consummate the
transactions contemplated hereby. As used in this Agreement, the word "
Subsidiary
" when used with respect to any party, means any corporation,
partnership, limited liability company, bank or other organization, whether incorporated or unincorporated, which is consolidated with such party for financial reporting purposes. True and complete
copies of the Restated Certificate of Incorporation of Company, as amended (the "
Company Certificate
"), and the bylaws of Company, as amended (the
"
Company Bylaws
"), as in effect as of the date of this Agreement, have previously been made available by Company to Parent.
(b) Each
Subsidiary of Company (a "
Company Subsidiary
") (i) is duly organized and validly existing under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and, where such concept is recognized under applicable law, 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 reasonably be
likely, either individually or in the aggregate, to have a Material Adverse Effect on Company 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. There are no restrictions on the ability of any Company Subsidiary to pay dividends or distributions except, in the case of a Subsidiary that is a
regulated entity, for restrictions on dividends or distributions generally applicable to all such regulated entities. The deposit accounts of each Company Subsidiary that is an insured depository
institution are insured by the Federal Deposit
Insurance Corporation (the "
FDIC
") through the Deposit Insurance Fund (as defined in Section 3(y) of the Federal Deposit Insurance Act of 1950)
to the fullest extent permitted by law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are
pending or, to Company's knowledge, threatened. Section 3.1(b) of the Company Disclosure Schedule sets forth a true, correct and complete list of (x) all Company Subsidiaries as of the
date hereof and their jurisdiction of formation and, for any Company
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Subsidiaries
that are not directly or indirectly wholly owned by Company, their capital structure (including the identity of any other equity holders), (y) all persons (not including Company
Subsidiaries) in which Company, together with any Company Subsidiaries, owns (directly or indirectly) more than 4.9% of a class of voting securities and (z) all outstanding subscriptions,
options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements obligating Company or any of its Subsidiaries to issue, transfer, sell, purchase,
redeem or otherwise acquire any securities of any other person for its or their own account. Neither the Company nor any of the Company Subsidiaries is required to register with the SEC as an
investment advisor under the Investment Advisers Act of 1940, as amended, and neither the Company nor any of the Company Subsidiaries is a broker-dealer under Section 15(b) of the Exchange Act.
3.2
Capitalization
.
(a) The
authorized capital stock of Company consists of 174,000,000 shares of Company Common Stock, without par value, 1,000,000 shares of preferred stock, without par
value, and 5,000,000 shares of non-voting common stock, without par value. As of June 24, 2016, no shares of capital stock or other voting securities of Company are issued, reserved for
issuance or outstanding, other than (i) 79,456,248 shares of Company Common Stock issued and outstanding, which number includes the shares of Company Common Stock held in the Company Savings,
Retirement & Employee Stock Ownership Plan and the 547,034 shares of Company Common Stock underlying outstanding Company Restricted Stock Awards, (ii) 0 shares of Company Common Stock
held in treasury, (iii) 3,216,231 shares of Company Common Stock issuable upon the exercise of outstanding Company Stock Options, (iv) 566,998 shares of Company Common Stock underlying
outstanding Company Restricted Stock Unit Awards; (v) 645,945 shares of Company Common Stock underlying outstanding Company Performance Share Unit Awards (assuming, with respect to any such
unvested Company Performance Share Award, that all applicable performance goals are achieved at the maximum level); and (vi) 138,956 shares of Company Common Stock underlying the Deferred Units
under the Deferred Compensation Plans. All the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, non-assessable and free of
preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, no bonds, debentures, notes or other indebtedness that have the right to vote on any
matters on which stockholders of Company may vote
are issued or outstanding. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, as of the date of this Agreement, no trust preferred or subordinated debt securities of
Company or any Company Subsidiary are issued or outstanding. Other than the Company Equity Awards, in each case, as of the date of this Agreement, there are no outstanding subscriptions, options,
warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements obligating Company to issue, transfer, sell, purchase, redeem or otherwise acquire any such
securities or any dividend reinvestment plans relating to Company Securities.
(b) There
are no voting trusts, shareholder agreements, proxies or other agreements in effect pursuant to which Company or any of the Company Subsidiaries has a contractual
or other obligation with respect to the voting or transfer of the Company Common Stock or other equity interests of Company. Section 3.2(b) of the Company Disclosure Schedule sets forth a true,
correct and complete list of all Company Equity Awards outstanding as of the date hereof specifying, on a holder-by-holder basis, (i) the name of each holder, (ii) the number of shares
subject to each such Company Equity Award, (iii) the grant date of each such Company Equity Award, (iv) the Company Stock Plan under which each such Company Equity Award was granted,
(v) the exercise price for each such Company Equity Award that is a Company Stock Option, (vi) the vesting schedule applicable to each such Company Equity Award, and (vii) the
expiration date of each
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such
Company Equity Award that is a Company Stock Option. As of the date hereof, other than the Company Equity Awards and Deferred Units, no equity-based awards (including any cash awards where the
amount of payment is determined in whole or in part based on the price of any capital stock of Company or any Company Subsidiaries) are outstanding.
(c) Company
owns, directly or indirectly, all the issued and outstanding shares of capital stock or other equity ownership interests of each of the Company Subsidiaries,
free and clear of any liens, pledges, charges, encumbrances and security interests whatsoever ("
Liens
"), and all such shares or equity ownership
interests are duly authorized and validly issued and are fully paid, non-assessable (except, with respect to Company Subsidiaries that are insured depository institutions, as provided under 12 U.S.C.
§ 55 or any comparable provision of applicable state law) and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Company Subsidiary has or
is bound by any outstanding subscriptions, options, warrants, calls, rights, 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) Company
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 Merger have been duly and validly approved by the Board of Directors of Company. The Board of Directors of Company has determined that the Merger, on the
terms and conditions set forth in this Agreement, is in the best interests of Company and its stockholders and has directed that this Agreement and the transactions contemplated hereby be submitted to
Company's stockholders for adoption at a meeting of such stockholders and has adopted a resolution to the foregoing effect. Except for the adoption of this Agreement by the affirmative vote of the
holders of outstanding Company Common Stock (the "
Requisite Company Vote
"), no other corporate proceedings on the part of Company are necessary to
approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Company and (assuming due authorization, execution and
delivery by Parent) constitutes a valid and binding obligation of Company, enforceable against Company in accordance with its terms (except in all cases as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws of general applicability relating to or affecting insured depository institutions or the rights of creditors
generally and subject to general principles of equity (the "
Enforceability Exceptions
")).
(b) Neither
the execution and delivery of this Agreement by Company nor the consummation by Company of the transactions contemplated hereby, nor compliance by Company with
any of the terms or provisions hereof, will (i) violate any provision of the Company Certificate or the Company Bylaws or (ii) assuming that the consents, approvals and filings referred
to in Section 3.4 are duly obtained and/or made, (x) violate any law, statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Company 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 Company 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 Company or any of its Subsidiaries is a party, or by which they or any of their
respective properties
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or
assets may be bound, except (in the case of clause (ii) above) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations which, either
individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on Company.
3.4
Consents and Approvals.
Except for (i) the filing of applications, filings and notices, as
applicable, with the Board of Governors of the Federal Reserve System (the
"
Federal Reserve Board
") under the BHC Act, the Office of the Superintendent of Financial Institutions (Canada)
("
OSFI
") under the Bank Act (Canada) and the Illinois Department of Financial and Professional Regulation, Division of Banking under Illinois law, and
approval of such applications, filings and notices, (ii) the filing with the Securities and Exchange Commission (the "
SEC
") of a proxy statement
in definitive form relating to the meeting of Company's stockholders to be held in connection with this Agreement and the transactions contemplated hereby (including any amendments or supplements
thereto, the "
Proxy Statement
"), and of the registration statement on Form F-4 in which the Proxy Statement will be included as a prospectus, to
be filed with the SEC by Parent in connection with the transactions contemplated by this Agreement (the "
F-4
") and declaration of effectiveness of the
F-4, (iii) the filing of the Certificate of Merger with the Delaware Secretary pursuant to the DGCL, (iv) the filing of any notices or other filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "
HSR Act
"), (v) 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 Parent Common Shares pursuant to this Agreement and (vi) the approval of the listing of such Parent Common Shares on
the New York Stock Exchange ("
NYSE
") and the Toronto Stock Exchange (the "
TSX
"), no consents or
approvals of or filings or registrations with any court or administrative agency or commission or other governmental authority or instrumentality or SRO (each a "
Governmental
Entity
") are necessary in connection with (A) the execution and delivery by Company of this Agreement or (B) the consummation by Company of the Merger and the
other transactions contemplated hereby. As used in this Agreement, "
SRO
" means (x) any "self regulatory organization" as defined in
Section 3(a)(26) of the Securities Exchange Act of 1934, as amended (the "
Exchange Act
") and (y) any other United States or foreign
securities exchange, futures exchange, commodities exchange or contract market. As of the date hereof, Company is not aware of any reason why the necessary regulatory approvals and consents will not
be received in order to permit consummation of the Merger on a timely basis.
3.5
Reports
.
(a) Company
and each of its Subsidiaries have timely filed (or furnished, as applicable) all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file (or furnish, as applicable) since January 1, 2013 with (i) any state regulatory authority, including the
Illinois Department of Financial and Professional Regulation,
Division of Banking, (ii) the SEC, (iii) the Federal Reserve Board, (iv) FDIC, (v) any foreign regulatory authority and (vi) any SRO (clauses (i)-(vi),
collectively "
Regulatory Agencies
"), including any material report, registration or statement required to be filed (or furnished, as applicable)
pursuant to the laws, rules or regulations of the United States, any state, any foreign entity, or any Regulatory Agency, and have paid all fees and assessments due and payable in connection
therewith. Except for examinations of Company and its Subsidiaries conducted by a Regulatory Agency in the ordinary course of business, no Regulatory Agency has initiated or has pending any proceeding
or, to the knowledge of Company, investigation into the business or operations of Company or any of its Subsidiaries since January 1, 2013. Except as would not reasonably be likely to have,
either individually or in the aggregate, a Material Adverse Effect, there is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating
to any examinations or inspections of Company or any of its Subsidiaries. There have been no material formal or informal inquiries by, or disagreements
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or
disputes with, any Regulatory Agency with respect to the business, operations, policies or procedures of Company or any of its Subsidiaries since January 1, 2013.
(b) An
accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by
Company or any of its Subsidiaries pursuant to the Securities Act of 1933, as amended (the "
Securities Act
") or the Exchange Act, as the case may be,
since January 1, 2013 (the "
Company SEC Reports
") is publicly available. No such Company SEC Report, at the time filed, furnished or communicated
(and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), 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 filed or furnished as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all
Company SEC Reports filed or furnished under the Securities Act and the Exchange Act complied as to form in all material respects with the published rules and regulations of the SEC with respect
thereto. As of the date of this Agreement, no executive officer of Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act. As of the date of this Agreement, there are no outstanding comments from or material unresolved issues raised by the SEC with respect to any of the Company SEC Reports.
3.6
Financial Statements
.
(a) The
financial statements of Company and its Subsidiaries included (or incorporated by reference) in the Company SEC Reports (including the related notes, where
applicable) (i) have been prepared from, and are in accordance with, the books and records of Company and its Subsidiaries, (ii) fairly present in all material respects the consolidated
results of operations, cash flows, changes in shareholders' equity and consolidated financial position of Company and its Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth (subject in the case of unaudited statements to year-end audit adjustments normal in nature and amount), (iii) complied, as of their respective dates of filing with the SEC,
in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. The books and records of Company and its Subsidiaries have been,
since January 1, 2013, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements. Ernst & Young LLP has
not resigned (or informed Company that it intends to resign) or been dismissed as independent public accountants of Company as a result of or in connection with any disagreements with Company on a
matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(b) Except
as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Company, neither Company nor any of its
Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for (i) those liabilities that are
reflected or reserved against on the consolidated balance sheet of Company included in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016 (including any notes
thereto), (ii) liabilities incurred in the ordinary course of business consistent with past practice since March 31, 2016 or in connection with this Agreement and the transactions
contemplated hereby or (iii) liabilities that are not material to Company and its Subsidiaries, taken as a whole.
(c) The
records, systems, controls, data and information of Company and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic,
mechanical or
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photographic
process, whether computerized or not) that are under the exclusive ownership and direct control of Company or its Subsidiaries or accountants (including all means of access thereto and
therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Company.
Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to Company,
including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of Company by others
within those entities as appropriate to allow timely decisions regarding required disclosures and to make the certifications required by the Exchange Act and Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002 (the "
Sarbanes-Oxley Act
"), and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to
Company's outside auditors and the audit committee of Company's Board of Directors (x) any significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect Company's ability to record, process, summarize and report financial
information, and (y) to the knowledge of Company, any fraud, whether or not material, that involves management or other employees who have a significant role in Company's internal controls over
financial reporting. Copies of any such disclosures were made in writing by management to Company's auditors and audit committee and a copy has been previously made available to Parent. To the
knowledge of Company, there is no reason to believe that Company's outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, prior to the Closing Date.
(d) Since
January 1, 2013, (i) neither Company nor any of its Subsidiaries, nor, to the knowledge of Company, any director, officer, auditor, accountant or
representative of Company or any of its Subsidiaries, has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or, to the
knowledge of Company, oral, regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to loan loss reserves, write-downs, charge-offs and accruals)
of Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or written claim that Company or any of its Subsidiaries
has engaged in questionable accounting or auditing practices, and (ii) no attorney representing Company or any of its Subsidiaries, whether or not employed by Company or any of its
Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by Company or any of its officers, directors or employees to the Board of
Directors of Company or any committee thereof or to the knowledge of Company, to any director or officer of Company.
3.7
Broker's Fees.
Neither Company nor any Company Subsidiary nor any of their respective officers or
directors has employed any broker, finder or financial advisor 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 Goldman, Sachs & Co. and
Sandler O'Neill & Partners, L.P., each pursuant to a letter agreement, true and complete copies of which have been previously provided to Parent.
3.8
Absence of Certain Changes or Events
.
(a) Since
December 31, 2015, no event or events have occurred that have had or would reasonably be likely to have, either individually or in the aggregate, a Material
Adverse Effect on Company.
(b) Since
December 31, 2015, except with respect to the transactions contemplated hereby or as required or permitted by this Agreement, (i) Company and its
Subsidiaries have carried on their respective businesses in the ordinary course, and (ii) none of the events specified in Section 5.2 (other than clauses (f), (h), (l), (m),
(n)(ii), (r) or (s)) have occurred.
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3.9
Legal and Regulatory Proceedings.
(a) There
is no suit, action, investigation, claim or proceeding pending, or to Company's knowledge, threatened against or involving it or any of its Subsidiaries or, in
their capacities as such, any of the current or former directors or executive officers of it or any of its Subsidiaries (and Company is not aware of any basis for any such suit, action or proceeding)
(i) that is brought by a Governmental Entity, (ii) that, individually or in the aggregate, and, in either case, is (A) material to it and its Subsidiaries, taken as a whole, or is
reasonably likely to result in a material restriction on its or any of its Subsidiaries' businesses, or, after the Effective Time, the business of Parent and any of its affiliates, or
(B) reasonably likely to materially prevent or delay it from performing its obligations under, or consummating the transactions contemplated by, this Agreement, (iii) that is a class
action or, to Company's knowledge, is seeking status as a class action or (iv) that is of a material nature challenging the validity or propriety of this Agreement.
(b) There
is no injunction, order, judgment, decree or regulatory restriction imposed upon Company or any of its Subsidiaries or the assets of Company or any of its
Subsidiaries (or that, upon consummation of the Merger, would apply to Parent, Surviving Corporation or any of their respective affiliates) that is material to Company and its Subsidiaries, taken as a
whole.
3.10
Taxes and Tax Returns.
(a) (i)
Each of Company and its Subsidiaries has duly and timely filed (taking into account all applicable extensions) all material Tax Returns in all jurisdictions in which
Tax Returns are required to be filed by it, and all such Tax Returns are true, correct, and complete in all material respects; (ii) neither Company nor any of its Subsidiaries is the
beneficiary of any extension of time within which to file any material Tax Return; (iii) all material Taxes of Company and its Subsidiaries (whether or not shown on any Tax Returns) that are
due have been fully and timely paid; (iv) each of Company and its Subsidiaries has collected or withheld all material Taxes required to have been collected or withheld and to the extent
required by applicable law have paid such amounts to the proper governmental authority or other person; (v) neither Company nor any of its Subsidiaries has granted any extension or waiver of
the limitation period applicable to any material Tax that remains in effect; (vi) the federal income Tax Returns of Company and its Subsidiaries for all years up to and including
December 31, 2013 have been examined by the Internal Revenue Service (the "
IRS
") or are Tax Returns with respect to which the applicable period
for assessment under applicable law, after giving effect to extensions or waivers, has expired; (vii) no deficiency with respect to a material amount of Taxes has been proposed, asserted or
assessed against Company or any of its Subsidiaries; (viii) there are no pending or threatened in writing disputes, claims, audits, examinations or other proceedings regarding any material
Taxes of Company and its Subsidiaries or the assets of Company and its Subsidiaries (ix) in the last six years, neither Company nor any of its Subsidiaries has been informed in writing by any
jurisdiction that the jurisdiction believes that Company or any of its Subsidiaries was required to file any material Tax Return that was not filed; (x) Company has made available to Parent
true, correct, and complete copies of any private letter ruling requests, technical advice memorandum received, voluntary compliance program statement or similar agreement, closing agreements or gain
recognition agreements with respect to material Taxes requested or executed in the last six years; (xi) Company and each of its Subsidiaries has in its respective files all Tax Returns that it
is required to retain in respect of withholding and information reporting requirements imposed by the Code (including the requirements of Chapters 3, 4 and 61 of the Code) or any similar
foreign, state or local law; (xii) Company and each of its Subsidiaries has systems, processes and procedures in place in order to materially comply with Sections 1471 through 1474 of
the Code and any similar provision of foreign law; (xiii) there are no Liens for material Taxes (except Taxes not yet due and payable) on any of the assets of Company or any of its
Subsidiaries; (xiv) neither Company nor any of its Subsidiaries is a party to or is bound by any Tax sharing, allocation or
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indemnification
agreement or arrangement (other than such an agreement or arrangement exclusively between or among Company and its Subsidiaries); (xv) neither Company nor any of its
Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was Company) or (B) has any
liability for the Taxes of any person (other than Company or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise; (xvi) neither Company nor any of its Subsidiaries has been, within the past two (2) years or otherwise as part of a "plan (or series of
related transactions)" within the meaning of Section 355(e) of the Code of which the Merger is also a part, a "distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code; (xvii) neither Company nor any of its
Subsidiaries has participated in a "listed transaction" within the meaning of Treasury Regulations Section 1.6011-4(b)(2); (xviii) at no time during the past five (5) years has
Company been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code; (xix) neither Company nor any of its Subsidiaries will be required to
include any material item of income in, or to exclude any material item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of any
(A) change in method of accounting, (B) installment sale or open transaction disposition made on or prior to the closing date, or (C) prepaid amount received on or prior to the
Closing Date, in each of case (A), (B) and (C), outside of the ordinary course of business; and (xx) all Subsidiaries of the Company are members of a consolidated group for U.S. federal
income tax purposes for which the Company is the common parent.
(b) As
used in this Agreement, the term "
Tax
" or "
Taxes
" means all federal,
state, local, and foreign income, excise, gross receipts, ad valorem, profits, gains, property, capital, sales, transfer, use, license, payroll, employment, social security, severance, unemployment,
withholding, duties, windfall profits, intangibles, franchise, backup withholding, value added, alternative or add-on minimum, estimated and other taxes, charges, fees, levies or like assessments
together with all penalties and additions to tax and interest thereon.
(c) As
used in this Agreement, the term "
Tax Return
" means any return, declaration, report, claim for refund, estimate, or
information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, supplied or required to be supplied to a Governmental Entity, and
any documentation required to be filed with any taxing authority or to be retained by Company or any of its Subsidiaries in respect of information reporting and withholding requirements imposed by the
Code or any similar foreign state or local law.
3.11
Employees.
(a) Section 3.11(a)
of the Company Disclosure Schedule lists all Company Benefit Plans sponsored or maintained by Company or any Company Subsidiary and all material
Company Benefit Plans sponsored or maintained by any Company ERISA Affiliate. For purposes of this Agreement, "
Company Benefit Plans
" means all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("
ERISA
")), whether or not subject
to ERISA, and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation (whether in the form of cash, stock, options, units or other equity or derivative thereof),
perquisite, retiree medical or life insurance, and supplemental retirement plans, programs or arrangements, and all fringe, vacation, retention, change in control, employment, consulting, termination,
and severance plans, programs, contracts, agreements or arrangements (i) with respect to which Company or any Subsidiary or other entity which together with Company would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (a "
Company
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ERISA Affiliate
"), is a party or has any obligation or (ii) that are maintained, contributed to or sponsored by Company or any of its Subsidiaries or any Company ERISA
Affiliate for the benefit of any current or former employee, officer, director or independent contractor (who is a natural person) of Company or any of its Subsidiaries or any Company ERISA Affiliate.
(b) Company
has heretofore provided to Parent a true and complete copy of each Company Benefit Plan sponsored or maintained by Company or any Company Subsidiary and each
material Company Benefit Plan sponsored or maintained by any Company ERISA Affiliate and the following related documents, to the extent applicable: (i) the most recent copy of any summary plan
description and all written amendments, modifications or material supplements applicable to such material Company Benefit Plan (and a summary of any material unwritten amendment, modification or
supplement applicable to such material Company Benefit Plan), (ii) the annual report (Form 5500), if any, filed with the IRS for the last two completed plan years, (iii) the most
recently received IRS determination or opinion letter, if any, relating to such material Company Benefit Plan, and (iv) the most recently prepared actuarial report for such material Company
Benefit Plan for each of the last two (2) completed plan years (if applicable).
(c) Each
Company Benefit Plan has been established, operated and administered in all material respects in accordance with its terms and the requirements of all applicable
laws, including ERISA and the Code, and, to Company's knowledge, no event has occurred which would reasonably be expected to result in any such Company Benefit Plan to fail to comply in any material
respect with such requirements and no written notice has been delivered to Company by any Governmental Entity questioning or challenging such compliance. Neither Company nor any of its Subsidiaries
has, within the prior three (3) years, taken any action to take material corrective action or make a material filing under any voluntary correction program of the IRS, the U.S. Department of
Labor or any other Governmental Entity with respect to any Company Benefit Plan, and neither Company nor any of its Subsidiaries has any knowledge of any plan defect that would qualify for correction
under any such program.
(d) Section 3.11(d)
of the Company Disclosure Schedule identifies each Company Benefit Plan that is intended to be qualified under Section 401(a) of the Code
(the "
Company Qualified Plans
"). The IRS has issued a favorable determination, advisory or opinion letter with respect to each Company Qualified Plan
and the related trust, which letter has not been revoked (nor has revocation been threatened in writing), and, to the knowledge of Company, there are no existing circumstances and no events have
occurred that could reasonably be expected to result in disqualification of any Company Qualified Plan or the related trust. No trust funding any Company Benefit Plan is intended to meet the
requirements of Section 501(c)(9) of the Code.
(e) Except
as has not resulted in, and would not reasonably be expected to result in, a material liability to the Company and its Subsidiaries taken as a whole, each Company
Benefit Plan that is a "nonqualified deferred compensation plan" (as defined in Section 409A(d)(1) of the Code) and any award thereunder, in each case that is subject to Section 409A of
the Code, has (i) since January 1, 2006, been maintained and operated in good faith compliance with Section 409A of the Code and IRS Notice 2005-1 and (ii) since
January 1, 2010, been in documentary and operational compliance with Section 409A of the Code.
(f) None
of Company and its Subsidiaries nor any Company ERISA Affiliate has, at any time during the last six (6) years, (i) contributed to or been obligated
to contribute to any plan that (A) is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, (B) is a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA (a "
Multiemployer Plan
") or (C) has two (2) or more contributing sponsors at least two (2) of
whom are not under common control, within the meaning of Section 4063 of ERISA (a "
Multiple Employer Plan
"), or (ii) incurred any
liability to a Multiemployer Plan or Multiple Employer Plan as a result of a
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complete
or partial withdrawal (as those terms are defined in Part I of Subtitle E of Title IV of ERISA) from a Multiemployer Plan or Multiple Employer Plan that has not been satisfied in full.
(g) Neither
Company nor any of its Subsidiaries sponsors, has sponsored or has any obligation with respect to any employee benefit plan that provides for any post-employment
or post-retirement health or medical or life insurance benefits for retired or former employees or beneficiaries or dependents thereof, except as required by Section 4980B of the Code.
(h) All
material contributions required to be made to any Company Benefit Plan by applicable law or by any plan document or other contractual undertaking, and all material
premiums due or payable with respect to insurance policies funding any Company Benefit Plan, for any period in the prior three (3) years through the date hereof, have been timely made or paid
in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the books and records of Company.
(i) There
are no pending or, to Company's knowledge, material threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations that have
been asserted or instituted, and, to Company's knowledge, no set of circumstances exists that may reasonably be likely to give rise to a material claim or lawsuit, against the Company Benefit Plans,
any fiduciaries thereof with respect to their duties to the Company Benefit Plans or the assets of any of the trusts under any of the Company Benefit Plans.
(j) None
of Company and its Subsidiaries nor any Company ERISA Affiliate, nor, to Company's knowledge, any fiduciary, has engaged in any "prohibited transaction" (as defined
in Section 4975 of the Code or Section 406 of ERISA), which could subject any of the Company Benefit Plans or their related trusts, Company, any of its Subsidiaries, any Company ERISA
Affiliate or any person that Company or any of its Subsidiaries has an obligation to indemnify, to any material tax or material penalty imposed under Section 4975 or 4976 of the Code or
Section 409 or 502 of ERISA.
(k) Neither
the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in conjunction with any other
event) (i) result in or cause an acceleration of the vesting, exercisability or delivery of, or increase in the amount or value of, any payment, right or other benefit to any employee, officer,
director or independent contractor (who is a natural person) of Company or any of its Subsidiaries under any Company Benefit Plan, (ii) entitle any employee, officer, director or independent
contractor (who is a natural person) of Company or any of
its Subsidiaries to severance pay or (iii) result in any limitation on the right of Company or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any
Company Benefit Plan or related trust. Without limiting the generality of the foregoing, no amount paid or payable (whether in cash, in property, or in the form of benefits) by Company or any of its
Subsidiaries in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of such transactions in conjunction with any other event) will be an "excess
parachute payment" within the meaning of Section 280G of the Code. Neither Company nor any of its Subsidiaries maintains or contributes to a rabbi trust or similar funding vehicle, and the
transactions contemplated by this Agreement will not cause or require Company or any of its affiliates to establish or make any contribution to a rabbi trust or similar funding vehicle.
(l) No
Company Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 409A of the Code.
(m) No
Company Benefit Plan provides for the gross-up or reimbursement of Taxes under Section 4999 of the Code.
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(n) The
Company is in compliance, in all material respects, with all applicable Laws regarding employment, equal employment opportunity and pay, worker classification,
labor, leaves, workers' compensation, disability, occupational health and safety, immigration, collective bargaining, secondment, contractors and temporary employees, other employment terms and
conditions, plant closings and layoffs (including the WARN Act), withholding and payment of social security and other taxes, and wage and hour matters. There are no pending or, to Company's knowledge,
threatened material employment claims or charges, labor grievances or material unfair labor practice claims or charges against Company or any of its Subsidiaries, or any strikes or other material
labor disputes against Company or any of its Subsidiaries. Neither Company nor any of its Subsidiaries are party to or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization applicable to employees of Company or any of its Subsidiaries and, to Company's knowledge, there are no organizing
efforts by any union seeking to represent any employees of Company or any of its Subsidiaries.
3.12
Compliance with Applicable Law.
(a) Company
and each of its Subsidiaries hold, and have at all times since January 1, 2013 held, all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their
respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all material fees and assessments due and payable in connection
therewith), and to the knowledge of Company, no suspension or cancellation of any such necessary material license, franchise, permit or authorization is threatened. Company and each of its
Subsidiaries have since January 1, 2013 complied with and are not in default or violation under any law, statute, order, rule or regulation of any Governmental Entity applicable to Company or
any of its Subsidiaries, including (to the extent applicable to Company or its Subsidiaries), all laws related to data protection or privacy, the USA PATRIOT Act, the Equal Credit Opportunity Act and
Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair
Debt Collection Practices Act, the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations promulgated by the Consumer Financial Protection Bureau,
the Foreign Corrupt Practices Act, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures
Act and Regulation X, and any other law relating to bank secrecy, discriminatory or abusive or deceptive lending or any other product or service, financing or leasing practices, money
laundering prevention, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act, and all agency requirements relating to the origination, sale and servicing of mortgage and
consumer loans, in each case, except for any such non-compliance, default or violation as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on
Company. The PrivateBank and Trust Company ("
Company Bank
") has a Community Reinvestment Act rating of "satisfactory" or better.
(b) Neither
Company nor any of the Company Subsidiaries nor, to Company's knowledge, any director, officer, agent, employee or any other person acting on behalf of Company
or any of the Company Subsidiaries has (i) used any funds for any unlawful contribution, payment, benefit, gift, entertainment or other unlawful expense relating to political activity;
(ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any government or regulatory official or employee,
including of any government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing;
(iii) violated or is in violation of any provision of any applicable anti-bribery or anti-corruption laws (collectively, the "
Anti-Corruption
Laws
"), or
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(iv) made,
offered, agreed, requested or accepted any unlawful bribe or other unlawful benefit, including any rebate, payoff, influence payment, kickback or other unlawful or improper payment
or benefit, in the case of each of clauses (i) through (iv) of this Section 3.12(b) in connection with the operation of the businesses of Company and its Subsidiaries. Company and
its Subsidiaries have established and maintain a system of internal controls designed to provide reasonable assurances regarding compliance by Company and its Subsidiaries with all applicable
Anti-Corruption Laws.
(c) Company
and its Subsidiaries are and since January 1, 2013 have been conducting operations at all times in compliance in all material respects with applicable
financial recordkeeping and reporting requirements of all money laundering laws administered or enforced by any Governmental Entity in jurisdictions where Company and its Subsidiaries conduct business
(collectively, the "
Anti-Money Laundering Laws
"). Company and its Subsidiaries have established and maintain a system of internal controls designed to
ensure compliance by Company and its Subsidiaries with applicable financial recordkeeping and reporting requirements of the Anti-Money Laundering Laws.
(d) Neither
Company nor any of its Subsidiaries nor any director, officer, agent, employee or any other person acting on behalf of Company or any of its Subsidiaries is
currently the subject or the target of any sanctions administered or enforced by any the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State
(collectively, "
Sanctions
"), nor is Company or any of its Subsidiaries located, organized or resident in a country or territory that is the subject or
the target of Sanctions (each, a "
Sanctioned Country
"). For the past five (5) years, Company and its Subsidiaries have not knowingly engaged in,
are not now knowingly engaged in and will not engage in, any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or
with any Sanctioned Country. Company and its Subsidiaries have established and maintain a system of internal controls designed to provide reasonable assurances regarding compliance by Company and its
Subsidiaries with all applicable Sanctions.
(e) Company
and each of its Subsidiaries has properly administered in all material respects all accounts for which it acts as a fiduciary, including accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents and applicable law. None of
Company, any of its Subsidiaries, or any director, officer or employee of Company or of any of its Subsidiaries, has committed any material breach of trust or fiduciary duty with respect to any such
fiduciary account, and the accountings for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.
3.13
Certain Contracts.
(a) Except
as set forth in Section 3.13(a) of the Company Disclosure Schedule, as of the date hereof, neither Company nor any of its Subsidiaries is a party to or
bound by any contract, arrangement, commitment or understanding (whether written or oral), other than any Company Benefit Plans, (i) which is a "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC), (ii) which contains a non-compete or client or customer non-solicit requirement or any other provision that materially restricts the
conduct of any line of business by Company or any of its affiliates or upon consummation of the Merger will materially restrict the ability of the Surviving Corporation or any of its affiliates to
engage in any line of business, (iii) with or to a labor union or guild (including any collective bargaining agreement), (iv) that relates to the incurrence of indebtedness by Company or
any of its Subsidiaries (other than deposit liabilities, trade payables, federal funds purchased, advances and loans from the Federal Home Loan Bank and securities sold under agreements to repurchase,
in each case incurred in the
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ordinary
course of business consistent with past practice, or intercompany indebtedness) in the principal amount of $1,000,000 or more including any sale and leaseback transactions, capitalized leases
and other similar financing transactions, (v) that grants any right of first refusal, right of first offer or similar right with respect to any assets, rights or properties (x) that are
material to Company and its Subsidiaries, taken as a whole, or (y) that would be applicable to Parent or any of its Subsidiaries (other than Company or any of its Subsidiaries) after the
Closing; or (vi) that is a vendor agreement or joint marketing agreement, including any consulting agreement, data processing, software programming or licensing contract, involving
(x) the payment of more than $1,000,000 over the remaining term of the agreement (other than any such contracts which are terminable by Company or any of its Subsidiaries on sixty
(60) days' or less notice without any required payment or other conditions, other than the condition of notice) or (y) the payment of more than $1,000,000 payable as a result of the
termination of the agreement or the consummation of the Merger. Each contract, arrangement, commitment or understanding of the type described in this Section 3.13(a), whether or not set forth
in the Company Disclosure Schedule, is referred to herein as a "
Company Contract
," and neither Company nor any of its Subsidiaries has received notice
of, and to the Company's knowledge there does not exist, any violation of a Company Contract by any of the other parties thereto which would reasonably be expected to be, either individually or in the
aggregate, material to Company and its Subsidiaries, taken as a whole. Section 3.13(a) of the Company Disclosure Schedule sets forth (a) a true, correct and complete list of all
acquisitions and sales of businesses made by Company or any of its Subsidiaries within the five (5) year period prior to the date of this Agreement and (ii) a true, correct and complete
list of any continuing earn-out obligations arising out of the acquisitions referred to in clause (i).
(b) In
each case, except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Company: (i) each Company
Contract is valid and binding on Company or one of its Subsidiaries, as applicable, and in full force and effect, (ii) Company and each of its Subsidiaries has performed all obligations
required to be performed by it prior to the date hereof under each Company Contract, (iii) to Company's knowledge, each third-party counterparty to each Company Contract has performed all
obligations required to be performed by it to date under such Company Contract and (iv) no event or condition exists which constitutes or, after notice or lapse of time or both, will
constitute, a default on the part of Company or any of its Subsidiaries under any such Company Contract.
3.14
Agreements with Regulatory Agencies.
Neither Company nor any of its Subsidiaries is subject to
any cease-and-desist or other order or enforcement action 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 ordered to
pay any civil money penalty by, or has been since January 1, 2013, a recipient of any supervisory letter from, or since January 1, 2013, has adopted any policies, procedures or board
resolutions at the request or suggestion of any Regulatory Agency or other Governmental Entity, specific to Company or its Subsidiaries, that, in each of any such cases, currently restricts in any
material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its
business (each, whether or not set forth in the Company Disclosure Schedule, a "
Company Regulatory Agreement
"), nor has Company or any of its
Subsidiaries been advised in writing or, to Company's knowledge, orally, since January 1, 2013, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating,
ordering, or requesting any such Company Regulatory Agreement.
3.15
Risk Management Instruments.
All swaps, caps, floors, option agreements, futures and forward
contracts and other similar derivative transactions and risk management arrangements
("
Derivative Contracts
"), whether entered into for the account of Company, any of its Subsidiaries or for the account of a customer of Company or one of
its Subsidiaries, were entered into in the ordinary
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course
of business and in accordance in all material respects with applicable rules, regulations and policies of any Regulatory Agency and with counterparties believed to be financially responsible at
the time and are legal, valid and binding obligations of Company or one of its Subsidiaries enforceable in accordance with their terms (except as may be limited by the Enforceability Exceptions).
Company 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
Company's knowledge, there are no material breaches, violations or defaults or
bona fide
allegations or assertions of such by any party thereunder. The
financial position of Company and its Subsidiaries on a consolidated basis under or with respect to each such Derivative Contract has been reflected in its books and records and the books and records
of such Subsidiaries, in each case in accordance with GAAP consistently applied.
3.16
Environmental Matters.
Except as would not reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect on Company, Company and its Subsidiaries are in
compliance, and since January 1, 2013, have complied, with any federal, state or local law, regulation, order, decree, permit, authorization, common law or legal requirement relating to:
(i) the protection or restoration of the environment, health and safety as it relates to hazardous substance exposure or natural resource damages, (ii) the handling, use, presence,
disposal, release or threatened release of, or exposure to, any hazardous substance, or (iii) noise, odor, wetlands, indoor air, pollution, contamination or any injury to persons or property
from exposure to any hazardous substance (collectively, "
Environmental Laws
") and have not incurred any liabilities under Environmental Laws. There are
no legal, administrative, arbitral or other judicial proceedings, claims or actions, or to the knowledge of Company, any private environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably be likely to result in the imposition, on Company or any of its Subsidiaries of any material liability or obligation arising
under any Environmental Law, pending or threatened against Company. To the knowledge of Company, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that
would impose any material liability or obligation. Company is not subject to any material agreement, order, judgment, decree, letter agreement or memorandum of agreement by or with any court,
governmental authority, regulatory agency or third party imposing any liability or obligation with respect to any Environmental Law.
3.17
Investment Securities.
(a) Each
of Company and its Subsidiaries has good title in all material respects to all securities owned by it (except those sold under repurchase agreements or held in any
fiduciary or agency capacity), free and clear of any Lien, except (i) as set forth in the financial statements included in the Company SEC Reports and (ii) to the extent such securities
or commodities are pledged in the ordinary course of business to secure obligations of Company or its Subsidiaries. Such securities are valued on the books of Company in accordance with GAAP in all
material respects.
(b) Company
and its Subsidiaries employ, to the extent applicable, investment, securities, risk management and other policies, practices and procedures relating to the
management of its investment securities portfolio that Company believes are prudent and reasonable in the context of their respective businesses, and Company and its Subsidiaries have, since
January 1, 2013, been in compliance with such policies, practices and procedures in all material respects.
3.18
Properties.
Except as would not reasonably be likely, either individually or in the aggregate,
to have a Material Adverse Effect on Company, Company or one of its
Subsidiaries (a) has good and marketable title to all the properties and assets reflected in the latest audited balance sheet included in such Company SEC Reports as being owned by Company or
one of its Subsidiaries or acquired after the date thereof (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business) (the
"
Owned Properties
"), free and clear of all Liens of any nature whatsoever, except (i) statutory Liens securing payments not yet due,
(ii) Liens for real property Taxes not yet due
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and
payable, (iii) easements, rights of way, and other similar encumbrances that do not materially affect the use of the properties or assets subject thereto or affected thereby or otherwise
materially impair business operations at such properties and (iv) such imperfections or irregularities of title or Liens as do not materially affect the use of the properties or assets subject
thereto or affected thereby or otherwise materially impair business operations at such properties (collectively, "
Permitted Encumbrances
"), and
(b) is the lessee of all leasehold estates reflected in the latest audited financial statements included in such Company SEC Reports or acquired after the date thereof (except for leases that
have expired by their terms since the date thereof) (the "
Leased Properties
" and, collectively with the Owned Properties, the
"
Real Property
"), free and clear of all Liens of any nature whatsoever, except for Permitted Encumbrances, and is in possession of the properties
purported to be leased thereunder, and each such lease is valid without default thereunder by the lessee or, to the knowledge of Company, the lessor. There are no pending or, to the knowledge of
Company, threatened condemnation proceedings against any Real Property that is material to Company. Other than the Owned Property, neither the Company nor any of its Subsidiaries owns any real
property.
3.19
Intellectual Property
.
(a) Each
item of registered or issued Registered Owned Intellectual Property is subsisting and, to Company's knowledge, valid and enforceable.
(b) To
the knowledge of Company: (i) Company and each of its Subsidiaries owns, or is licensed to use (in each case, free and clear of any material Liens other than
any Permitted Encumbrances), all material Intellectual Property necessary for the conduct of its business as currently conducted; (ii)(A) the conduct of the respective business of Company and each of
its Subsidiaries does not infringe, misappropriate or otherwise violate, and in the three-year period prior to the date of this Agreement has not infringed, misappropriated or otherwise violated, the
Intellectual Property rights of any person in any material respect, and (B) neither Company nor any of its Subsidiaries has received in the three-year period prior to the date of this Agreement
any written claims alleging that the conduct of its
business infringes, misappropriates or otherwise violates the Intellectual Property rights of any person in any material respect; (iii) no person is challenging, infringing, misappropriating or
otherwise violating any material right of Company or any of its Subsidiaries with respect to any material Intellectual Property owned by Company or its Subsidiaries; and (iv) neither Company
nor any Company Subsidiary has received any written notice of any pending claim with respect to material Intellectual Property.
(c) In
each case, except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Company: (i) the computer,
information technology and data processing systems, facilities and services used by Company and each of its Subsidiaries, including all software, hardware, networks, communications facilities,
platforms and related systems and services (collectively, the "
Systems
"), are reasonably sufficient for the conduct of the respective businesses of
Company and such Subsidiaries as currently conducted; and (ii) the Systems are in good working condition to effectively perform all computing, information technology and data processing
operations necessary for the operation of the respective businesses of Company and each of its Subsidiaries as currently conducted. To Company's knowledge, in the three-year period prior to the date
of this Agreement no third party has gained unauthorized access to any material Systems owned or controlled by Company or any of its Subsidiaries, and Company and each of its Subsidiaries have taken
commercially reasonable steps and implemented commercially reasonable safeguards to ensure that the Systems are secure from unauthorized access and free from any disabling codes or instructions,
spyware, Trojan horses, worms, viruses or other software routines that permit or cause unauthorized access to, or disruption, impairment, disablement, or destruction of, software, data or other
materials. Company and each of its Subsidiaries has implemented backup and disaster recovery policies, procedures and systems consistent with generally accepted industry standards and sufficient to
reasonably maintain the operation of the respective businesses of Company and each of its Subsidiaries in all material respects.
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(d) To
Company's knowledge, Company and each of its Subsidiaries has in the three-year period prior to the date of this Agreement (i) complied in all material
respects with its published privacy policies and internal privacy policies and guidelines, including with respect to the collection, storage, transmission, transfer, disclosure, destruction and use of
personally identifiable information and (ii) taken commercially reasonable measures to ensure that all personally identifiable information in its possession or control is protected against
loss, damage, and unauthorized access, use, modification, or other misuse. To Company's knowledge, in the three-year period prior to the date of this Agreement there has been no loss, damage, or
unauthorized access, use, modification, or other misuse of any such information by Company, any of its Subsidiaries.
(e) For
purposes of this Agreement:
(i) "
Intellectual Property
" means trademarks, service marks, brand names, internet domain names, logos and other indications
of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application ("
Trademarks
"); patents, applications for patents (including divisions, continuations, continuations
in part and provisional and renewal
applications), and any re-examinations, extensions or reissues thereof, in any jurisdiction ("
Patents
"); trade secrets; and copyrights and registrations
or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof ("
Copyrights
");
(ii) "
Registered Intellectual Property
" means all Trademark registrations and applications for registration (including
internet domain name registrations), Copyright registrations and applications for registration, issued Patents and Patent applications; and
(iii) "
Registered Owned Intellectual Property
" means all of the Registered Intellectual Property owned by, or purported to be
owned by, filed in the name of or applied for by Company or any of its Subsidiaries.
3.20
Related Party Transactions
.
There are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related
transactions between Company or any of its Subsidiaries, on the one hand, and any current or former director or "executive officer" (as defined in Rule 3b-7 under the Exchange Act) of Company
or any of its Subsidiaries or any person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) five percent (5%) or more of the outstanding Company Common Stock (or
any of such person's immediate family members or affiliates) (other than Company Subsidiaries) on the other hand, of the type required to be reported in any Company SEC Report pursuant to
Item 404 of Regulation S-K promulgated under the Exchange Act.
3.21
State Takeover Laws
.
The Board of Directors of Company has approved this Agreement and the transactions contemplated hereby as required to render inapplicable to this Agreement and the transactions
contemplated hereby any provisions of the takeover laws of any state, including any "moratorium," "control share," "fair price," "takeover" or "interested shareholder" law (any such laws,
"
Takeover Statutes
").
3.22
Reorganization
. Company has not taken any action and is not aware of any fact
or circumstance that could reasonably be expected to prevent the Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code.
3.23
Opinion
. Prior to the execution of this Agreement, Company has received an
opinion (which, if initially rendered orally, has been or will be confirmed by a written opinion, dated the same date) from each of Goldman, Sachs & Co. and Sandler O'Neill &
Partners, L.P., to the effect that, as of the date thereof, and based upon and subject to the factors, assumptions and limitations set forth
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therein,
the Merger Consideration pursuant to this Agreement is fair, from a financial point of view, to the holders of Company Common Stock. Each such opinion has not been amended or rescinded in any
material respect as of the date of this Agreement.
3.24
Company Information
.
The information relating to Company and its Subsidiaries that is provided by Company or its representatives for inclusion in (a) the Proxy Statement, on the date it (or any
amendment or supplement thereto) is first mailed to holders of Company Common Stock or at the time of the Company Meeting, (b) in the F-4, when it or any amendment thereto becomes effective
under the Securities Act, (c) the documents and financial statements of Company incorporated by reference in the Proxy Statement, the F-4 or any amendment or supplement thereto or
(d) any other document filed with any other Regulatory Agency in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made, not misleading. The portions of the Proxy Statement relating to Company and its Subsidiaries and other portions within the
reasonable control of Company and its Subsidiaries will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing,
no representation or warranty is made by Company with respect to statements made or incorporated by reference therein based on information provided or supplied by or on behalf of Parent or its
Subsidiaries for inclusion in the Proxy Statement or the F-4.
3.25
Loan Portfolio
.
(a) As
of the date hereof, except as set forth in Section 3.25(a) of the Company Disclosure Schedule, neither Company nor any of its Subsidiaries is a party to any
written or oral (i) loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, commitments, guarantees and interest-bearing assets) (collectively,
"
Loans
") in which Company or any Company Subsidiary is a creditor which, as of March 31, 2016, had an outstanding balance of $1,000,000 or more
and under the terms of which the obligor was, as of March 31, 2016, over 90 days or more delinquent in payment of principal or interest, or (ii) Loans with any director, executive
officer or principal stockholder of Company or any of its Subsidiaries (as such terms are defined in 12 C.F.R. Part 215). Except as such disclosure may be limited by any applicable law, rule or
regulation, Section 3.25(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all of the Loans of Company and its Subsidiaries that, as of March 31,
2016, had an outstanding balance of $1,000,000 or more and were classified by Company as "Other Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans," "Watch List" or words of similar import, together with the principal amount of each such Loan and the aggregate principal amount of such Loans as
of such date.
(b) Except
as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Company, each outstanding Loan of Company and its
Subsidiaries (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent carried on the books and
records of Company and its Subsidiaries as secured Loans, has been secured by valid Liens, which have been perfected and (iii) is the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, subject to the Enforceability Exceptions.
(c) Except
as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Company, each outstanding Loan of Company and its
Subsidiaries has been solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained, in accordance with the relevant
notes or other credit or security documents, the applicable written underwriting and servicing standards of Company and its Subsidiaries and with all applicable federal, state and local laws,
regulations and
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rules.
Every Company Subsidiary that services any mortgage Loans complies with the "small servicer" exemption set forth in the regulations of the Bureau of Consumer Financial Protection, 12 C.F.R.
§ 1026.41(e)(4).
(d) Neither
Company nor any of its Subsidiaries is bound by an agreement pursuant to which Loans or pools of Loans or participations in Loans have been sold that contains
any obligation of Company or any of its Subsidiaries to repurchase such Loans or interests therein. Section 3.25(d) of the Company Disclosure Schedule sets forth a true and correct report
regarding the current status of (i) repurchase requests received by Company or any of its Subsidiaries to repurchase any Loan or interests therein, and (ii) Company's and its
Subsidiaries' reserves in respect of potential repurchase requests to repurchase any Loan or interests therein.
(e) There
are no outstanding Loans made by Company or any of its Subsidiaries to any "executive officer" or other "insider" (as each such term is defined in
Regulation O promulgated by the Federal Reserve Board) of Company or its Subsidiaries, other than Loans that are subject to and that were made and continue to be in compliance with
Regulation O or that are exempt therefrom.
(f) Neither
Company nor any of its Subsidiaries is now nor has it ever been since January 1, 2013, subject to any material fine, suspension, settlement or other
contract or other administrative agreement
or sanction by, or any reduction in any loan purchase commitment from, any Governmental Entity or Regulatory Agency relating to the origination, sale or servicing of mortgage or consumer Loans.
3.26
Insurance.
(a) Company and its Subsidiaries are insured with reputable insurers against such
risks and in such amounts as the management of Company reasonably has determined
to be prudent and consistent with industry practice, and neither Company nor any of its Subsidiaries has received notice to the effect that any of them are in default under any material insurance
policy; (b) each such policy is outstanding and in full force and effect and, except for policies insuring against potential liabilities of officers, directors and employees of Company and its
Subsidiaries, Company or the relevant Subsidiary thereof is the sole beneficiary of such policies; and (c) all premiums and other payments due under any such policy have been paid, and all
claims thereunder have been filed in due and timely fashion.
3.27
Books and Records.
The books and records of Company and its Subsidiaries have been fully,
properly and accurately maintained in all material respects, and there are no material
inaccuracies or discrepancies or reflected therein.
3.28
No Other Representations or Warranties
.
(a) Except
for the representations and warranties made by Company in this Article III, neither Company nor any other person makes any express or implied
representation or warranty with respect to Company, its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and Company
hereby disclaims any such other representations or warranties.
(b) Company
acknowledges and agrees that none of Parent, Holdco or any other person has made or is making any express or implied representation or warranty other than those
contained in Article IV.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND HOLDCO
Except
(i) as disclosed in the disclosure schedule delivered by Parent and Holdco to Company prior to the execution hereof (the
"
Parent Disclosure Schedule
") (
provided
, that (a) no such item is required to be set forth as an
exception to a representation or warranty if its absence would not result in the related representation or warranty being deemed untrue or incorrect, (b) the mere inclusion of an item in the
Parent Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by Parent or Holdco that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in a Material Adverse Effect, and (c) any disclosures made with respect to a section of this Article IV shall be deemed to
qualify (1) any other section of this Article IV specifically referenced or cross-referenced and (2) other sections of this Article IV to the extent it is reasonably
apparent on its face (notwithstanding the absence of a specific cross reference) from a reading of the disclosure that such disclosure applies to such other sections) or (ii) as disclosed in
any Parent SEC Reports filed prior to the date hereof (but disregarding risk factor disclosures contained under the heading "Risk Factors," or disclosures of risks set forth in any "forward-looking
statements" disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature), Parent and Holdco hereby represent and warrant to Company as
follows:
4.1
Corporate Organization
.
Parent validly exists as a Schedule I bank under the Bank Act (Canada) and is a bank holding company duly registered under the BHC Act that has elected to be treated as a
financial holding company under the BHC Act. Holdco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of Parent and Holdco 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, except as would not, either individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect on Parent, 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. A true and complete copy of Parent's by-laws, as in effect as of the date
of this Agreement, has previously been made available by Parent to Company.
4.2
Capitalization
.
(a) The
authorized capital stock of Parent consists of an unlimited number of Parent Common Shares without nominal or par value, and an unlimited number of Class A
preferred shares and Class B preferred shares, without nominal or par value, which classes of preferred shares may be issued for a maximum aggregate consideration not to exceed
C$10 billion (the "
Parent Preferred Shares
"). As of
May 31, 2016 (the "
Parent Capitalization Date
"), no shares of capital stock or other voting securities of Parent were issued, reserved for
issuance or outstanding, other than (i) 394,746,840 Parent Common Shares issued and outstanding, (ii) 40,000,000 Parent Preferred Shares issued and outstanding and (iii) 6,798,097
Parent Common Shares reserved for issuance upon exercise of options issued pursuant to employee and director stock plans of Parent or Subsidiaries of Parent in effect as of the date of this Agreement
(the "
Parent Stock Plans
"). All the issued and outstanding Parent Common Shares have been duly authorized and validly issued and are fully paid,
non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the Parent Capitalization Date, no bonds, debentures, notes or other indebtedness
that have the right to vote on any matters on which shareholders of Parent may vote were issued or outstanding, no trust preferred or subordinated debt securities of Parent or any Subsidiary of Parent
were issued or outstanding and, other than the Parent Stock Plans, there were no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other
commitments or agreements obligating Parent to issue, transfer, sell, purchase, redeem or otherwise acquire any Parent Common Shares.
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(b) There
are no voting trusts, shareholder agreements, proxies or other agreements in effect pursuant to which Parent or any of its Subsidiaries has a contractual or other
obligation with respect to the voting or transfer of the Parent Common Shares or other equity interests of Parent.
4.3
Authority; No Violation
.
(a) Each
of Parent and Holdco 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 Merger have been duly and validly approved by the Board of Directors of each of Parent and Holdco. The Board of Directors of each
of Parent and Holdco has determined that the Merger, on the terms and conditions set forth in this Agreement, is in the best interests of such company. No other corporate proceedings on the part of
either Parent or Holdco are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent
and Holdco and (assuming due authorization, execution and delivery by Company) constitutes a valid and binding obligation of each of Parent and Holdco, enforceable against Parent in accordance with
its terms (except in all cases as such enforceability may be limited by the Enforceability Exceptions). The Parent Common Shares to be issued in the Merger have been validly authorized and, when
issued, will be validly issued, fully paid and non-assessable, and no current or past shareholder of Parent will have any preemptive right or similar rights in respect thereof.
(b) Neither
the execution and delivery of this Agreement by each of Parent and Holdco, nor the consummation by each of Parent and Holdco of the transactions contemplated
hereby, nor compliance by each of Parent and Holdco with any of the terms or provisions hereof, will (i) violate any provision of the organizational documents of Parent or Holdco, as
applicable, or (ii) assuming that the consents, approvals and filings referred to in Section 4.4 are duly obtained and/or made, (x) violate any law, statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to Parent, Holdco or any of their 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
Parent, Holdco or any of their 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 Parent, Holdco or any of their Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound, except (in the case of clause (ii)
above) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations which either individually or in the aggregate would not reasonably be likely to have
a Material Adverse Effect on Parent.
4.4
Consents and Approvals.
Except for (i) the filing of applications, filings and notices, as
applicable, with the Federal Reserve Board under the BHC Act, OSFI under the Bank Act
(Canada) and the Illinois Department of Financial and Professional Regulation, Division of Banking under Illinois law, and approval of such applications, filings and notices, the filing with the SEC
of the Proxy Statement and the F-4 in which the Proxy Statement will be included as a prospectus, and declaration of effectiveness of the F-4, (ii) the filing of the Certificate of Merger with
the Delaware Secretary pursuant to the DGCL, (iii) the filing of any notices or other filings under the HSR Act, (iv) 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 Parent Common Shares pursuant to this Agreement and (v) the approval of the listing of such
Parent Common Shares on the NYSE and the TSX, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (A) the execution and
delivery by each of Parent and Holdco of this Agreement or
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(B) the
consummation by each of Parent and Holdco of the Merger and the other transactions contemplated hereby. As of the date hereof, neither Parent nor Holdco is aware of any reason why the
necessary regulatory approvals and consents will not be received in order to permit consummation of the Merger on a timely basis. No vote or other approval of the shareholders or any other
securityholders of Parent is required in connection with the execution, delivery or performance of this Agreement or to consummate the transactions contemplated hereof (including the issuance of stock
consideration) in accordance with the terms hereof, whether by reason of applicable law, the organizational documents of Parent, the rules or requirements of any exchange, or otherwise.
4.5
Reports
.
(a) Each
of Parent, Holdco and their respective Subsidiaries has timely filed or furnished, as applicable, all material reports, registrations and statements, together with
any amendments required to be made with respect thereto, that they were required to file (or furnish, as applicable) since January 1, 2013 with any Regulatory Agencies, including any material
report, registration or statement required to be filed (or furnished, as applicable) pursuant to the laws, rules or regulations of the United States, any state, any foreign entity, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection therewith. Except for examinations of Parent, Holdco and their respective Subsidiaries conducted by a Regulatory Agency in
the ordinary course of business, no Regulatory Agency has initiated or has pending any proceeding or, to the knowledge of Parent or Holdco, investigation into the business or operations of Parent,
Holdco or any of their respective Subsidiaries since January 1, 2013. Except as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect, there
is no unresolved violation, criticism or exception by any Regulatory Agency with respect to any report or statement relating to any examinations or inspections of Parent, Holdco or any of their
respective Subsidiaries.
(b) An
accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by
Parent or any of its Subsidiaries pursuant to the Securities Act or the Exchange Act, as the case may be, since January 1, 2013 (the "
Parent SEC
Reports
") is publicly available. No such Parent SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of the relevant meetings, respectively), 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 filed or furnished as of a later date (but before
the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all Parent SEC Reports filed or furnished under the Securities Act and the
Exchange Act complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto. As of the date of this Agreement, no executive officer of Parent has
failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act. As of the date of this Agreement, there are no outstanding comments
from, or material unresolved issues raised by, the SEC with respect to any of the Parent SEC Reports.
4.6
Financial Statements
.
(a) The
financial statements of Parent and its Subsidiaries included (or incorporated by reference) in the Parent SEC Reports (including the related notes, where applicable)
(i) have been prepared from, and are in accordance with, the books and records of Parent and its Subsidiaries, (ii) fairly present in all material respects the consolidated results of
operations, cash flows, changes in shareholders' equity and consolidated financial position of Parent and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set
forth (subject in the case of
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unaudited
statements to year-end audit adjustments normal in nature and amount), (iii) complied, as of their respective dates of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (iv) have been prepared in accordance with IFRS or Canadian generally accepted
accounting principles ("
Canadian GAAP
"), as applicable, consistently applied during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto. The books and records of Parent and its Subsidiaries have been, since January 1, 2013, and are being maintained in all material respects in accordance with
IFRS, Canadian GAAP or GAAP, as applicable, and any other applicable legal and accounting requirements. Ernst & Young LLP has not resigned (or informed Parent that it intends to resign)
or been dismissed as independent public accountants of Parent as a result of or in connection with any disagreements with Parent on a matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
(b) Except
as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Parent, none of Parent, Holdco or any of their
respective Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for (i) those liabilities that
are reflected or reserved against on the consolidated balance sheet of Parent included in its Quarterly Report to Shareholders filed with the SEC on Form 6-K for the fiscal quarter ended
April 30, 2016 (including any notes thereto), (ii) liabilities incurred in the ordinary course of business consistent with past practice since April 30, 2016 or in connection with
this Agreement and the transactions contemplated hereby or (iii) liabilities that are not material to Parent and its Subsidiaries, taken as a whole.
(c) The
records, systems, controls, data and information of Parent and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic,
mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Parent or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on
Parent. Parent (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to
Parent, including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of Parent by others within those entities as appropriate to allow timely decisions
regarding required disclosures and to make the certifications required by the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act, and (ii) has disclosed, based on its most
recent evaluation prior to the date hereof, to Parent's outside auditors and the audit committee of Parent's Board of Directors (x) any significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect Parent's ability to record,
process, summarize and report financial information, and (y) to the knowledge of Parent, any
fraud, whether or not material, that involves management or other employees who have a significant role in Parent's internal controls over financial reporting. Copies of any such disclosures were made
in writing by management to Parent's auditors and audit committee and a copy has previously been made available to Company. To the knowledge of Parent, there is no reason to believe that Parent's
outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted
pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, prior to the Closing Date.
(d) Since
January 1, 2013, (i) none of Parent, Holdco or any of their respective Subsidiaries, nor, to the knowledge of Parent, any director, officer, auditor,
accountant or representative of
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Parent,
Holdco or any of their respective Subsidiaries, has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or, to the
knowledge of Parent, oral, regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to loan loss reserves, write-downs, charge-offs and accruals) of
Parent, Holdco or any of their respective Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or written claim that Parent, Holdco or
any of their respective Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing Parent, Holdco or any of their respective Subsidiaries,
whether or not employed by Parent, Holdco or any of their respective Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by
Parent, Holdco or any of their respective officers, directors or employees to the Board of Directors of either Parent or Holdco or any committee thereof or to the knowledge of Parent, to any director
or officer of Parent or Holdco.
4.7
Broker's Fees
.
None of Parent, Holdco or any of their respective Subsidiaries, nor any of their respective officers or directors, has employed any broker, finder or financial advisor 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 CIBC World Markets Inc. and
J.P. Morgan Securities LLC.
4.8
Absence of Certain Changes or Events
.
Since October 31, 2015, no event or events have occurred that have had or would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on
Parent.
4.9
Legal and Regulatory Proceedings
.
(a) There
is no suit, action, investigation, claim or proceeding pending or, to Parent's knowledge, threatened against or involving Parent or Holdco or any of their
respective Subsidiaries or, in their capacities as such, any of the current or former directors or executive officers of Parent, Holdco or any of their Subsidiaries (and Parent is not aware of any
basis for any such suit, action or proceeding) (i) that would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Parent, or (ii) of a
material nature challenging the validity or propriety of this Agreement.
(b) There
is no injunction, order, judgment, decree, or regulatory restriction imposed upon Parent, Holdco, any of their respective Subsidiaries or the assets of Parent,
Holdco or any of their respective Subsidiaries that is material to Parent and its Subsidiaries, taken as a whole.
4.10
Compliance with Applicable Law.
(a) Parent,
Holdco and each of their respective Subsidiaries hold, and have at all times since January 1, 2013 held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to each (and have paid all material
fees and assessments due and payable in connection therewith), and to the knowledge of Parent, no suspension or cancellation of any such necessary material license, franchise, permit or authorization
is threatened. Parent, Holdco and each of their respective Subsidiaries have since January 1, 2013 complied with and are not in default or violation under any, law, statute, order, rule or
regulation of any Governmental Entity applicable to them, including (to the extent applicable to Parent, Holdco or their respective Subsidiaries), all laws related to data protection or privacy, the
USA PATRIOT Act, the Bank Secrecy Act, the Equal Credit Opportunity Act and Regulation B, the Fair Housing Act, the Community Reinvestment Act, the Fair Credit Reporting Act, the Truth in
Lending Act and Regulation Z, the Home Mortgage Disclosure Act, the Fair Debt Collection Practices Act, the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer
Protection Act,
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any
regulations promulgated by the Consumer Financial Protection Bureau, the Foreign Corrupt Practices Act, the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products, the SAFE
Mortgage Licensing Act of 2008, the Real Estate Settlement Procedures Act and Regulation X, and any other law relating to bank secrecy, discriminatory or abusive or deceptive lending or any
other product or service, financing or leasing practices, money laundering prevention, Sections 23A and 23B of the Federal Reserve Act, the Sarbanes-Oxley Act, and all agency requirements
relating to the origination, sale and servicing of mortgage and consumer loans, in each case, except for any such non-compliance, default or violation as would not reasonably be likely to have, either
individually or in the aggregate, a Material Adverse Effect on Parent.
(b) Parent,
Holdco and their respective Subsidiaries are and since January 1, 2013 have been conducting operations at all times in compliance with applicable
financial recordkeeping and reporting requirements of all Anti-Money Laundering Laws, except for any such non-compliance as would not reasonably be likely to have, either individually or in the
aggregate, a Material Adverse Effect on Parent.
4.11
Reorganization.
Neither Parent nor Holdco has taken any action or is aware of any fact or
circumstance that could reasonably be expected to prevent the Merger from qualifying as
a "reorganization" within the meaning of Section 368(a) of the Code.
4.12
Parent Information.
The information relating to Parent and its Subsidiaries that is provided by
Parent or its representatives for inclusion in (a) the Proxy Statement, on the
date it (or any amendment or supplement thereto) is first mailed to holders of Company Common Stock or at the time of the Company Meeting, (b) the F-4, when it or any amendment thereto becomes
effective under the Securities Act, (c) the documents and financial statements of Parent incorporated by reference in the Proxy Statement, the F-4 or any amendment or supplement thereto or
(d) any other document filed with any other Regulatory Agency in connection herewith, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made, not misleading. The portions of the Proxy Statement relating to Parent and its Subsidiaries and other portions within the
reasonable control of Parent will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent with respect to statements made or incorporated by reference therein based on information provided or supplied by or on behalf of Company or its Subsidiaries for inclusion
in the Proxy Statement or the F-4.
4.13
Financing.
Parent has, or will have available to it prior to the Closing Date, all funds
necessary to satisfy its obligations hereunder.
4.14
Agreements with Regulatory Agencies.
In each case, except as would not reasonably be likely to
have, either individually or in the aggregate, a Material Adverse Effect on Parent, neither Parent nor
any of its Subsidiaries is subject to any cease-and-desist or other order or enforcement action 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 ordered to pay any civil money penalty by, or has been since
January 1, 2013, a recipient of any supervisory letter from, or since January 1, 2013, has adopted any policies, procedures or board resolutions at the request or suggestion of any
Regulatory Agency or other Governmental Entity, specific to Parent or its Subsidiaries, that, in each of any such cases, currently restricts in any material respect the conduct of its business or that
in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business (each, whether or not set forth in the
Parent Disclosure Schedule, a "
Parent Regulatory Agreement
"), nor has Parent or any of its Subsidiaries been advised in writing or, to Parent's
knowledge, orally, since January 1, 2013, by any Regulatory Agency or other Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Parent Regulatory
Agreement.
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4.15
Books and Records.
The books and records of Parent and its Subsidiaries have
been fully, properly and accurately maintained in all material respects, and there are no material
inaccuracies or discrepancies or reflected therein.
4.16
No Other Representations or Warranties.
(a) Except
for the representations and warranties made by each of Parent and Holdco in this Article IV, none of Parent, Holdco or any other person makes any express
or implied representation or warranty with respect to Parent, Holdco, their respective Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or
otherwise) or prospects, and each of Parent and Holdco hereby disclaims any such other representations or warranties.
(b) Each
of Parent and Holdco acknowledges and agrees that neither Company nor any other person has made or is making any express or implied representation or warranty other
than those contained in Article III.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1
Conduct of Business of Company Prior to the Effective Time.
During the period from the date of this
Agreement to the Effective Time or earlier termination of this Agreement, except as expressly contemplated or permitted by
this Agreement (including as set forth in the Company Disclosure Schedule), required by law or as consented to in writing by Parent (such consent not to be unreasonably withheld), (a) Company
shall, and shall cause its Subsidiaries to, (i) conduct its business in the ordinary course in all material respects and (ii) use reasonable best efforts to maintain and preserve intact
its business organization, employees and advantageous business relationships, and (b) each of Parent and Company shall, and shall cause their respective Subsidiaries to, take no action, or, to
the extent feasible, fail to prevent an action, that is intended to or would reasonably be likely to adversely affect or delay the ability to obtain any necessary approvals of any Regulatory Agency or
other Governmental Entity required for the transactions contemplated hereby or to perform its respective covenants and agreements under this Agreement or to consummate the transactions contemplated
hereby on a timely basis.
5.2
Company Forbearances.
During the period from the date of this Agreement to the Effective Time or
earlier termination of this Agreement, except as set forth in the Company Disclosure
Schedule, as expressly contemplated or permitted by this Agreement or as required by law, Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of
Parent (such consent not to be unreasonably withheld):
(a) other
than in the ordinary course of business, incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other person (other than any Company Subsidiary);
(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 (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of
its capital stock (except (A) regular quarterly cash dividends by Company (and dividend equivalents to the extent provided by the terms of any Company Equity Awards or Deferred Units) at a rate
not in excess of $0.01 per share of Company Common Stock, (B) dividends paid by any Company Subsidiary to Company or any of its wholly owned Subsidiaries, (C) any required dividends on
the preferred stock of any Company Subsidiary or (D) the withholding
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or
acceptance of shares of Company Common Stock in connection with the vesting, exercise and/or settlement of any Company Equity Award or Deferred Unit, in each case in accordance with past practice
and the terms of the applicable award agreements);
(iii) grant
any stock options, stock appreciation rights, performance shares, restricted stock units, restricted shares or other equity-based awards or interests, or grant
any individual, corporation or other entity any right to acquire any shares of its capital stock; or
(iv) issue,
sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any
shares of its capital stock or any options, warrants or other rights of any kind to acquire any shares of capital stock, except for the issuance of shares upon the exercise of Company Stock Options or
the vesting or settlement of Company Equity Awards (and dividend equivalents thereon, if any);
(c) sell,
transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets to any individual, corporation or other entity other than a wholly
owned Subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course of business;
(d) except
for transactions in the ordinary course of business, 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 in a wholly owned Company Subsidiary;
(e) other
than in the ordinary course of business, (i) terminate, materially amend, or waive any material provision of, any Company Contract, or make any change in
any instrument or agreement governing the terms of any of its securities, or (ii) enter into any contract that would constitute a Company Contract if it were in effect on the date of this
Agreement;
(f) except
as required under applicable law or the terms of any Company Benefit Plan existing as of the date hereof, (i) enter into, adopt or terminate any material
employee benefit or compensation plan, program, policy or arrangement for the benefit of any current or former employee, officer, director or consultant (who is a natural person), (ii) except
as would not in the aggregate result in an increase in costs from the date hereof that would be material to the Company or the Surviving Corporation, enter into any new, adopt, amend (whether in
writing or through the interpretation of) or terminate any Company Benefit Plan or any employee benefit or compensation plan, program, policy or arrangement for the benefit of any current or former
employee, officer, director or consultant (who is a natural person) that would be a Company Benefit Plan if in effect on the date hereof, (iii) increase the compensation or benefits payable to
any current or former employee, officer, director or consultant (who is a natural person), (iv) pay or award, or commit to pay or award, any bonuses or incentive compensation, (v) grant
or accelerate the vesting of any equity-based awards or other compensation, (vi) fund any rabbi trust, (viii) terminate the employment of any member of the Company's Operating Committee
or Executive Committee as of the date hereof, other than for cause, or (ix) hire any employee to a position that would be a member of the Company's Operating Committee or Executive Committee;
(g) settle
any material claim, suit, action or proceeding, except in the ordinary course of business, in an amount and for consideration not in excess of $5,000,000
individually or $10,000,000 in the aggregate or that would not impose any material restriction on the business of it or its Subsidiaries or the Surviving Corporation or affect the Merger and the other
transactions contemplated hereby;
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(h) take
any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the Merger from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code;
(i) amend
the Company Certificate, Company Bylaws or comparable governing documents of Subsidiaries;
(j) merge
or consolidate itself or any of its Subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of
its Subsidiaries;
(k) materially
restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise;
(l) take
any action that is intended or 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;
(m) implement
or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or by applicable laws, regulations, guidelines or
policies imposed by any Governmental Entity;
(n) (i)
enter into any material new line of business or change in any material respect its lending, investment, underwriting, risk and asset liability management and other
banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan
portfolio or any segment thereof), except as required by such policies or applicable law, regulation or policies imposed by any Governmental Entity or (ii) make any loans or extensions of
credit except in the ordinary course of business consistent with past practice and in conformity with Company's ordinary course lending policies and guidelines (including, in each case, with respect
to loan amounts, security, collateral, loan terms, single name exposure limits and portfolio mix) in effect as of the date hereof;
(o) make
any material changes in its policies and practices with respect to (i) underwriting, pricing, originating, acquiring, selling, servicing or buying or selling
rights to service Loans or (ii) its hedging practices and policies, in each case except as may be required by such policies and practices or by any applicable laws, regulations, guidelines or
policies imposed by any Governmental Entity;
(p) make,
or commit to make, any capital expenditures in excess of the amounts specified in the capital expenditure budget made available to Parent prior to the date hereof
plus 10%;
(q) other
than in the ordinary course of business consistent with past practice, make, change or revoke any material Tax election, change an annual Tax accounting period,
adopt or materially change any Tax accounting method, file any amended Tax Return, enter into any closing agreement with respect to Taxes, or settle any material Tax claim, audit, assessment or
dispute or surrender any right to claim a refund of a material amount of Taxes;
(r) make
application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office or other significant office or
operations facility of it or its Subsidiaries;
(s) terminate,
or fail to maintain in effect, the material insurance policies of Company and its Subsidiaries, including any policies of directors' and officers' liability
insurance, of at least the same
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coverage
and amounts and on terms and conditions not less advantageous to the insured as currently maintained by Company and its Subsidiaries; or
(t) agree
to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by
this Section 5.2.
5.3
Parent and Holdco Forbearances.
During the period from the date of this Agreement to the
Effective Time or earlier termination of this Agreement, except as set forth in the Parent Disclosure
Schedule, as expressly contemplated or permitted by this Agreement, or as required by law, each of Parent and Holdco shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of Company (such consent not to be unreasonably withheld):
(a) amend
the Parent's by-laws or the governing documents of any of its Subsidiaries in a manner that would materially and adversely affect the economic benefits of the
Merger to the holders of Company Common Stock or adversely affect the holders of Company Common Stock relative to holders of Parent Common Shares or that would materially impede Parent's ability to
consummate the transactions contemplated by this Agreement;
(b) Except
as would not (i) reasonably be expected to have a Material Adverse Effect on Parent or (ii) adversely affect the Tax treatment of the Merger with
respect to Company's stockholders or the value or the Merger Consideration, merge or consolidate itself or any of its Subsidiaries with any other
person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its Subsidiaries;
(c) notwithstanding
anything herein to the contrary, take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to
(i) prevent the Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code or (ii) cause the stockholders of Company to recognize gain pursuant
to Section 367(a) of the Code (assuming that, in the case of any such holder who would be treated as a "five-percent transferee shareholder" within the meaning of Treasury Regulations
Section 1.367(a)-3(c)(5)(ii), such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8, as provided for in Treasury
Regulations Section 1.367(a)-3(c)(1)(iii)(B), and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of gain), or,
except as may be required by applicable law, regulation or policies imposed by any Governmental Entity, (i) take any action that would reasonably be expected to prevent, materially impede or
materially delay the consummation of the transactions contemplated by this Agreement, or (ii) take, or omit to take, any action where such action or omission is reasonably likely to result in
any of the conditions to the Merger set forth in Article VII not being satisfied; or
(d) agree
to take, make any commitment to take, or adopt any resolutions of its Board of Directors in support of, any of the actions prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1
Regulatory Matters
.
(a) Parent
and Company shall prepare the F-4 and the Proxy Statement promptly and in no event later than thirty (30) days after the date of this Agreement. Parent
shall thereupon file the F-4, in which the Proxy Statement will be included as a prospectus, with the SEC. Each of Parent and Company shall use its reasonable best efforts to have the F-4 declared
effective under the Securities Act as promptly as practicable after such filing, and Company shall thereafter file the Proxy Statement with the SEC and mail or deliver the Proxy Statement to its
stockholders. Parent
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shall
also use its reasonable best 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
Company shall furnish all information concerning Company and the holders of Company Common Stock as may be reasonably requested in connection with any such action.
(b) Subject
to other provisions of this Agreement, the parties hereto shall cooperate with each other and use their reasonable 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 the Merger), and to comply with the terms and conditions of all such
permits, consents, approvals and authorizations of all such third parties and Governmental Entities. Without limiting the generality of the foregoing, as soon as practicable and in no event later than
forty (40) days after the date of this Agreement, Parent and Company shall, and shall cause their respective Subsidiaries to, each prepare and file any applications, notices and filings
required in order to obtain the Requisite Regulatory Approvals. Parent and Company shall each use, and shall each cause their applicable Subsidiaries to use, reasonable best efforts to obtain each
such Requisite Regulatory Approval as promptly as reasonably practicable. The parties shall cooperate with each other in connection therewith (including the furnishing of any information and any
reasonable undertaking or commitments that may be required to obtain the Requisite Regulatory Approvals). Parent and Company 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 Company or Parent, as the case may be, and any of their
respective Subsidiaries, which appears 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. Each party will provide the other with copies of any applications and all
correspondence relating thereto prior to filing, other than any portions of material filed in connection therewith that contain competitively sensitive business or other proprietary information filed
under a claim of confidentiality and subject to applicable laws relating to the exchange of information. 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. Each party shall consult with the other in advance of any meeting or
conference with any Governmental Entity in connection with the transactions contemplated by this Agreement, and to the extent permitted by such Governmental Entity, give the other party and/or its
counsel the opportunity to attend and participate in such meetings and conferences;
provided
that each party shall be permitted to respond to inbound
telephone calls or other inquiries from any Governmental Entity, and to provide informal status updates to a Governmental Entity, in each case without consulting in advance with the other party;
provided
,
further
, that Parent shall be permitted to redact from copies provided to Company of written
materials submitted or intended for submission by Parent to OSFI, information relating to the business or operations of Parent to the extent that access to such information is not required for Company
to reasonably assess the status of matters relating to consummation of the transactions contemplated by this
Agreement, and Parent need not include Company in meetings or conferences, or portions of meetings or conferences, between Parent (or any of its affiliates) and OSFI in which the business or
operations of Parent will be discussed with OSFI, provided that if such a discussion is germane to the status of matters relating to the consummation of the transactions contemplated by this
Agreement, Parent will promptly inform Company of the occurrence of such a meeting and the general subject discussed and provide Company with summary information conveying the import of the matters
discussed.
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(c) In
furtherance and not in limitation of the foregoing, each of Parent and Company shall use its reasonable best efforts to avoid the entry of, or to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the Closing. Notwithstanding anything
to the contrary in this Agreement, nothing contained in this Agreement shall require Parent or Company to take, or commit to take, any action or agree to any condition or restriction that would
reasonably be likely to have a material and adverse effect on Parent and its Subsidiaries, taken as a whole, giving effect to the Merger (with such materiality measured on a scale relative to Company
and its Subsidiaries, taken as a whole) (a "
Materially Burdensome Regulatory Condition
").
(d) Parent
and Company shall, upon request, furnish each other with all information to which they have access concerning themselves, their Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or advisable in connection with the Proxy Statement, the F-4 or any other statement, filing, notice or application made by or on
behalf of Parent, Company or any of their respective Subsidiaries to any Governmental Entity in connection with the Merger and the other transactions contemplated by this Agreement. Each of Parent and
Company agrees, as to itself and its Subsidiaries, (i) that none of the information supplied or to be supplied by it for inclusion or incorporation by reference in the F-4 will, at the time the
F-4 and each amendment or supplement thereto, if any, becomes effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) that none of the information supplied or to be supplied
by it for inclusion or incorporation by reference in the Proxy Statement and any amendment or supplement thereto will, at the date of mailing to shareholders and at the time of the Company Meeting,
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
such statement was made, not misleading. Each of Parent and Company further agrees that if it becomes aware that any information furnished by it would cause any of the statements in the F-4 or the
Proxy Statement to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, to promptly inform
the other party thereof and to take appropriate steps to correct the F-4 or the Proxy Statement.
(e) Parent
and Company 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 that 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.
(f) Parent
shall, and shall cause the Surviving Company to, comply with the "reporting requirements" of Treasury Regulations Section 1.367(a)-3(c)(6).
6.2
Access to Information
.
(a) Upon
reasonable notice and subject to applicable laws, Company shall, and shall cause each of its Subsidiaries to, afford to the officers, employees, accountants,
counsel, advisors and other representatives of Parent reasonable access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, personnel,
information technology systems and records, and each shall reasonably cooperate with Parent in preparing to execute after the Effective Time conversion or consolidation of systems and business
operations generally (including by entering into customary confidentiality, nondisclosure and similar agreements with service providers), and, during such period, Company shall, and shall cause its
Subsidiaries to, make available to Parent such information concerning its business, properties and personnel as Parent may reasonably request. Parent shall use commercially reasonable efforts to
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minimize
any interference with Company's regular business operations during any such access. Upon reasonable notice and subject to applicable laws, Parent shall, and shall cause each of its
Subsidiaries to, furnish or otherwise make available to the officers, employees, accountants, counsel, advisors and other representatives of Company such information concerning its businesses as is
reasonably relevant to Company and its stockholders in connection with the transactions contemplated by this Agreement. No party shall be required to provide access to or to disclose information where
such access or disclosure would jeopardize the attorney-client privilege of the institution in possession or control of such information (after giving due consideration to the existence of any common
interest, joint defense or similar agreement between the parties) 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
party shall hold all information furnished by or on behalf of it or any of its Subsidiaries or representatives pursuant to Section 6.2(a) in confidence to
the extent required by, and in accordance with, the provisions of the confidentiality agreement, dated April 25, 2016, by and between Parent and Company (the
"
Confidentiality Agreement
");
provided
that, as of the date of this Agreement, Sections 13 and 15
of the Confidentiality Agreement shall terminate and no longer be in effect.
(c) No
investigation by Parent, Company or their respective representatives pursuant to this Section 6.2 or prior to the date of this Agreement shall affect or be
deemed to modify or waive the representations and warranties of the other set forth herein. Nothing contained in this Agreement shall give either Parent or Company, directly or indirectly, the right
to control or direct the operations of the other party prior to the Effective Time. Prior to the Effective Time, each party shall exercise, consistent with the terms and conditions of this Agreement,
complete control and supervision over its and its Subsidiaries' respective operations.
6.3
Company Stockholder Approval
.
(a) Company
shall take, in accordance with applicable law and the Company Certificate and Company Bylaws, all action necessary to convene a meeting of its stockholders (the
"
Company Meeting
") to be held as soon as reasonably practicable after the F-4 is declared effective for the purpose of obtaining the Requisite Company
Vote required in connection with this Agreement and the Merger, and, if so desired and mutually agreed, upon other matters of the type customarily brought before an annual or special meeting of
stockholders to adopt a merger agreement. The Board of Directors of Company shall use its reasonable best efforts to obtain from the stockholders of Company the Requisite
Company Vote, including by communicating to its stockholders its recommendation (and including such recommendation in the Proxy Statement) that they adopt and approve this Agreement and the
transactions contemplated hereby. Company shall engage a proxy solicitor reasonably acceptable to Parent to assist in the solicitation of proxies from stockholders relating to the Requisite Company
Vote. However, subject to Sections 8.1 and 8.2, if the Board of Directors of Company, after receiving the advice of its outside counsel and, with respect to financial matters, its financial
advisors, determines in good faith that, because of the receipt by Company of an Acquisition Proposal that the Board of Directors of Company concludes in good faith constitutes a Superior Proposal, it
would violate its fiduciary duties under applicable law to continue to recommend this Agreement, then in submitting this Agreement to its stockholders, the Board of Directors of Company may submit
this Agreement to its stockholders without recommendation (although the resolutions approving this Agreement as of the date hereof may not be rescinded or amended), in which event the Board of
Directors of Company may communicate the basis for its lack of a recommendation to its stockholders in the Proxy Statement or an appropriate amendment or supplement thereto to the extent required by
law;
provided
that
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the
Board of Directors of Company may not take any actions under this sentence unless (i) it gives Parent at least four (4) business days' prior written notice of its intention to take
such action and a reasonable description of the event or circumstances giving rise to its determination to take such action (including, in the event such action is taken by the Board of Directors of
Company in response to an Acquisition Proposal, the latest material terms and conditions and the identity of the third party in any such Acquisition Proposal, or any amendment or modification thereof,
or describe in reasonable detail such other event or circumstances) and (ii) at the end of such notice period, the Board of Directors of Company takes into account any amendment or modification
to this Agreement proposed in writing by Parent and after receiving the advice of its outside counsel and, with respect to financial matters, its financial advisors, determines in good faith that it
would nevertheless more likely than not result in a violation of its fiduciary duties under applicable law to continue to recommend this Agreement. Any material amendment to any Acquisition Proposal
will be deemed to be a new Acquisition Proposal for purposes of this Section 6.3 and will require a new notice period as referred to in this Section 6.3.
(b) Company
shall adjourn or postpone the Company Meeting (i) if, as of the time for which such meeting is originally scheduled, there are insufficient shares of
Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of such meeting, or (ii) if, on the date of such meeting, Company has
not received proxies representing a sufficient number of shares necessary to obtain the Requisite Company Vote. Notwithstanding anything to the contrary herein, unless this Agreement has been
terminated in accordance with its terms, the Company Meeting shall be convened and this Agreement shall be submitted to the stockholders of Company at the Company Meeting, for the purpose of voting on
the adoption of this Agreement and the other matters contemplated hereby, and nothing contained herein shall be deemed to relieve Company of such obligation. Company shall only be required to adjourn
or postpone the Company Meeting twice pursuant to this Section 6.3(b).
6.4
Legal Conditions to Merger.
Subject in all respects to Section 6.1 of this Agreement, each
of Parent and Company shall, and shall cause its Subsidiaries to, use their reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements that 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 material consent, authorization, order or approval of, or any exemption by, any Governmental Entity and any other third party that is required to be obtained by
Company or Parent or any of their respective Subsidiaries in connection with the Merger and the other transactions contemplated by this Agreement.
6.5
Stock Exchange Listing.
Parent shall cause the Parent Common Shares to be issued in the Merger to
be approved for listing on the NYSE and the TSX, in each case subject to official
notices of issuance, prior to the Effective Time.
6.6
Employee Benefit Plans
.
(a) During
the period commencing at the Effective Time and ending on October 31, 2018 (the "
Continuation Period
"),
Parent shall cause the Surviving Corporation to provide each employee of Company or any of its Subsidiaries as of the Effective Time who remains employed by Parent or any of its affiliates (including
the Surviving Corporation and its Subsidiaries) following the Effective Time (a "
Continuing Employee
") with (i) an annual base salary or base
wage rate that is no less than that provided to such employee by Company and its Subsidiaries immediately prior to the Effective Time, (ii) a total incentive compensation opportunity that is no
less than the aggregate total incentive compensation opportunity (whether relating to annual or any other type of incentive compensation) provided to such employee by Company and its Subsidiaries
immediately prior to the Effective Time and (iii) employee benefits that are substantially
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comparable
in the aggregate to those provided to such employees by Company and its Subsidiaries immediately prior to the Effective Time. In addition, Parent agrees that, for each Continuing Employee,
the terms and conditions of (A) the annual long-term incentive awards granted in respect of
calendar year 2016 to be granted in the first quarter of 2017, (B) the 2017 annual short-term incentive award and (C) to the extent applicable, mandatory 2016 annual bonus deferrals,
shall, in each case, be consistent with the terms described on Section 6.6(a) of the Company Disclosure Schedule. During the period commencing at the Effective Time and ending on the second
anniversary of the Effective Time (the "
Severance Continuation Period
"), Parent shall continue to maintain or cause to be maintained, without amendment,
the Company's severance plan applicable to Continuing Employees immediately prior to the Effective Time which shall include the terms set forth on Section 6.6(a) of the Company Disclosure
Schedule (the "
Company Severance Plan
"), and shall provide, or cause to be provided, to each Continuing Employee whose employment is terminated during
the Severance Continuation Period without "cause", as such term is defined or concept is used for purposes of the Company Severance Plan, or who otherwise experiences a severance-qualifying
termination under the Company Severance Plan, with the severance benefits specified in the Company Severance Plan.
(b) With
respect to any employee benefit plans of Parent or its Subsidiaries in which any employees of Company or its Subsidiaries become eligible to participate on or after
the Effective Time (the "
New Plans
"), Parent shall or shall cause the Surviving Corporation to:
(i) use
commercially reasonable efforts to (A) waive all pre-existing conditions, exclusions and waiting periods with respect to participation and coverage
requirements applicable to each such employee and his or her eligible dependents under any New Plans, except to the extent such pre-existing conditions, exclusions or waiting periods would apply under
the analogous Company Benefit Plan, and (B) provide each such employee and his or her eligible dependents with credit for any co-payments or deductibles paid prior to the Effective Time under a
Company Benefit Plan (to the same extent that such credit was given under the analogous Company Benefit Plan prior to the Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements under any New Plans; and
(ii) recognize
all service of each such employee with Company and its Subsidiaries (and their respective predecessors, if applicable) for all purposes in any New Plan;
provided
that the foregoing service recognition
shall not apply (A) to the extent it would result in duplication of benefits for the same period
of services, (B) for purposes of any defined benefit pension plan or benefit plan that provides retiree welfare benefits, or (C) to any benefit plan that is a frozen plan or provides
grandfathered benefits.
(c) Nothing
in this Agreement shall confer upon any employee, officer, director or consultant of Company or any of its Subsidiaries or affiliates any right to continue in
the employ or service of the Surviving Corporation, Company, or any Subsidiary or affiliate thereof, or shall interfere with or restrict in any way the rights of the Surviving Corporation, Company,
Parent or any Subsidiary or affiliate thereof to discharge or terminate the services of any employee, officer, director or consultant of Company or any of its Subsidiaries or affiliates at any time
for any reason whatsoever, with or without cause. Nothing in this Agreement shall be deemed to (i) establish, amend or modify any Company Benefit Plan, New Plan or any other benefit or
employment plan, program, agreement or arrangement, or (ii) alter or limit the ability of the Surviving Corporation or any of its Subsidiaries or affiliates to amend, modify or terminate any
particular Company Benefit Plan, New Plan or any other benefit or employment plan, program, agreement or arrangement after the Effective Time. Without limiting the generality of the final sentence of
Section 9.11, nothing in this Agreement, express or implied, is
intended to or shall confer upon any person, other than the parties hereto, including any current or former employee, officer,
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director
or consultant of Company or any of its Subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
6.7
Indemnification; Directors' and Officers' Insurance
.
(a) From
and after the Effective Time, Parent shall cause the Surviving Corporation to indemnify and hold harmless each present and former director, officer or employee of
Company and its Subsidiaries or fiduciaries of Company or any of its Subsidiaries under Company Benefit Plans (in each case, when acting in such capacity) (collectively, the
"
Company Indemnified Parties
") against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, damages or liabilities
incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, whether arising before or after the
Effective Time, arising in whole or in part out of (i) the fact that such person is or was a director, officer or employee of Company or any Company Subsidiary or is or was a fiduciary of
Company or any of its Subsidiaries under Company Benefit Plans or (ii) matters, acts or omissions existing or occurring at or prior to the Effective Time, including the transactions
contemplated hereby to the same extent as such persons are indemnified as of the date of this Agreement by Company pursuant to the Company Certificate, the Company Bylaws, the governing or
organizational documents of any Company Subsidiary and any indemnification agreements in existence as of the date hereof; and Parent shall also cause the Surviving Corporation to advance expenses as
incurred by such Company Indemnified Party to the same extent as such persons are entitled to advancement of expenses as of the date of this Agreement by Company pursuant to the Company Certificate,
the Company Bylaws, the governing or organizational documents of any Company Subsidiary and any indemnification agreements in existence as of the date hereof;
provided
that the Company Indemnified Party
to whom expenses are advanced provides an undertaking (in a reasonable and customary form) to repay such
advances if it is ultimately determined that such Company Indemnified Party is not entitled to indemnification.
(b) Subject
to the following sentence, for a period of six (6) years after the Effective Time, Parent shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by Company (
provided
, that the Surviving Corporation may substitute therefor policies with a
substantially comparable insurer of at least the same coverage and amounts containing terms and conditions which are no less advantageous to the insured) with respect to claims against the present
and former officers and directors of Company or any of its Subsidiaries arising from facts or events which occurred at or before the Effective Time (including the transactions contemplated by this
Agreement);
provided
,
however
, that the Surviving Corporation shall not be obligated to expend, on an
annual basis, an amount in excess of 300% of the aggregate annual premium paid as of the date hereof by Company for such insurance (the "
Premium Cap
"),
and if such premiums for such insurance would at any time exceed the Premium Cap, then the Surviving Corporation shall cause to be maintained policies of insurance which, in the Surviving
Corporation's good faith determination, provide the maximum coverage available at an annual premium equal to the Premium Cap. In lieu of the foregoing, Company, in consultation with Parent may (and at
the request of Parent, Company shall use its reasonable best efforts to) obtain at or prior to the Effective Time a six-year "tail" policy under Company's existing directors and officers insurance
policy providing equivalent coverage to that described in the preceding sentence if and to the extent that the same may be obtained for an amount that, in the aggregate, does not exceed the Premium
Cap (it being understood that any failure by Company to obtain such a "tail" policy shall not modify or alter in any manner any of the obligations of Parent or the Surviving Corporation under this
Section 6.7).
(c) The
provisions of this Section 6.7 shall survive the Effective Time and are intended to be for the benefit of, and shall be enforceable by, each Company
Indemnified Party and his or her heirs and representatives. If the Surviving Corporation, or any of its successors or assigns,
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consolidates
with or merges into any other entity and is not the continuing or surviving entity of such consolidation or merger, transfers all or substantially all of its assets or deposits to any
other entity or engages in any similar transaction, then in each case, the Surviving Corporation will cause proper provision to be made so that the successors and assigns of the Surviving Corporation
will expressly assume the obligations set forth in this Section 6.7.
6.8
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 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, each party to this Agreement and their respective Subsidiaries
shall take, or cause to be taken, all such necessary action as may be reasonably requested by any other party, at the expense of the party who makes any such request.
6.9
Advice of Changes.
Each of Parent and Company shall promptly advise the other of any fact, change,
event or circumstance known to it (i) that has had or is reasonably likely
to have a Material Adverse Effect on it or (ii) 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 or that reasonably could be expected to give rise, individually or in the aggregate, to the failure of a condition in Article VII;
provided
, that any failure to give
notice in accordance with the foregoing shall not be deemed to constitute a violation of this Section 6.9,
provide a basis for terminating this Agreement or constitute the failure of any condition set forth in Article VII to be satisfied, or otherwise constitute a breach of this Agreement by the
party failing to give such notice, in each case unless the underlying fact, change, event or circumstance would independently result in a failure of the conditions set forth in Article VII to
be satisfied or provide a basis for terminating this Agreement or constitute a breach of this Agreement.
6.10
Acquisition Proposals
.
(a) Company
shall not, and shall cause its Subsidiaries not to, and shall use its reasonable best efforts to cause its and their officers, directors, agents, advisors and
representatives (collectively, "
Representatives
") not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or knowingly
facilitate inquiries or proposals with respect to, (ii) engage or participate in any negotiations with any person concerning or (iii) provide any confidential or nonpublic information or
data to, or have or participate in any discussions with, any person relating to, any Acquisition Proposal;
provided
, that, prior to receipt of the
Requisite Company Vote, in the event Company receives an unsolicited
bona fide
written Acquisition Proposal and the Board of Directors of Company
concludes in good faith that such Acquisition Proposal constitutes or is more likely than not result in a Superior Proposal, it may, and may permit its Subsidiaries and its and its Subsidiaries'
Representatives to, furnish or cause to be furnished nonpublic information or data and participate in such negotiations or discussions to the extent that its Board of Directors concludes in good faith
(after receiving the advice of its outside counsel, and with respect to financial matters, its financial advisors) that failure to take such actions would result in a violation of its fiduciary duties
under applicable law;
provided
,
further
, that, prior to or substantially concurrently with providing any
nonpublic information permitted to be provided pursuant to the foregoing proviso, Company shall have provided notice to Parent of its intention to provide such information, and shall have provided
such information to Parent if not previously provided to Parent, and shall have entered into a confidentiality agreement with such third party on terms no less favorable to it than the Confidentiality
Agreement, which confidentiality agreement shall not provide such person with any exclusive right to negotiate with Company. Company will, and will cause its Representatives to, immediately cease and
cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any person other than Parent with respect to any Acquisition Proposal. Company will
promptly (and in any event within twenty-four (24) hours) advise Parent following receipt of any Acquisition Proposal or any
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inquiry
which could reasonably be expected to result in an Acquisition Proposal, and the substance thereof (including the terms and conditions of and the identity of the person making such inquiry or
Acquisition Proposal), and will promptly (and in any event within twenty-four (24) hours) advise Parent of any related developments, discussions and negotiations on a current basis, including
any amendments to or revisions of the terms of such inquiry or Acquisition Proposal. Company shall use its reasonable best efforts, subject to applicable law, to (x) enforce any existing
confidentiality, standstill or similar agreements to which it or any of its Subsidiaries is a party relating to an Acquisition Proposal, and (y) within ten (10) business days after the
date hereof, request and confirm the return or destruction of any confidential information provided to any person (other than Parent and its affiliates) pursuant to any such confidentiality,
standstill or similar agreement. Unless this Agreement is contemporaneously terminated in accordance with its terms, Company shall not, and shall cause its Subsidiaries and its and their officers,
directors, agents, advisors and representatives not to on its behalf, enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, or
other agreement (other than a confidentiality agreement referred to and entered into in accordance with this Section 6.10(a)) relating to any Acquisition Proposal).
(b) As
used in this Agreement, "
Acquisition Proposal
" shall mean, other than the transactions contemplated by this Agreement,
any offer, proposal, inquiry or indication of interest, made by a person (or a group of persons acting in concert within the meaning of Rule 13d-5 of the Exchange Act) relating to
(i) any acquisition or purchase, direct or indirect, of twenty percent (20%) or more of the consolidated assets of Company and its Subsidiaries or twenty percent (20%) or more of any class of
voting securities of Company or its Subsidiaries whose assets, individually or in the aggregate, constitute more than twenty percent (20%) of the consolidated assets of Company, (ii) any tender
offer or exchange offer that, if consummated, would result in such third party beneficially owning twenty percent (20%) or more of any class of equity or voting securities of Company or its
Subsidiaries whose assets, individually or in the aggregate, constitute more than twenty percent (20%) of the consolidated assets of Company, or (iii) a merger, consolidation, share exchange,
other business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving Company or its Subsidiaries whose assets, individually or in the
aggregate, constitute more than twenty percent (20%) of the consolidated assets of Company, except, in each case, any sale of whole loans and securitizations in the ordinary course of business and any
bona fide
internal reorganization.
(c) As
used in this Agreement, "
Superior Proposal
" means a
bona fide
written
Acquisition Proposal that the Board of Directors of Company concludes in good faith to be more favorable from a financial point of view to its stockholders than the Merger and the other transactions
contemplated hereby, (i) after receiving the advice of its financial advisors (who shall be a nationally recognized investment banking firm), (ii) after taking into account the
likelihood of consummation of such transaction on the terms set forth therein and (iii) after taking into account all legal (with the advice of outside counsel), financial (including the
financing terms of any such proposal), regulatory and other aspects of such proposal (including any expense reimbursement provisions and conditions to closing) and any other relevant factors permitted
under applicable law;
provided
, that for purposes of the definition of "Superior
Proposal," the references to "20%" in the definition of Acquisition Proposal shall be deemed to be references to "a majority."
(d) Nothing
contained in this Agreement shall prevent Company or its Board of Directors from complying with Rules 14d-9 and 14e-2 under the Exchange Act with respect
to an Acquisition Proposal;
provided
, that such Rules will in no way eliminate or modify the effect that any action pursuant to such Rules would
otherwise have under this Agreement.
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6.11
Public Announcements.
Company and Parent shall each use their reasonable best efforts
(a) to develop a joint communications plan, (b) to ensure that all press releases
and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan, and (c) except in respect of any announcement required
by (i) applicable law or regulation, (ii) a request by a Governmental Entity, (iii) an obligation pursuant to any listing agreement with or rules of any securities exchange or
(iv) disclosures by Parent in connection with the offering of securities or capital raising, each of Company and Parent agrees to consult with the other and to obtain the advance approval of
the other (which approval shall not be unreasonably withheld, conditioned or delayed) before issuing any press release or, to the extent practical, otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby; provided that Company shall not be required to comply with such joint communications plan pursuant to this Section 6.11 with respect
to communications made relating to an Acquisition Proposal.
6.12
Change of Method.
Parent may at any time change the method of effecting the transactions
contemplated hereby if and to the extent requested by Parent, and Company hereby agrees to
enter into such amendments to this Agreement as Parent may reasonably request in order to give effect to such restructuring, including effecting the acquisition of Company by Parent through other
affiliates of Parent;
provided
,
however
, that no such change or amendment shall (i) alter or
change the amount or kind of the Merger Consideration provided for in this Agreement, (ii) adversely affect the Tax treatment of the Merger with respect to Company's stockholders or
(iii) be reasonably likely to cause the Closing to be materially delayed or the receipt of the Requisite Regulatory Approvals to be prevented or materially delayed.
6.13
Restructuring Efforts.
If Company shall have failed to obtain the Requisite Company Vote at the
duly convened Company Meeting or any adjournment or postponement thereof, each of the
parties shall in good faith use its reasonable best efforts to negotiate a restructuring of the transaction provided for herein (
provided
,
however
, that no
party shall have any obligation to agree to (i) alter or change any material term of this Agreement, including the amount or
kind of the Merger Consideration, in a manner adverse to such party or its shareholders or (ii) adversely affect the Tax treatment of the Merger with respect to Company's stockholders) and/or
(in the case of Company) resubmit this Agreement or the transactions contemplated hereby (or as restructured pursuant to this Section 6.13) to its stockholders for approval or adoption.
6.14
Takeover Statutes.
No party shall take any action that would cause any Takeover Statute to become
applicable to this Agreement, the Merger, or any of the other transactions
contemplated hereby, and each party shall take all necessary steps within its control to exempt (or ensure the continued exemption of) the Merger and the other transactions contemplated hereby from
any applicable Takeover Statute now or hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable to the transactions contemplated hereby, each party and its respective
board of directors will grant such approvals and take such actions within its control as are necessary so that the transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the transactions contemplated by this Agreement, including, if
necessary, challenging the validity or applicability of any such Takeover Statute.
6.15
Exemption from Liability Under Section 16(b).
Prior to the Effective Time, Parent and
Company shall each take such steps as may be necessary or appropriate to cause any disposition of shares of Company Common
Stock or conversion of any derivative securities in respect of such shares of Company Common Stock in connection with the consummation of the transactions contemplated by this Agreement to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
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6.16
Litigation and Claims.
Each of Parent and Company shall promptly notify each
other in writing of any action, arbitration, audit, hearing, investigation, litigation, suit, subpoena or
summons issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or arbitrator pending or, to the knowledge of Parent or Company, as applicable,
threatened against Parent, Company or any of their respective Subsidiaries that (a) questions or would reasonably be expected to question the validity of this Agreement or the other agreements
contemplated hereby or thereby or any actions taken or to be taken by Parent, Company or their respective Subsidiaries with respect hereto or thereto, or (b) seeks to enjoin, materially delay
or otherwise restrain the transactions contemplated hereby or thereby. Company shall give Parent the opportunity to participate at its own expense in the defense or settlement of any stockholder
litigation against Company and/or its directors or affiliates relating to the transactions contemplated by this Agreement, and no such settlement shall be agreed without Parent's prior written consent
(such consent not to be unreasonably withheld, conditioned or delayed).
6.17
Company Debt.
Parent will execute and deliver, or cause to be executed and delivered, by or on
behalf of Holdco, at or prior to the Effective Time, any supplements, amendments
or other instruments required for the due assumption of Company's outstanding fixed and floating rate Junior Subordinated Debentures due 2034, 2035 and 2068 and 7.125% Subordinated Debentures due 2042
(collectively, the "
Company Debentures
") and (to the extent informed of such requirement by the Company) other agreements to the extent required by the
terms of the Company Debentures.
6.18
Financial Statements and Other Current Information.
As soon as reasonably practicable after they
become available, but in no event more than thirty (30) days after the end of each calendar month ending after
the date hereof, Company will furnish to Parent (a) consolidated financial statements (including balance sheets, statements of operations and shareholders' equity) of Company and any of its
Subsidiaries (to the extent available) as of and for such month then ended, (b) internal management reports showing actual financial performance against plan and previous period, and
(c) to the extent permitted by applicable law, any reports provided to Company's Board of Directors or any committee thereof relating to the financial performance and risk management of Company
or any of its Subsidiaries.
6.19
Company Dividends.
After the date of this Agreement until the earlier of Closing or termination
of this Agreement in accordance with its terms, Company shall coordinate with Parent
regarding the record dates and payment dates for dividends in respect of Company Common Stock, it being the intention of the parties that holders of Company Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with respect to their shares of Company Common Stock and any Parent Common Shares any such holder receives in exchange
therefor in the Merger. Parent agrees that, in the event that a dividend record date with respect to Parent Common Shares is anticipated to occur contemporaneously with the anticipated Closing, the
parties shall cooperate to implement the intentions of the parties set forth in this Section 6.19 and to the extent practicable have the Effective Time occur prior to such record date.
6.20
Corporate Governance
.
(a) Parent
shall take all appropriate action so that, as of the Effective Time, subject to Parent's organizational documents, policies and applicable law and regulation, one
(1) individual designated by Company and reasonably acceptable to Parent (the "
Company Director
") shall be appointed as an independent director
of Parent. The Company Director shall thereafter be nominated for election as a director of Parent, subject to the approval of the Board of Directors, at Parent's first annual meeting of shareholders
after the Closing Date. Subject to the foregoing, the Company Director, once duly confirmed as a director, shall be given the opportunity to serve on at least one (1) committee of the Board of
Directors of Parent, with the applicable committee
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determination
to be as recommended by Parent's Corporate Governance Committee from time to time, for so long as the Company Director is a member of the Board of Directors of Parent.
(b) Parent
will take all appropriate action so that, as of the Effective Time, subject to Parent's organizational documents, policies and applicable law and regulation, the
board of directors of Holdco (and any successor thereto) will be comprised of nine (9) directors, of whom three (3) independent directors and one (1) non-independent
director will be individuals designated by Company and reasonably acceptable to Parent, subject to Holdco's organizational documents, policies and applicable law and regulation.
(c) Parent
will take all appropriate action so that, as of the Effective Time, subject to Parent's organizational documents, policies and applicable law and regulation, the
board of directors of Company Bank (and any successor thereto) will be comprised of nine (9) directors, of whom three (3) independent directors and
one (1) non-independent director will be individuals designated by Company and reasonably acceptable to Parent, subject to Company Bank's organizational documents, policies and
applicable law and regulation.
(d) At
the Effective Time, Company Bank will be headquartered in Chicago, Illinois and that Holdco and Company Bank will constitute the primary banking, lending and wealth
management platform of Parent in the United States.
6.21
Company Intellectual Property.
No later than thirty (30) days after the date of this
Agreement, Company shall provide Parent with a complete and accurate list of all Registered
Owned Intellectual Property, in each case listing, as applicable, (i) the name of the applicant/registrant and current owner, (ii) the jurisdiction where the application/registration is
located (or, for internet domain names, the applicable registrar), (iii) the application or registration number, and (iv) the filing date, issuance/registration/grant date (other than
with respect to internet domain names) and expiration date.
ARTICLE VII
CONDITIONS PRECEDENT
7.1
Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of the parties to
effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder
Approval. This Agreement shall have been adopted by the stockholders of Company by the Requisite Company Vote.
(b) Stock
Exchange Listing. The Parent Common Shares that shall be issuable pursuant to this Agreement shall have been authorized for listing on the NYSE and the TSX, in
each case subject to official notices of issuance.
(c) F-4
Effectiveness. The F-4 shall have become effective under the Securities Act and no stop order suspending the effectiveness of the F-4 shall have been issued and be
in effect and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn.
(d) 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
preventing the consummation of the Merger 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 or makes illegal consummation of the Merger.
(e) Regulatory
Approval. (i) (x) All regulatory authorizations, consents, orders or approvals from the Federal Reserve Board, the OSFI and the Illinois Department of
Financial and
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Professional
Regulation, Division of Banking and under the HSR Act and (y) any other approvals set forth in Sections 3.4 and 4.4 which are necessary to consummate the transactions
contemplated by this Agreement, including the Merger, or those the failure of which to be obtained would reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect on
the Surviving Corporation, shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired (such approvals and the expiration
of such waiting periods being referred to herein as the "
Requisite Regulatory Approvals
"), and (ii) no such Requisite Regulatory Approval shall
have resulted in the imposition of any Materially Burdensome Regulatory Condition.
7.2
Conditions to Obligations of Parent and Holdco.
The obligation of Parent and Holdco to effect the
Merger is also subject to the satisfaction, or waiver by Parent, at or prior to the Effective Time, of the
following conditions:
(a)
Representations and Warranties.
The representations and warranties of Company set forth in
Section 3.2(a) and Section 3.8(a) (in each case after giving effect to the lead-in to Article III) shall be true and correct (other than, in the case of Section 3.2(a),
such failures to be true and correct as are
de minimis
) in each case as of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, and the representations and warranties of Company set forth in Section 3.1,
Section 3.2(b), Section 3.2(c), Section 3.3(a) and Section 3.7 (in each case, after giving effect to the lead-in to Article III) shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date. All other representations and warranties of Company set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in
such representations or warranties but, in each case, after giving effect to the lead-in to Article III) shall be true and correct in all respects as of the date of this Agreement and (except
to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date;
provided
,
however
, that for purposes of this sentence, such representations and warranties shall be
deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, either individually or in the aggregate, and without giving effect to any
qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, has had or would reasonably be likely to have a Material Adverse Effect on Company or the
Surviving Corporation. Parent shall have received a certificate signed on behalf of Company by the Chief Executive Officer and the Chief Financial Officer of Company to the foregoing effect.
(b)
Performance of Obligations of Company.
Company shall have performed in all material respects the obligations
required to be performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of Company by the Chief Executive Officer and the Chief Financial Officer of Company to such effect.
(c)
Federal Tax Opinion.
Parent shall have received an opinion of Mayer Brown LLP, in form and substance
reasonably satisfactory to Parent, dated as of the Closing Date and based on facts, representations and assumptions described in such opinion, to the effect that (i) the Merger will qualify as
a "reorganization" within the meaning of Section 368(a) of the Code and (ii) that the Merger will not result in gain recognition to the holders of Company Common Stock pursuant to
Section 367(a) of the Code (assuming that in the case of any such holder who would be treated as a "five-percent transferee shareholder" within the meaning of Treasury Regulations
Section 1.367(a)-3(c)(5)(ii), such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8, as provided for in Treasury
Regulations Section 1.367(a)-3(c)(1)(iii)(B), and complies with the requirements of that agreement and
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Treasury
Regulations Section 1.367(a)-8 for avoiding the recognition of gain). In rendering such opinion, Mayer Brown LLP will be entitled to receive and rely upon customary certificates
and representations of officers of Parent, Holdco and Company.
7.3
Conditions to Obligations of Company.
The obligation of Company to effect the Merger is also
subject to the satisfaction, or waiver by Company, at or prior to the Effective Time, of the following
conditions:
(a)
Representations and Warranties.
The representations and warranties of Parent and Holdco set forth in
Section 4.2(a) and Section 4.8 (in each case, after giving effect to the lead-in to Article IV) shall be true and correct (other than, in the case of Section 4.2(a), such
failures to be true and correct as are
de minimis
) in each case as of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, and the representations and warranties of Parent set forth in Sections 4.1, 4.2(b)
and 4.3(a) (in each case, after giving effect to the lead-in to Article IV) shall be true and correct in all material respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date. All other representations and warranties of Parent set forth in this
Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties but, in each case, after giving effect to the
lead-in to Article IV) shall be true and correct in all respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date,
provided
,
however
, that
for purposes of this sentence, such representations and warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or Material Adverse Effect
set forth in such representations or warranties, has had or would be reasonably expected to have a Material Adverse Effect on Parent. Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer of Parent to the foregoing effect.
(b)
Performance of Obligations of Parent and Holdco.
Each of Parent and Holdco shall have performed in all
material respects the obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Company shall have received a certificate to such effect from each of Parent
and Holdco (i) signed on behalf of Parent by the Chief Executive Officer and the Chief Financial Officer of Parent and (ii) signed on behalf of Holdco by the Chief Executive Officer and
the Chief Financial Officer of Holdco.
(c)
Federal Tax Opinion.
Company shall have received an opinion of Wachtell, Lipton, Rosen & Katz, in
form and substance reasonably satisfactory to Company, dated as of the Closing Date and based on facts, representations and assumptions described in such opinion, to the effect that (i) the
Merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code and (ii) that the Merger will not result in gain recognition to the holders of Company Common
Stock pursuant to Section 367(a) of the Code (assuming that, in the case of any such holder who would be treated as a "five-percent transferee shareholder" within the meaning of Treasury
Regulations Section 1.367(a)-3(c)(5)(ii), such holder enters into a five-year gain recognition agreement in the form provided in Treasury Regulations Section 1.367(a)-8, as provided for
in Treasury Regulations Section 1.367(a)-3(c)(1)(iii)(B), and complies with the requirements of that agreement and Treasury Regulations Section 1.367(a)-8 for avoiding the recognition of
gain). In rendering such opinion, Wachtell, Lipton, Rosen & Katz will be entitled to receive and rely upon customary certificates and representations of officers of Parent, Holdco and Company.
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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 adoption of this Agreement by the stockholders of Company:
(a) by
mutual consent of Parent and Company in a written instrument;
(b) by
either Parent or Company if any Governmental Entity that must grant a Requisite Regulatory Approval has denied approval of the Merger or the other transactions
contemplated hereby and such denial has become final and non-appealable or any Governmental Entity of competent jurisdiction shall have issued a final non-appealable order, injunction or decree
permanently enjoining or otherwise prohibiting or making illegal the consummation of the Merger or the other transactions contemplated hereby, unless the failure to obtain a Requisite Regulatory
Approval 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;
(c) by
either Parent or Company if the Merger shall not have been consummated on or before the first anniversary of the date of this Agreement (the
"
Termination Date
"), unless the failure of the Closing 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 Parent or Company (
provided
, that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation
or warranty shall cease to be true) set forth in this Agreement on the part of Company, in the case of a termination by Parent, or Parent, in the case of a termination by Company, which breach or
failure to be true, either individually or in the aggregate with all other breaches by such party (or failures of such representations or warranties to be true), would constitute, if occurring or
continuing on the Closing Date, the failure of a condition set forth in Section 7.2 or Section 7.3, as the case may be, and which is not cured before the earlier of the Termination Date
and 60 days following written notice to Company, in the case of a termination by Parent, or Parent, in the case of a termination by Company, or by its nature or timing cannot be cured during
such period; or
(e) by
Parent, if (i) prior to such time as the Requisite Company Vote is obtained, Company or the Board of Directors of Company (A) submits this Agreement to
its stockholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or publicly discloses its intention to withdraw or materially and adversely modify)
its recommendation as contemplated by Section 6.3(a), or recommends to its stockholders an Acquisition Proposal other than the Merger, or (B) materially breaches its obligations under
Section 6.3 or its obligations under Section 6.10; or (ii) a tender offer or exchange offer for 20% or more of the outstanding shares of Company Common Stock is commenced (other
than by Parent or a Subsidiary thereof), and the Board of Directors of Company recommends that the stockholders of Company tender their shares in such tender or exchange offer or otherwise fails to
recommend that such stockholders reject such tender
offer or exchange offer within the 10 business day period specified in Rule 14e-2(a) under the Exchange Act.
The
party desiring to terminate this Agreement pursuant to clause (b), (c), (d) or (e) of this Section 8.1 shall give written notice of such termination to
the other party in accordance with Section 9.5, specifying the provision or provisions hereof pursuant to which such termination is effected.
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8.2
Effect of Termination
.
(a) In
the event of termination of this Agreement by either Parent or Company as provided in Section 8.1, this Agreement shall forthwith become void and have no
effect, and none of Parent, Company, Holdco, 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 3.3(a), 3.7, 4.3(a), 4.7, 6.2(b), this Section 8.2 and Article IX shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the contrary contained in this Agreement, neither Parent nor Company shall be relieved or released from any liabilities or
damages arising out of its willful and material breach of any provision of this Agreement (which, in the case of Company, shall include the loss to the holders of Company Common Stock of the economic
benefits of the Merger, including the loss of premium offered to such holders).
(b) (i)
In the event that (A) after the date of this Agreement a
bona fide
Acquisition Proposal shall have been made
known to senior management of Company or shall have been made directly to its stockholders generally or any person shall have publicly announced (and not withdrawn) an Acquisition
Proposal with respect to Company and thereafter (x) this Agreement is terminated by either Parent or Company pursuant to Section 8.1(c) without the Requisite Company Vote having been
obtained, or (y) this Agreement is terminated by Parent pursuant to Section 8.1(d), and (B) prior to the date that is fifteen (15) months after the date of any
applicable termination described in clauses (x) through (y) hereof, Company enters into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal
(whether or not the same Acquisition Proposal as that referred to above), then Company shall, on the earlier of the date it enters into such definitive agreement and the date of consummation of such
transaction, pay Parent, by wire transfer of same day funds, a fee equal to $150,000,000 (the "
Termination Fee
");
provided
, that for purposes of this
Section 8.2(b), all references in the definition of Acquisition Proposal to "20%" shall instead refer to
"50%".
(ii) In
the event that this Agreement is terminated by Parent pursuant to Section 8.1(e) (or this Agreement is terminated pursuant to Section 8.1(c) but at the
time of such termination Parent could have terminated this Agreement pursuant to Section 8.1(e)), then Company shall pay Parent, by wire transfer of same day funds, the Termination Fee as
promptly as reasonably practical after the date of termination (and, in any event, within three (3) business days thereafter).
(c) Notwithstanding
anything to the contrary herein, but without limiting the right of any party to recover liabilities or damages, the maximum aggregate amount of fees
payable by Company under this Section 8.2 shall be equal to the Termination Fee, and in no event shall Company be obligated to pay the Termination Fee on more than one occasion.
(d) Each
of Parent and Company acknowledges that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, the other party would not enter into this Agreement; accordingly, if Company fails promptly to pay the amount due pursuant to this Section 8.2, and, in order
to obtain such payment, Parent commences a suit which results in a judgment against Company for the Termination Fee or any portion thereof, Company shall pay the costs and expenses of Parent
(including reasonable attorneys' fees and expenses) in connection with such suit. In addition, if Company fails to pay the amounts payable pursuant to this Section 8.2, then Company shall pay
interest on such overdue amounts (for the period commencing as of the date that such overdue amount was originally required to be paid and ending on the date that such overdue amount is actually paid
in full) at a rate per annum equal to the "prime rate" (as announced by JPMorgan Chase & Co. or any successor thereto) in effect on the date on which such payment was required
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to
be made for the period commencing as of the date that such overdue amount was originally required to be paid. The amount payable by Company pursuant to Section 8.2(b) shall, except in the
case of fraud or willful misconduct, be the sole monetary remedy of Parent in the event of a termination of this Agreement specified in such section.
ARTICLE IX
GENERAL PROVISIONS
9.1
Non-survival 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 the
Confidentiality Agreement, which shall survive in accordance with its terms) shall survive the Effective Time, except for Section 3.28, Section 4.16 and Section 6.7 and for those
other covenants and agreements contained herein and therein which by their terms apply or are to be performed in whole or in part after the Effective Time.
9.2
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 Merger by the stockholders of Company;
provided
,
however
, that
after the adoption of this Agreement by the stockholders of Company, there may not be, without further approval of such stockholders, any
amendment of this Agreement that requires further approval under applicable law. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise,
except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the parties in interest at the time of the amendment.
9.3
Extension; Waiver
.
At any time prior to the Effective Time, the parties hereto 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 satisfaction of any conditions contained herein;
provided
,
however
, that after
adoption of this Agreement by the stockholders of Company, there may not be, without further approval of such stockholders, any extension or waiver of this Agreement or any portion thereof that
requires further approval under applicable law. 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.
9.4
Expenses
. Except (i) with respect to costs and expenses of printing and
mailing the Proxy Statement and all filing and other fees paid to the SEC in connection with the Merger, which shall be borne equally by Parent and Company, (ii) as otherwise provided in
Section 8.2, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not
the Merger is consummated.
9.5
Notices
. All notices and other communications hereunder shall be in writing and
shall be deemed duly given (a) on the date of delivery if delivered personally, or if by facsimile or email, upon confirmation of receipt, (b) on the first business day following the
date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth
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below,
or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
PrivateBancorp, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
Attention: Jennifer Evans, Executive Managing Director, General Counsel and Corporate Secretary
Facsimile: 312-564-6882
Email: jrevans@theprivatebank.com
With a copy (which shall not constitute notice) to:
Wachtell,
Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10011
Attention: Edward D. Herlihy and Matthew M. Guest
Facsimile: (212) 403-2000
Email: EDHerlihy@wlrk.com and MGuest@wlrk.com
and
-
(b)
-
if
to Parent, to:
Canadian
Imperial Bank of Commerce
199 Bay Street, 11
th
Floor
Toronto, ON M5L 1A2
Attention: Robert J. Richardson, Senior Vice President & General Counsel
Facsimile: 416-368-9826
Email: Robert.Richardson@cibc.com
With a copy (which shall not constitute notice) to
:
Mayer
Brown LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: James B. Carlson and Reb D. Wheeler
Facsimile: (212) 849-5515; (212) 849-5914
Email: jcarlson@mayerbrown.com and
rwheeler@mayerbrown.com
-
(c)
-
if
to Holdco, to:
CIBC
Holdco Inc.
425 Lexington Ave.
New York, NY 10017
Attention: Achilles Perry, Vice President & General Counsel (U.S.)
Facsimile: 212-667-8366
Email: Achilles.Perry@cibc.com
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With a copy (which shall not constitute notice) to
:
Mayer
Brown LLP
1221 Avenue of the Americas
New York, NY 10020
Attention: James B. Carlson and Reb D. Wheeler
Facsimile: (212) 849-5515; (212) 849-5914
Email: jcarlson@mayerbrown.com and
rwheeler@mayerbrown.com
9.6
Interpretation
. The parties have participated jointly in negotiating and
drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to Articles, Sections, Exhibits
or Schedules, such reference shall be to an Article or Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained 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." References to "the date hereof" shall mean the date of this Agreement. As used in this Agreement, the
"
knowledge
" of Company means the actual knowledge of any of the officers of Company listed on Section 9.6 of the Company Disclosure Schedule, and
the "
knowledge
" of Parent means the actual knowledge of any of the officers of Parent
listed on Section 9.6 of the Parent Disclosure Schedule. As used herein, (i) "
business day
" means any day other than a Saturday, a Sunday
or a day on which banks in New York, New York, Chicago, Illinois or Toronto, Canada are authorized by law or executive order to be closed, (ii) the term
"
person
" means any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate,
trust, association, organization, Governmental Entity or other entity of any kind or nature, (iii) an "
affiliate
" of a specified person is any
person that directly or indirectly controls, is controlled by, or is under common control with, such specified person and (iv) the term "
made
available
" means any document or other information that was (a) provided by one party or its representatives to the other party and its representatives prior to the date
hereof, (b) included in the virtual data room of a party prior to the date hereof or (c) filed by a party with the SEC and publicly available on EDGAR prior to the date hereof. The
Company Disclosure Schedule and the Parent Disclosure Schedule, as well as all other schedules and all exhibits hereto, shall be deemed part of this Agreement and included in any reference to this
Agreement. All references to "
dollars
" or "$" in this Agreement are to United States dollars. This Agreement shall not be interpreted or construed to
require any person to take any action, or fail to take any action, if to do so would violate any applicable law. No disclosure, representation or warranty shall be required to be made (or any other
action taken) pursuant to this Agreement that would involve the disclosure of confidential supervisory information of a Governmental Entity by any party hereto to the extent prohibited by applicable
law, and appropriate substitute disclosures or actions shall be made or taken under circumstances in which the limitations of this sentence apply.
9.7
Counterparts
. This Agreement may be executed in two or more counterparts
(including by facsimile or other electronic means), 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.
9.8
Entire Agreement
.
This Agreement (including the documents and the instruments referred to herein) together with the Confidentiality Agreement constitutes the entire agreement among the parties and
supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
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9.9
Governing Law; Jurisdiction
.
(a) 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.
(b) Each
party agrees that it will bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby
exclusively in any federal or state court of competent jurisdiction located in the State of Delaware (the "
Chosen Courts
"), and, solely in connection
with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts,
(ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not
have jurisdiction over any party and (iv) agrees that service of process upon such party in any such action or proceeding will be effective if notice is given in accordance with
Section 9.5.
9.10
Waiver of Jury Trial
.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER,
(II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10.
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 party. Any purported assignment in contravention hereof shall be null and void. 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 6.7, which is intended to benefit each Company Indemnified Party
and his or her heirs and representatives, this Agreement (including the documents and instruments referred to herein) is not intended to and does not confer upon any person other than the parties
hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein. The representations and warranties in this Agreement are the product of
negotiations among the parties hereto and are for the sole benefit of the parties. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance
herewith without notice or liability to any other person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks
associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, persons other than the parties may not rely upon the representations and warranties in this
Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date. Except as provided in Section 6.7, notwithstanding any other provision
hereof to the contrary, no consent, approval or agreement of any third party beneficiary will be required to amend, modify or waive any provision of this Agreement.
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9.12
Specific Performance
.
The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached.
Accordingly, subject to Section 8.2(a) and the last sentence of Section 8.2(d), the parties shall be entitled to specific performance of the terms hereof, including an injunction or
injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the parties' obligation to consummate the Merger), in
addition to any other remedy to which they are entitled at law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at
law would be adequate and (b) any requirement under any law to post security or a bond as a prerequisite to obtaining equitable relief.
9.13
Severability
. Whenever possible, each provision or portion of any provision
of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction
such that the invalid, illegal or unenforceable provision or portion thereof shall be interpreted to be only so broad as is enforceable.
9.14
Delivery by Facsimile or Electronic Transmission
.
This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered
by means of a facsimile machine or by e-mail delivery of a ".pdf" format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine
or e-mail delivery of a ".pdf" format data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine or e-mail delivery of a ".pdf" format data file as a defense to the formation of a contract and each party hereto forever waives any such defense.
[
Signature Page Follows
]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above
written.
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CANADIAN IMPERIAL BANK OF COMMERCE
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By:
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/s/ VICTOR G. DODIG
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Name:
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Victor G. Dodig
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Title:
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President & Chief Executive Officer
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By:
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/s/ MICHAEL G. CAPATIDES
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Name:
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Michael G. Capatides
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Title:
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Senior Executive Vice President, Chief Administrative Officer & General Counsel
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PRIVATEBANCORP, INC.
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By:
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/s/ LARRY D. RICHMAN
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Name:
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Larry D. Richman
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Title:
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President & Chief Executive Officer
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CIBC HOLDCO INC.
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By:
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/s/ MICHAEL G. CAPATIDES
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Name:
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Michael G. Capatides
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Title:
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Director
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[Signature
Page to Agreement and Plan of Merger]
Table of Contents
APPENDIX BOPINION OF GOLDMAN SACHS
PERSONAL AND CONFIDENTIAL
June 29,
2016
Board of Directors
PrivateBancorp, Inc.
120 S. LaSalle Street
Chicago, IL 60603
Ladies and Gentlemen:
You
have requested our opinion as to the fairness from a financial point of view to the holders (other than Canadian Imperial Bank of Commerce ("CIBC") and its affiliates) of the
outstanding shares of common stock, without par value (the "Shares"), of PrivateBancorp, Inc. (the "Company") of the Aggregate Consideration (as defined below) to be paid to such holders
pursuant to the Agreement and Plan of Merger, dated as of June 29, 2016 (the "Agreement"), by and among CIBC, CIBC Holdco Inc., a direct, wholly owned subsidiary of CIBC ("Holdco"), and
the Company. Pursuant to the Agreement, the Company will be merged with and into Holdco and each outstanding Share will be converted into $18.80 in cash (the "Cash Consideration") and 0.3657 common
shares ("CIBC Common Shares") of CIBC (the "Share Consideration," together with the Cash Consideration, the "Aggregate Consideration").
Goldman,
Sachs & Co. and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and
other financial and non-financial activities and services for various persons and entities. Goldman, Sachs & Co. and its affiliates and employees, and funds or other entities they manage
or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives,
loans, commodities, currencies, credit default swaps and other financial instruments of the Company, CIBC, any of their respective affiliates and third parties, or any currency or commodity that may
be involved in the transaction contemplated by the Agreement (the "Transaction"). We have acted as financial advisor to the Company in connection with, and have participated in certain of the
negotiations leading to, the Transaction. We expect to receive fees for our services in connection with the Transaction, the principal portion of which is contingent upon consummation of the
Transaction, and the Company has agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. We have provided certain
financial advisory and/or underwriting services to the Company and/or its affiliates from time to time. We have provided certain financial advisory and/or underwriting services to CIBC and/or its
affiliates from time to time for which our Investment Banking Division has received, and may receive, compensation. We may also in the future provide financial advisory and/or underwriting services to
the Company, CIBC and their respective affiliates for which our Investment Banking Division may receive compensation.
In
connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to stockholders and Annual Reports on Form 10-K of the Company for the five
fiscal years ended December 31, 2015 and annual reports to shareholders and Annual Reports on Form 40-F of CIBC for the five fiscal years ended October 31, 2015; certain interim
reports to stockholders and Quarterly Reports on Form 10-Q of the Company and certain interim reports to shareholders of CIBC; certain
other communications from the Company to its stockholders and from CIBC to its shareholders; certain publicly available research analyst reports for the Company and CIBC; and certain internal
financial analyses and forecasts for the Company on a stand-alone basis prepared by its management ("Company Financial Forecasts"), certain financial analyses and forecasts for CIBC on a stand-alone
basis reflecting Wall Street analyst consensus estimates for CIBC for 2016 and 2017, as
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extrapolated
by management of the Company for periods thereafter ("CIBC Forecasts"), certain financial analyses and forecasts for the Company as owned by CIBC provided by the Company and comprised of
the Company Financial Forecasts and estimates and judgments of the management of the Company with respect to ownership of the Company by CIBC ("Company As-Owned Forecasts") and certain financial
analyses and forecasts for the combined Company and CIBC provided by the Company and comprised of the CIBC Forecasts and the Company As-Owned Forecasts, in each case, as approved for our use by the
Company (the "Forecasts"), including certain operating synergies and other adjustments anticipated by the management of the Company to result from the Transaction, as approved for our use by the
Company (the "Synergies"). We have also held discussions with members of the senior management of the Company regarding their assessment of the past and current business operations, financial
condition and future prospects of the Company and CIBC and the strategic rationale for, and the potential benefits of, the Transaction and with members of the senior management of CIBC regarding their
assessment of the past and current business operations, financial condition and future prospects of the CIBC and the strategic rationale for, and the potential benefits of, the Transaction; reviewed
the reported price and trading activity for the Shares and CIBC Common Shares; compared certain financial and stock market information for the Company and CIBC with similar information for certain
other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the banking industry; and performed such other studies and
analyses, and considered such other factors, as we deemed appropriate.
For
purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and
other information provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the
Forecasts, including the Synergies, have been reasonably prepared and reflect the best currently available estimates and judgments of the management of the Company. We have not reviewed individual
credit files nor have we made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the
Company or CIBC or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We are not experts in the evaluation of loan and lease portfolios for
purposes of assessing the adequacy of the allowances and marks for losses with respect thereto and, accordingly, we have assumed that such allowances and marks are in the aggregate adequate to cover
such losses. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on the
Company or CIBC or on the expected benefits of the Transaction in any way meaningful to our analysis. We have assumed that the Transaction will be consummated on the terms set forth in the Agreement,
without the waiver or modification of any term or condition the effect of which would be in any way meaningful to our analysis.
Our
opinion does not address the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic
alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. We were not requested to solicit, and did not solicit, interest from other
parties with respect to an acquisition of, or other business combination with, the Company or any other alternative transaction. This opinion addresses only the fairness from a financial point of view
to the holders (other than CIBC and its affiliates) of Shares, as of the date hereof, of the Aggregate Consideration to be paid to such holders pursuant to the Agreement. We do not express any view
on, and our opinion does not address, any other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into
or amended in connection with the Transaction, including, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any other class of securities,
creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or
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payable
to any of the officers, directors or employees of the Company, or class of such persons, in connection with the Transaction, whether relative to the Aggregate Consideration to be paid to the
holders (other than CIBC and its affiliates) of Shares pursuant to the Agreement or otherwise. We are not expressing any opinion as to the prices at which the CIBC Common Shares will trade at any time
or as to the impact of the Transaction on the solvency or viability of the Company or CIBC or the ability of the Company or CIBC to pay their respective obligations when they come due. Our opinion is
necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we assume no responsibility for updating,
revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof. Our advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder
of Shares should vote with respect to such Transaction or any other matter. This opinion has been approved by a fairness committee of Goldman, Sachs & Co.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Aggregate Consideration to be paid to the holders (other than CIBC and its affiliates) of
Shares pursuant to the Agreement is fair from a financial point of view to such holders.
Very
truly yours,
/s/
Goldman, Sachs & Co.
GOLDMAN,
SACHS & CO.
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APPENDIX COPINION OF SANDLER O'NEILL
June 29,
2016
Board
of Directors
PrivateBancorp, Inc.
120 S. LaSalle Street, Suite 400
Chicago, IL 60603
Ladies
and Gentlemen:
PrivateBancorp, Inc.
("Company"), Canadian Imperial Bank of Commerce ("Parent") and CIBC Holdco Inc. ("Holdco"), a direct, wholly-owned subsidiary of Parent, are proposing
to enter into an Agreement and Plan of Merger (the "Agreement") pursuant to which Company will merge with and into Holdco (the "Merger") with Holdco surviving the Merger. Pursuant to the terms of the
Agreement, upon the Effective Time of the Merger, each share of common stock, no par value, of Company issued and outstanding immediately prior to the Effective Time ("Company Common Stock"), except
for certain shares of Company Common Stock as specified in the Agreement, shall be converted, in accordance with the procedures set forth in the Agreement, into the right to receive, without interest,
(i) 0.3657 common shares of Parent (the "Per Share Stock Consideration"), and (ii) $18.80 in cash (the "Per Share Cash Consideration"). The terms and conditions of the Merger are more
fully set forth in the Agreement. The Per Share Stock Consideration and the Per Share Cash Consideration are collectively referred to herein as the "Merger Consideration." Capitalized terms used
herein without definition shall have the meanings assigned to them in the Agreement. You have requested our opinion as to the fairness, from a financial point of view, of the Merger Consideration to
the holders of Company Common Stock.
Sandler
O'Neill & Partners, L.P. ("Sandler O'Neill", "we" or "our"), as part of its investment banking business, is regularly engaged in the valuation of financial
institutions and their securities in connection with mergers and acquisitions and other corporate transactions. In connection with this opinion, we have reviewed and considered, among other things:
(i) the Agreement; (ii) certain publicly available financial statements and other historical financial information of Company that we deemed relevant; (iii) certain publicly
available financial statements and other historical financial information of Parent that we deemed relevant; (iv) internal financial projections for Company for the years ending
December 31, 2016 through December 31, 2022, as provided by the senior management of Company; (v) financial projections for Parent for the years ending October 31, 2016
through October 31, 2022, as provided by the senior management of Company; (vi) the pro forma financial impact of the Merger on Parent based on certain assumptions relating to
transaction expenses, purchase accounting adjustments, a core deposit intangible asset and cost savings, as well as internal financial projections for Company, as owned by Parent, for the years ending
December 31, 2016 through December 31, 2022, as provided by the senior management of Company; (vii) the publicly reported historical price and trading activity for Company Common
Stock and Parent common shares, including a comparison of certain stock market information for Company and Parent common stock and certain stock indices as well as publicly available information for
certain other similar companies, the securities of which are publicly traded; (viii) a comparison of certain financial information for Company and Parent with similar institutions for which
information is publicly available; (ix) the financial terms of certain recent business combinations in the banking industry (on a regional and nationwide basis), to the extent publicly
available; (x) the current market environment generally and the banking environment in particular; and (xi) such other information, financial studies, analyses and investigations and
financial, economic and market criteria as we considered relevant. We also discussed with certain members of senior management of Company the business, financial condition, results of operations and
prospects of Company and held similar discussions with certain members of senior management of Parent regarding the business, financial condition, results of operations and prospects of Parent.
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In
performing our review, we have relied upon the accuracy and completeness of all of the financial and other information that was available to and reviewed by us from public sources,
that was provided to us by Company or Parent, or their respective representatives, or that was otherwise reviewed by us and we have assumed such accuracy and completeness for purposes of rendering
this opinion without any independent verification or investigation. We have further relied on the assurances of the respective managements of Company and Parent that they are not aware of any facts or
circumstances that would make any of such information inaccurate or misleading. We have not been asked to and have not undertaken an independent verification of any of such information and we do not
assume any responsibility or liability for the accuracy or completeness thereof. We did not make an independent evaluation or perform an appraisal of the specific assets, the collateral securing
assets or the liabilities (contingent or otherwise) of Company or Parent or any of their respective subsidiaries, nor have we been furnished with any such evaluations or appraisals. We render no
opinion or evaluation on the collectability of any assets or the future performance of any loans of Company or Parent or any of their respective subsidiaries. We did not make an independent evaluation
of the adequacy of the allowance for loan losses of Company or Parent, or the combined entity after the Merger and we have not reviewed any individual credit files relating to Company or Parent or any
of their respective subsidiaries. We have assumed, with your consent, that the respective allowances for loan losses for both Company and Parent are adequate to cover such losses and will be adequate
on a pro forma basis for the combined entity.
In
preparing its analyses, Sandler O'Neill used internal financial projections for Company for the years ending December 31, 2016 through December 31, 2022, as provided by
the senior management of Company. In addition, in preparing its analyses Sandler O'Neill used financial projections for Parent for the years ending October 31, 2016 through October 31,
2022, as provided by the senior management of Company. Sandler O'Neill also received and used in its pro forma analyses certain assumptions relating to transaction expenses, purchase accounting
adjustments, a core deposit intangible asset and cost savings, as well as internal financial projections for Company, as owned by Parent, for the years ending December 31, 2016 through
December31, 2022, as provided by the senior management of Company. With respect to the foregoing information, the management of Company confirmed to us that such information reflected the best
currently available projections, estimates and judgment of senior management of the future financial performance of Company and Parent, as applicable, and we assumed that such performance would be
achieved. We express no opinion as to such projections, estimates or judgments, or the assumptions on which they are based. We have also assumed that there has been no material change in Company's or
Parent's assets, financial condition, results of operations, business or prospects since the date of the most recent financial statements made available to us. We have assumed in all respects material
to our analysis that Company and Parent will remain as going concerns for all periods relevant to our analyses.
We
have also assumed, with your consent, that (i) each of the parties to the Agreement will comply in all material respects with all material terms and conditions of the Agreement
and all related agreements, that all of the representations and warranties contained in such agreements are true and correct in all material respects, that the parties to such agreements will perform
in all material respects
all of the covenants and other obligations required to be performed by such party under such agreements and that the conditions precedent in such agreements are not and will not be waived,
(ii) in the course of obtaining the necessary regulatory or third party approvals, consents and releases with respect to the Merger, no delay, limitation, restriction or condition will be
imposed that would have an adverse effect on Company, Parent or the benefits contemplated by the Merger or any related transaction, and (iii) the Merger and any related transaction will be
consummated in accordance with the terms of the Agreement without any waiver, modification or amendment of any material term, condition or agreement thereof and in compliance with all applicable laws
and other requirements. We express no opinion as to any of the legal, accounting or tax matters relating to the Merger or any other transactions contemplated in connection therewith.
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Our
analyses and opinion are necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof.
Events occurring after the date hereof could materially affect this opinion. We have not undertaken to update, revise, reaffirm or withdraw this opinion or otherwise comment upon events occurring
after the date hereof. We express no opinion as to the trading values of Company Common Stock or Parent common shares at any time or what the value of Parent common stock will be once it is actually
received by the holders of Company Common Stock.
We
will receive a fee for rendering this opinion. Company has also agreed to indemnify us against certain claims and liabilities arising out of our engagement and to reimburse us for
certain of our out-of-pocket expenses incurred in connection with our engagement. We have not provided any other investment banking services to Company in the two years immediately preceding the date
hereof, nor have we provided any investment banking services to Parent in the two years immediately preceding the date hereof. In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to Company or Parent and their respective affiliates. We may also actively trade the equity and debt securities of Company and Parent or their respective
affiliates for our own account and for the accounts of our customers.
Our
opinion is directed to the Board of Directors of Company in connection with its consideration of the Agreement and the Merger and does not constitute a recommendation to any
shareholder of Company as to how any such shareholder should vote at any meeting of shareholders called to consider and vote upon the adoption of the Agreement and approval of the Merger. Our opinion
is directed only to the fairness, from a financial point of view, of the Merger Consideration to the holders of Company Common Stock and does not address the underlying business decision of Company to
engage in the Merger, the form or structure of the Merger or the other transactions contemplated in the Agreement, the relative merits of the Merger as compared to any other alternative transactions
or business strategies that might exist for Company or the effect of any other transaction in which Company might engage. We also do not express any opinion as to the amount of compensation to be
received in the Merger by any Company or Parent officer, director or employee, or class of such persons, if any, relative to the amount of compensation to be received by any other shareholder. This
opinion has been approved by Sandler O'Neill's fairness opinion committee. This opinion shall not be reproduced without Sandler O'Neill's prior written consent;
provided
, however, Sandler O'Neill will
provide its consent for the opinion to be included in regulatory filings to be completed in connection with the
Merger.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration is fair to holders of Company Common Stock from a financial point of
view.
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Very truly yours,
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/s/ Sandler O'Neill & Partners, L.P.
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Sandler O'Neill & Partners, L.P.
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APPENDIX DSECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
§ 262. Appraisal rights.
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(a)
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Any
stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section
and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words; and the words "depository receipt" mean a
receipt or other instrument issued by a depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
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(b)
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Appraisal
rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected
pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section,
§ 251(h) of this title), § 252, § 254, § 255, § 256, § 257, § 258,
§ 263 or § 264 of this title:
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(1)
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Provided,
however, that, except as expressly provided in § 363(b) of this title, no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of
the meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000
holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the
vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
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(2)
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Notwithstanding
paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256,
257, 258, 263 and 264 of this title to accept for such stock anything except:
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a.
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Shares
of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
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b.
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Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or
depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
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c.
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Cash
in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
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d.
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Any
combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the
foregoing paragraphs (b)(2)a., b. and c. of this section.
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(3)
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In
the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 251(h), § 253 or
§ 267 of this title is not owned by the parent immediately prior to
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(c)
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Any
corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or
series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d)
and (e) of this section, shall apply as nearly as is practicable.
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(d)
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Appraisal
rights shall be perfected as follows:
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(1)
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If
a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who
received notice in accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this
section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent
corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall
not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has become effective; or
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(2)
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If
the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or
§ 267 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days
thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the
constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such
notice or, in the case of a merger approved pursuant to § 251(h) of this title, within the later of the consummation of the tender or exchange offer contemplated by
§ 251(h) of this title and 20 days after the date
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of
mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation
of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the
merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the tender or exchange
offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled
to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
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(e)
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Within
120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation,
any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder's demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later.
Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such
person's own name, file a petition or request from the corporation the statement described in this subsection.
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(f)
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Upon
the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who
have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting
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corporation.
If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the
list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in
the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
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(g)
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At
the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder.
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(h)
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After
the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court
of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising
from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of
payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between
the effective date of the merger and the date of payment of the judgment. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal
proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
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(i)
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The
Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by
certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of any state.
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(j)
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The
costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of
a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees
and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
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(k)
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From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock
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(except
dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an
appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in
subsection (e) of this section.
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(l)
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The
shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
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MMMMMMMMMMMM . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy form, you may choose one of the voting methods below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on December 8, 2016. MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by Internet Go to www.envisionreports.com/PVTB or scan the QR code with your smartphone Follow the steps outlined on the secure website Vote by telephone Call toll free 1-800-652-VOTE (8683) within the United States, U.S. territories & Canada on a touch tone telephone Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals The Board of Directors recommends a vote FOR Proposals 1, 2 and 3. + ForAgainst Abstain 1. Adoption of the Agreement and Plan of Merger (the Merger Agreement), dated as of June 29, 2016, as it may be amended from time to time, by and among PrivateBancorp, Inc., Canadian Imperial Bank of Commerce and CIBC Holdco Inc. 2. Approval, by advisory (non-binding) vote, of certain compensation that may be paid or become payable to PrivateBancorp, Inc.s named executive officers in connection with the merger contemplated by the Merger Agreement 3. Approval of an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the Merger Agreement Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below Please sign exactly as name(s) appears hereon. If shares are held by joint tenants, both should sign. If signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature within the box. NNNIF NVOTINNG BY NMAIL, NYOU MUST SIGN AND DATE THIS FORM IN SECTION B ABOVE C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND + MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 1 U P X2 9 5 6 6 0 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 02GI8B MMMMMMMMM B A Special Meeting Proxy Card1234 5678 9012 345 X IMPORTANT SPECIAL MEETING INFORMATION
. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q + Proxy Form PrivateBancorp, Inc. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PRIVATEBANCORP, INC. FOR THE SPECIAL MEETING OF STOCKHOLDERS, DECEMBER 8, 2016 AT 8:00 A.M., CENTRAL TIME The undersigned hereby (i) appoints Jennifer R. Evans and Kevin M. Killips, or either of them, as proxy holder and attorney, with full power of substitution, to appear and vote all of the shares of Common Stock of PrivateBancorp, Inc. that the undersigned would be entitled to vote on all matters which may properly come before the Special Meeting of Stockholders of PrivateBancorp, Inc., to be held at The PrivateBank Conference Center, 120 South LaSalle Street, Lower Level, Chicago, Illinois 60603, on December 8, 2016, and at any adjournment(s) or postponement(s) thereof, hereby revoking any and all proxies heretofore given and (ii) authorizes and directs said proxy holders to vote all of the shares of Common Stock of PrivateBancorp, Inc. represented by this proxy in accordance with the directions indicated on the reverse side of this form, and proxies are authorized to vote in their discretion upon other business as may properly come before the meeting and any adjournments or postponements thereof. If no directions are given, said shares will be voted FOR the adaptation of the Agreement and Plan of Merger (Proposal 1), FOR approval of certain compensation arrangements (Proposal 2) and FOR approval of an adjournment of the Special Meeting (Proposal 3). PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE OR VOTE BY TELEPHONE OR INTERNET USING THE INSTRUCTIONS ON THE REVERSE SIDE. (Continued and to be signed on reverse side.) Non-Voting Items Change of Address Please print new address below. Meeting Attendance Mark box to the right if you plan to attend the Special Meeting. + IF VOTING BY MAIL, YOU MUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. C