Agreement and Plan of Merger, dated November 16, 2022, by and among AtlasClear, Inc. and Commercial Bancorp and, with respect to Section 6.16 only, Calculator New Pubco, Inc

EX-10.3 5 ea168828ex10-3_quantum.htm AGREEMENT AND PLAN OF MERGER, DATED NOVEMBER 16, 2022, BY AND AMONG ATLASCLEAR, INC. AND COMMERCIAL BANCORP AND, WITH RESPECT TO SECTION 6.16 ONLY, CALCULATOR NEW PUBCO, INC

Exhibit 10.3

 

AGREEMENT AND PLAN OF MERGER

 

dated as of

 

November 16, 2022

 

by and among AtlasClear, Inc.

 

And

 

Commercial Bancorp

 

And, with respect to Section 6.16 only,

 

Calculator New Pubco, Inc.

 

 

TABLE OF CONTENTS

 

AGREEMENT AND PLAN OF MERGER		1
RECITALS		1
ARTICLE I CERTAIN DEFINITIONS		2
1.01	Certain Definitions	2
ARTICLE II THE MERGER		8
2.01	The Merger	8
2.02	Effective Time	8
2.03	Escrow Deposit	8
ARTICLE III CONSIDERATION; EXCHANGE PROCEDURES		8
3.01	Calculation of Merger Consideration	8
3.02	Effect on Capital Stock	9
3.03	Rights as Shareholders; Stock Transfers	9
3.04	Election Procedures; Exchange Procedures	9
ARTICLE IV ACTIONS PENDING ACQUISITION		12
4.01	Forbearances of CB and Bank	12
4.02	Forbearances of Clear	13
ARTICLE V REPRESENTATIONS AND WARRANTIES		14
5.01	Disclosure Schedules	14
5.02	Representations and Warranties of CB and Bank	14
5.03	Representations and Warranties of Clear	24
ARTICLE VI COVENANTS		25
6.01	Reasonable Best Efforts	25
6.02	Shareholder Approval; Appraisal Rights	25
6.03	Press Releases	26
6.04	Access; Information; Board Observation Rights	26
6.05	Acquisition Proposals	27
6.06	Reports and Filings	27
6.07	Regulatory Applications	28
6.08	Notification of Certain Matters	28
6.09	No Breaches of Representations or Warranties	28
6.10	Consents	28
6.11	Insurance Coverage	28

 

 

6.12	Correction of Information	28
6.13	Confidentiality	28
6.14	Allowance for Loan and Lease Losses; Pre-Closing Loan Review	28
6.15	Continuity of Interest	29
6.16	Offering of New Pubco Stock	29
ARTICLE VII ESCROW ACCOUNT		30
ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGER		30
8.01	Conditions to Each Party’s Obligation to Effect the Merger	30
8.02	Conditions to Obligation of CB	31
8.03	Conditions to Obligation of Clear	31
ARTICLE IX TERMINATION		32
9.01	Termination by Mutual Consent	32
9.02	Termination by Either Clear or CB	32
9.03	Termination by CB	32
9.04	Termination by Clear	32
9.05	Effect of Termination and Abandonment	32
ARTICLE X MISCELLANEOUS		33
10.01	Survival	33
10.02	Waiver; Amendment	33
10.03	Counterparts	33
10.04	Governing Law and Venue; Waiver of Jury Trial	33
10.05	Counterparts	33
10.06	Expenses	33
10.07	Notices	33
10.08	Entire Understanding; No Third Party Beneficiaries	35
10.09	Interpretation; Effect	35
10.10	Severability	35
10.11	Assignment	35

 

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER, dated as of November 16, 2022 (this “Agreement”), by and among AtlasClear, Inc., a Wyoming corporation (“Clear”), Commercial Bancorp, a Wyoming corporation (“CB”), and, with respect to Section 6.16 only, Calculator New Pubco, Inc., a Delaware corporation (“New Pubco”).

 

RECITALS

 

CB is a Wyoming corporation, a registered bank holding company and the owner of 100% of the outstanding stock of Farmers State Bank (the “Bank”), located in Pine Bluffs, Wyoming.

 

A. As of the date hereof, Clear and Quantum FinTech Acquisition Corp. (“QFTA”), Calculator New Pubco, Inc. (“New Pubco”), Calculator Merger Sub 1, Inc., Calculator Merger Sub 2, Inc., Atlas FinTech Holdings Corp. and Robert McBey are entering into a Business Combination Agreement (the “Business Combination Agreement”) providing for the acquisition by New Pubco of Quantum and Clear;

 

B. It is a condition to the consummation of the transactions contemplated by the Business Combination Agreement that Clear enter into this Agreement.

 

C. It is a condition to the transaction contemplated by this Agreement that the transactions contemplated by the Business Combination Agreement have occurred.

 

D. It is contemplated that following the date of this Agreement, (i) New Pubco will send to CB shareholders either a Prospectus or an Offering Memorandum (each as defined herein) setting forth information with respect to the transactions contemplated by the Business Combination Agreement, New Pubco and the expected operations of New Pubco giving effect to the transactions contemplated by the Business Combination Agreement; and (ii) following receipt of the Offering Memorandum, CB shareholders will be asked to approve this Agreement and, in the event this Agreement is approved, elect to receive the Option A merger consideration or Option B merger consideration as described herein.

 

E. The respective boards of directors of Clear and CB have determined that it is in the best interests of their respective companies and their shareholders to consummate the Merger and the other transactions contemplated by this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants, representations, warranties and agreements contained herein, intending to be legally bound hereby, the parties agree as follows:

 

 

ARTICLE I
CERTAIN DEFINITION

 

1.01 Certain Definitions. The following terms are used in this Agreement with the meanings set forth below:

 

“Acquisition Proposal” has the meaning set forth in Section 6.05.

 

“Adjusted Estimated Book Value” (“AEBV”) means the mutually agreed upon book value of CB, to be used to calculate the “Merger Consideration”

 

“Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such Person. For purposes of this definition, “control” of a Person shall mean the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors or other management of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

“Agreement” means this Agreement, as amended or modified from time to time in accordance with Section 10.02.

 

“Anti-Money Laundering Laws” has the meaning set forth in Section 5.02(x)

 

“Appraisal Rights” means a shareholders right to appraisal pursuant to the WBCA

 

“Appraised Value” means the conclusive assignment of value reached by a professional commercial real estate appraiser jointly selected and retained by CB and Clear, provided said assigned value is not less than $400,000

 

“Bank” has the meaning set forth in the preamble to this Agreement.

 

“Bank Articles” means the Articles of Incorporation of Bank.

 

“Bank Board” means the Board of Directors of Bank.

 

“Bank Bylaws” means the Bylaws of Bank.

 

“Banking Code” means the Wyoming Banking Code, as amended.

 

“Bank Common Stock” means the common stock of Bank.

 

“Bank Equity Capital” means the total equity capital of the Bank as of the Calculation Date, determined using Call report Methodology.

 

“Bank Financial Statements” has the meaning set forth in Section 5.02(g).

 

“BHC Act” means the Bank Holding Company Act of 1956, as amended.

 

“Business Combination Agreement” has the meaning set forth in the preamble to this Agreement.

 

 

“Business Day” means Monday through Friday of each week, except a legal holiday recognized as such by the United States federal government or any day on which banking institutions in the State of Wyoming are authorized or obligated to close.

 

“Calculation Date” means the last day of the month prior to the Effective Time.

 

“Calculation Statement” has the meaning set forth in Section 3.01.

 

“Certificate” has the meaning set forth in Section 3.02.

 

“Clear Board” means the Board of Directors of Clear.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Disclosure Schedule” has the meaning set forth in Section 5.01.

 

“Closing Date” shall have the meaning set forth in Section 2.02.

 

“Earnest Money” means the sum of $100,000 to be deposited by Clear with the Escrow Agent upon mutual execution of this Agreement.

 

“Election Deadline” has the meaning set forth in Section 3.04 (b).

 

“Election Form” has the meaning set forth in Section 3.04 (b).

 

“Effective Date” means the date in which the Effective Time falls.

 

“Effective Time” has the meaning set forth in Section 2.02.

 

“Equity Capital” means the total equity capital of CB as of the Calculation Date, determined using Federal Reserve Report methodology for the preparation of the applicable Federal Reserve form for registered small bank holding companies.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any Person treated as a single employer with the Company under Section 414(b), (c), (m), or (o) of the Code.

 

“Exchange Fund” has the meaning set forth in Section 3.04(b).

 

“Escrow Account” means the account maintained by the Escrow Agent.

 

“Escrow Agent” means a qualified entity mutually agreed upon by the parties.

 

“FDIA” has the meaning set forth in Section 5.02(v).

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System.

 

“GAAP” means accounting principles generally accepted in the United States.

 

“Governmental Authority” means any court, administrative agency or commission or other federal, state or local governmental authority or instrumentality.

 

“Hazardous Material” means, collectively, (i) any “hazardous substance” as defined by CERCLA, (ii) any “hazardous waste” as defined by the Resource Conservation and Recovery Act, as amended through the date hereof, and (iii) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other Federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as now in effect.

 

“Holdback Funds” means the funds in the Escrow held back at Closing Date.

 

“Investor Questionnaire” has the meaning set forth in Section 6.16.

 

“IRS” has the meaning set forth in Section 5.02(n).

 

“Knowledge” means, with respect to a party hereto, actual knowledge and the knowledge that each person would have reasonably obtained after making due and appropriate inquiry with respect to the particular matter in question or of any officer of that party with the title of not less than a vice president.

 

“Lien” means any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance of any kind.

 

“Material Adverse Effect” means any effect, circumstance, occurrence or change that (i) is material and adverse to the business, assets or deposit liabilities, properties, operations, results of operations, condition (financial or otherwise) or prospects of CB or the Bank, taken as a whole, or would materially impair the ability of CB or the Bank to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement provided, however, that Material Adverse Effect shall not be deemed to include the impact of any (a) change in law, rule or regulation or GAAP or interpretations thereof that applies to CB or the Bank, (b) changes in economic conditions affecting commercial banks generally (including, without limitation, any changes in interest rates), (c) acts of terrorism or war, (d) any modifications or changes to valuation policies and practices in connection with the Merger or restructuring charges taken in connection with the Merger, in each case in accordance with GAAP or RAP, as applicable, (e) changes resulting from fees and expenses (including, but not limited to legal, accounting and investment bankers’ fees) incurred in connection with this Agreement or the transactions contemplated herein, including any fees or expenses relating to litigation that may be filed to contest the transactions contemplated herein, (f) the payment of any amounts due, or the provision of any benefits to, any officer or employee under employment contracts or employee benefit plans, severance agreements, consulting agreements or other arrangements disclosed in the Disclosure Schedules; or (g) actions or omissions of CB or the Bank taken in contemplation of the transactions contemplated hereby; as required or permitted hereunder; as required under any regulatory approval received in connection with the Merger; or which have been waived by Clear.

 

 

“Merger” has the meaning set forth in Section 2.01(a).

 

“Merger Consideration” means: the per share consideration to be paid to each CB shareholder in cash and/ or New Pubco common stock in accordance with each shareholders election to receive a combination of stock and cash (“Option A” as defined), or cash only (“Option B” as defined). For purposes of clarity and by way of example only, a sample calculation of the Merger Consideration and Per Share Merger Price based on CB and Bank financials, adjusted as agreed upon, as of the Calculation Date is attached as Schedule I to this Agreement.

 

“Merger Sub” means the subsidiary corporation to be formed by Clear and with which CB will merger as set forth in Section 2.01

 

“New Pubco” has the meaning set forth in the preamble to this Agreement.

 

“NOL Tax Benefit” means $150,000, an arbitrary number agreed upon by the Parties

 

“Non-Election Shares” has the meaning set forth in Section 3.04.

 

“OFAC” has the meaning set forth in Section 5.02(x).

 

“Offering Memorandum” has the meaning set forth in Section 6.16.

 

“Option A” means consideration for each share of CB stock consisting of three times the per share AEBV of CB common stock, , plus a pro rata share of net Premises valuation and NOL Tax Benefit, paid out 1/3 cash and 2/3 New Pubco common stock (valued at $10 per share). In the event the receipt of New Pubco stock pursuant to this Agreement does not, in the reasonable determination of Clear, qualify as part of a “reorganization” within the meaning of Code Section 368 (and does not otherwise qualify for tax deferral under the Code), Clear will make an additional payment at Closing to those shareholders electing Option A who provide in a reasonable time frame prior to the Closing any information reasonably requested or necessary to determine the amount of such payment, an amount equal to the U.S. federal and state income taxes they incur with respect to the receipt of New Pubco stock pursuant to this Agreement, that are in effect at the time of Closing per the U.S. Tax Code, which currently include up to a 20% Capital Gain rate and a 3.9% Medicare Tax rate and the appropriate rate for any applicable state income taxes.

 

“Option B” means an all cash payment for each share of CB common stock consisting of two times the per share AEBV of CB common stock, plus the pro rata per share amount of net Premises valuation and NOL Tax Benefit.

 

 

“Paying Agent” means a qualified entity mutually agreed upon by the parties hereto.

 

“Pension Plan” has the meaning set forth in Section 5.02(m)(ii).

 

“Per Share Merger Price” means the quotient of (a) the Merger Consideration; divided by (b) the total number of Shares outstanding immediately prior to the Effective Time.

 

“Person” means any individual, bank, corporation (including not-for-profit), joint-stock company, general or limited partnership, limited liability company, joint venture, estate, business trust, trust, association, organization, Governmental Authority or other entity of any kind or nature.

 

“Premises” means the existing building and land comprising the physical location of the Bank.

 

“Privacy and Security Requirements” means, to the extent directly applicable to CB and the Bank, (a) any provisions Laws that regulate the processing of Protected Data; (b) provisions of Contracts between CB or the Bank and any Person that directly apply to the processing of Protected Data; and (c) all written policies relating to the processing of Protected Data.

 

“Protected Data” means any personal information or data that CB or the Bank is required by Contract or Law to keep confidential.

 

“QFTA” has the meaning set forth in the preamble to this Agreement.

 

“RAP” means regulatory accounting.

 

“Regulatory Accounting” means the accounting treatment, rules, and reporting processes required by CB and the Banks regulators.

 

“Regulatory Authority” shall mean any federal or state Governmental Authority charged with the supervision or regulation of financial institutions or issuers of securities or engaged in the insurance of deposits (including, without limitation, the Wyoming Division of Banking, the Federal Reserve Board and the FDIC).

 

“Resale Registration Statement” means the Resale Registration Statement referenced in Section 3.04(h).

 

“Rights” means, with respect to any Person, securities or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, or any options, calls or commitments relating to, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such Person.

 

“Security Breach” means any (a) material unauthorized use, disclosure, acquisition of, or access to, Protected Data; or (b) any breach of information technology security safeguards that had a material impact on CB’s or the Bank’s operations.

 

 

“Share” and “Shares” has the meaning set forth in Section 3.02(a).

 

“Statement of Merger” has the meaning set forth in Section 2.02.

 

“Subsidiary” as to any Person, a corporation, limited liability company, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, limited liability company, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

 

“Tax” or “Taxes” means any and all federal, state, local or foreign taxes, charges, fees, levies, duties, tariffs, imposts, other assessments and other similar fees or similar charges, however denominated (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto), the liability for which is imposed by any government or taxing authority, by contractual agreement, as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to or transferee of another person, or otherwise including, without limitation: taxes on or with respect to income, franchises, windfall or other profits, gross receipts, license, property, sales, use, service, service use, capital stock, payroll, employment, social security, disability, severance, workers’ compensation, employer health, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, estimated, severance, occupation, customs, duties, fees, ad valorem, property, environmental, stamp, transfer, value added, or gains taxes; license, registration, recording and documentation fees whether arising before, on or after the Effective Time.

 

“Tax Return” or “Tax Returns” means returns, declarations, reports, statements, elections, estimates, claims for refund, information returns or other documents (including any related or supporting schedules, exhibits, statements or information, any amendment to the foregoing, and any sales and use and resale certificates) filed or required to be filed in connection with the determination, assessment, payment, deposit, collection or reporting of any Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

 

“Transaction Costs” means any and all costs, fees and expenses incurred by CB in connection with this Agreement and the transactions contemplated hereby, including but not limited to the fees and expenses of CB’s attorneys, accountants and investment advisors.

 

“WBCA means the Wyoming Business Corporation Act, (WBCA 17-16-101 et seq)

 

 

ARTICLE II
THE MERGER

 

2.01 The Merger.

 

(a) A series of related mergers will occur pursuant to the terms of this Agreement and the transactions described in the Business Combination Agreement. On the Closing Date, CB shall be merged with the Merger Sub pursuant to all applicable legal requirements, whereupon the separate existence of the Merger Sub shall cease, and CB shall be the surviving corporation (the “Surviving Corporation”). Immediately following on the Closing Date CB as the surviving corporation shall be merged with Clear, with Clear as “Surviving Corporation” and as a wholly owned subsidiary of New Pubco.

 

(b) Continuity of Operation. The parties will continue the operation of the Bank for not less than two (2) years following the Effective Time of the merger.

 

2.02 Effective Time. Subject to the satisfaction or waiver of the conditions set forth in Article VIII (other than those conditions that by their nature are to be satisfied at the consummation of the Merger, but subject to the fulfillment or waiver of those conditions), on the tenth (10th) Business Day of the month immediately following the month in which receipt of all necessary regulatory, corporate and other approvals have been obtained and the expiration of any mandatory waiting periods and satisfaction of the material conditions to closing hereunder have occurred and the parties have consummated the transactions in this Agreement (herein, the “Closing Date”), a Statement of Merger (the “Statement of Merger”) shall be filed with the Secretaries of State of the States of Wyoming and Delaware in accordance with applicable law together with such certificates, documents or other instruments as may be required by law, and the Merger shall become effective upon such filing. The “Effective Time” of the Merger shall be the time of such filing or as set forth in such filing if other than the time of filing.

 

2.03 Escrow Deposit. Upon execution of this Agreement, Clear shall deposit into escrow with the Escrow Agent $100,000 prorated among CB shareholders to be held as a good faith deposit, and, if not previously released, to serve as Holdback funds on Closing Date in accordance with ARTICLE VII. Clear shall cause said $100,000 good faith deposit to be released to CB in the event that the proposed transaction fails to close within two (2) years from the date of this Agreement (provided regulatory applications are no longer pending); provided, however, no such payment will be required if Clear and New PubCo fail to enter into the transactions described in the RECITALS; no such payment will be required if any regulatory approval required pursuant to Article VIII of this Agreement has been denied; CB or the Bank have breached the terms of this Agreement; there has been a “material adverse change” in the condition of CB or the Bank; or if CB has failed to obtain the required approval of CB shareholders approving this Agreement and the Merger.

 

ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES

 

3.01 Calculation of Merger Consideration. The calculation of adjusted book value for these purposes requires the Bank to make available to Clear at least fifteen (15) days prior to the Closing Date all reasonably requested information regarding the status of each loan contained in the loan portfolio of the Bank. Based on Clear’s review, any adjustment to the Bank’s allowance for loan or lease losses, which are allowable under all applicable regulatory and GAAP, will be made by Bank prior to Closing Date. At least five (5) days prior to the Closing Date, CB shall calculate its Adjusted Estimated Book Value, taking into consideration the above referenced adjustment to the allowance for loan and lease losses, the Merger Consideration and the Per Share Merger Price and shall provide Clear with a copy of such calculations together with such supporting documentation as may be reasonably requested by Clear (the “Calculation Statement”). The Calculation Statement and calculations hereon shall fairly present the financial position of CB and the Bank in accordance with GAAP and RAP, as applicable, and each of the Equity Capital, the Merger Consideration and the Per Share Merger Price calculated in accordance with the terms of this Agreement. No fractional shares of New Pubco Common Stock shall be issued, any such fractions to be paid in cash based upon a $10 per share value of New Pubco Common Stock.

 

 

3.02 Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of any holder of shares of CB Common Stock:

 

(a) Outstanding CB Common Stock. Each share of CB Common Stock issued and outstanding immediately prior to the Effective Time (each, a “Share” and, collectively, “Shares”), shall become and be converted into the right to receive the Per Share Merger Price per each shareholders election under Option A or Option B. At the Effective Time, all Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented any Shares (a “Certificate”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration.

 

3.03 Rights as Shareholders; Stock Transfers. At the Effective Time, holders of CB Common Stock shall cease to be, and shall have no rights as, shareholders of CB other than to receive the Merger Consideration.

 

3.04 Election Procedures; Exchange Procedures.

 

(a)

Election Procedures.

 

a.

Holders of record of CB Common Stock have the right to submit an Election Form (defined below) specifying the number of shares of CB Common Stock, if any, as to which such holder desires to select Option A and the number of shares of CB Common Stock, if any, as to which such holder desires to select Option B.

 

b.

An election form (“Election Form”), together with a Letter of Transmittal and Offering Memorandum shall be mailed no less than twenty (20) Business Days prior to the election deadline specified in the Election Form (the “Election Deadline”) or on such earlier date the parties shall mutually agree (the “Mailing Date”) to each holder of record of CB Common Stock as of five (5) Business Days prior to the Mailing Date. Holders of record of shares of CB Common Stock who hold such shares as nominees, trustees or in other representative capacities may submit multiple Election Forms, provided that each such Election Form covers all the shares of CB Common Stock held by each representative for a particular beneficial owner. Any shares owned by a holder who has not, as of the Election Deadline, made an election by submission to the Paying Agent of an effective, properly completed Election Form shall be deemed “Non-Election Shares” and shall be deemed to have selected Option B (all cash).

 

 

c.

An election shall have been properly made only if the Paying Agent shall have actually received a properly completed Election Form by the Election Deadline. Any Election Form may be revoked or changed by the Person submitting such Election Form to the Paying Agent by written notice to the Paying Agent only if such notice of revocation or change is actually received by the Paying Agent at or prior to the Election Deadline. Shares of CB Common Stock held by holders who acquired such shares subsequent to the Election Deadline will be designated Non-Election Shares. In addition, if a Holder of CB Common Stock either (1) does not submit a properly completed Election Form in a timely fashion or (2) revokes its Election Form prior to the Election Deadline and fails to file a new properly completed Election Form before the deadline, such shares shall be designated Non-Election Shares. Subject to the terms of this Agreement and of the Election Form, the Paying Agent shall have discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decisions of the Paying Agent regarding such matters shall be binding and conclusive. Neither CB, Clear, New Pubco nor the Paying Agent shall be under any obligation to notify any Person of any defect in an Election Form.

 

(b) Paying Agent. At or prior to the Effective Time, New Pubco shall deposit, or shall cause to be deposited, with the Paying Agent, for the benefit of the holders of Shares the aggregate amount of Merger Consideration payable in respect of Shares pursuant to Section 3.01 upon surrender of Certificates (the “Exchange Fund”).

 

(c) Exchange of Certificates. As soon as practicable after the Effective Time, but in no event later than one Business Day thereafter, Clear shall cause the Paying Agent to mail to each former holder of record of Shares of CB (i) a letter of transmittal specifying that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof and, if required, indemnities in accordance with Section 3.04(f) to the Paying Agent, such letter of transmittal to be in such form and have such other provisions as Clear and CB may reasonably agree, and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent (or an affidavit of loss in lieu thereof and, if required, an indemnity in accordance with Section 3.04(f)) together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration (after giving effect to any required Tax deductions and withholdings in accordance with Section 3.04(g)), and the Certificates so surrendered shall forthwith be cancelled. Clear shall direct the Paying Agent to promptly deliver the Merger Consideration to each former holder of record of Shares who properly complies with the transmittal instructions described herein, and in no case shall such payment be made later than two (2) Business Days after receipt by the Paying Agent of such instructions. No interest will be paid or accrued on any amount payable upon due surrender of the Certificates. In the event of a transfer of ownership of Shares that is not registered in the transfer records of CB, the proper amount of the Merger Consideration may be paid in exchange therefor to a Person other than the Person in whose name the Certificate so delivered is registered if the Certificate formerly representing such Shares is presented to the Paying Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable Taxes have been paid.

 

 

(d) No Liability. Notwithstanding the foregoing of CB, neither the Paying Agent nor any party hereto shall be liable to any former holder of Shares for any amount properly delivered to a Governmental Authority pursuant to applicable abandoned property, escheat or similar laws.

 

(e) Unclaimed Funds. Any portion of the Exchange Fund that remains unclaimed by former holders of Shares of CB for one hundred eighty (180) days after the Effective Time shall be transferred from Paying Agent to New Pubco. Any former holders of Shares of CB who have not theretofore complied with this Article III shall thereafter look only to Clear for payment of the Merger Consideration deliverable in respect of their Shares upon due surrender of their Certificates (or affidavits of loss in lieu thereof) pursuant to this Article III, in each case, without any interest thereon.

 

(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Clear or the Paying Agent, the posting by such Person of a bond in customary amount as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will pay in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect of such Shares represented by such Certificate.

 

(g)

Withholding Rights. The Paying Agent or Clear shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as Clear or the Paying Agent 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 deducted and withheld by the Paying Agent or Clear, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Shares in respect of which such deduction and withholding was made by the Paying Agent or Clear.

 

(h)

Resale Registration Statement. As soon as practicable (and in any event within 30 Calendar days following the Closing date) New Pubco shall file a registration statement with the SEC providing for the resale by CB shareholders of shares received as part of the Merger Consideration (the “Resale Registration Statement”). New Pubco shall use commercially reasonable efforts to cause such Resale Registration Statement to become effective within 60 Calendar days from Closing Date.

 

 

ARTICLE IV
ACTIONS PENDING ACQUISITION

 

4.01 Forbearances of CB and Bank. From the date hereof until the Effective Time, except as expressly contemplated by this Agreement and/or disclosed on CB and the Bank’s Disclosure Schedule, without the prior written consent of Clear, which consent shall not be unreasonably withheld, CB and Bank will not:

 

(a) Ordinary Course. (i) Conduct the business of CB and Bank other than in the ordinary and usual course or fail to use reasonable efforts to preserve intact their business organizations and assets and maintain its rights, franchises and existing relations with customers, suppliers, employees and business associates, or voluntarily take any action which, at the time taken, has or is reasonably likely to have an adverse effect upon CB and Bank’s ability to perform any of its material obligations under this Agreement, or (ii) enter into any new material line of business or change its lending, investment, underwriting, risk, asset liability management or other banking and operating policies, except as required by applicable law, regulation or policies imposed by any Governmental Authority.

 

(b) Capital Stock. Other than pursuant to Rights, if any, as set forth on the Disclosure Schedule and outstanding on the date hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of CB or Bank Stock or any Rights, (ii) enter into any agreement with respect to the foregoing, or (iii) permit any additional shares of CB or Bank Stock to become subject to new grants of employee or director stock options, other Rights or similar stock-based employee rights.

 

(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment any dividend, other than quarterly cash dividends on CB or Bank Common Stock in amounts consistent with past practice , or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock.

 

(d) Compensation; Employment Agreements, Etc. Enter into, amend, or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer or employee of CB or Bank, or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), other than officer salary increases that the board of directors deem to be in the best interests of the Bank, except (i) for normal individual increases in compensation to non-officer employees in the ordinary course of business consistent with past practice which in no case shall exceed a reasonable cost of living increase, (ii) for other changes that are required by applicable law, and (iii) to satisfy contractual obligations existing as of the date hereof set forth in the Section 5.02(k) or (m) of CB Bank's Disclosure Schedule.

 

(e) Benefit Plans. (i) Enter into, establish, adopt, terminate, or amend any (a) collective bargaining or agreement with a union, works council or labor organization covering any employee or (b) Compensation Plan (except (i) as may be required by applicable law, (ii) to satisfy contractual obligations existing as of the date hereof which are disclosed in the Section 5.02(k) or (m) of CB and Bank’s Disclosure Schedule, or (iii) within the regular annual renewal of insurance contracts, or (ii) take any action or make any promise to accelerate the payment, vesting or exercisability of stock options, restricted stock, severance, or other compensation or benefits for any employee, director, officer, or other individual service provider of CB or Bank.

 

 

(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties except in the ordinary course of business.

 

(g) Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice) all or any portion of, the assets, business, deposits or properties of any other Person (other than purchases of loans and loan participations made in the ordinary and usual course of business consistent with past practice).

 

(h) Governing Documents. Amend the CB or Bank Articles, CB or Bank Bylaws (or similar governing documents).

 

(i) Accounting Methods; Maintenance of Books and Records. Implement or adopt any change in the CB or Bank’s book or tax accounting principles, practices or methods, other than as may be required by GAAP or RAP, and as concurred in by CB or the Bank’s independent public accountants; or fail to maintain and prepare CB and the Bank’s books and records other than in accordance with GAAP or RAP, as applicable, consistent with past practice.

 

(j) Contracts. Except in the ordinary course of business consistent with past practice, enter into or terminate any material Contract or amend or modify in any material respect any of its existing material Contracts.

 

(k) Claims. Settle any claim, action or proceeding that requires the payment by CB or the Bank of an amount in excess of $ 10,000 for an individual claim, and $ 50,000 for claims in the aggregate.

 

(l) Adverse Actions. Take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VIII not being satisfied, or (iii) a material violation of any provision of this Agreement except, in each case, as may be required by applicable law or regulation.

 

(m) Risk Management. Except pursuant to applicable law or regulation or by order of any relevant Regulatory Authority, (i) implement or adopt any material change in its interest rate risk management and other risk management policies, procedures or practices; (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk; or (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk and other risk.

 

(n) Indebtedness. Incur any indebtedness for borrowed money other than in the ordinary course of business consistent with past practice.

 

(o) Capital Expenditures. Other than expenditures for updates to the Bank’s core operating systems, make any capital expenditure or commitments with respect thereto in an amount in excess of $ 10,000 for any item or project, or $ 30,000 in the aggregate for any related items or projects, except as have been previously committed to prior to the date hereof. This limitation excludes any update for Bank's core operating system.

 

(p) Taxes. Commence or settle any litigation or proceeding with respect to any liability for Taxes, make or change any material express or deemed Tax election, file any amended Tax Return, take any action which is reasonably likely to have a material adverse effect on any Tax position of CB or the Bank or, after the Merger, which is reasonably likely to have a material adverse effect on any Tax position of Clear, QFTA or New Pubco, change any of its methods of reporting income or deductions for Tax purposes or take any other action with respect to Taxes that is outside the ordinary and usual course of business or inconsistent with past practices.

 

(q) Conflict of Interest Transactions. Engage or agree to engage in any “covered transaction” within the meaning of Sections 23A or 23B of the Federal Reserve Act (without regard to the applicability of any exemptions contained in Section 23A) unless the Bank has complied with Sections 23A and 23B of the Federal Reserve Act.

 

(r) Loan Loss Allowances. Fail to maintain an allowance for possible loan and lease losses which is adequate in all material respects under the requirements of GAAP and RAP, as applicable, to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable), or fail to charge off any loans or leases that would be deemed uncollectible in accordance with the policies of the Bank.

 

(s) Commitments. Agree or commit to do any of the foregoing.

 

4.02 Forbearances of Clear. From the date hereof until the Effective Time, except as expressly contemplated by this Agreement, without the prior written consent of CB (which consent will not be unreasonably withheld), Clear will not take or omit to take, or agree or commit to take or omit to take, any action that would result in (i) any of Clear’s representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VIII not being satisfied or (iii) a material violation of any provision of this Agreement, except as may be required by applicable law or regulation.

 

 

ARTICLE V
REPRESENTATIONS AND WARRANTIES

 

5.01 Disclosure Schedules. On or prior to the date hereof, (or at such later date as agreed to by the parties hereto) CB will have delivered to Clear a schedule (the “Disclosure Schedule”) setting forth, among other things, items, the disclosure of which are necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 5.02. An exception or matter disclosed with respect to one representation or warranty shall also be deemed disclosed with respect to each other representation or warranty to the extent such disclosure of such item would be reasonably understood to be applicable to such other schedule or representation. The inclusion of any item in the Disclosure Statement shall not be deemed an admission that such item is a material fact, event or circumstance or that such item has had or would be reasonably likely to have a Material Adverse Effect.

 

5.02 Representations and Warranties of CB and Bank. Subject to Section 5.01, CB and Bank hereby represent and warrant to Clear:

 

(a) Organization, Standing and Authority. CB is a Wyoming corporation duly organized, validly existing and in good standing under the laws of the State of Wyoming. Bank is a Wyoming state banking corporation duly organized, validly existing and in good standing under the laws of the State of Wyoming.

 

(b)  Capital Structures; Organizational Documents and Records.

 

(i) The authorized capital stock of the Bank consists of 10,000,000 shares of Common Stock with no par value of which 100% of the outstanding shares are owned by CB as of the date of this Agreement. The authorized capital stock of CB consists of an unlimited number of shares of CB common stock, no par value, of which 449,043 shares are outstanding as of the date of this Agreement. The outstanding shares of CB and Bank Common Stock have been duly authorized, are validly issued and outstanding, fully paid and nonassessable, and are not subject to any preemptive rights (and were not issued in violation of any preemptive rights). Except as set forth on Section 5.02(b) of the Disclosure Schedules, as of the date hereof, (A) there were no shares of CB or Bank Common Stock authorized and reserved for issuance, (B) Neither CB nor Bank have any Rights issued or outstanding with respect to Common Stock, and (C) Neither CB nor Bank have any commitment to authorize, issue or sell any Common Stock or Rights. All shares of Common Stock were issued in compliance with all applicable laws, including federal and state securities laws.

 

(ii) The Bank and CB have furnished to Clear copies of their articles of incorporation and by-laws , in each case as amended to the date hereof, together with such other documents, including the charter of the bank, as reasonably requested by Clear relating to the authority of each to conduct its business. All such copies are complete and correct. The stock registers and minute books of CB and the Bank are each complete and correct in all material respects.

 

 

(c) Subsidiaries. Bank does not have any Subsidiaries or own beneficially, directly or indirectly, any equity securities or similar interests of any Person, or any interest in a partnership or joint venture of any kind.

 

(d) Corporate Power. CB and the Bank have full corporate power and authority to carry on business as it is now being conducted and to own all properties and assets. CB and Bank have the corporate power and authority to execute, deliver and perform its obligations under this Agreement.

 

(e) Corporate Authority. Subject to receipt of the requisite adoption of this Agreement by the holders of the outstanding shares of CB and Bank Common Stock entitled to vote thereon, this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of CB and Bank prior to the date hereof. This Agreement is a valid and legally binding obligation of CB and Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

 

(f) Regulatory Filings; No Defaults.

 

(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by CB and Bank or any of its Subsidiaries in connection with the execution, delivery or performance by CB and Bank of this Agreement or to consummate the Merger except for (A) filings of applications or notices with, or seeking approvals and waivers from, as applicable, federal and state banking authorities, including the Federal Reserve Board and the Wyoming Division of Banking, (B) filings with state and federal securities authorities, (C) the filing of the Statement of Merger with the Wyoming Secretary of State pursuant to the WBCA, (D) the approval of the Merger by the holders of two-thirds (2/3) of the outstanding shares of CB Common Stock entitled to vote thereon, and (E) the third party consents set forth on the Disclosure Schedule under Section 5.02. As of the date hereof, CB and Bank are not aware of any reason why the approvals set forth in Section 8.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 8.01(b).

 

(ii) Subject to receipt of the regulatory and shareholder approvals and third party consents referred to above and the expiration of certain regulatory waiting periods, and required filings under federal and state securities laws, to our Knowledge the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) constitute or result in a breach or violation of, or a default under, the acceleration of any obligations or the creation of a Lien on the assets of CB or the Bank (with or without notice, lapse of time, or both) pursuant to, any agreement, lease, license, contract, insurance policy, note, mortgage, indenture, instrument, arrangement or other obligation (each, a “Contract” and, collectively, “Contracts”) binding upon CB or the Bank or to which they or any of their properties are subject or bound or any law or governmental or non-governmental permit or license to which CB or the Bank is subject, (B) constitute a breach or violation of, or a default under, CB or Bank Articles or Bylaws, or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.

 

 

(g) Financial Reports; Undisclosed Liabilities.

 

(i) CB and Bank Call Reports and other periodic filings with the Federal Reserve of financial information (the “Financial Statements”), fairly present in all material respects the financial position of CB and the Bank as of filing dates. The books and records of CB and the Bank have been, and are being, maintained in accordance with GAAP and RAP, as applicable.

 

(ii) CB and the Bank has or will timely file all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they are required to file with (A) the Federal Reserve Board and the Wyoming Division of Banking, as the case may be, and (B) any other Regulatory Authority (collectively, the “Regulatory Filings”), and all other material reports, registrations and statements required to be filed by it since December 31, 2021, including, without limitation, any report, registration or statement required to be filed pursuant to the laws of the United States or the State of Wyoming and the rules and regulations of the Federal Reserve Board, the Wyoming Division of Banking or any other Regulatory Authority, and has paid all fees and assessments due and payable in connection therewith. As of their respective dates, such reports, registrations and statements complied in all material respects with all the laws, rules and regulations of the applicable Regulatory Authority with which they were filed.

 

(iii) To their knowledge, except as set forth in Section 5.02 of the Disclosure Schedule, since December 31, 2020, CB and the Bank have not incurred any obligations or liabilities of any kind or nature (whether or not accrued, contingent or otherwise and whether or not required to be disclosed, including those related to environmental and occupational safety and health matters) other than in the ordinary and usual course of business consistent with past practice.

 

(iv) Since December 31, 2020, (A) CB and the Bank have conducted business only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such business consistent with past practice and (B) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events (described in any paragraph of this Section 5.02 or otherwise) has had or could be reasonably likely to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of CB and the Bank to consummate the transactions contemplated by this Agreement.

 

(v) Since December 31, 2020, there has not been (A) any material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by CB or the Bank, whether or not covered by insurance, (B) any declaration, setting aside or payment of any dividend or other distribution in cash, stock or property in respect of the capital stock of CB or the Bank, or (C) any change by CB or the Bank in accounting principles, practices, procedures or methods.

 

 

(h) Litigation. Except as disclosed in Section 5.02(h) of CB and the Bank’s Disclosure Schedules, there is no suit, action, investigation, audit or proceeding (whether judicial, arbitral, administrative or other) pending or, to CB and the Bank’s knowledge, threatened against or affecting CB or the Bank, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority or arbitration outstanding against CB or the Bank. Neither CB nor the Bank have pending or threatened any legal proceeding against any third parties, other than collection, foreclosure or other similar actions in the ordinary course of business.

 

(i) Regulatory Matters.

 

(i) Neither CB nor the Bank or any of its properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, any Regulatory Authority charged with the supervision or regulation of financial institutions and their subsidiaries (including their holding companies) or issuers of securities.

 

(ii) Neither CB nor the Bank has been advised by any Regulatory Authority that such Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission nor to its knowledge has any Regulatory Authority commenced an investigation in connection therewith.

 

(j) Compliance with Laws. Except as set forth in Section 5.02(j) of the Disclosure Schedule, each of CB and the Bank:

 

(i) is in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act (which includes a CRA Rating of “satisfactory” or better), the Home Mortgage Disclosure Act and all other applicable fair lending laws and other laws relating to discriminatory business practices;

 

(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to CB and the Bank’s knowledge, no suspension or cancellation of any of them is threatened; and

 

(iii) has not received, since December 31, 2020, any notification or communication from any Governmental Authority or in a written communication from any other third party (A) asserting that CB or the Bank is not in compliance with any statute, regulation, or ordinance or other law or (B) threatening to revoke any license, franchise, permit, or governmental authorization (nor, to CB and the Bank’s knowledge, do any grounds for any of the foregoing exist).

 

 

(k) Material Contracts; Defaults.

 

(i) Except as set forth in Section 5.02(k)(i) of the Disclosure Schedule (each a “Material Contract”), CB and the Bank are not a party to, bound by or subject to any Contract (whether written or oral) (i) that would be a “material contract” within the meaning of Item 601(b)(10) of the SEC’s Regulation S-K; (ii) that purports to limit in any material respect either the type of business in which CB or the Bank (or, after giving effect to the Merger, New Pubco) may engage or the manner or locations in which any of them may so engage in any business; (iii) that constitute consulting arrangements and contracts for professional, advisory, and other services, including contracts under which the Bank performs services for others; (iv) that is a lease of real property; (v) that is a lease for equipment and computer hardware; (vi) that is a data processing agreement; (vii) that is a contract that involves performance of services or delivery of goods or materials by Bank that was not entered into in the ordinary course of business; or (viii) is a contract not referred to elsewhere in this section that materially affects the business or financial condition of the Bank, provided however, other than core system update contracts, the types of Material Contracts set forth in subsections (iii) through (viii) of this sentence are limited to and include only such contracts that could be reasonably expected to involve payments to or by the Bank of more than $25,000 in any twelve-month period. True and correct copies of the Material Contracts have been delivered to the Clear. Each of the Material Contracts is a legal, valid and binding obligation of, and enforceable against CB or the Bank, and to the knowledge of CB and the Bank, the other party thereto; and is in full force and effect on the date hereof. Neither CB nor the Bank is in default under any Material Contract, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. No power of attorney or similar authorization given directly or indirectly by CB or the Bank is currently outstanding.

 

(ii) Section 5.02(k)(ii) of the Disclosure Schedule sets forth a true and complete list of (x) all Contracts pursuant to which consents or waivers are or may be required and (y) all notices which are or may be required to be given, in each case, prior to the performance by CB and the Bank of this Agreement and the consummation of the Merger and the other transactions contemplated hereby.

 

(l) No Brokers. No action has been taken by CB or the Bank that would give rise to any valid claim against any party hereto for a brokerage commission, finder’s fee or other like payment with respect to the transactions contemplated by this Agreement.

 

(m) Employee Benefit Plans and Labor Matters.

 

(i) Section 5.02(m) of the Bank’s Disclosure Schedule contains a list of all “employee benefit plans” (within the meaning of Section 3(3) of ERISA), stock purchase and other equity-based plans, deferred compensation arrangements, and other employment, compensation, individual independent contractor or consultant, termination, bonus, commission, severance, change in control, transaction or retention bonus, or other similar plans, programs, policies, contracts, or arrangements (whether written or unwritten) maintained or contributed to, or required to be contributed to by CB or Bank for the benefit of any current or former employee, director, officer or individual independent contractor or consultant thereof or under which CB or Bank may have any Liability (“Compensation Plans”). All Compensation Plans have been operated in substantial compliance with the terms of such Compensation Plan, ERISA and other applicable Law.

 

 

(ii) Neither CB, Bank, nor any of their ERISA Affiliates has ever sponsored, maintained, administered, or contributed to, or has had or could have any Liability with respect to, (a) any plan subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code, (b) any “multiemployer plan” (as defined in Section 3(37) of ERISA), (c) any “multiple employer plan” (as defined in Section 413(c) of the Code), or (d) any “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA). Except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or any similar state Laws (and for which the beneficiary pays the full cost of coverage), no Compensation Plan provides medical, health or other welfare benefits or coverage for any current or former employees following retirement or other termination of service.

 

(iii) CB and Bank are not party to or bound by any collective bargaining agreement or other Contract with a union, works council or labor organization with respect to any employees. As of the date hereof, there are no pending or, to the Knowledge of CB and Bank, threatened, arbitrations, grievances, organizing campaigns, strikes, or other labor disputes or disruptions against or affecting the Company and no such event has occurred within the last three years. CB and Bank are in compliance, in all material respects, with all applicable Laws governing employment and labor.

 

(iv) There are no claims, proceedings, audits, investigations, or other similar matters pending or, to the Knowledge of CB and Bank, threatened, against, relating to, involving or otherwise affecting CB, Bank or any current or former employee, officer, director, applicant for employment, temporary or leased employee, or independent contractor or consultant thereof with respect to the Compensation Plans (other than routine claims for benefits) or any employment, labor, or employee benefit matters. No claims or allegations have been made against CB, Bank or any current or former individual service provider thereof for discrimination, sexual or other harassment, sexual misconduct or retaliation within the last three years, nor, to Knowledge of CB and Bank, are any such claims threatened or pending nor is there any reasonable basis for such a claim

 

(n) Tax Matters. (i) All Tax Returns that are required to be filed by or with respect to CB and the Bank have been duly filed, (ii) all Taxes shown to be due on the Tax Returns referred to in clause (i) have been paid in full, (iii) except as set forth in Section 5.02(n) of CB and the Bank’s Disclosure Schedule, the Tax Returns referred to in clause (i) have been examined by the IRS or the appropriate state, local or foreign taxing authority or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (iv) all deficiencies asserted or assessments made as a result of such examinations have been paid in full, (v) no issues that have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns referred to in clause (i) are currently pending, (vi) there are no pending or, to CB and the Bank’s knowledge, threatened suits, proceedings, actions or claims and, to CB and the Bank’s knowledge, no pending or threatened audits, in each case, for or relating to any tax liability with respect to CB or the Bank, and (vii) no waivers of statutes of limitation have been given by or requested with respect to any Taxes of CB or the Bank. CB and the Bank have made or will make available to Clear true and correct copies of the United States federal income Tax Returns filed by it or its Affiliates for each of the three most recent fiscal years ended on or before December 31, 2021. Neither CB nor the Bank has any liability with respect to income, franchise or similar Taxes that accrued on or before the end of the period ended December 31, 2021 in excess of the amounts accrued with respect thereto that are reflected in the Financial Statements.

 

 

(o) Risk Management Instruments; Investments.

 

(i) All material interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for Bank’s own account, or for the account of one or more of Bank or its customers (all of which are listed on Bank’s Disclosure Schedule), were entered into (i) in accordance with prudent business practices and all applicable laws, rules, regulations and regulatory policies and (ii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of Bank, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither Bank, nor to Bank’s knowledge any other party thereto, is in breach of any of its obligations under any such agreement or arrangement.

 

(ii) Set forth on Section 5.02(o) of the Disclosure Schedule is a complete and correct list of all investment and debt securities, mortgage- backed and related securities, marketable equity securities and securities purchased under agreements to resell that are owned by the Bank, other than in a fiduciary or agency capacity (the “Bank Investment Securities”). Bank has good and marketable title to all Bank Investment Securities held by it, free and clear of all encumbrances, and except to the extent such Bank Investment Securities are pledged in the ordinary course of business consistent with prudent banking practices to secure obligations of the Bank. The Bank Investment Securities are valued on the books of the Bank in accordance with GAAP, as may be modified by RAP. Except as set forth on Section 5.02(o) of the Disclosure Schedule, and as may be imposed by applicable securities laws and documents governing the terms of such securities, none of the Bank Investment Securities is subject to any restriction, whether contractual or statutory, that materially impairs the ability of the Bank to freely dispose of such investment at any time. With respect to all material repurchase agreements to which the Bank is a party, the Bank has a valid, perfected first lien or security interest in the securities or other collateral securing each such repurchase agreement equals or exceeds the amount of debt secured by such collateral under such agreement.

 

 

(p) Books and Records. The books and records of CB and the Bank have been fully, properly and accurately maintained in all material respects, have been maintained in accordance with sound business practices in the banking industry, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein and they fairly reflect the substance of events and transactions included therein.

 

(q) Insurance. The Disclosure Schedule sets forth all of the insurance policies, binders, or bonds maintained by CB and the Bank. CB and the Bank are insured with reputable insurers against such risks and in such amounts as the management of CB and the Bank reasonably have determined to be prudent in accordance with industry practices. All such insurance policies are in full force and effect; Neither CB nor Bank is in material default thereunder; and all claims thereunder have been filed in due and timely fashion.

 

(r) Transactions With Affiliates. Except as set forth in Section 5.02(r) of the Disclosure Schedule, neither CB nor the Bank has any transactions with Affiliates within the meaning of Sections 23A and 23B of the Federal Reserve Act, as implemented by Regulation W of the Federal Reserve Board.

 

(s) Properties. Section 5.02(s) of the Disclosure Schedule sets forth all real property owned or leased by the Bank or in which the Bank has an interest (other than as a mortgagee). The Bank owns, or has a valid right to use or a leasehold interest in, all real property used by it in the conduct of its business as such business is presently conducted. Bank has good and marketable title, free and clear of all liens, encumbrances, charges, defaults or equitable interests to all of the properties and assets, real and personal, reflected on the Bank Financial Statements as being owned by Bank as of December 31, 2021 or acquired after such date, except (i) statutory liens for amounts not yet due and payable, (ii) pledges to secure deposits and other liens incurred in the ordinary course of banking business, (iii) such imperfections of title, easements, encumbrances, liens, charges, defaults or equitable interests, if any, as do not affect the use of properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, (iv) dispositions and encumbrances in the ordinary course of business, and (v) liens on properties acquired in foreclosure or on account of debts previously contracted. All leases pursuant to which Bank, as lessee, leases real or personal property (except for leases that have expired by their terms or that Bank has agreed to terminate since the date hereof) are valid without default thereunder by the lessee or, to Bank’s knowledge, the lessor. The condition of the properties and assets of the Bank is sufficient, in all material respects, for the operation of the business of the Bank as currently conducted by the Bank.

 

(t) Loans. Each loan reflected as an asset in the Bank Financial Statements and each balance sheet date subsequent thereto (i) is evidenced by notes, agreements or other evidences of indebtedness that are true and genuine, (ii) to the extent secured, has been secured by valid liens and security interests that 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 bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles. The reserves for loan and lease losses shown on each of the balance sheets contained in the Bank Financial Statements are adequate in the judgment of management and consistent with the standards of the Federal Reserve and under GAAP to provide for incurred and probable losses, net of recoveries relating to loans and leases previously charged off, on loans and leases outstanding (including accrued interest receivable) as of the applicable date of such balance sheet. The aggregate loan balances of the Bank as of December 31, 2021, in excess of such reserves as shown on the balance sheet as of that date included in the Bank Financial Statements are, to the knowledge of CB and the Bank, collectible in accordance with their terms. All loans and extensions of credit that have been made by the Bank that are subject either to Section 22(b) of the Federal Reserve Act, as amended, or to Part 349 of the rules and regulations of the FDIC, comply therewith.

 

 

(u) Allowance for Loan Losses. The allowance for loan losses reflected on the Bank Financial Statements, as of their respective dates, is adequate in all material respects under the requirements of RAP to provide for reasonably incurred losses on outstanding loans.

 

(v) Deposit Insurance. The deposits of the Bank are insured by the FDIC in accordance with the Federal Deposit Insurance Act of 1933, as amended (“FDIA”), and Bank has paid all assessments and filed all reports required by the FDIA.

 

(w) Annual Disclosure Statement. Bank is in compliance with Part 350 of the rules and regulations promulgated by the FDIC concerning disclosure requirements, including the preparation of an annual disclosure statement, and the signature and attestation requirements provided and to be provided pursuant to such Part are accurate.

 

(x) Bank Secrecy Act, Anti-Money Laundering, Trade Compliance and Customer Information.

 

(i) Neither CB, the Bank nor any of their representatives acting on their behalf, is aware of, based on its internal compliance procedures, and has not been advised of, and has no reason to believe that any facts or circumstances exist, which would cause it to be deemed (i) to be operating in violation in any material respect of the Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering statute (including but not limited to the USA PATRIOT Act of 2011, the United States Bank Secrecy Act of 1970, the United States Money Laundering Control Act of 1986, and the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, the laws and executive orders administered by state agencies, and any regulations promulgated thereunder (collectively, the “Anti-Money Laundering Laws”)) in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority; or (ii) not to be in satisfactory compliance in any material respect with the applicable privacy and customer information requirements contained in any federal and state privacy laws and regulations, including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and the regulations promulgated thereunder, as well as the provisions of the information security program adopted by Bank pursuant to 12 C.F.R Part 40. No suit, action, investigation, audit or proceeding (whether judicial, arbitral, administrative or other) involving CB or the Bank with respect to any of the foregoing is pending or, to the knowledge of CB or the Bank, threatened.

 

 

(ii) Neither CB, the Bank nor any of their representatives acting on their behalf, is aware of any facts or circumstances that would cause it to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it or any of its Subsidiaries to undertake any material remedial action. The Bank Board has adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with Section 326 of the Patriot Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the Patriot Act and the regulations thereunder, and it (or such other of its Subsidiaries) has complied in all material respects with any requirements to file reports and other necessary documents as required by the Patriot Act and the regulations thereunder. The Bank’s internal compliance procedures comply with all applicable laws and regulations. Neither CB nor the Bank have received any written or oral communication from any Governmental Authority that alleges that CB, the Bank, or any of their agents are in violation of, or have, or may have any liability under, any international trade laws or Anti-Money Laundering Laws. Further, neither CB nor the Bank has, during the past five (5) years, made any voluntary or involuntary disclosure to a Governmental Authority or conducted any internal investigation or audit concerning any actual or potential violation or wrongdoing related to international trade laws or Anti-Money Laundering Laws.

 

(iii) Neither CB, the Bank, nor any of their representatives acting on their behalf have (1) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (2) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law or (3) made any other unlawful payment. Neither CB, the Bank, nor any of their representatives acting on their behalf have directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder CB or the Bank or assist CB or the Bank in connection with any actual or proposed transaction.

 

(iv) Neither CB, the Bank, nor any of their shareholders, directors, or officers, nor, to the knowledge of CB or the Bank, any other representative acting on behalf of CB or the Bank is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by OFAC, and the Parties have not, since their incorporation, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in Cuba, Iran, North Korea, Syria, the Donetsk People’s Republic, Luhansk People’s Republic, and Crimea regions of Ukraine, or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC.

 

(v) Except as specifically authorized by a governmental license, license exception, or other permit or applicable authorization of a Governmental Authority, neither CB nor the Bank have exported, reexported, transferred, facilitated or brokered the sale of any goods, services, technology, or technical data to or from, or entered into any transaction or had any dealing with, any person or entity for whom a license or other authorization is required under the U.S. Export Administration Regulations (the “EAR,” 15 C.F.R. § 730 et seq.), the International Traffic in Arms Regulations (the “ITAR,” 22 C.F.R. § 120 et seq.) or any other U.S. or non-U.S. export control regime, nor has CB or the Bank entered into any transaction prohibited by such laws.

 

 

(y) Intellectual Property. Section 5.02(y) of the Disclosure Schedule sets forth a complete list of all (i) registered trademarks, service marks, copyrights and patents; (ii) applications for registration or grant of any of the foregoing; and (iii) licenses for any of the foregoing, in each case, owned by CB or the Bank. The items on Section 5.02(y), together with all other trademarks, service marks, trade names, logos, assumed names, patents, copyrights, trade secrets, computer software, licenses, formulae, customer lists or other databases, business application designs and inventions currently used in or necessary to conduct the business of the Bank, in whatever form or medium, constitute the “Bank Intellectual Property.” Except as set forth on Section 5.02(y) of the Disclosure Schedule, CB or the Bank has ownership of, or such other rights by license, lease or other agreement in and to, the Bank Intellectual Property as is necessary to permit the Bank to use the Bank Intellectual Property in the conduct of its businesses as presently conducted.

 

(z) Data Privacy. CB and the Bank (i) is and has been in compliance in all material respects with applicable Privacy and Security Requirements; (ii) has not experienced any Security Breaches; and (iii) has implemented commercially reasonable safeguards designed to protect Protected Data. Neither CB nor the Bank has received any written complaints regarding the unauthorized processing of Protected Data or non-compliance with applicable Privacy and Security Requirements. The execution or performance of this Agreement will not, in any material respect, affect CB’s or the Bank’s rights to process Protected Data in the same manner as prior to the closing or violate any applicable Privacy and Security Requirements.

 

5.03. Representations and Warranties of Clear. Subject to Section 5.01, Clear hereby represents and warrants to CB and the Bank as follows:

 

(a) Organization, Standing and Authority. Clear is a corporation duly organized, validly existing and in good standing under the laws of the State of Wyoming. Clear is duly qualified to do business and is in good standing in the State of Wyoming.

 

(b) Corporate Power. Clear has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets; and Clear has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.

 

(c) Corporate Authority; Authorized and Effective Agreement. This Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of Clear, and the Clear Board prior to the date hereof. This Agreement is a valid and legally binding agreement of Clear enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

 

 

(d) Regulatory Approvals; No Defaults.

 

(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained in connection with the execution, delivery or performance by Clear of this Agreement or to consummate the Merger except for (A) filings of applications or notices with, and approvals or waivers by, the Federal Reserve Board, and the Wyoming Division of Banking, as may be required, (B) the filing of the Statement of Merger with the Secretary of State of the State of Wyoming pursuant to the WBCA; and (C) receipt of the approvals set forth in Section 8.01(b). As of the date hereof, Clear is not aware of any reason why the approvals set forth in Section 8.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 8.01(b).

 

(ii) Subject to the satisfaction of the requirements referred to in the preceding paragraph and expiration of the related waiting periods, and required filings under federal and state securities laws, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Clear, any of its Subsidiaries, to which Clear, any of its Subsidiaries, or their properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Articles of Incorporation or Bylaws (or similar governing documents) of Clear or any of its Subsidiaries, or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.

 

ARTICLE VI
COVENANTS

 

6.01 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each of CB and Clear and agrees to use its respective reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, expressly including Clear’s best efforts to ensure that New Pubco execute all documents as may be reasonably requested by CB in connection with this Agreement, so as to permit consummation of the Merger as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby, including the satisfaction of the conditions set forth in Article VIII hereof, and shall cooperate fully with the other party hereto to that end.

 

6.02 Shareholder Approval/ Appraisal Rights.

 

(a) CB agrees to take, in accordance with applicable law and the CB Articles and the CB Bylaws, all action necessary to vote upon the approval of the principal terms of the Merger and any other matters required to be approved by CB’s shareholders for consummation of the Merger. The CB Board shall at all times recommend such approval and shall take all reasonable lawful action to solicit such approval by its shareholders (including the approvals, waivers and consents set forth in Section 8.01(c); provided, that nothing in this Agreement shall prevent the CB Board from withholding, withdrawing, amending or modifying its recommendation if the CB Board determines, after consulting with outside legal counsel, that such action is required in order for the directors to comply with their fiduciary duties to the CB shareholders under applicable law.

 

 

(b) Any Shareholder who neither votes in favor of nor consents to the Merger may, under certain circumstances and by following procedures under Section 17-16-1302 of the WBCA, a copy of which is attached hereto as Exhibit A, exercise appraisal rights to receive cash in an amount equal to the “fair value” of such Shareholders shares of CB common stock to which such Shareholder has exercised such appraisal or dissenters rights.

 

6.03 Press Releases. CB and Clear shall consult with each other before issuing any press release with respect to the Merger or this Agreement and shall not issue any such press release or make any such public statements without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed. CB and Clear shall cooperate to develop all public announcement materials and make appropriate management available at presentations related to the transactions contemplated by this Agreement as reasonably requested by the other party.

 

6.04 Access; Information; Board Observation Rights.

 

(a) CB and Bank agree that upon reasonable notice and subject to applicable laws relating to the exchange of information, they shall afford Clear and Clear’s officers, employees, counsel, accountants and other authorized representatives, such access during normal business hours throughout the period prior to the Effective Time to the books, records (including, without limitation, tax returns and work papers of independent auditors), properties, personnel and to such other information as Clear may reasonably request and, during such period, it shall furnish promptly to Clear (i) a copy of each material report, schedule and other document filed by CB or Bank pursuant to federal or state securities or banking laws, and (ii) all other information concerning the business, properties and personnel of CB and Bank as Clear may reasonably request.

 

(b) Each of Clear, CB and Bank agrees that it will not, and will cause its representatives not to use any information obtained pursuant to this Section 6.04 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. Subject to the requirements of law, each party will keep confidential, and will cause its representatives to keep confidential, all information and documents obtained pursuant to this Section 6.04 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement) unless such information (i) was already known to such party, (ii) becomes available to such party from other sources not known by such party to be bound by a confidentiality obligation, (iii) is disclosed with the prior written approval of the party to which such information pertains, (iv) is or becomes readily ascertainable from published information or trade sources or (v) is disclosed to a potential investor in New Pubco pursuant to a confidentiality agreement in form and substance reasonably agreed to by CB and the Bank which is enforceable by CB and the Bank. No investigation by either party of the business and affairs of the other shall affect or be deemed to modify or waive any representation, warranty, covenant or agreement in this Agreement, or the conditions to either party’s obligation to consummate the transactions contemplated by this Agreement. Notwithstanding the foregoing or anything to the contrary in this Agreement, Clear shall be permitted to disclose (and to permit QFTA and New Pubco to disclose) any information regarding the Company and/or its business as may be necessary or appropriate to include in the Registration Statement / Proxy Statement (as such term is defined in the Business Combination Agreement), any other filings to be made with the SEC by QFTA or New Pubco in connection with the transactions contemplated by this Agreement and the Business Combination Agreement, and/or any materials that may be provided to potential investors in the Potential Financing (as such term is defined in the Business Combination Agreement), unless otherwise prohibited by the Federal Reserve Board and the State of Wyoming Banking Division.

 

 

(c) During the period from the date of this Agreement to the Effective Time, CB and the Bank shall promptly furnish Clear copies of all monthly and other interim financial statements produced in the ordinary course of business as the same shall become available.

 

(d) Without limiting the generality of the foregoing, between the date hereof and the Final Closing, the Company shall (a) provide to Clear all financial statements of CB required to be provided pursuant to, and at such times and in conformity with all applicable requirements set forth in, Section 6.4 of the Business Combination Agreement; (b) use its reasonable best efforts (i) to assist Clear in causing to be prepared in a timely manner any other financial information or statements (including customary pro forma financial statements) that are required to be included in the Registration Statement / Proxy Statement and any other filings to be made by QFTA or New Pubco with the SEC in connection with the transactions contemplated by this Agreement and the Definitive Acquisition Agreement and (ii) to obtain the consents of CB or the Bank’s auditors with respect thereto as may be required by applicable Law or requested by the SEC; and (c) notwithstanding anything to the contrary in this Agreement, reasonably cooperate with Clear, as may be requested by Clear from time to time, in assisting with the preparation of (i) the Registration Statement / Proxy Statement and any other filings to be made with the SEC by QFTA or New Pubco in connection with the transactions contemplated by this Agreement and the Definitive Acquisition Agreement and (ii) any materials that may be provided to potential investors in the Potential Financing.

 

(e) CB and the Bank shall invite and allow up to three (3) Clear observers to attend and observe (but not vote or otherwise participate in) all regular and special meetings of the board of directors of CB or the Bank and all regular and special meetings of any senior management committee (including, but not limited to, the executive committee and the loan committee) of the Bank; provided that such observer may be excluded from any portion of any meeting in order to maintain any confidentiality, confidential privileges, including attorney-client privileged communications, or to allow confidential discussion of matters pertaining to the Bank, this Agreement and the transactions contemplated hereby. CB and the Bank shall share all board packages, financial reports and updated loan information with Clear at and in anticipation of such meetings; provided that CB and the Bank may exclude from any such materials provided to Clear any portion of such materials necessary to maintain any confidentiality, confidential privileges, including attorney-client privileged communications, or to allow confidential discussion of matters pertaining to the Bank, this Agreement and the transactions contemplated hereby. If the Merger is finally disapproved by any appropriate regulatory authority or if this Agreement is terminated pursuant to its terms, Clear will no longer be entitled to notice of and permission to attend such meetings. All information obtained by Clear in connection with these meetings shall be treated in confidence as provided in Section 6.13 hereof.

 

6.05

Acquisition Proposals. CB and Bank agree that neither it nor its officers, directors or Affiliates shall, and that it shall direct and use its best efforts to cause its employees, agents and representatives (including any financial advisor, attorney or accountant retained by it) not to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving, or any purchase of all or substantially all of the assets of or more than 10% of the outstanding equity securities of, CB (any such proposal or offer being hereinafter referred to as an “Acquisition Proposal”). CB and Bank further agree that neither it nor any of its officers and directors shall, and that it shall direct and use its reasonable best efforts to cause its employees, Affiliates, agents and representatives (including any financial advisor, attorney or accountant retained by it) not to, directly or indirectly, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal.

 

6.06 Reports and Filings. Each of CB, the Bank and Clear shall file between the date of this Agreement and the Effective Time, all reports required to be filed by it with all Regulatory Authorities having jurisdiction over such party. Any financial statements contained in any reports to a Regulatory Authority shall be prepared in accordance with requirements applicable to such reports.

 

 

6.07 Regulatory Applications.

 

(a)  CB, Bank and Clear, (and, when timely, Clear will ensure that New Pubco), shall cooperate and use their respective reasonable best efforts to prepare all documentation, to timely effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary to consummate the transactions contemplated by this Agreement. Clear, QFTA and New Pubco will assume primary responsibility to effect all filings and will pay all costs and expenses related thereto per Section 10.06. Each party hereto agrees that it will consult with the other party hereto with respect to the obtaining of all material permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other party apprised of the status of material matters relating to completion of the transactions contemplated hereby. Clear, QFTA and New Pubco will ensure that any initial filing with Governmental Authorities shall be made as soon as reasonably practicable after the execution hereof. Subject to applicable laws relating to the exchange of information, each of CB and Bank shall have the right to review in advance and, to the extent practicable, consult with the other on all material written information submitted to any third party and/or any Governmental Authority in connection with the Merger and the other transactions contemplated by this Agreement. In exercising the foregoing right, each of such parties agrees to act reasonably and as promptly as practicable.

 

(b) Each party agrees, upon request, to furnish the other party with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other party or any of its Subsidiaries to any third party or Governmental Authority.

 

6.08 Notification of Certain Matters. Each of CB, the Bank and Clear shall give prompt notice to the other of any fact, event or circumstance known to it that (i) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in a Material Adverse Effect or to prevent, materially delay or materially impair the ability of CB or Clear, as the case may be, to consummate the transactions contemplated by this Agreement or (ii) would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein.

 

6.09 No Breaches of Representations or Warranties. Between the date of this Agreement and the Effective Time, without the written consent of the other party, each of Clear, CB, and Bank will not do any act or suffer any omission of any nature whatsoever that would cause any of the representations or warranties made in Article V of this Agreement to become untrue or incorrect in any material respect.

 

6.10 Consents. Each of Clear, CB and Bank shall use its best commercial efforts to obtain any required consents to the transactions contemplated by this Agreement.

 

6.11 Insurance Coverage. CB and Bank shall cause each of the policies of insurance listed in its Disclosure Schedule to remain in effect between the date of this Agreement and the Effective Date.

 

6.12 Correction of Information. Each of Clear, CB and Bank shall promptly correct and supplement any information furnished under this Agreement so that such information shall be correct and complete in all material respects at all times, and shall include all facts necessary to make such information correct and complete in all material respects at all times, provided that any such correction or supplement that may result in a change to a party’s Disclosure Schedule (“Updated Disclosure Schedule”) shall not be made without the prior written consent of the other party, which shall not be unreasonably withheld.

 

6.13 Confidentiality. Except for the use in connection with the governmental filings required in order to complete the transactions contemplated by this Agreement, all information (collectively, the “Information”) received by each of CB, Bank and Clear, pursuant to the terms of this Agreement shall be kept in strictest confidence; CB, Bank, and Clear agree that the Information will be used only for the purpose of completing the transactions contemplated by this Agreement. CB, Bank, and Clear agree to hold the Information in strictest confidence and shall not use, and shall not disclose directly or indirectly any of such Information except when, after and to the extent such Information (i) is or becomes generally available to the public other than through the failure of CB, Bank, or Clear to fulfill its obligations hereunder, (ii) was already known to the party receiving the Information on a nonconfidential basis prior to the disclosure or (iii) is subsequently disclosed to the party receiving the Information on a nonconfidential basis by a third party having no obligation of confidentiality to the party disclosing the Information.

 

6.14 Allowance for Loan and Lease Losses; Pre-Closing Loan Review.

 

(a) The Bank will continue to adhere to its policies and procedures, as well as all guidance from any applicable Regulatory Authority and GAAP and RAP, related to its allowance for loan and lease losses as the Bank has in its normal course of business.

 

 

(b) Any additional adjustments to the Bank’s allowance for loan and lease losses or other accounts required by the Clear, which are allowable under all applicable Regulatory Authority and GAAP and RAP, will be made by the Bank at or immediately prior to Effective Time. Any such adjustments will not be included in the Calculation Statement or otherwise impact the calculation of the Merger Consideration, or the total proceeds to be received by the shareholders of CB.

 

(c) The Bank shall make available to Clear all reasonably requested information regarding the status of each loan contained in the loan portfolio of the Bank, as of a date not more than 15 days prior to the Effective Time.

 

6.15 Continuity of Interest. The parties agree to continue the operation of the Bank for not less than two (2) years following the Effective Time in a manner substantially similar to the operation of the Bank prior to the Effective Time.

 

6.16 Offering of New Pubco Common Stock.

 

(a)

New Pubco will use reasonable best efforts to cause the offer and sale of the New Pubco Common Stock issuable in the Merger to be registered on the Registration Statement on Form S-4 filed in connection with the transactions contemplated by the Business Combination Agreement (the “Form S-4”). If the SEC does not permit the offer and issuance of the registration of the New Pubco Common Stock on the Form S-4, New Pubco shall offer and issue the New Pubco Common Stock in a transaction exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended (a “Private Placement”); provided that New Pubco shall not be required to issue any New Pubco Common Stock unless such issuance complies with all federal and state securities laws.

 

(b)

If the New Pubco Common Stock is registered on the Form S-4, as promptly as practicable after the effective date of the Form S-4, New Pubco shall mail to each CB shareholder a Prospectus, together with an Election Form and Letter of Transmittal.

 

(c)

If New Pubco is not permitted to register the New Pubco Common Stock issuable in the Merger on the Form S-4, as soon as practicable after such determination, New Pubco shall mail to each CB Stockholder an Investor Questionnaire requesting that each CB Stockholder return such Investor Questionnaire by the Certification Deadline specified therein, which shall be ten (10) Business Days after the mailing date of such Investor Questionnaire. CB shall promptly provide New Pubco with a copy of all completed Investor Questionnaires. If New Pubco is not permitted to register the New Pubco Common Stock issuable in the Merger, New Pubco shall prepare an Offering Memorandum and cause such Offering Memorandum to be mailed to CB shareholders that have provided a properly completed Investor Questionnaire certifying that such holder of CB Common Stock is an accredited investor and to each unaccredited investor that has appointed a Purchaser Representative. Any CB Stockholder that (i) does not return an Investor Questionnaire by the Certification Deadline or (ii) does not certify in the Investor Questionnaire that it is an “accredited investor” (or that it is an unaccredited investor and has appointed a purchaser representative in accordance with Rule 502) shall be deemed to have selected Option B (all cash).

 

(d)

New Pubco shall not be required to offer or issue shares of New Pubco Common Stock to any CB Stockholder if such offer or issuance would, in its reasonable judgement, be in violation of any federal or state securities laws. New Pubco shall be under no obligation to issue any New Pubco Common Stock unless the transactions contemplated by the Business Combination Agreement have been consummated. Subject to the foregoing, New Pubco shall cause to be deposited with the Paying Agent, the shares of New Pubco Common Stock issuable pursuant to Article III hereof.

 

(e)

The parties hereto agree that all obligations of New Pubco under this Section 6.16 to issue any New Pubco Common Stock shall be conditioned upon the consummation of the transactions contemplated the Business Combination Agreement and that all obligations of New Pubco under this Section 6.16 shall terminate without action of any party upon termination of the Business Combination Agreement.

 

(f)

If New Pubco is not permitted to register the New Pubco Common Stock issuable in the Merger on the Form S-4 and instead issues such stock in a Private Placement, as soon as practicable (and in any event within 30 calendar days following the Closing Date) New Pubco shall file a registration statement with the SEC providing for the resale by CB shareholders of shares received as part of the Merger Consideration (the “Resale Registration Statement”). Clear shall use commercially reasonable efforts to cause such Resale Registration Statement to become effective within 60 calendar days from Closing Date.

 

 

ARTICLE VII
ESCROW AND HOLDBACK ACCOUNT

 

The funds deposited in the Escrow Account will comprise a $100,000 good faith deposit by Clear and, unless previously released, will convert on Closing Date to a Holdback fund to be reserved in the Escrow for a period of 12 months post-Closing as a fund for potential reimbursement to Clear, as the circumstances dictate, in the event of costs incurred by them through payment of claims for tax or other liabilities arising from breach by CB or Bank of the representations, warranties or covenants contained in this Agreement.

 

ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER

 

8.01 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligation of each of Clear and CB to consummate the Merger is subject to the fulfillment or written waiver by Clear and CB prior to the Effective Time of each of the following conditions:

 

(a) Shareholder Approval. This Agreement shall have been duly adopted by the requisite vote of Clear, New Pubco, Bank and CB’s shareholders,and the issuance of New Pubco Stock shall have been duly approved by the requisite vote of New Pubco stockholders if required.

 

(b) Regulatory Approvals. All regulatory approvals set forth on Schedule 8.01(b) shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain (i) any restrictions or requirements that the Clear Board reasonably determines would either before or after the Effective Time have a material adverse effect on Clear, New Pubco, Bank or CB after giving effect to the consummation of the Merger, or (ii) reduce the benefits of the transactions contemplated hereby to such a degree that Clear, New Pubco, CB and Bank would not have entered into this Agreement had such conditions, restrictions or requirements been known as of the date hereof.

 

(c) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and prohibits consummation of the transactions contemplated by this Agreement.

 

(d) Business Combination. The transactions contemplated by the Business Combination Agreement, including the acquisition of private company Wilson-Davis by Clear, shall have been completed.

 

 

8.02 Conditions to Obligation of CB. The obligation of CB to consummate the Merger is also subject to the fulfillment or written waiver by CB prior to the Effective Time of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of Clear set forth in this Agreement shall be true and correct in all material respects, as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), and CB shall have received a certificate, dated the Effective Date, signed on behalf of Clear by the Chief Executive Officer of Clear to such effect.

 

(b) Performance of Obligations of Clear. Clear shall have performed in all material respects all obligations required to be performed by Clear under this Agreement at or prior to the Effective Time, and CB shall have received a certificate, dated the Effective Date, signed on behalf of Clear by the Chief Executive Officer of Clear to such effect.

 

(c) New Pubco Duties and Obligations. New Pubco shall have executed this Agreement.

 

8.03 Conditions to Obligation of Clear. The obligation of Clear to consummate the Merger is also subject to the fulfillment or written waiver by Clear prior to the Effective Time of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of CB and Bank set forth in this Agreement (without giving effect to any Updated Disclosure Schedule delivered by CB and Bank pursuant to Section 6.12, except for changes to Section 5.02 Schedules reflecting actions taken by CB and the Bank in compliance with Section 4.01) shall be true and correct in all material respects, as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date) and Clear shall have received a certificate, dated the Effective Date, signed on behalf of CB and the Bank by their respective authorized officers to such effect.

 

(b) Performance of Obligations of CB and Bank. CB and Bank shall have performed in all material respects all obligations required to be performed by CB or Bank under this Agreement at or prior to the Effective Time, and Clear shall have received a certificate, dated the Effective Date, signed on behalf of CB and Bank by an authorized officer of each to such effect.

 

(c) Consents. CB and the Bank shall have obtained each of the consents listed in Section 5.02(k) of the Disclosure Schedules and any consents of the type required to be identified in Section 5.02(k) of the Disclosure Schedule but which were not so identified as of the date of this Agreement. A copy of each such consent shall have been delivered to Clear.

 

(d) No Adverse Changes. Between the date of this Agreement and the Effective Date there shall not have occurred and be existing any change or any condition, event, circumstance, fact or occurrence, other than as provided in this Agreement, that would have a Material Adverse Effect.

 

 

(e) Transaction Costs. CB and the Bank shall have used its reasonable best efforts to cause its legal, accounting, financial and other advisors to submit final bills or estimates of final bills for all professional fees related to the transactions contemplated by this Agreement by the Calculation Date to allow them to prepare the Calculation Statement accounting for such Transaction Costs owing by them. Based upon such final bills or estimates of such final bills, CB and the Bank shall have paid all such Transaction Costs in full prior to or immediately prior to the Effective Time. In no event shall Clear be liable for any such Transaction Costs in connection with the transactions contemplated by this Agreement, other than expenses, if any, incurred by CB or the Bank in connection with applications for regulatory approvals.

 

ARTICLE IX
TERMINATION

 

9.01 Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval by shareholders referred to in Section 8.01(a), by the mutual written consent of Clear and CB by action of their respective boards of directors.

 

9.02 Termination by Either Clear or CB. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval by shareholders referred to in Section 8.01(a), by action of the board of directors of either Clear or CB, in the event:

 

(a) The Merger is not consummated within two (2) years of the date of this Agreement, (providing the applications for approval set forth in Section 6.06 are no longer pending) except to the extent that the failure of the Merger then to be consummated arises out of or results from the knowing action or inaction of the party seeking to terminate pursuant to this Section 9.02(a), which action or inaction is in violation of its obligations under this Agreement.

 

(b) (i) The approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied by final and nonappealable action of such Governmental Authority or an application therefor shall have been permanently withdrawn at the invitation, request or suggestion of a Governmental Authority or (ii) the shareholder approval referred to in Section 8.01(a) herein is not obtained.

 

(c) The Business Combination Agreement is terminated.

 

9.03 Termination by CB. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after approval by shareholders of CB referred to in Section 8.01(a), by action of the CB Board if there has been a breach of any representation, warranty, covenant or agreement made by Clear in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Sections 8.02(a) or 8.02(b) would not be satisfied and such breach or condition is not curable or, if curable, is not cured within thirty (30) days after written notice thereof is given by CB to Clear, provided that CB or Bank is not itself in material breach of any provision of this Agreement.

 

9.04 Termination by Clear. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after approval by shareholders referred to in Section 8.01(a), by action of the Clear Board, in the event that:

 

(a) There has been a breach of any representation, warranty, covenant or agreement made by CB or the Bank in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Sections 8.03(a), 8.03(b), 8.03(c) or 8.03(d) would not be satisfied and such breach or condition is not curable or, if curable, is not cured within thirty (30) days after written notice thereof is given by Clear to CB, provided that Clear is not itself in material breach of any provision of this Agreement.

 

(b) CB or the Bank shall have breached Section 6.06 or the CB or Bank Board shall have failed to make its recommendation referred to in Section 6.02, withdrawn such recommendation or adversely modified or changed such recommendation or failed to reconfirm its recommendation of this Agreement within five (5) Business Days after a written request by Clear to do so.

 

9.05 Effect of Termination and Abandonment. In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article IX, this Agreement (other than as set forth in Section 9.01) shall become void and of no effect with no liability or further obligation on the part of any party hereto (or of any of its directors, officers, employees, agents, legal and financial advisors or other representatives); provided, however, except as otherwise provided herein, no such termination shall relieve any party hereto of any liability or damages resulting from any willful breach of this Agreement

 

 

ARTICLE X
MISCELLANEOUS

 

10.01 Survival. Except as relates to the Holdback in the Escrow, (see ARTICLE VII) the representations, warranties, agreements and covenants contained in this Agreement shall not survive the Effective Time, provided, however, except as otherwise provided herein, no termination shall relieve any party hereto of any liability or damages resulting from any willful breach of this Agreement.

 

10.02 Waiver; Amendment. Prior to the Effective Time, any provision of this Agreement may be (i) waived by the party benefited by the provision, or (ii) amended or modified at any time, by an agreement in writing between the parties hereto executed in the same manner as this Agreement, except to the extent that any such amendment would violate applicable law or require resubmission of this Agreement or the plan of merger contained herein to the shareholders of CB.

 

10.03 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original.

 

10.04 Governing Law and Venue; Waiver of Jury Trial.

 

(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF WYOMING, WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts of the State of Wyoming and the federal courts of the United States of America located in Wyoming solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such documents, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such Wyoming state or federal court. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 10.04 or in such other manner as may be permitted by law, shall be valid and sufficient service thereof.

 

(b) 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 ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION 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 THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, 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 10.04.

 

10.05 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to constitute an original.

 

10.06 Expenses. Whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the Merger and the other transactions contemplated by this Agreement, other than regulatory application expenses, (all of which will be paid by Clear), shall be paid by the party incurring such expense.

 

10.07 Notices. All notices, requests and other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, faxed (with confirmation) or mailed by registered or certified mail (return receipt requested) or private courier delivered to such party at its address set forth below or such other address as such party may specify by notice to the parties hereto.

 

 

If to CB, to:	Wynema Engstrom
	P.O. Box 870
	214 Main Street
	Pine Bluffs, WY 82082
With a copy to:	Kenneth C. Wolfe, Esq.
	Wolfe, Van Ackern & Stephenson LLP
	1008 Centre Avenue, Suite A
	Fort Collins, CO 80526
If to Bank, to:	Greg Gross
	103 East 2nd Street
	Pine Bluffs, WY 82082
With a copy to:	(same)
If to Clear, to:	Craig Ridenhour
	4221 W Boy Scout Blvd
	Suite 300
	Tampa, Fl 33607
with a copy to:	Fairfield and Woods, P.C.
	1801 California Street, Suite 2600
	Denver, CO 80202
	Attn: Robert M. Vinton, Esq.
	Cell: 303 ###-###-####
	***@***
If to New Pubco, to:	John Schaible
	4221 W. Boy Scout Blvd.
	Suite 300
	Tampa FL 33607
With a copy to:	Winston & Strawn LLP
	200 Park Avenue
	New York, NY 10166-4700
	Attention: Jason Osborn
	***@***

 

 

 

10.08 Entire Understanding; No Third-Party Beneficiaries. Nothing in this Agreement, whether express or implied, is intended to confer upon any Person, other than the parties hereto or their respective successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement; provided, however, that New Pubco and QFTA are express third-party beneficiaries of the representations and warranties of the Company and Bank set forth in Section 5.02 of this Agreement.

 

10.09 Interpretation; Effect. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and are not part 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.”

 

10.10 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination, the parties will negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

 

10.11 Assignment. Clear, New Pubco and CB may not assign any of their rights or obligations under this Agreement to any other Person, except upon the prior written consent of the other Party, and subject to the express understanding that it is the intention that Clear and New Pubco will consummate between them an acquisition transaction.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.

 

	CB:
	By:	/s/ Wynema Engstrom
	Name:	Wynema Engstrom
	Title:	Chairwoman and President
	Bank:
	By:	/s/ Wynema Engstrom
	Name:	Wynema Engstrom
	Title:	Chairwoman and President
	AtlasClear, Inc.:
	By:	/s/ Craig Ridenhour
	Name:	Craig Ridenhour
	Title:	Chief Business Development Officer
	Calculator New Pubco, Inc.
	By:	/s/ Steven J. Carlson
	Name:	Steven J. Carlson
	Title:	President and Secretary

 

 

SCHEDULE I

 

Sample Merger Consideration Calculation

 

 

SCHEDULE 1-SAMPLE MERGER CONSIDERATION CALCULATION

 

For illustrative purposes, based on the following assumptions (final numbers will change other than $10 value for New Pubco common stock and $150,000 NOL Tax Benefit):

 

(1) Adjusted Estimated Book Value (“AEBV”) as of 10/24/22 is $2,604,000 (based on Equity Capital of $2,700,000 minus $96,000 loan impairment)

 

(2) New Pubco common stock will be delivered under Option A at $10.00 per share

 

(3) CB common stock has 449,043 shares outstanding

 

(4) per above, per share AEBV is $5.80

 

(5) in addition to AEBV, shareholders will receive a pro rata share of Premises valued at

 

$400,000 (* number may change based on Appraised Value) less value on books of $121,350 = $278,650 ($278,650 / 449,043) = $.6205 per share

 

$150,000 for NOL Tax Benefit ($150,000/449,043) = $.3340

 

As an example, assume 85% (381,686)) of shares outstanding are held by shareholders electing Option A, which is 3 X AEBV with 1/3 in cash and 2/3 in equity:

 

Sample Calculation:

 

Option A-3x per share AEBV: $5.80 X3 = $ 17.40 plus, $.6205 for Premises above what it is carried on the books, plus $.3340 for NOL Tax Benefit= $18.3545 per share

 

Total value to Option A electors -$18.3545 X 381,686 = $7,005,656

 

Stock portion X .66 = $4,670,390.63

 

Number of shares of QFTA common at $10 per share—467,039

 

Cash payment: ($6,338,315.88 X .33) = $2,335,195.31

 

Option B electors comprising 15% of outstanding shares (67,356 shares) receive:

 

AEBV per share of $5.80 X2 = $11.60, plus $.6205 (Premises), plus $.3340 for NOL Tax Benefit = $12.5545 per share

 

Total B-($12.5545 X 67,356) = $845,620.90

 

New Pubco common stock: $4,670,390.63

 

Option A cash: $2,335,195.31

 

Option B cash: $845,620.90

 

TOTAL $7,851.206.84

 

 

EXHIBIT A

 

17-16-1302 of the Wyoming Business Corporation Act

 

§ 17-16-1302. Right to appraisal.

 

(a) A shareholder is entitled to appraisal rights, and to obtain payment of the fair value of his shares in the event of, any of the following corporate actions:

 

(i) Consummation of a plan of merger or consolidation to which the corporation is a party if:

 

(A) Shareholder approval is required for the merger or the consolidation by W.S. 17-16-1104 or 17-16-1111 and the shareholder is entitled to vote on the merger or consolidation, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series that remain outstanding after consummation of the merger; or

 

(B) The corporation is a subsidiary that is merged with its parent under W.S. 17-16-1105.

 

(ii) Consummation of a share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the exchange, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not exchanged;

 

(iii) Consummation of a disposition of assets pursuant to W.S. 17-16-1202 if the shareholder is entitled to vote on the disposition;

 

(iv) An amendment of the articles of incorporation with respect to a class or series of shares that:

 

(A) Alters or abolishes a preferential right of the shares;

 

(B) Creates, alters or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares;

 

(C) Alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities;

 

(D) Excludes or limits the right of the shares to vote on any matter, or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights; or

 

(E) Reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or right to repurchase the fractional share so created.

 

(v) Any other amendment to the articles of incorporation, merger, share exchange or disposition of assets if specifically provided in the articles of incorporation, bylaws or a resolution of the board of directors;

 

 

(vi) Consummation of a transfer or domestication if the shareholder does not receive shares in the foreign corporation resulting from the transfer or domestication that have terms as favorable to the shareholder in all material respects, and represent at least the same percentage interest of the total voting rights of the outstanding shares of the corporation, as the shares held by the shareholder before the transfer or domestication;

 

(vii) Consummation of a conversion of the corporation to nonprofit status; or

 

(viii) Consummation of a conversion of the corporation to an unincorporated entity.

 

(b) Notwithstanding subsection (a) of this section, the availability of appraisal rights under paragraphs (a)(i), (ii), (iii), (iv), (vi) and (viii) of this section shall be limited in accordance with the following provisions:

 

(i) Appraisal rights shall not be available for the holders of shares of any class or series of shares which is:

 

(A) A covered security under section 18(b)(1)(A) or (B) of the Securities Act of 1933, as amended; or

 

(B) Traded in an organized market and has at least two thousand (2,000) shareholders and a market value of at least twenty million dollars ($20,000,000.00), exclusive of the value of such shares held by the corporation's subsidiaries, senior executives, directors and beneficial shareholders owning more than ten percent (10%) of such shares; or

 

(C) Issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and may be redeemed at the option of the holder at net asset value.

 

(ii) The applicability of paragraph (i) of this subsection shall be determined as of:

 

(A) The record date fixed to determine the shareholders entitled to receive notice of, and to vote at, the meeting of shareholders to act upon the corporate action requiring appraisal rights; or

 

(B) The day before the effective date of such corporate action if there is no meeting of shareholders.

 

(iii) Paragraph (i) of this subsection shall not be applicable and appraisal rights shall be available pursuant to subsection (a) of this section for the holders of any class or series of shares who are required by the terms of the corporate action requiring appraisal rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in paragraph (i) of this subsection at the time the corporate action becomes effective;

 

(iv) Reserved.