EXHIBIT (2)
AGREEMENT AND PLAN OF REORGANIZATION
By and Between
BANK OF BOSTON CORPORATION
and
THE BOSTON BANCORP
October 10, 1995
TABLE OF CONTENTS
----- -- --------
Page
----
ARTICLE I
DEFINITIONS
-----------
ARTICLE II
THE ACQUISITION MERGER
--- ----------- ------
2.01 Surviving Corporation.............................................. 10
2.02 Purposes and Authorized Capital Stock
of Surviving Corporation.......................................... 10
2.03 Effect of the Acquisition Merger................................... 10
2.04 Additional Actions................................................. 11
2.05 Articles of Organization and By-laws............................... 11
2.06 Directors and Officers............................................. 11
2.07 Effective Time; Conditions......................................... 11
2.08 Dissenters' Appraisal Rights....................................... 11
2.09 Effect on Outstanding Shares....................................... 12
2.10 Anti-Dilution...................................................... 13
2.11 Procedures......................................................... 13
2.12 Treatment of Seller Stock Options.................................. 15
2.13 Exchange Agent..................................................... 16
2.14 Delivery of Measurement Date Documents............................. 16
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
--------------- --- ---------- -- -----
3.01 Corporate Organization............................................. 17
3.02 Capitalization..................................................... 18
3.03 Authority; No Violation............................................ 18
3.04 Consents and Approval.............................................. 20
3.05 Financial Statements............................................... 20
3.06 Absence of Undisclosed Liabilities................................. 21
3.07 Broker's Fees...................................................... 21
3.08 Absence of Certain Changes or Events............................... 21
3.09 Legal Proceedings.................................................. 21
-ii-
3.10 Agreements with Banking Authorities................................ 22
3.11 Reports............................................................ 22
3.12 Compliance with Applicable Law..................................... 22
3.13 Buyer Common Stock................................................. 22
3.14 Ownership of Seller Common Stock................................... 23
3.15 Buyer Information.................................................. 23
3.16 Disclosure......................................................... 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
--------------- --- ---------- -- ------
4.01 Corporate Organization............................................. 23
4.02 Capitalization..................................................... 24
4.03 Authority; No Violation............................................ 25
4.04 Consents and Approvals............................................. 27
4.05 Financial Statements............................................... 27
4.06 Absence of Undisclosed Liabilities................................. 28
4.07 Broker's Fee....................................................... 28
4.08 Absence of Certain Changes or Events............................... 28
4.09 Legal Proceedings.................................................. 28
4.10 Taxes and Tax Returns.............................................. 29
4.11 Employees.......................................................... 31
4.12 Agreements with Banking Authorities................................ 32
4.13 Material Agreements................................................ 32
4.14 Ownership of Property.............................................. 33
4.15 Reports............................................................ 33
4.16 Compliance with Applicable Law..................................... 34
4.17 Environmental Matters.............................................. 34
4.18 Antitakeover Statutes Not Applicable............................... 34
4.19 Ownership of Buyer Common Stock.................................... 34
4.20 Insurance.......................................................... 35
4.21 Labor.............................................................. 35
4.22 Material Interests of Certain Persons.............................. 35
4.23 Absence of Registration Obligations................................ 35
4.24 Loans.............................................................. 35
4.25 Seller Information................................................. 36
4.26 Disclosure......................................................... 36
-iii-
ARTICLE V
COVENANTS OF THE PARTIES
--------- -- --- -------
5.01 Conduct of the Business of Seller.................................. 36
5.02 Access to Properties and Records;
Confidentiality.................................................. 40
5.03 No Solicitation.................................................... 42
5.04 Regulatory Matters; Consents....................................... 43
5.05 Approval of Seller's Stockholders.................................. 43
5.06 Agreements of Seller's Affiliates.................................. 44
5.07 Further Assurances................................................. 44
5.08 Disclosure Supplements............................................. 44
5.09 Public Announcements............................................... 45
5.10 Organization of Merger Subsidiary.................................. 45
5.11 Tax-Free Reorganization Treatment.................................. 45
5.12 Stock Exchange Listing............................................. 45
5.13 Employment and Benefit Matters..................................... 45
5.14 Directors' and Officers' Indemnification........................... 46
5.15 Accountants' Letters............................................... 47
5.16 Maintenance of Records............................................. 47
5.17 Leases............................................................. 47
5.18 Pre-Closing Transactions........................................... 47
5.19 Bank Merger........................................................ 48
5.20 Resignations....................................................... 48
5.21 Disposition of Commercial Real Estate Loan Portfolio............... 48
ARTICLE VI
CLOSING CONDITIONS
------- ----------
6.01 Conditions to Each Party's
Obligations Under This Agreement................................. 48
6.02 Conditions to the Obligations of
Buyer Under This Agreement....................................... 49
6.03 Conditions to the Obligations of
Seller Under This Agreement...................................... 50
-iv-
ARTICLE VII
CLOSING
-------
7.01 Time and Place..................................................... 52
7.02 Deliveries at the Closing.......................................... 52
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
----------- --------- --- ------
8.01 Termination........................................................ 52
8.02 Effect of Termination.............................................. 53
8.03 Amendment, Extension and Waiver.................................... 53
ARTICLE IX
MISCELLANEOUS
-------------
9.01 Expenses........................................................... 54
9.02 Non-Survival....................................................... 54
9.03 Notice............................................................. 54
9.04 Parties in Interest................................................ 55
9.05 Entire Agreement................................................... 55
9.06 Counterparts....................................................... 56
9.07 Governing Law...................................................... 56
9.08 Captions........................................................... 56
9.09 Effect of Investigations........................................... 56
9.10 Severability....................................................... 56
9.11 Specific Enforceability............................................ 56
9.12 Waiver of Jury Trial............................................... 56
- v -
LIST OF SCHEDULES AND EXHIBITS
---- -- --------- --- --------
Schedule 1. Pre-Closing Transactions
Exhibit A. Form of Seller Option Agreement
Exhibit B. Form of Seller Stockholder's Agreement
Exhibit C. Form of Seller Affiliates Agreement
Exhibit D. Form of Bank Merger Agreement
Exhibit E. Buyer's Reduction in Force Policy
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
October 10, 1995, by and between Bank of Boston Corporation, a Massachusetts
corporation (the "Buyer"), and The Boston Bancorp, a Massachusetts corporation
(the "Seller").
The Buyer and the Seller deem it advisable and in the best interests of
their respective stockholders to consummate the business combination provided
for herein.
In consideration of the mutual covenants, representations, warranties and
agreements contained herein and in consideration of (a) the execution and
delivery of the Seller Option Agreement (as hereinafter defined in Article I
hereof) between the Seller and the Buyer pursuant to which the Seller has on
this day granted the Seller Option (as defined in Article I hereof) to the Buyer
and (b) the execution and delivery by the Principal Stockholder of the Seller
Stockholder's Agreement (as such terms are defined in Article I hereof), each as
a condition and inducement to the Buyer to enter into this Agreement, the
parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
Except as otherwise provided herein or as otherwise clearly required by the
context, the following terms shall have the respective meanings indicated when
used in this Agreement:
"Acquisition Merger" shall mean the merger of Merger Subsidiary with and
----------- ------
into Seller in accordance with the terms and conditions of this Agreement.
Acquisition Transaction" shall have the meaning ascribed thereto in Section
----------- -----------
5.03 hereof.
"Adjusted Net Worth" shall mean, as determined with respect to any given
-------- --- -----
date, the consolidated stockholders' equity of Seller determined in accordance
with GAAP as of such date, adjusted as follows:
(a) decreased by:
(i) all contracted severance costs related to the termination
of the employment of the persons listed on Schedule 5.13,
to the extent such costs have not previously been accrued;
-2-
(ii) all costs associated with the transactions contemplated by
this Agreement, including without limitation accounting,
legal, investment banking, brokerage and any other service
fees and related expenses, to the extent such fees and
expenses have not previously been accrued;
(iii) any prepayment penalties associated with the prepayment of
Federal Home Loan Bank borrowings, to the extent such
penalties have not previously been accrued;
(iv) any remaining book value and deferred tax attributes
related to partnership interests in Harbor Point and
▇▇▇▇▇▇▇▇ or related to advances previously made to the
Central Fund;
(v) any costs associated with the defeasement of the Seller's
medium-term notes, to the extent that such costs have not
previously been accrued; and
(b) increased by:
(i) the excess of (A) the deferred tax liability associated
with the recapture of the tax bad debt reserve, over (B)
the present value of that tax liability using an annual
discount rate of 14% and assuming that such deferred tax
liability will be paid ratably on the last day of each of
the 24 calendar quarters ending after the Closing Date;
(ii) the tax benefit realized or to be realized by the Seller or
the Buyer with respect to (a) nonqualified options as to
which the option holders have committed on or prior to the
Measurement Date to exercise such options after the
Measurement Date and on or prior to the Effective Time, (b)
incentive stock options as to which the option holders have
on or prior to the Measurement Date (i) exercised such
options or committed to exercise and have exercised such
options on or prior to the Effective Time and (ii)
committed to consummate and have consummated on or prior to
the Effective Time a disqualifying disposition of the
shares acquired upon exercise, or (c) any cash payments
which option holders have committed on or prior to the
Measurement Date to accept in lieu of their rights under
their options; and
(iii) (a) the amount of Seller's consolidated accrued pension
cost, calculated under Statement of Financial Accounting
Standards No. 87 as of the Measurement Date minus (b) the
amount of any deferred tax asset corresponding to such
accrued pension cost, minus (c) the amount, if
-3-
any, of the consolidated cash contributions required to be
made to Seller's pension plan to ensure that as of the
Measurement Date the current value of the assets of
Seller's Pension Plan is not more than $500,000 less than
the plan's "Benefit Liabilities" as that term is defined in
(S)4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if that plan terminated in
accordance with all applicable legal requirements (whether
or not such amount could lawfully be added to the plan at
the Measurement Date), plus (d) the amount of any tax
benefit that would be realizable by Buyer or by Seller
after the Measurement Date when and if it contributes to
the plan the amount determined in clause (c) above
attributable to the deductibility of such amount.
"Agreement" shall mean this Agreement and Plan of Reorganization by and
---------
among the Buyer, the Seller and the Savings Bank.
"Articles of Merger" shall have the meaning ascribed thereto in Section
-------- -- ------
2.07 hereof.
"Average Closing Price" shall have the meaning ascribed thereto in Section
------- ------- -----
2.09(a) hereof.
"Bank" shall mean The First National Bank of Boston.
----
"Bank Merger" shall mean the merger of the Savings Bank with and into the
---- ------
Bank in accordance with the terms and conditions of the Bank Merger Agreement.
"Bank Merger Agreement" shall mean the Agreement of Merger to be entered
---- ------ ---------
into by and between the Bank and the Savings Bank in substantially the form
attached hereto as Exhibit D.
------- -
"Bank Merger Effective Time" shall mean the specific time at which the Bank
---- ------ --------- ----
Merger has become effective in accordance with the terms and conditions
contained in the Bank Merger Agreement and applicable law.
"Bank Premises" shall mean the main office and all of the branch offices of
---- --------
the Savings Bank and all other facilities used in the ordinary course of the
business of the Savings Bank, including all of the real estate and improvements
located thereon which compose such offices and other banking premises.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
----
"BSE" shall mean the Boston Stock Exchange, Inc.
---
-4-
"Buyer Balance Sheet" shall have the meaning ascribed thereto in Section
----- ------- -----
3.05 hereof.
"Buyer Common Stock" shall have the meaning ascribed thereto in Section
----- ------ -----
3.02(a) hereof.
"Buyer Preferred Stock" shall have the meaning ascribed thereto in Section
----- --------- -----
3.02(a) hereof.
"Buyer Registration Statement" shall have the meaning ascribed thereto in
----- ------------ ---------
Section 5.04 hereof.
"Buyer Reports" shall have the meaning ascribed thereto in Section 3.11
----- -------
hereof.
"Buyer Rights Agreement" shall mean that Rights Agreement dated as of June
----- ------ ---------
28, 1990, as amended, between the Buyer and the Bank as Rights Agent.
"Central Fund" shall mean the Mutual Savings Central Fund, Inc.
------- ----
"Closing Date " shall mean the date on which the Effective Time occurs.
------- ----
"CMPs" shall have the meaning ascribed thereto in Section 3.12 hereof.
----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
---------
hereof.
"Confidentiality Agreement" shall mean that certain letter agreement
--------------- ---------
between the Buyer and the Seller dated April 24, 1995.
"Confidential Information" shall have the meaning ascribed thereto in
------------ -----------
Section 5.02(b) hereof.
"Constituent Corporations" shall have the meaning ascribed thereto in
----------- ------------
Section 2.01 hereof.
"Conversion Number" shall have the meaning ascribed thereto in Section
---------- ------
2.09(a) hereof.
"CRE Loans" shall have the meaning ascribed thereto in Section 5.21 hereof.
--- -----
"Deposits" shall mean the deposits (as such term is defined under Section
--------
3(1) of the FDIA) reflected in the Records of the Savings Bank as of the close
of business on the Measurement Date, and shall include, but shall not be limited
to, deposits which are
-5-
maintained in the following types of accounts: (i) passbook/statement savings
accounts; (ii) 90-day accounts (i.e., special notice accounts); (iii) NOW and
SuperNOW Accounts (i.e., negotiable order of withdrawal accounts); (iv) money-
market accounts; (v) demand deposit accounts; (vi) certificates of deposit;
(vii) escrow accounts; (viii) time deposit accounts; and (ix) individual
retirement accounts ("IRAs"). Deposits shall also include all uncollected items
included in the depositors' balances and credited on the books of the Savings
Bank as of the close of business on the Measurement Date.
"Deposit Liabilities" shall mean the obligation of the Savings Bank, as of
------- -----------
the close of business on the Measurement Date, to pay the principal balances of,
and interest or dividends on, all accounts relating to the Deposits in
accordance with the terms of the contracts by which such accounts were created
or otherwise as required by law.
"Disagreement" shall have the meaning ascribed thereto in Section 2.14(b)
------------
hereof.
"Dissenting Holder" shall have the meaning ascribed thereto in section
---------- ------
2.09(c) hereof.
"Dissenting Shares" shall have the meaning ascribed thereto in Section
---------- ------
2.09(c) hereof.
"DOJ" shall mean the United States Department of Justice.
---
"DPC Shares" shall have the meaning ascribed thereto in Section 3.14
--- ------
hereof.
"Effective Time" shall mean the specific time on the Closing Date at which
--------- ----
the Acquisition Merger has become effective pursuant to the laws of the
Commonwealth of Massachusetts.
"EPA" shall mean the United States Environmental Protection Agency.
---
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Exchange Act" shall have the meaning ascribed thereto in Section 3.05
-------- ---
hereof.
"Exchange Agent" shall have the meaning ascribed thereto in Section 2.13
-------- -----
hereof.
"Excluded Employees" shall have the meaning ascribed thereto in Section
-------- ---------
5.13 hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
----
"FDIC" shall mean the Federal Deposit Insurance Corporation.
----
-6-
"Federal Reserve Board" shall mean the Board of Governors of the Federal
------- ------- -----
Reserve System or the Federal Reserve Bank of Boston, as applicable.
"GAAP" shall mean generally accepted accounting principles and practices in
----
effect from time to time within the United States applied consistently
throughout the period involved.
"HOLA" shall mean the Home Owners Loan Act of 1933, as amended.
----
"Independent Accounting Firm" shall mean any "Big Six" accounting firm or
----------- ---------- ----
its successor (other than the respective independent public accountants of each
of Buyer and Seller.
"Injunction" shall have the meaning ascribed thereto in Section 6.01(d)
----------
hereof.
"IRS" shall mean the United States Internal Revenue Service.
---
"Loans" shall have the meaning set forth in Section 4.25 hereof.
-----
"Massachusetts Board" shall have the meaning ascribed thereto in Section
------------- -----
3.04 hereof.
"Massachusetts Commissioner" shall have the meaning ascribed thereto in
------------- ------------
Section 3.04 hereof.
"Material Adverse Effect" shall mean with respect to Buyer or Seller, or
-------- ------- ------
any other entity, a material adverse effect on the assets, properties,
liabilities (including without limitation any material reduction in Deposit
Liabilities), business, operations, results of operations or financial condition
of Buyer or Seller or such other entity, as the case may be, and its
subsidiaries, taken as a whole; provided, however, that any material adverse
effect on the assets, properties, liabilities, business, operations, results of
operations or financial condition of Seller and its subsidiaries, taken as a
whole, resulting from activities permitted or required by Section 5.18 hereof
shall not be taken into account in determining whether a Material Adverse Effect
has occurred for purposes of this Agreement.
"MBCL" shall mean the Massachusetts Business Corporation Law, as amended.
----
"Measurement Date" shall mean that day which (i) is the last day of a
----------- ----
calendar month and (ii) precedes the Closing Date by not less than ten (10) nor
more than twenty-three (23) business days.
"Measurement Date Documents" shall have the meaning ascribed thereto in
----------- ---- ---------
Section 2.14(a) hereof.
-7-
"Merger Subsidiary" shall mean that certain business corporation, which
------ ----------
shall be organized as a wholly-owned direct or indirect subsidiary of Buyer
under the laws of the Commonwealth of Massachusetts for the purpose of merging
with the Seller pursuant to the terms of this Agreement.
"Merger Subsidiary Common Stock" shall have the meaning ascribed thereto in
------ ---------- ------ -----
Section 5.10 hereof.
"MHPF" shall mean the Massachusetts Housing Partnership Fund.
----
"NASD" shall mean the National Association of Securities Dealers, Inc.
----
"Notice of Disagreement" shall have the meaning ascribed thereto in Section
------ -- ------------
2.14(b) hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
----
"OCC" shall mean the Office of the Comptroller of the Currency of the
---
United States Department of the Treasury.
"OTS" shall mean the Office of Thrift Supervision of the United States
---
Department of the Treasury.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Pre-Closing Transactions" shall mean all of those transactions that are
----------- ------------
further described in Schedule 1 to this Agreement, which shall or may be
completed by the Seller and its subsidiaries, as applicable, on or prior to the
close of business on the Measurement Date in accordance with the terms of this
Agreement.
"Principal Stockholder" shall mean Chieftain Capital Management, Inc.
--------- -----------
"Proxy Statement" shall have the meaning ascribed thereto in Section
----- ---------
5.04(a) hereof.
"Records" means all records and original documents in the Seller's
-------
possession which pertain to and are utilized by the Seller and its subsidiaries
to administer, reflect, monitor, evidence or record information respecting
Seller's consolidated business and operations, including but not limited to all
records and documents relating to (a) corporate, regulatory, supervisory and
litigation matters, (b) tax planning and payment of taxes, (c) personnel and
employment matters, and (d) the business or conduct of the consolidated business
of the Seller.
"Requisite Regulatory Approvals" shall have the meaning ascribed thereto in
--------- ---------- ---------
Section 6.01(b) hereof.
-8-
"Savings Bank" shall mean Seller's wholly owned subsidiary, South Boston
------- ----
Savings Bank.
"SEC" shall have the meaning ascribed thereto in Section 3.04 hereof.
---
"Securities Act" shall mean the Securities Act of 1933, as amended (15
---------- ---
U.S.C. (S)77a et seq.).
-- ---
"Seller" shall have the meaning ascribed thereto in the preamble to this
------
Agreement.
"Seller Affiliates" shall have the meaning ascribed thereto in Section 5.06
------ ----------
hereof.
"Seller Affiliates Agreement" shall mean the form of written agreement to
------ ---------- ---------
be executed and delivered to the Buyer prior to the Effective Time by the Seller
Affiliates, substantially in the form attached hereto as Exhibit C.
------- -
"Seller Balance Sheet" shall have the meaning ascribed thereto in Section
------ ------- -----
4.05 hereof.
"Seller Benefit Plans" shall have the meaning ascribed thereto in Section
------ ------- -----
4.11(a) hereof.
"Seller Common Stock" shall have the meaning ascribed thereto in Section
------ ------ -----
4.02(a) hereof.
"Seller Disclosure Schedule" shall have the meaning ascribed thereto in
------ ---------- --------
Section 4.02(b) hereof.
"Seller ESOP" shall mean Seller's Employee Stock Ownership Plan.
------ ----
"Seller Option" shall mean the option granted to the Buyer pursuant to the
------ ------
Seller Option Agreement.
"Seller Option Agreement" shall mean that certain stock option agreement of
------ ------ ---------
even date herewith by and between the Buyer and the Seller in the form attached
hereto as Exhibit A.
------- -
"Seller Other Plans" shall have the meaning ascribed thereto in Section
------ ----- -----
4.11(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in Section
------ ------- -----
4.11(a) hereof.
-9-
"Seller Preferred Stock" shall have the meaning ascribed thereto in Section
------ --------- -----
4.02(a) hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section 4.15
------ -------
hereof.
"Seller Stock Option Plan" means the Seller's 1983, 1986 and 1989 Stock
------ ----- ------ ----
Option Plans, considered collectively, each as may be amended and currently in
effect.
"Seller Stockholders' Agreement" means that certain letter agreement or
------ ------------- ---------
agreements of even date herewith executed and delivered to the Buyer by each of
the Principal Stockholders in the form attached hereto as Exhibit B.
------- -
"Significant Subsidiary" shall have the meaning ascribed thereto in Section
----------- ----------
3.01(b) hereof.
"subsidiaries" shall mean, when used with reference to a party, any
------------
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any subsidiary of such party do not have a majority of the voting
interests in such partnership) or, with respect to such corporation or other
organization, at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries.
"Surviving Corporation" shall have the meaning ascribed thereto in Section
--------- -----------
2.01 hereof.
"Tax" shall have the meaning ascribed thereto in Section 4.10(r)(A) hereof.
---
"Tax Return" shall have the meaning ascribed thereto in Section 4.10(r)(B)
--- ------
hereof.
"Termination Date" shall have the meaning ascribed thereto in Section
----------- ----
8.01(b) hereof.
"Trust Account Shares" shall have the meaning ascribed thereto in Section
----- ------- ------
3.12 hereof.
"Valuation Period" shall have the meaning ascribed thereto in Section
--------- ------
2.09(a) hereof.
-10-
ARTICLE II
THE ACQUISITION MERGER
--- ----------- ------
2.01 Surviving Corporation. In accordance with the provisions of this
--------- -----------
Article II and Section 78 of the MBCL, at the Effective Time, Merger Subsidiary
shall be merged with and into Seller (the two merging corporations being
sometimes collectively referred to herein as the "Constituent Corporations") and
----------- ------------
the separate corporate existence of Merger Subsidiary shall cease. Seller shall
be the surviving corporation in the Acquisition Merger (hereinafter sometimes
referred to as the "Surviving Corporation") and shall continue its corporate
--------- -----------
existence under the laws of the Commonwealth of Massachusetts. The name of the
Surviving Corporation shall be "The Boston Bancorp".
2.02 Purposes and Authorized Capital Stock of Surviving Corporation. As
-------- --- ---------- ------- ----- -- --------- -----------
of the Effective Time, the purposes and authorized capital stock of the
Surviving Corporation shall be as stated in the Articles of Organization of
Seller immediately prior to the Effective Time.
2.03 Effect of the Acquisition Merger.
------ -- --- ----------- ------
(a) At the Effective Time, all of the estate, property, rights,
privileges, powers and franchises of the Constituent Corporations and all
of their property, real, personal and mixed, and all the debts due on
whatever account to any of them, as well as all stock subscriptions and
other choses in action belonging to any of them, shall be transferred to
and vested in the Surviving Corporation, without further act or deed, and
all claims, demands, property and other interest shall be the property of
the Surviving Corporation, and the title to all real estate vested in any
of the Constituent Corporations shall not revert or be in any way impaired
by reason of the Acquisition Merger, but shall be vested in the Surviving
Corporation.
(b) From and after the Effective Time, the rights of creditors
of any Constituent Corporation shall not in any manner be impaired, nor
shall any liability or obligation, including taxes due or to become due, or
any claim or demand in any cause existing against such corporation, or any
stockholder, director, or officer thereof, be released or impaired by the
Acquisition Merger, but the Surviving Corporation shall be deemed to have
assumed, and shall be liable for, all liabilities and obligations of each
of the Constituent Corporations in the same manner and to the same extent
as if the Surviving Corporation had itself incurred such liabilities or
obligations. The stockholders, directors, and officers of the Constituent
Corporations shall continue to be subject to all liabilities, claims and
demands existing against them as such at or before the Acquisition Merger.
No action or proceeding then pending before any court or tribunal of the
Commonwealth of Massachusetts or otherwise in which any Constituent
Corporation is a party, or in which any such
-11-
stockholder, director, or officer is a party, shall ▇▇▇▇▇ or be
discontinued by reason of the Acquisition Merger, but any such action or
proceeding may be prosecuted to final judgment as though no merger had
taken place, or the Surviving Corporation may be substituted as a party in
place of any Constituent Corporation by the court in which such action or
proceeding is pending.
2.04 Additional Actions. If, at any time after the Effective Time,
---------- -------
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Acquisition Merger or to otherwise carry out this Agreement, the officers and
directors of the Surviving Corporation shall and will be authorized to execute
and deliver, in the name and on behalf of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of the Constituent Corporations or otherwise,
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Corporation or to otherwise carry
out the purposes and intent of this Agreement.
2.05 Articles of Organization and By-laws. The Articles of Organization
-------- -- ------------ --- -------
and the By-Laws of Seller, as in effect immediately prior to the Effective Time,
shall be the Articles of Organization and the By-laws of the Surviving
Corporation and, subject to the rights of Buyer as the sole stockholder, shall
thereafter continue to be the Surviving Corporation's Articles of Organization
and By-Laws until amended as provided therein or by applicable law.
2.06 Directors and Officers. The directors and officers of Merger
--------- --- --------
Subsidiary immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation, subject to the rights of Buyer as the
sole stockholder, each to hold office in accordance with the Articles of
Organization and By-Laws of the Surviving Corporation.
2.07 Effective Time; Conditions. If all of the conditions precedent set
--------- ----- ----------
forth in Article VI hereof have been satisfied or waived (to the extent
permitted by law), and this Agreement has not otherwise been properly terminated
under Article VIII hereof, the appropriate form of articles of merger with
respect to the Acquisition Merger shall be prepared by Merger Subsidiary and
Seller and filed and recorded pursuant to Section 78(d) of the MBCL with the
Massachusetts Secretary of State (as so filed and recorded, the "Articles of
-------- --
Merger"). The Acquisition Merger shall become effective at, and the Effective
------
Time shall be, the time specified in the Articles of Merger.
2.08 Dissenters' Appraisal Rights. Any Dissenting Holder (i) who files
----------- --------- ------
with Seller an objection to the Acquisition Merger in writing before the
approval of this Agreement by
-12-
the stockholders of Seller and who states in such objection that he intends to
demand payment for his shares of Seller Common Stock if the Acquisition Merger
is concluded and (ii) whose shares of Seller Common Stock are not voted in favor
of the Acquisition Merger shall be entitled to demand payment for his shares of
Seller Common Stock and an appraisal of the value thereof, in accordance with
the provisions of Sections 86 through 98 of the MBCL.
2.09 Effect on Outstanding Shares.
------ -- ----------- ------
(a) Seller Common Stock. By virtue of the Acquisition Merger,
------ ------ -----
automatically and without any action on the part of the holder thereof,
each share of Seller Common Stock issued and outstanding immediately prior
to the Effective Time (other than Dissenting Shares and any such shares
held directly or indirectly by Buyer, other than Trust Account Shares and
DPC Shares, and any such shares held as treasury stock by Seller) shall
become and be converted into the number of shares or fraction of a share of
Buyer Common Stock (together with the number of Buyer Rights associated
therewith), rounded to the nearest thousandth of a share, equal to the
Conversion Number. The "Conversion Number" shall be equal to the quotient
---------- ------
of dividing
(i) the sum of (A) the Adjusted Net Worth as of the close of
business on the Measurement Date, (B) $40,640,806.00, (C)
the product of $40,000.00 and the number of days after the
Measurement Date to and including the Closing Date, and (D)
the aggregate exercise price of all options to purchase
Seller Common Stock outstanding at the close of business on
the Measurement Date, by
(ii) the product of (A) Average Closing Price, and (B) the sum
of the number of shares of Seller Common Stock and options
to purchase Seller Common Stock outstanding at the close of
business on the Measurement Date.
As of the Effective Time, each share of Seller Common Stock held directly
or indirectly by Buyer, other than Trust Account Shares and DPC Shares, and
held by Seller as treasury stock shall be canceled, retired and cease to
exist, and no payment shall be made with respect thereof. For purposes of
this Agreement, "Average Closing Price" shall mean the average of the
------- ------- -----
closing prices of shares of Buyer Common Stock as reported on the NYSE
composite transactions reporting system for the twenty consecutive trading
days ending on the third business day prior to the Closing Date (such
period being the "Valuation Period").
--------- ------
(b) Merger Subsidiary Common Stock. By virtue of the
------ ---------- ------ -----
Acquisition Merger, automatically and without any action on the part of the
holder thereof, each share of Merger Subsidiary Common Stock issued and
outstanding immediately prior
-13-
to the Effective Time shall become and be converted into 1.00 share of
common stock of the Surviving Corporation, par value $1.00 per share
("Surviving Corporation Common Stock"). Each certificate which immediately
--------- ----------- ------ -----
prior to the Effective Time represented outstanding shares of Merger
Subsidiary Common Stock shall on and after the Effective Time be deemed for
all purposes to represent the number of shares of Surviving Corporation
Common Stock into which the shares of Merger Subsidiary Common Stock
represented by such certificate shall have been converted pursuant to this
Section 2.09(b).
(c) Dissenting Shares. No conversion under Section 2.09(a)
---------- ------
hereof shall be made with respect to the shares of Seller Common Stock held
by a Dissenting Holder (such shares being referred to herein as "Dissenting
----------
Shares"); provided, however, each Dissenting Share outstanding immediately
------
prior to the Effective Time and held by a Dissenting Holder who shall,
after the Effective Time, withdraw his demand for appraisal or lose his
right of appraisal, in either case pursuant to the applicable provisions of
the MBCL, shall be deemed to be converted, as of the Effective Time, into
shares of Buyer Common Stock as specified in Section 2.09(a) hereof. For
purposes of this Agreement, the term "Dissenting Holder" shall mean a
---------- ------
holder of shares of Seller Common Stock who has demanded appraisal rights
in compliance with the applicable provisions of the MBCL concerning the
right of such holder to dissent from the Acquisition Merger and demand
appraisal of such holder's shares of Seller Common Stock. Any payments made
by Buyer to Dissenting Holders after the Effective Time shall be funded by
Buyer's utilizing assets that were either in its possession on a
consolidated basis prior to the Effective Time or otherwise not acquired by
Buyer on a consolidated basis as a result of the consummation of the
Acquisition Merger.
2.10 Anti-Dilution. In the event that during the period beginning on the
-------------
first day of the Valuation Period and ending on the Closing Date the outstanding
shares of Buyer Common Stock (or the number of Buyer Rights) shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through reorganization, recapitalization,
reclassification, stock (or other non-cash) dividend, stock split, reverse stock
split, or other like changes in Buyer's capitalization (a "Recapitalization"),
----------------
then to the extent necessary or appropriate an appropriate and proportionate
adjustment shall be made to the number and/or kind of securities to be delivered
to the holders of Seller Common Stock so that each holder of Seller Common Stock
shall receive under Section 2.09(a) hereof the number of shares of Buyer Common
Stock (or the number of Buyer Rights) and/or other securities that such holder
would have received if the Recapitalization had occurred immediately after the
Effective Time.
2.11 Procedures.
----------
(a) Certificates which represent shares of Seller Common Stock
that are outstanding immediately prior to the Effective Time (each, in each
case, a
-14-
"Certificate") and are converted into shares of Buyer Common Stock
-----------
pursuant to this Article II shall, after the Effective Time, be deemed to
represent shares of the Buyer Common Stock into which such shares have
been converted and shall be exchangeable by the holders thereof in the
manner provided in the transmittal materials described below for new
certificates representing the shares of Buyer Common Stock into which such
shares have been converted.
(b) Buyer shall use all reasonable efforts to cause the
Exchange Agent to send to each holder of record of shares of Seller Common
Stock outstanding at the Effective Time as promptly as practicable, and in
any event within three days after the Effective Time, transmittal
materials (which shall be reviewed with and be reasonably acceptable to
Seller) for use in exchanging the Certificates for such shares for
certificates for shares of Buyer Common Stock into which such shares of
Seller Common Stock have been converted pursuant to this Article II. Upon
surrender of a Certificate, together with a duly executed letter of
transmittal and any other required documents, the holder of such
Certificate shall be entitled to receive, in exchange therefor, a
certificate for the number of shares of Buyer Common Stock to which such
holder is entitled, and such Certificate shall forthwith be canceled. No
dividend or other distribution payable after the Effective Time with
respect to Buyer Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof surrenders such
Certificate in accordance with the provisions of this Article II and the
transmittal materials, at which time such holder shall receive all
dividends and distributions, without interest thereon, previously payable
but withheld from such holder pursuant hereto. After the Effective Time,
there shall be no transfers on the stock transfer books of Seller of
shares of Seller Common Stock which were issued and outstanding at the
Effective Time and converted pursuant to the provisions of this Article
II. If, after the Effective Time, Certificates are presented for transfer
to Seller, they shall be canceled and exchanged for the shares of Buyer
Common Stock deliverable in respect thereof as determined in accordance
with the provisions and procedures set forth in this Article II.
(c) In lieu of the issuance of fractional shares of Buyer
Common Stock pursuant to Section 2.09(a) hereof, cash adjustments, without
interest, will be paid to the holders of Seller Common Stock in respect of
any fractional share that would otherwise be issuable and the amount of
such cash adjustment shall be equal to an amount in cash determined by
multiplying such holder's fractional interest by the Average Closing Price
(rounded up to the nearest cent). For purposes of determining whether, and
in what amounts, a particular holder of Seller Common Stock would be
entitled to receive cash adjustments under this Section 2.11(c), shares of
record held by such holder and represented by two or more Certificates
shall be aggregated.
(d) After the Effective Time, holders of Seller Common Stock
shall have no rights as stockholders of Seller, other than (i) to receive
shares of Buyer Common Stock into which such shares of Seller Common Stock
have been converted and
-15-
fractional share payments, if any, pursuant to the provisions of Section
2.11(c) above and (ii) the rights afforded to any Dissenting Holder under
applicable provisions of the MBCL.
(e) Notwithstanding the foregoing, neither Buyer nor Seller nor
any other person shall be liable to any former holder of shares of Seller
Common Stock for any shares or any dividends or distributions with respect
thereto properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen
or destroyed, upon receipt of appropriate evidence as to such loss, theft
or destruction and to the ownership of such Certificate by the person
claiming such Certificate to be lost, stolen or destroyed, and the receipt
by Buyer of appropriate and customary indemnification, Buyer will issue in
exchange for such lost, stolen or destroyed Certificate shares of Buyer
Common Stock and the fractional share payment, if any, deliverable in
respect thereof as determined in accordance with this Article II.
(g) If any certificate representing shares of Buyer Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of
the issuance thereof that the Certificate so surrendered shall be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
otherwise in proper form for transfer (including, but not limited to, that
the signature of the transferor shall be properly guaranteed by a
commercial bank, trust company or member firm of the NYSE, and that the
person requesting such exchange shall pay to the Exchange Agent in advance
any transfer or other taxes required by reason of the issuance of a
certificate representing shares of Buyer Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or
required for any other reason, or shall establish to the reasonable
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
2.12 Treatment of Seller Stock Options. Each stock option granted by
--------- ------ ----- -------
Seller pursuant to the Seller Stock Option Plan outstanding and unexercised
immediately prior to the Effective Time shall be converted into an option to
purchase shares of Buyer Common Stock with the following terms:
(a) The number of shares of Buyer Common Stock shall be equal
to the product of the number of shares of Seller Common Stock previously
subject thereto and the Conversion Number, rounded up to the nearest whole
share for non-statutory options and rounded down to the nearest whole share
for incentive stock options; and
(b) The exercise price per share of Buyer Common Stock
shall be equal to the exercise price per share of Seller Common Stock
previously subject thereto divided by the Conversion Number, rounded
up to the nearest cent; and
-16-
(c) The duration and other terms of the option shall be
unchanged except that all references to Seller shall be deemed to be
references to Buyer; and
(d) Buyer shall assume the option as contemplated by Section
424(a) of the Code.
2.13 Exchange Agent. Prior to the Effective Time, Buyer shall appoint
-------- -----
an exchange agent for the purpose of exchanging certificates representing shares
of Buyer Common Stock for Certificates (the "Exchange Agent"). Buyer shall issue
-------- -----
and deliver to the Exchange Agent certificates representing the shares of Buyer
Common Stock to be issued and shall pay to the Exchange Agent the aggregate cash
amount to be paid in lieu of fractional share interests, all in accordance with
the terms of this Article II.
2.14 Delivery of Measurement Date Documents.
-------- -- ----------- ---- ---------
(a) Within five (5) days following the Measurement Date, and
prior to the Effective Time, Seller shall prepare and deliver to Buyer (i)
an unaudited consolidated balance sheet of Seller, prepared in accordance
with GAAP as of the close of business on the Measurement Date and (ii) a
schedule calculating the Adjusted Net Worth as of the close of business on
the Measurement Date (collectively, the Measurement Date Documents").
(b) Within five (5) days after Seller's delivery of the
Measurement Date Documents to Buyer, and in any event prior to the
Effective Time, Buyer may dispute the amount of the Adjusted Net Worth
contained in the Measurement Date Documents by giving written notice (a
"Notice of Disagreement") to Seller setting forth in reasonable detail the
------ -- ------------
basis for such dispute (such dispute being referred to herein as a
"Disagreement"). The parties shall promptly commence good faith
------------
negotiations with a view to resolving such Disagreement. If Buyer does not
give a Notice of Disagreement in accordance with the provisions of the
first sentence of this Section 2.14(b) within the five (5) day period set
forth therein, Buyer shall be deemed to have irrecoverably accepted the
amount of the Adjusted Net Worth as set forth in the Measurement Date
Documents delivered to Buyer by Seller.
(c) If Buyer shall deliver a Notice of Disagreement to Seller
in accordance with Section 2.14(b) above, and within five (5) days
following Buyer's delivery to Seller of such Notice of Disagreement Buyer
and Seller do not resolve the Disagreement, such Disagreement shall be
referred to an Independent Accounting Firm mutually selected by Buyer and
Seller for a resolution of such Disagreement in accordance with the terms
of this Agreement. Any failure by Seller to respond to a Notice of
Disagreement within the five (5) day period set forth in the preceding
sentence shall be deemed to be a conclusive indication by Seller that it is
in agreement with the changes to the Measurement Date Documents proposed by
Buyer
-17-
in such Notice of Disagreement. If Seller and Buyer do not immediately
agree on the selection for an Independent Accounting Firm, their respective
independent public accountants shall immediately select such firm. Such
firm shall resolve the Disagreement as soon as possible and, in any event,
within seven (7) days after its selection. The determinations of such firm
with respect to any Disagreement shall be final and binding upon the
parties and the amount(s) so determined shall be used to complete the final
Measurement Date Documents, which shall serve as the basis for determining
the Conversion Number under Section 2.09(a) above and/or Seller's
satisfaction of the condition set forth in Section 6.02(f) below. All of
the fees and expenses of any Independent Accounting Firm retained pursuant
to this Section 2.14(c) shall be paid by the Buyer, if the Independent
Accounting Firm agrees with the position asserted by the Seller; shall be
paid by the Seller, if the Independent Accounting Firm agrees with the
position asserted by the Buyer; or shall be split evenly by the Buyer and
the Seller if the Independent Account Firm does not agree with either the
Buyer or the Seller.
(d) Following the final completion of the Measurement Date
Documents and related final determination of the amount of the Adjusted Net
Worth as of the close of business on the Measurement Date, all in
accordance with the provisions of Sections 2.14(a) through 2.14(c) above,
and subject to the satisfaction or waiver (to the extent legally permitted)
of the conditions set forth in Article VI of this Agreement, the parties
shall promptly consummate the Acquisition Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
--------------- --- ----------
OF BUYER
-- -----
Buyer hereby represents and warrants to Seller and the Savings Bank as
follows:
3.01 Corporate Organization.
--------- ------------
(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts.
The Buyer has the corporate power and authority to own, lease or operate
all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in, with
respect to the Buyer, a Material Adverse Effect. The Buyer is a bank
holding company registered with the Federal Reserve Board under the BHCA.
-18-
(b) Each subsidiary of the Buyer that is a "significant
subsidiary" as such term is defined in Regulation S-X of the SEC (each a
"Significant Subsidiary" and together the "Significant Subsidiaries") is
----------- ---------- ----------- ------------
duly organized, validly existing and in corporate good standing under the
laws of the jurisdiction of its incorporation. Each Significant Subsidiary
of the Buyer has the corporate power and authority to own, lease or operate
all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased, or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would neither individually
nor in the aggregate, result in, with respect to the Buyer, a Material
Adverse Effect.
3.02 Capitalization. The authorized capital stock of the Buyer consists
--------------
of 200,000,000 shares of common stock, par value $2.25 per share (the "Buyer
-----
Common Stock"), and 10,000,000 shares of preferred stock, no par value (the
------ -----
"Buyer Preferred Stock"). As of the close of business on September 30, 1995
----- --------- -----
there were 112,161,218 shares of the Buyer Common Stock issued and outstanding
and a total of 4,593,941 shares of the Buyer Preferred Stock issued and
outstanding (in the form of 1,044,843 shares of Adjustable Rate Cumulative
Preferred Stock, Series A, 1,574,783 shares of Adjustable Rate Cumulative
Preferred Stock, Series B, 774,783 shares of Adjustable Rate Cumulative
Preferred Stock, Series C, 920,000 shares of 8.60% Cumulative Preferred Stock,
Series E (represented by 92,000 depositary shares) and 280,000 shares of 7.875%
Cumulative Preferred Stock, Series F (represented by 28,000 depositary shares)).
As of the close of business on September 30, 1995, the Buyer had 112,161,218
preferred stock purchase rights issued and outstanding pursuant to the Buyer
Rights Agreement, which entitle the holders thereof to purchase shares of Junior
Participating Preferred Stock, Series D, under certain circumstances. As of the
close of business on September 30, 1995, there were 200,000 shares of Junior
Participating Preferred Stock, Series D, reserved for issuance upon exercise of
such preferred stock purchase rights, none of which shares were issued and
outstanding. There were also no shares of the Buyer Common Stock held in the
Buyer's treasury as of the close of business on September 30, 1995. In addition,
as of the close of business on September 30, 1995, there were 3,732,000 shares
of the Buyer Common Stock reserved for issuance upon exercise of outstanding
stock options. All issued and outstanding shares of the Buyer Common Stock and
the Buyer Preferred Stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
3.03 Authority; No Violation.
--------- -- ---------
(a) The Buyer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly approved
by the Board
-19-
of Directors of the Buyer. No other corporate proceedings on the part of
the Buyer are necessary to consummate any of the transactions so
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by the Buyer and (assuming due authorization,
execution and delivery by the Seller) constitutes the valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with
its terms, except that enforcement hereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(b) The Bank has full corporate power and authority to execute
and deliver the Bank Merger Agreement and to consummate the Bank Merger.
When the Bank Merger Agreement is duly and validly executed by the Bank, as
contemplated under Section 5.19 below, and assuming that the Bank Merger
Agreement is duly authorized, executed and delivered by the Savings Bank,
the Bank Merger Agreement shall constitute a valid and binding obligation
of the Bank, enforceable against the Bank in accordance with its terms,
except that enforcement thereof may be limited by receivership,
conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting enforcement of creditors' rights generally and
except that enforcement thereof may be subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and the availability of equitable remedies. Except for
the due authorization, execution and delivery of the Bank Merger Agreement
by the Bank and the adoption of the Bank Merger Agreement by the Buyer and
one or more wholly owned subsidiaries of the Buyer in their capacity as the
stockholders of the Bank, all as contemplated under Section 5.19 below, no
other corporate proceedings on the part of the Bank are necessary to
consummate the Bank Merger.
(c) Neither the execution and delivery of this Agreement and
the Bank Merger Agreement by the Buyer and the Bank, respectively, nor the
consummation by the Buyer and the Bank, as applicable, of the transactions
contemplated by this Agreement and the Bank Merger Agreement, nor
compliance by the Buyer and the Bank, as applicable, with any of the terms
or provisions of this Agreement and the Bank Merger Agreement, will (i)
assuming that the consents and approvals referred to in Section 3.04 hereof
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Buyer or any
of its subsidiaries or any of their respective properties or assets, or,
(ii) violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of
-20-
termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the respective properties or assets
of the Buyer or any of its subsidiaries under, any of the terms, conditions
or provisions of (A) the articles of organization, certificate of
incorporation or other charter document of like nature or by-laws of the
Buyer, or such Buyer subsidiary, as the case may be, or (B) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Buyer or any of its subsidiaries is a
party thereto as issuer, guarantor or obligor, or by which they or any of
their respective properties or assets may be bound or affected, except, in
the case of clauses (i) and (ii)(B) above, for such violations, conflicts,
breaches or defaults which either individually or in the aggregate will not
result, with respect to the Buyer, in a Material Adverse Effect.
3.04 Consents and Approvals. Except for consents, waivers or approvals
-------- --- ---------
of, notice to, or filings or registrations with, the Federal Reserve Board, the
Massachusetts Board of Bank Incorporation (the "Massachusetts Board"), the OTS,
------------- -----
the OCC, the Massachusetts Commissioner of Banks (the "Massachusetts
-------------
Commissioner"), the Securities and Exchange Commission (the "SEC"), the NYSE,
------------ ---
the BSE, the Central Fund, the MHPF, the DOJ, the Massachusetts Secretary of
State and certain state "Blue Sky" or securities commissioners, no consents,
waivers or approvals of, notices to, or filings or registrations with, any
public body or authority are necessary, and no consents or approvals of or
notices to any third parties (which term does not include the Board of Directors
of the Buyer or of the Bank or the stockholders of the Bank) are necessary, in
connection with (i) the execution and delivery by the Buyer of this Agreement,
(ii) the execution and delivery by the Bank of the Bank Merger Agreement or
(iii) the consummation by the Buyer and the Bank of the transactions
contemplated by this Agreement and the Bank Merger Agreement. As of the date
hereof, Buyer is not aware of any reason why the approvals described in Section
6.03(c) could not be obtained without significant delay.
3.05 Financial Statements. The Buyer has made available to the Seller
--------- ----------
copies of (a) the consolidated balance sheets of the Buyer and its subsidiaries
as of December 31 for the fiscal years 1992 through 1994, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in the
Buyer Annual Reports on Form 10-K for each of the three fiscal years ended
December 31, 1992 through December 31, 1994 filed with the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case
-------- ---
accompanied by the audit report of Coopers & ▇▇▇▇▇▇▇, independent accountants
for the Buyer and (b) the unaudited consolidated balance sheet of the Buyer and
its subsidiaries as of June 30, 1995, the related unaudited consolidated
statements of income for the three and six months ended June 30, 1995 and June
30, 1994, the related unaudited consolidated changes in stockholders' equity for
the six months ended June 30, 1995 and June 30, 1994 and the related unaudited
consolidated statements of cash flows for the six months ended June 30, 1995 and
June 30, 1994, all as reported in the Buyer's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995 filed with the SEC under the Exchange Act. The
-21-
December 31, 1994 consolidated balance sheet (the "Buyer Balance Sheet") of the
----- ------- -----
Buyer (including the related notes, where applicable) and the other financial
statements referred to herein (including the related notes, where applicable)
fairly present, and the financial statements to be included in any reports or
statements (including reports on Forms 10-Q 10-K and 8-K) to be filed by the
Buyer with the SEC after the date hereof will fairly present, the consolidated
financial position and results of the consolidated operations and cash flows and
changes in stockholders' equity of the Buyer and its subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; and
each of such statements (including the related notes, where applicable) has been
and will be prepared in accordance with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto (subject,
in the case of unaudited interim statements, to normal year-end adjustments).
The books and records of the Buyer and its subsidiaries have been, and are
being, maintained in accordance with GAAP and applicable legal and regulatory
requirements.
3.06 Absence of Undisclosed Liabilities. As of June 30, 1995, none of
------- -- ----------- -----------
the Buyer or any of its subsidiaries had any obligation or liability (contingent
or otherwise) that is material on a consolidated basis to the Buyer, or that
when combined with all similar obligations or liabilities would be material on a
consolidated basis to the Buyer, except as disclosed or reflected in the Buyer's
unaudited consolidated balance sheet as of such date.
3.07 Broker's Fees. Neither the Buyer nor any of its officers or
-------- ----
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement and the Bank Merger Agreement.
3.08 Absence of Certain Changes or Events. Since June 30, 1995, the
------- -- ------- ------- -- ------
Buyer and its subsidiaries have not incurred any material liability, except in
the ordinary course of their business consistent with their past practices, nor
has there been any change in the business, assets, financial condition or
results of operations of the Buyer or any of its subsidiaries which has had,
individually or in the aggregate, a Material Adverse Effect on the Buyer.
3.09 Legal Proceedings. There is no suit, action or proceeding pending
----- -----------
or, to the best knowledge of the Buyer, threatened, against the Buyer or any
subsidiary of the Buyer or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Bank Merger Agreement, as to
which there is a reasonable probability of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, have a
Material Adverse Effect on the Buyer or otherwise materially adversely affect
the Buyer's or the Bank's ability to perform its obligations under this
Agreement and the Bank Merger Agreement, as applicable, nor is there any
judgment, decree, injunction, rule or order of any legal or administrative body
or arbitrator outstanding against the Buyer or any subsidiary of the Buyer
having any such effect.
-22-
3.10. Agreements with Banking Authorities. Neither Buyer nor any of its
---------- ---- ------- -----------
subsidiaries is a party to any commitment, letter, written agreement, memorandum
of understanding or order to cease and desist with, or has adopted any
resolutions at the request of, any federal or state governmental entity charged
with the supervision or regulation of banks, bank holding companies or savings
and loan holding companies or engaged in the insurance of bank deposits which
restricts materially the conduct of its business, or in any manner relates to
its capital adequacy, credit policies, management or overall safety and
soundness or such entity's ability to perform its obligations hereunder.
3.11 Reports. Since January 1, 1995, the Buyer and its subsidiaries
-------
have filed, and subsequent to the date hereof will file, all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required to be filed with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy
statements (and all such reports, registrations and statements have been or will
be made available by the Buyer to the Seller), (b) the Federal Reserve Board,
(c) the OCC, (d) the FDIC and (e) any applicable state securities or banking
authorities (except, in the case of state securities authorities, no such
representation is made as to filings which are not material) (all such reports
and statements are collectively referred to herein as the "Buyer Reports"). As
----- -------
of their respective dates, the Buyer Reports complied and, with respect to
filings made after the date of this Agreement, will at the date of filing
comply, in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed.
As of their respective dates, the Buyer Reports described in clause (a) above
did not contain and, with respect to filings made after the date of this
Agreement, will not at the date of filing contain, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
3.12 Compliance with Applicable Law. Buyer holds all material licenses,
---------- ---- ---------- ---
franchises, permits and authorizations necessary for the lawful conduct of its
business, and Buyer has complied with, and is not in default in any respect
under any, applicable law, statute, order, rule, regulation or policy of, or
agreement with, any federal, state or local governmental agency or authority
relating to Buyer, other than where such default or noncompliance will not
result in or create a reasonable probability of resulting in a Material Adverse
Effect on Buyer or otherwise materially adversely affect Buyer's or the Bank's
ability to perform its obligations under this Agreement and the Bank Merger
Agreement, as applicable.
3.13 Buyer Common Stock. The Buyer Common Stock (and the associated
----- ------ -----
Buyer Rights) to be issued in connection with the Acquisition Merger is duly
authorized and, when issued in accordance with Article II hereof, will be
validly issued, fully paid and non-assessable and not subject to preemptive
rights, with no personal liability attaching thereto.
-23-
3.14 Ownership of Seller Common Stock. Neither the Buyer nor, to its
--------- -- ------ ------ -----
best knowledge, any of its affiliates or associates (as such terms are defined
under the Exchange Act), (a) beneficially own, directly or indirectly, or (b)
are parties to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of the Seller, which in the aggregate represent five percent (5%) or more
of the outstanding shares of capital stock of the Seller entitled to vote
generally in the election of directors (other than shares in trust accounts,
managed accounts and the like that are beneficially owned by third parties (any
such shares, "Trust Account Shares") and any other shares held in respect of a
debt previously contracted (any such shares, "DPC Shares")).
3.15 Buyer Information. The information relating to the Buyer and its
----- -----------
subsidiaries to be contained or incorporated by reference in the Buyer
Registration Statement and the Proxy Statement, as described in Section 5.04
hereof, and any other documents filed with the SEC or any regulatory agency in
connection herewith, to the extent such information is provided in writing by
the Buyer, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make such information not misleading.
3.16 Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any certificate, list or other writing
furnished to the Seller pursuant to the provisions hereof, to the best knowledge
of the Buyer, contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
--------------- --- ---------- ---------
Seller hereby represents and warrants to Buyer as follows:
4.01 Corporate Organization.
--------- ------------
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. The Savings Bank is a savings bank in stock form duly
organized and validly existing under the laws of the Commonwealth of
Massachusetts. Each of the Seller and the Savings Bank has the corporate
power and authority to own, lease or operate all of its properties and
assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned, leased or operated by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not result in, with respect to the Seller,
-24-
any Material Adverse Effect. The deposits of the Savings Bank are insured by
the FDIC in accordance with the FDIA, and the Savings Bank has paid all
assessments that have become due and payable to the FDIC. The Seller is a
unitary savings and loan holding company registered with the OTS under the
HOLA.
(b) Each subsidiary of the Seller, other than the Savings
Bank, is duly organized, validly existing and in corporate good standing
under the laws of the jurisdiction of its incorporation. Each subsidiary of
the Seller has the corporate power and authority to own, lease or operate
all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or
operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified would, neither
individually nor in the aggregate, result in, with respect to the Seller, a
Material Adverse Effect.
(c) Since January 1, 1995, the minute books of the Seller and
the Savings Bank contain complete and accurate records of all meetings and
other corporate actions authorized at such meetings held or taken since the
respective dates of the Seller's and the Savings Bank's incorporations by
its stockholders and Board of Directors and any deficiencies in such minute
books prior to January 1, 1995 shall not result, either individually or in
the aggregate, in a Material Adverse Effect on Seller.
4.02 Capitalization.
--------------
(a) The authorized capital stock of the Seller consists of
20,000,000 shares of common stock, par value $1.00 per share (the "Seller
------
Common Stock"), and 3,000,000 shares of preferred stock, par value $1.00
------ -----
per share (the "Seller Preferred Stock"). As of the close of business on
------ --------- -----
September 30, 1995, there were 5,218,193 shares of the Seller Common Stock
and no shares of the Seller Preferred Stock issued and outstanding, no
shares of the Seller Common Stock held in the Seller's treasury and no
shares of the Seller Common Stock reserved and available for future
issuance under outstanding options under the Seller Stock Option Plan. As
of the date hereof, 1,038,420 shares of Seller Common Stock are reserved
for issuance upon exercise of the Option (the "Seller Option") issued to
------ ------
Buyer pursuant to the Stock Option Agreement with respect to Seller Common
Stock of even date herewith between Seller and Buyer (the "Seller Option
------ ------
Agreement"). All issued and outstanding shares of the Seller Common Stock
---------
have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. Except as referred to in this Section
4.02 and except for the Seller Option Agreement, the Seller does not have
and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the Seller to
issue, deliver or sell, or cause to be issued,
-25-
delivered or sold any shares of the Seller Common Stock or the Seller
Preferred Stock or any other equity security of the Seller or any the
Seller subsidiary or any securities convertible into, exchangeable for or
representing the right to subscribe for, purchase or otherwise receive any
shares of the Seller Common Stock or the Seller Preferred Stock or any
other equity security of the Seller or any Seller subsidiary or obligating
the Seller to grant, extend or enter into any such subscriptions, options,
warrants, calls, commitments or agreements. As of the date hereof, except
for the Seller Option Agreement, there are no outstanding contractual
obligations of the Seller to repurchase, redeem or otherwise acquire any
shares of capital stock of the Seller or any the Seller subsidiary.
(b) Section 4.02(b) to the disclosure schedule prepared by
the Seller and delivered to the Buyer in conjunction with the parties'
execution and delivery of this Agreement (the "Seller Disclosure Schedule")
------ ---------- --------
lists each of the subsidiaries of the Seller as of the date of this
Agreement and indicates for such subsidiary as of such date: (i) the
percentage and type of equity securities owned or controlled by the Seller;
and (ii) the jurisdiction of incorporation. No subsidiary of the Seller has
or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for such Seller
subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, any equity security of the Seller or of any Seller subsidiary or any
securities convertible into, exchangeable for or representing the right to
subscribe for, purchase or otherwise receive any such equity security or
obligating a Seller subsidiary to grant, extend or enter into any such
subscriptions, options, warrants, calls, commitments or agreements. As of
the date hereof, there are no outstanding contractual obligations of any
Seller subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Seller or any Seller subsidiary. All of the shares of
capital stock of each of the Seller's subsidiaries held by the Seller are
fully paid and nonassessable and are owned by the Seller free and clear of
any claim, lien, encumbrance or agreement with respect thereto.
4.03 Authority; No Violation.
--------- -- ---------
(a) The Seller has full corporate power and authority to
execute and deliver this Agreement and the Seller Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Seller Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly approved by the Board of Directors of the Seller. The
Board of Directors of Seller has directed that this Agreement and the
transactions contemplated hereby be submitted to the stockholders of the
Seller for approval at a meeting of such stockholders and no other
corporate proceedings on the part of Seller are necessary to consummate any
of the transactions so contemplated by this Agreement or the Seller Option
Agreement. This Agreement and the Seller Option Agreement have been duly
and validly executed and delivered by the Seller and (assuming due
authorization, execution and
-26-
delivery of this Agreement and the Seller Option Agreement by the Buyer)
constitute the valid and binding obligations of the Seller, enforceable
against it in accordance with their respective terms, except that
enforcement thereof may be limited by the receivership, conservatorship and
supervisory powers of bank regulatory agencies generally as well as
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and except that
enforcement thereof may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and the availability of equitable remedies.
(b) The Savings Bank has full corporate power and authority
to execute and deliver the Bank Merger Agreement and to consummate the Bank
Merger. When the Bank Merger Agreement is duly and validly executed by the
Savings Bank, as contemplated under Section 5.19 below, and assuming that
the Bank Merger Agreement is duly authorized, executed and delivered by the
Bank, the Bank Merger Agreement shall constitute a valid and binding
obligation of the Savings Bank, enforceable against the Savings Bank in
accordance with its terms, except that enforcement thereof may be limited
by receivership, conservatorship and supervisory powers of bank regulatory
agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
Except for the due authorization, execution and delivery of the Bank Merger
Agreement by the Savings Bank and the adoption of the Bank Merger Agreement
by the Seller or the Surviving Corporation, as the case may be, in its
capacity as the sole stockholder of the Savings Bank, all as contemplated
under Section 5.19 below, no other corporate proceedings on the part of the
Savings Bank are necessary to consummate the Bank Merger.
(c) Neither the execution and delivery of this Agreement,
the Seller Option Agreement and the Bank Merger Agreement by the Seller and
the Savings Bank, as applicable, nor the consummation by the Seller and the
Savings Bank, as applicable, of the transactions contemplated hereby and
thereby, nor compliance by the Seller and the Savings Bank, as applicable,
with any of the terms or provisions hereof or thereof, will (i) assuming
that the consents and approvals referred to in Section 4.04 are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to the Seller or any of its
subsidiaries or any of their respective properties or assets, or (ii)
except as set forth in Section 4.03(c) of the Seller Disclosure Schedule,
violate, conflict with, result in a breach of any provisions of, constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or
other encumbrance upon any of the respective properties or assets of the
Seller or any of its
-27-
subsidiaries under, any of the terms, conditions or provisions of (A)
certificate of incorporation or other charter document of like nature or
By-laws of the Seller or such Seller subsidiary, as the case may be, or (B)
any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Seller or any of
its subsidiaries is a party thereto as issuer, guarantor or obligor, or by
which they or any of their respective properties or assets may be bound or
affected, except, in the case of clauses (i) and (ii)(B) above, for such
violations, conflicts, breaches or defaults which either individually or in
the aggregate will not result, with respect to the Seller, in a Material
Adverse Effect.
4.04 Consents and Approvals. Except for consents, waivers or approvals
-------- --- ---------
of, notices to, or filings or registrations with, the Federal Reserve Board, the
Massachusetts Board, the OTS, the OCC, the Massachusetts Commissioner, the SEC,
the Central Fund, the MHPF, the DOJ, the Massachusetts Secretary of State or as
may be set forth in Sections 4.03(b) or 4.04 of the Seller Disclosure Schedule,
no consents, waivers or approvals of, notices to, or filings or registrations
with, any public body or authority are necessary, and no consents or approvals
of or notices to any third parties (which term does not include the Board of
Directors and stockholders of the Seller and the Savings Bank) are necessary, in
connection with the execution and delivery by the Seller and the Savings Bank,
as applicable, of this Agreement, the Seller Option Agreement and the Bank
Merger Agreement or the consummation by the Seller and the Savings Bank, as
applicable, of the transactions contemplated by such agreements. The affirmative
vote of holders of two-thirds of the outstanding shares of the Seller Common
Stock is the only vote of the holders of any class or series of the Seller
capital stock or other securities necessary to approve this Agreement and the
transactions contemplated hereby, including without limitation the Acquisition
Merger and the Bank Merger. As of the date hereof, Seller is not aware of any
reason why the approvals described in Section 6.02(c) could not be obtained
without significant delay.
4.05 Financial Statements. The Seller has made available to the Buyer
--------- ----------
copies of (a) the consolidated balance sheets of the Seller and its subsidiaries
as of October 31 for the fiscal years 1992 through 1994, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in the
Seller' Annual Reports on Form 10-K for each of the three fiscal years ended
October 31, 1992 through October 31, 1994 filed with the SEC under the Exchange
Act, in each case accompanied by the audit report of ▇. ▇. ▇▇▇▇▇▇▇ & Co,.P.C.,
independent accountants for the Seller and (b) the unaudited consolidated
balance sheet of the Seller and its subsidiaries as of July 31, 1995, the
related unaudited consolidated statements of income for the three and nine
months ended July 31, 1995 and July 31, 1994, the related unaudited consolidated
changes in stockholders' equity for the nine months ended July 31, 1995 and July
31, 1994 and the related unaudited consolidated statements of cash flows for the
nine months ended July 31, 1995 and July 31, 1994, all as reported in the
Seller's Quarterly Report on Form 10-Q for the quarter ended July 31, 1995 filed
with the SEC under the Exchange Act. The October 31, 1994 consolidated balance
sheet (the "Seller Balance Sheet") of the Seller (including the related notes,
------ ------- -----
where applicable) and the other
-28-
financial statements referred to herein (including the related notes, where
applicable) fairly present, and the financial statements to be included in any
reports or statements (including reports on Forms 10-Q and 10-K and 8-K) to be
filed by the Seller with the SEC after the date hereof will fairly present, the
consolidated financial position and results of the consolidated operations and
cash flows and changes in shareholders' equity of the Seller and its
subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; and each of such statements (including the related notes,
where applicable) has been and will be prepared in accordance with GAAP
consistently applied during the periods involved, except as otherwise set forth
in the notes thereto (subject, in the case of unaudited interim statements, to
normal year-end adjustments). The books and records of the Seller and its
subsidiaries have been, and are being, maintained in accordance with GAAP and
applicable legal and regulatory requirements.
4.06 Absence of Undisclosed Liabilities. As of July 31, 1995, none
------- -- ----------- -----------
of the Seller or any of its subsidiaries had any obligation or liability
(contingent or otherwise) that is material on a consolidated basis to the
Seller, or that when combined with all similar obligations or liabilities would
be material on a consolidated basis to the Seller, except as disclosed or
reflected in the Seller's unaudited consolidated balance sheet as of such date
or Section 4.06 of the Seller Disclosure Schedule.
4.07 Broker's Fees. Neither the Seller or any of its subsidiaries nor
-------- ----
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement and the
Bank Merger Agreement, except that Seller has engaged, and will pay a fee or
commission to, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated.
4.08 Absence of Certain Changes or Events. Except as disclosed in
------- -- ------- ------- -- ------
Schedule 4.08 of the Seller Disclosure Schedule, since July 31, 1995, the Seller
and its subsidiaries have not incurred any material liability, except in the
ordinary course of their business consistent with their past practices, nor has
there been any change in the business, assets, financial condition or results of
operations of the Seller or any of its subsidiaries which has had, individually
or in the aggregate, a Material Adverse Effect on the Seller.
4.09 Legal Proceedings. There is no suit, action or proceeding pending
----- -----------
or, to the best knowledge of the Seller, threatened, against the Seller or any
subsidiary of the Seller or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Bank Merger Agreement, as to
which there is a reasonable probability of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, have a
Material Adverse Effect on the Seller or otherwise materially adversely affect
the Seller's or the Savings Bank's ability to perform its obligations under this
Agreement, the Seller Option Agreement and the Bank Merger Agreement, as
applicable, nor is there any judgment, decree, injunction, rule or order of any
legal or administrative body or arbitrator outstanding against the Seller or any
subsidiary of the Seller having any such effect.
-29-
4.10 Taxes and Tax Returns. Except as may be set forth in Section 4.10
----- --- --- -------
of the Seller Disclosure Schedule:
(a) The Seller has timely filed all Tax Returns required to
be filed by it, each such Tax Return has been prepared in compliance with
all applicable laws and regulations, and all such Tax Returns are true and
accurate in all respects material to the financial condition of the Seller
and its subsidiaries, taken as a whole. All Taxes shown on such Tax Returns
as due and payable by Seller have been paid and Seller will not be liable
for any additional Taxes for any taxable period ending on or before the
Effective Time in excess of the amounts set up as reserves for taxes on the
Seller Balance Sheet. Seller has made available to Buyer correct and
complete copies of all federal income Tax Returns filed with respect to
Seller for taxable periods ended on or after December 31, 1990, and all
examination reports, and statements of deficiencies assessed against or
agreed to by Seller with respect to such taxable periods;
(b) Seller has neither requested nor been granted an
extension of the time for filing any Tax Return to a date later than
the Effective Time;
(c) With respect to each taxable period of Seller, either
such taxable period has been audited by the relevant taxing authority or
the time for assessing or collecting income Tax with respect to each such
taxable period has closed and such taxable period is not subject to review
by any relevant taxing authority;
(d) Seller has not consented to extend the time in which
any Tax may be assessed or collected by any tax authority;
(e) No deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Tax has been asserted or
assessed by any taxing authority against Seller;
(f) There is no action, suit, taxing authority proceeding
or audit now in progress, pending or, to the knowledge of Seller,
threatened against or with respect to Seller with respect to any Tax;
(g) No claim has ever been made by a taxing authority in a
jurisdiction where Seller does not pay Tax or file Tax Returns that Seller
is or may be subject to Taxes assessed by that jurisdiction;
(h) There are no liens for Taxes (other than current Taxes
not yet due and payable) on the assets of Seller;
-30-
(i) Seller has not filed or been included in a combined,
consolidated or unitary income Tax Return (other than consolidated Tax
Returns in which it is the parent corporation);
(j) Seller has neither made nor is affected by any elections
under Code Sections 108(b)(5), 338(g), or 565, or Treasury Regulation
Sections 1.1502-20(g) or 1.1502-32(f)(2);
(k) Seller is not a party to or bound by any Tax allocation or
Tax sharing agreement nor does Seller have any current or potential
contractual obligation to indemnify any other person or entity with respect
to Taxes (other than the tax sharing agreement among Seller and its
subsidiaries);
(l) Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party;
(m) Seller has no permanent establishment in any foreign
country, as defined in the relevant tax treaty between the United States of
America and such foreign country, nor otherwise operates or conducts
business through any branch in any foreign country;
(n) Seller will not be required, as a result of a change in
method of accounting for any period ending on or before the Effective Time,
to include any adjustment under Section 481(c) of the Code (or any similar
or corresponding provision or requirement of federal, state, local or
foreign income Tax law) in taxable income for any period ending after the
Effective Time;
(o) None of the assets of Seller directly or indirectly secures
any indebtedness the interest on which is tax-exempt under Section 103(a)
of the Code, and Seller is not directly or indirectly an obligor or a
guarantor with respect to any such indebtedness;
(p) Seller has not filed a consent under Code Sec. 341(f)
concerning collapsible corporations;
(q) Seller has not made any payments, nor is obligated to
make any payments, nor is it a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Sec. 280G;
(r) For purposes of this Section 4.10:
(A) "Tax" means any federal, state, local or foreign income,
---
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer,
-31-
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy,
of any kind whatsoever, including any interest, penalties or additions to
tax in respect of the foregoing.
(B) "Tax Return" means any return, declaration, report, claim
--- ------
for refund, information return or other document (including any related or
supporting estimates, elections, schedules, statements or information)
filed or required to be filed in connection with the determination,
assessment or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
4.11 Employees. Except as set forth in Section 4.11 of the Seller
---------
Disclosure Schedule:
(a) Neither the Seller nor any of its subsidiaries maintains or
contributes to any "employee pension benefit plan" (the "Seller Pension
------ -------
Plans"), as such term is defined in Section 3 of ERISA, "employee welfare
-----
benefit plan" (the "Seller Benefit Plans"), as such term is defined in
------ ------- -----
Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, other employee benefit plan for employees of the Seller
or any subsidiary thereof, or any other plan, program or arrangement of the
same or similar nature that provides benefits to non-employee directors of
the Seller or any subsidiary thereof (collectively, the "Seller Other
------ -----
Plans").
-----
(b) The Seller shall have delivered to the Buyer
contemporaneous with the delivery of the Seller Disclosure Schedule a
complete and accurate copy of each of the following with respect to each of
the Seller Pension Plans, the Seller Benefit Plans and the Seller Other
Plans: (i) plan document; (ii) trust agreement or insurance contract, if
any; (iii) most recent IRS determination letter, if any; (iv) most recent
actuarial report, if any; and (v) most recent annual report on Form 5500.
(c) The current value of the assets of each of the Seller
Pension Plans subject to Title IV of ERISA exceeds that plan's "Benefit
Liabilities" as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if that plan terminated
in accordance with all applicable legal requirements.
(d) Each of the Seller Pension Plans and each of the Seller
Benefit Plans has been administered in compliance with its terms in all
material respects and is in compliance in all material respects with the
applicable provisions of ERISA (including, but not limited to, the funding
and prohibited transactions provisions thereof), the Code and other
applicable laws.
-32-
(e) There has been no reportable event within the meaning of
Section 4043(b) of ERISA or any waived funding deficiency within the
meaning of Section 412(d)(3) (or any predecessor section) of the Code with
respect to any the Seller Pension Plan.
(f) The Seller and its subsidiaries have made or provided for
all contributions to the Seller Pension Plans required thereunder as of the
date of this representation.
(g) Neither the Seller nor any of its subsidiaries has, since
September 2, 1974, contributed to any "Multiemployer Plan," as such term is
defined in Section 3(37) of ERISA.
(h) Each of the Seller Pension Plans which is intended to be a
qualified plan within the meaning of Section 401(a) of the Code is so
qualified, and Seller is not aware of any fact or circumstance which would
adversely affect the qualified status of any such plan.
(i) Neither Seller nor any of its subsidiaries is party to or
maintains any contract or other arrangement with any employee or group of
employees, providing severance payments, stock or stock-equivalent payments
or post-employment benefits of any kind or providing that any otherwise
disclosed plan, program or arrangement will irrevocably continue, with
respect to any or all of its participants, for any period of time.
4.12 Agreements with Banking Authorities. Except as set forth in
---------- ---- ------- -----------
Section 4.12 of the Seller Disclosure Schedule, neither the Seller nor any of
its subsidiaries is a party to any commitment, letter, written agreement,
memorandum of understanding or order to cease and desist with, or has adopted
any resolutions at the request of, any federal or state governmental entity
charged with the supervision or regulation of banks, bank holding companies or
savings and loan holding companies or engaged in the insurance of bank deposits
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, credit policies, management or overall safety and
soundness or such entity's ability to perform its obligations hereunder.
4.13 Material Agreements. Except as set forth in the index of exhibits
-------- ----------
in the Seller's Annual Report on Form 10-K for the year ended October 31, 1994
or as otherwise disclosed in Section 4.13 of the Seller Disclosure Schedule,
except for this Agreement and the agreements specifically referred to herein,
neither the Seller nor any of its subsidiaries is a party to or is bound by (a)
any agreement, arrangement, or commitment other than contracts entered into in
the ordinary course of the Saving Bank's banking business and consistent with
past practice that has a term of more than one year or requires payment by the
Seller or any subsidiary of more than $150,000 annually; (b) any written (or
oral, if
-33-
material) agreement, arrangement, or commitment relating to the employment
(including severance) of any person; (c) any contract, agreement, or
understanding with any labor union; or (d) any other contract or agreement or
amendment thereto that would be required to be filed as an exhibit to Seller's
Annual Report on Form 10-K.
4.14 Ownership of Property. The Seller and its subsidiaries have good
--------- -- --------
and marketable title to all assets and properties, whether real or personal,
tangible or intangible (including, without limitation, the capital stock of its
subsidiaries and all other assets and properties), reflected on the Seller
Balance Sheet, or acquired subsequent thereto subject to no encumbrances, liens,
mortgages, security interests or pledges, except (a) those items that secure
liabilities that are reflected in said balance sheet or the notes thereto or
incurred in the ordinary course of business after the date of such balance
sheet, (b) statutory liens for amounts not yet delinquent or which are being
contested in good faith, (c) those items that secure public or statutory
obligations or any discount with, borrowing from, or other obligations to any
Federal Reserve Bank, Federal Home Loan Bank, inter-bank credit facilities, or
any transaction by the Seller or any subsidiary acting in a fiduciary capacity,
and (d) such encumbrances, liens, mortgages, security interests, and pledges
that are not in the aggregate material to the Seller on a consolidated basis.
The Seller and its subsidiaries as lessees have the right under valid and
existing leases to use, possess and control all of the personal property leased
by Seller and its subsidiaries as presently used, possessed and controlled by
the Seller and its subsidiaries except where not material to the Seller on a
consolidated basis. The Savings Bank owns in fee simple, directly or indirectly
through wholly owned subsidiaries, all of the Bank Premises.
4.15 Reports. Since November 1, 1994, the Seller and its subsidiaries
-------
have filed, and subsequent to the date hereof will file, all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were and are required to be filed with (a) the SEC,
including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy
statements (and all such reports, registrations and statements have been or will
be made available by the Seller to the Buyer), (b) the OTS, (c) the FDIC, (d)
the Massachusetts Commissioner and (e) any applicable state securities
authorities (except, in the case of state securities authorities, no such
representation is made as to filings which are not material) (all such reports
and statements are collectively referred to herein as the "Seller Reports"). As
------ -------
of their respective dates, the Seller Reports complied and, with respect to
filings made after the date of this Agreement, will at the date of filing
comply, in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were filed.
As of their respective dates, the Seller Reports described in clause (a) above
did not contain and, with respect to filings made after the date of this
Agreement, will not at the date of filing contain, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
-34-
4.16 Compliance with Applicable Law. Except as set forth in Section
---------- ---- ---------- ---
4.16 of the Seller Disclosure Schedule or as otherwise previously disclosed in
writing by Seller to Buyer, the Seller holds all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of its business, and
the Seller has complied with and is not in default in any respect under any,
applicable law, statute, order, rule, regulation or policy of, or agreement
with, any federal, state or local governmental agency or authority relating to
the Seller, other than where such default or noncompliance will not result in or
create a reasonable probability of resulting in a Material Adverse Effect on
Seller or otherwise materially adversely affect Seller's or the Savings Bank's
ability to perform its obligations under this Agreement and the Bank Merger
Agreement, as applicable, and the Seller has not received notice of any
violation of, or commencement of any proceeding in connection with any violation
of any such law, statute, order, rule, regulation, policy or agreement, as to
which there is a reasonable probability of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, result in the
imposition of CMPs in a material amount or otherwise expose Seller or any of its
subsidiaries to financial liability in a material amount.
4.17 Environmental Matters. Except as disclosed in Section 4.17 of
------------- -------
the Seller Disclosure Schedule, Seller and its subsidiaries are in compliance
and have always been in compliance with all environmental laws, rules,
regulations and standards promulgated, adopted or enforced by the United States
Environmental Protection Agency (the "EPA") and of similar agencies in states in
which they conduct their respective business, except for any noncompliance that
singly or in the aggregate would not have a Material Adverse Effect on Seller.
Except as disclosed in Section 4.17 of the Disclosure Schedule, there is no
suit, claim, action or proceeding now pending before any court, governmental
agency or board or other forum or, to the knowledge of Seller, threatened by any
person, as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on Seller (i) for alleged
noncompliance with any environmental law, rule or regulation or (ii) relating to
the discharge or release into the environment of any hazardous material or waste
at or on a site presently or formerly owned, leased or operated by Seller or any
subsidiary of Seller or in which Seller or any Seller subsidiary has a lien or
other security interest.
4.18 Antitakeover Statutes Not Applicable. Assuming the accuracy of
------------ -------- --- ----------
Buyer's representation in Section 3.14 above, no "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation,
including without limitation Chapters 110D and 110F of the MBCL, is applicable
to the transactions contemplated by this Agreement.
4.19 Ownership of Buyer Common Stock. As of the date hereof, neither
--------- -- ----- ------ -----
the Seller nor, to its best knowledge, any of its affiliates or associates (as
such terms are defined under the Exchange Act), (a) beneficially own, directly
or indirectly, or (b) are parties to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, in each case,
shares of capital stock of the Buyer, which in the aggregate
-35-
represent five percent (5%) or more of the outstanding shares of capital stock
of the Buyer entitled to vote generally in the election of directors (other than
Trust Account Shares or DPC Shares).
4.20 Insurance. The Seller and each of its subsidiaries is presently
---------
insured, and since January 1, 1992 has been insured, for reasonable amounts
against such risks as companies engaged in a similar business in a similar
location would, in accordance with good business practice, customarily be
insured.
4.21 Labor. No work stoppage involving the Seller or any of its
-----
subsidiaries is pending or, to the best knowledge of the Seller, threatened.
Neither the Seller nor any of its subsidiaries is involved in, or, to the best
knowledge of the Seller, threatened with or affected by, any dispute,
arbitration, lawsuit or administrative proceeding relating to labor or
employment matters which might reasonably be expected to result in a Material
Adverse Effect with respect to the Seller. No employees of the Seller or any of
its subsidiaries are represented by any labor union, and, to the best knowledge
of the Seller, no labor union is attempting to organize employees of the Seller
or any of its subsidiaries.
4.22 Material Interests of Certain Persons. Except as disclosed in
-------- --------- -- ------- -------
Section 4.22 of the Seller Disclosure Schedule or in Seller's Annual Report on
Form 10-K for the year ended October 31, 1994, no officer or director of the
Seller, or any "associate" (as such term is defined in Rule 14a-1 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of the Seller or any of its subsidiaries.
4.23 Absence of Registration Obligations. Neither the Seller nor any of
------- -- ------------ -----------
its subsidiaries is under any obligation, contingent or otherwise, by reason of
any agreement to register or otherwise issue any of its securities which will
continue after the Effective Time.
4.24 Loans. All outstanding loans of, or extensions of credit by,
-----
Seller and/or the Savings Bank, other than loans or extensions of credit to be
sold prior to the Effective Time in accordance with Section 5.18 (individually,
a "Loan" and collectively the "Loans"), were solicited, originated and currently
exist in compliance with all requirements of federal and state statutory and
common law and any regulations promulgated thereunder and all Loans are
adequately documented, except where any failures with respect to any of the
foregoing would not have, either individually or in the aggregate, a Material
Adverse Effect on the Seller or otherwise materially adversely affect Seller's
or the Savings Bank's ability to perform its obligations under this Agreement
and the Bank Merger Agreement. Except as disclosed in Section 4.24 of the Seller
Disclosure Schedule, (i) none of the Loans are presently serviced by third
parties and there is no obligation which could result in any Loan becoming
subject to any third party servicing and (ii) no Loan has been sold with
continuing recourse liability on the part of Seller or any of its subsidiaries.
-36-
4.25 Seller Information. The information relating to the Seller and
------ -----------
its subsidiaries to be contained or incorporated by reference in the Buyer
Registration Statement and the Proxy Statement as described in Section 5.04
hereof, and any other documents filed with the SEC or any regulatory agency in
connection herewith, to the extent such information is provided in writing by
the Seller, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make such information not misleading.
4.26 Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any certificate, list or other writing,
including but not necessarily limited to the Schedules, furnished to the Buyer
or the Bank pursuant to the provisions hereof, to the best knowledge of the
Seller, contains or will contain any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein not misleading.
ARTICLE V
COVENANTS OF THE PARTIES
--------- -- --- -------
5.01 Conduct of the Business of Seller. During the period from the date
------- -- --- -------- -- ------
of this Agreement to the Effective Time, and except with respect to the
transactions required or permitted to be undertaken by Seller prior to the
Effective Time in accordance with Section 5.18 below and Seller's management
during such period of the assets, liabilities and operations that are the
subject of such transactions or except as specifically described in Section 5.01
of the Seller Disclosure Schedule, the Seller:
(a) shall, and shall cause each of its subsidiaries to, conduct
its business and engage in transactions only in the ordinary and usual
course of business consistent with past practices, which shall mean (i)
conducting its banking, trust and other businesses in the ordinary and
usual course, (ii) refraining from any of the activities described in
Section 5.01(b) below and (iii) not entering into any material transactions
except in the ordinary and usual course of business consistent with past
practices;
(b) shall not and shall not permit any of its subsidiaries to,
without the prior written consent of the Buyer:
(i) engage or participate in any material transaction or
incur or sustain any material obligation or liability except in the
ordinary, regular and usual course of its businesses consistent
with past practices;
(ii) accept, renew or roll over any "brokered deposit" as
defined under 12 C.F.R. (s)(s)337.6(a)(3) or offer an interest rate
with respect to any
-37-
deposit that would either constitute an impermissible interest rate
with respect to deposits of an undercapitalized insured depository
institution pursuant to the limitations contained under 12
C.F.R.(s)(s)337.6(b)(3)(ii) or otherwise set interest rates on
deposits that depart from past practices of the Savings Bank with
respect to the setting of interest rates on deposits, unless such
interest rates do not exceed the rates then offered by the Bank on
comparable deposit products;
(iii) except in the ordinary, regular and usual course of
business consistent with past practices and in an immaterial
aggregate amount, sell, lease, transfer, assign, encumber or
otherwise dispose of or enter into any contract, agreement or
understanding to lease, transfer, assign, encumber or dispose of
any of its assets;
(iv) relocate, or file any application to relocate, any
branch office;
(v) terminate, or give any notice (written or verbal) to
customers or governmental authorities or agencies to terminate the
operations of any branch office; or
(vi) waive any material right, whether in equity or at
law, that it has with respect to any asset except in the ordinary,
regular and usual course of business consistent with past practice;
(c) shall use all reasonable efforts, and cause each of its
subsidiaries to use all reasonable efforts, to preserve intact its business
organization and goodwill in all material respects, keep available the
services of its officers and employees as a group and maintain satisfactory
relationships with borrowers, depositors, other customers and others having
business relationships with it;
(d) shall, at the Buyer's request and expense, use its best
efforts to cooperate with the Buyer with respect to preparation for the
combination and integration of the businesses, systems and operations of
the Bank and the Savings Bank, and shall confer on a regular and frequent
basis with one or more representatives of the Buyer to report on
operational and related matters;
(e) shall, subject to any restrictions under applicable law or
regulation, promptly notify the Buyer of any emergency or other change in
the normal course of its or its subsidiaries' businesses or in the
operation of its or its subsidiaries' properties and of any governmental
complaints, investigations or hearings (or communications indicating that
the same may be contemplated) if such emergency, change, complaint,
investigation or hearing would be material to the assets, properties,
liabilities, business, results of operations, financial condition or
prospects of the Seller or any of its subsidiaries;
-38-
(f) shall not declare or pay any dividends on or make any other
distributions in respect of the Seller Common Stock after the Measurement
Date ;
(g) Seller (with Buyer's cooperation) prior to the Effective
Time, and Buyer upon and following the Effective Time, shall take all
appropriate steps to (i) effectuate termination of the Seller ESOP
effective as of the Effective Time, (ii) cause the Seller ESOP, upon
termination, to repay promptly and in full any loan outstanding, and (iii)
cause any shares of Seller Common Stock or Buyer Common Stock held
unallocated in the Seller ESOP following such termination and repayment to
be allocated among the accounts of those participants in the Seller ESOP
who were participants immediately prior to the Effective Time in proportion
to their relative compensation for the period beginning with the first day
of the plan year of the Seller ESOP in which the Closing Date occurs and
ending on the Effective Time, subject only to such limitations as are
required to maintain qualification of the Seller ESOP under the Code.
Seller may repurchase from the Seller ESOP a sufficient number of shares of
Seller Common Stock for not less than "adequate consideration" as defined
in Section 3(18) of ERISA to permit the Seller ESOP to repay in full any
loan outstanding to the Seller ESOP. Seller shall not otherwise adopt or
amend (other than amendments required by applicable law or amendments that
reduce amounts payable by it or its subsidiaries) in any material respect
any Seller Pension Plan, any Seller Benefit Plan or any Seller Other Plan
or enter (or permit any of its subsidiaries to enter) into any employment,
severance or similar contract with any person (including, without
limitation, contracts with management which might require that payments be
made upon the consummation of the transactions contemplated hereby) or
amend any such existing agreements, plans or contracts to increase any
amounts payable thereunder or benefits provided thereunder, or grant or
permit any increase in compensation to its or its subsidiaries' employees
as a class or pay any bonus except in the ordinary course of business
consistent with past practices and as disclosed in Section 5.01(g) of the
Seller Disclosure Schedule;
(h) subject to its directors fiduciary duties, shall not, with
respect to itself or any of its subsidiaries, authorize, recommend, propose
or announce an intention to authorize, recommend or propose, or enter into
an agreement with respect to, any merger, consolidation, purchase and
assumption transaction or business combination (other than the Acquisition
Merger and the Bank Merger), any acquisition of a material amount of assets
or securities or assumption of liabilities (including deposit liabilities),
any disposition of a material amount of assets or securities, or any
release or relinquishment of any material contract rights not in the
ordinary course of business and consistent with past practices;
(i) shall not propose or adopt amendments to its certificate of
incorporation or by-laws;
-39-
(j) shall not issue, deliver or sell any shares (whether
original issuance or from treasury shares) of its capital stock or
securities convertible into or exercisable for shares of its capital stock
(or permit any of its subsidiaries to issue, deliver or sell any shares of
such subsidiaries' capital stock or securities convertible into or
exercisable for shares of such subsidiaries' capital stock), except upon
exercise or fulfillment of options issued or existing on the date hereof
pursuant to the Seller Stock Option Plan and listed in Section 5.01(j) of
the Seller Disclosure Schedule, and except upon exercise of the Seller
Option, as applicable, or effect any stock split, reverse stock split,
recapitalization, reclassification or similar transaction or otherwise
change its equity capitalization as it exists on the date hereof;
(k) shall not grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date hereof, to
acquire any shares of its capital stock;
(l) shall not purchase, redeem or otherwise acquire, or permit
any of its subsidiaries to purchase, redeem or otherwise acquire, any
shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, except in a fiduciary
capacity;
(m) shall not impose, or suffer the imposition, on any share of
capital stock held by it or by any of its subsidiaries of any material
lien, charge, or encumbrance, or permit any such lien, charge, or
encumbrance to exist;
(n) shall not incur, or permit any of its subsidiaries to
incur, any additional debt obligation or other obligation for borrowed
money, or to guaranty any additional debt obligation or other obligation
for borrowed money, except in the ordinary course of business consistent
with past practices, which shall include but not necessarily be limited to
creation of deposit liabilities, purchases of federal funds, sales of
certificates of deposit and entry into repurchase agreements or other
similar arrangements commonly employed by banks;
(o) shall not incur or commit to any capital expenditures or
any obligations or liabilities in connection therewith, other than capital
expenditures and such related obligations or liabilities incurred or
committed to in the ordinary and usual course of business consistent with
past practices, which, in all cases, do not individually exceed $75,000 or
cumulatively exceed $300,000;
(p) shall not change its methods of accounting in effect at
October 31, 1994, except as may be required by changes in GAAP as concurred
in by the Seller's independent auditors, and the Seller shall not change
its fiscal year;
(q) shall file all reports, applications and other documents
required to be filed by it with the SEC, OTS, FDIC, Massachusetts
Commissioner and any other
-40-
governmental agency or authority between the date of this Agreement and the
Effective Time and shall furnish to the Buyer copies of all such reports
promptly after the same are filed; and
(r) shall not agree, in writing or otherwise, to take any of
the actions prohibited under this Section 5.01 or any action which would
make any of its representations or warranties contained in this Agreement
untrue or incorrect or would otherwise violate any of its other agreements
or commitments contained in this Agreement in any material respect.
5.02 Access to Properties and Records; Confidentiality.
------ -- ---------- --- ------- ---------------
(a) The Seller shall permit the Buyer reasonable access to its
properties and those of its subsidiaries, and shall disclose and make
available to the Buyer all Records, including all books, papers and records
relating to the assets, stock ownership, properties, operations,
obligations and liabilities of the Seller and its subsidiaries, including,
but not limited to, all books of account (including the general ledger),
tax records, minute books of directors and stockholders meetings,
organizational documents, by-laws, material contracts and agreements,
filings with any regulatory authority, accountants' work papers, litigation
files, plans affecting employees, and any other business activities or
prospects in which the Buyer may reasonably have an interest in light of
the transactions contemplated hereby. In connection with the foregoing and
not in limitation thereof, Seller and its subsidiaries shall provide Buyer
or any party designated by Buyer such access to all commercial real estate
loan files and related materials as is sufficient to enable Buyer or any
such designee of Buyer to participate in a timely manner on a fully
informed basis in any auction process with regard to Seller's disposition
of its commercial real estate loan portfolio as may be undertaken by Seller
in accordance with Section 5.21 below. The Seller shall make arrangements
with each third party provider of services to the Seller to permit the
Buyer reasonable access to all of the Seller's Records held by each such
third party. The Buyer shall permit the Seller reasonable access to such
properties and records of the Buyer and/or its subsidiaries in which the
Seller may reasonably have an interest in light of the transactions
contemplated hereby. Neither the Buyer nor the Seller nor any of their
respective subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or
prejudice the rights of any customer, would jeopardize the attorney-client
privilege of the institution in possession or control of such information,
or would contravene any law, rule, regulation, order, judgment, decree or
binding agreement. The parties will use all reasonable efforts to make
appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.
(b) All Confidential Information, as such term is defined
below, furnished by each party hereto to the other, or to any of its
affiliates or to any of its affiliates'
-41-
directors, officers, employees, or representatives or agents (such persons
being referred to collectively herein as "Representatives") shall be
---------------
treated as the sole property of the party furnishing the information until
consummation of the transactions contemplated hereby, and, if such
transactions shall not occur, the party receiving the information, or any
of its affiliates or Representatives, as the case may be, shall, upon
request, return to the party which furnished such information all documents
or other materials containing, reflecting or referring to such information,
shall keep confidential all such information for the period hereinafter
referred to, and shall not directly or indirectly at any time use such
information for any competitive or other commercial purpose; provided,
--------
however, that the Buyer and its affiliates shall be permitted to retain and
-------
share with their regulators, examiners and auditors (who need to know such
information and are informed of the confidential nature thereof and
directed to treat such information confidentially), and with no other
persons, such materials, files and information relating to or constituting
the Buyer's or any of its affiliates' or Representatives' work product,
presentations or evaluation materials as the Buyer deems reasonably
necessary or advisable in connection with auditing or examination purposes,
and Buyer shall not make use of any such materials, files or information
for any other purpose. The obligation to keep such information confidential
shall continue for two years from the date this Agreement is terminated or
as long as may be required by law. In the event that either party or its
affiliates or Representatives are requested or required in the context of a
litigation, governmental, judicial or regulatory investigation or other
similar proceeding (by oral questions, interrogatories, requests for
information or documents, subpoenas, civil investigative demands or similar
process) to disclose any Confidential Information, the party or its
affiliate or its Representative so requested or required will directly or
through the party or such affiliate or Representative, if practicable and
legally permitted, prior to providing such information, and as promptly as
practicable after receiving such request, provide the other party with
notice of each such request or requirement so that the other party may seek
an appropriate protective order or other remedy or, if appropriate, waive
compliance with the provisions of this Agreement. If, in the absence of a
protective order or the receipt of a waiver hereunder, the party or
affiliate or Representative so requested or required is, in the written
opinion of its counsel, legally required to disclose Confidential
Information to any tribunal, governmental or regulatory authority, or
similar body, the party or affiliate or Representative so required may
disclose that portion of the Confidential Information which it is advised
in writing by such counsel it is legally required to so disclose to such
tribunal or authority or similar body without liability to the other party
hereto for such disclosure. The parties and their affiliates and
Representatives will exercise reasonable efforts, at the expense of the
party who disclosed Confidential Information to the other party, to obtain
assurance that confidential treatment will be accorded the information so
disclosed.
As used in this Section 5.02(b), "Confidential Information"
------------ -----------
means all data, reports, interpretations, forecasts and records (whether in
written form, electronically
-42-
stored or otherwise) containing or otherwise reflecting information
concerning the disclosing party or its affiliates which is not available to
the general public and which the disclosing party or any affiliate or any
of their respective Representatives provides or has previously provided to
the receiving party or to the receiving party's affiliates or
Representatives at any time in connection with the transactions
contemplated by this Agreement, including but not limited to any
information obtained by meeting with Representatives of the disclosing
party or its affiliates, together with summaries, analyses, extracts,
compilations, studies, personal notes or other documents or records,
whether prepared by the receiving party or others, which contain or
otherwise reflect such information. Notwithstanding the foregoing, the
following information will not constitute "Confidential Information": (i)
------------ -----------
information that is or becomes generally available to the public other than
as a result of a disclosure by the receiving party or any affiliate or
Representative of the receiving party, (ii) information that was previously
known to the receiving party or its affiliates or Representatives on a
nonconfidential basis prior to its disclosure by the disclosing party, its
affiliates or Representatives, (iii) information that became or becomes
available to the receiving party or any affiliate or Representative thereof
on a nonconfidential basis from a source other than the disclosing party or
any affiliate or Representatives of the disclosing party, provided that
such source is not known by the disclosing party or its affiliates or
Representatives to be subject to any confidentiality agreement or other
legal restriction on disclosing such information and (iv) information that
has been independently acquired or developed by the receiving party or its
affiliates or Representatives without violating the obligation's of this
Section 5.02(b).
5.03 No Solicitation. Unless and until this Agreement shall have been
-- ------------
properly terminated by either party pursuant to Section 8.01 hereof, neither the
Seller nor any of its subsidiaries shall (and the Seller and each of its
subsidiaries shall use all reasonable efforts to cause its officers, directors,
employees, representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, encourage,
solicit, initiate or, subject to the fiduciary obligations of the Seller's Board
of Directors (as advised in writing by outside counsel), participate in any
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than the Buyer
and its affiliates or representatives) concerning any merger, tender offer, sale
of substantial assets (other than as otherwise permitted under this Agreement),
sale of shares of capital stock or debt securities or similar transaction
involving the Seller or any of its subsidiaries (an "Acquisition Transaction").
----------- -----------
Notwithstanding the foregoing, nothing contained in this Section 5.03 shall
prohibit the Seller or its Board of Directors from taking and disclosing to the
Seller's stockholders a position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from
making such disclosure to the Seller's stockholders which, in the judgment of
the Board of Directors, with the written advice of outside counsel, may be
required under applicable law. The Seller will immediately communicate to the
Buyer the terms of any proposal, discussion, negotiation or inquiry
-43-
relating to an Acquisition Transaction and the identity of the party making such
proposal or inquiry which it may receive in respect of any such transaction
(which shall mean that any such communication shall be delivered no less
promptly than by telephone within twenty-four (24) hours of the Seller's receipt
of any such proposal or inquiry) or its receipt of any request for information
from the OTS, Federal Reserve Board, DOJ or any other governmental agency or
authority with respect to a proposed Acquisition Transaction.
5.04 Regulatory Matters; Consents.
---------- ------- --------
(a) The parties will cooperate in connection with (i) the
preparation and filing by the Buyer with the SEC under the Securities Act
of a registration statement on Form S-4 relating to the shares of the Buyer
Common Stock to be issued in connection with the Acquisition Merger (the
"Buyer Registration Statement"), (ii) the preparation and filing by the
----- ------------ ---------
Seller of a proxy statement (the "Proxy Statement") with the SEC under the
----- ---------
Exchange Act as shall be necessary or desirable in order to consummate the
transactions contemplated by this Agreement, each to be undertaken as
promptly as practicable, and the Buyer and the Seller will use their
respective best efforts to have the Buyer Registration Statement declared
effective by the SEC and to mail the Proxy Statement to the Seller's
stockholders as promptly as practicable. The parties shall also take any
reasonable action required to be taken under any state "Blue Sky" laws in
connection with the consummation of the transactions contemplated by this
Agreement. In addition to the foregoing, except as may be required by its
board of directors' fiduciary duties as advised in writing by outside
counsel, neither party shall take or permit any of its subsidiaries to take
any action that materially adversely affects its ability to consummate the
transactions contemplated under this Agreement or the Bank Merger Agreement
in a timely manner.
(b) Each of the Seller and the Buyer will cooperate with the
other and use all reasonable efforts to prepare all documentation, to
effect all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary or
appropriate to consummate the transactions contemplated by this Agreement
and the Bank Merger Agreement. Each party hereto shall have the right to
review and approve in advance all descriptions of it and its subsidiaries
which appear in any filing made in connection with the transactions
contemplated by this Agreement, including without limitation all filings
contemplated by Section 5.04(a) above, with any governmental body. In
exercising the foregoing right, the parties hereto shall act reasonably and
as promptly as practicable.
5.05 Approval of Seller's Stockholders. The Seller will (a) as
-------- -- -------- ------------
promptly as practicable, take all steps necessary to duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose of approving this
Agreement and the transactions contemplated hereby, and for such other purposes
as may be necessary or desirable, (b)
-44-
subject to the fiduciary duties of its board of directors as advised in writing
by outside counsel, recommend to its stockholders the approval of such foregoing
matters to be submitted by it to its stockholders, and (c) cooperate and consult
with the Buyer with respect to each of the foregoing matters. Subject to the
fiduciary duties of its board of directors as advised in writing by outside
counsel, the Seller will use all reasonable efforts to obtain the necessary
approvals of its stockholders of the proposals described above to be submitted
by it in connection with this Agreement. If the Seller's Board of Directors is
required by applicable law to review or restate the recommendation to the
Seller's stockholders contemplated in clause (b) of the preceding sentence, this
Section 5.05 shall not prohibit accurate disclosure by the Seller that is
required in any release or regulatory filing (including the Proxy Statement and
the Buyer Registration Statement) or otherwise under applicable law in the
opinion of the Seller's Board of Directors, upon the written advice of outside
counsel, as of the date of such release or regulatory filing or such other
required disclosure as to the transactions contemplated hereby or as to any
Acquisition Transaction.
5.06 Agreements of Seller's Affiliates. The Seller shall identify in a
---------- -- -------- ----------
letter to the Buyer, after consultation with counsel, all persons who, at the
time of the meeting of its stockholders referred to in Section 5.05 hereof, it
believes may be deemed to be "affiliates" of the Seller, as that term is defined
for purposes of paragraphs (c) and (d) of Rule 145 under the Securities Act,
(the "Seller Affiliates"). The Seller shall use all reasonable efforts to cause
------ ----------
each person who is identified as a Seller Affiliate in the letter referred to
above to deliver to the Buyer at least forty (40) days prior to the Closing Date
an executed copy of the Seller Affiliates Agreement. Prior to the Closing Date,
the Seller shall amend and supplement such letter and use all reasonable efforts
to cause each additional person who is identified as a Seller Affiliate as of
the Closing Date to execute a copy of the Seller Affiliates Agreement.
5.07 Further Assurances. Subject to the terms and conditions herein
------- ----------
provided, each of the parties hereto agrees to use all reasonable efforts to, as
promptly as practicable, take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Bank Merger Agreement or to vest the Bank
upon and after the Bank Merger Effective Time with full title to all properties,
assets, rights, approvals, immunities and franchises of the Savings Bank. In
case at any time after the Effective Time or the Bank Merger Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or the Bank Merger Agreement or to vest the Bank with full title to
all properties, assets, rights, approvals, immunities and franchises of the
Savings Bank, the proper officers and directors of each party to this Agreement
and the Bank Merger Agreement, as applicable, shall take all such necessary
action.
5.08 Disclosure Supplements. From time to time prior to the Effective
---------- -----------
Time, and in any event immediately prior to the Effective Time, Seller will
promptly supplement or amend the Seller Disclosure Schedule with respect to any
matter hereafter arising which, if
-45-
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in the Seller Disclosure Schedule or which
is necessary to correct any information in the Seller Disclosure Schedule which
has become inaccurate. No such supplement or amendment to the Seller Disclosure
Schedules pursuant to this Section 5.08 shall have any effect for the purpose of
determining satisfaction of any of the conditions set forth in Article VI
hereof.
5.09 Public Announcements. Except as otherwise required by law or the
------ -------------
rules of the NYSE or the NASD, the Seller and the Buyer will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby.
5.10 Organization of Merger Subsidiary. Prior to the Effective Time,
---------------------------------
Buyer shall cause Merger Subsidiary to be organized under the laws of the
Commonwealth of Massachusetts. The authorized capital stock of Merger Subsidiary
shall consist of one hundred (100) shares of common stock, par value $.01 per
share ("Merger Subsidiary Common Stock"), all of which shall be issued directly
------ ---------- ------ -----
or indirectly to, and held directly or indirectly by, Buyer. Prior to the
Effective Time, Merger Subsidiary shall not conduct any business or otherwise
engage in any material activities or incur any material liabilities, except as
specifically contemplated by this Agreement or as the parties hereto may
otherwise agree. Following the organization of Merger Subsidiary, Buyer shall
cause Merger Subsidiary to execute and deliver an appropriate instrument of
accession to this Agreement, whereupon Merger Subsidiary shall become a party
to, and be bound by, this Agreement.
5.11 Tax-Free Reorganization Treatment. None of the parties hereto or
-------- -------------- ---------
any of their respective subsidiaries or affiliates has taken, shall take or will
cause to be taken any action, whether before or after the Effective Time, which
would disqualify the Acquisition Merger and the transactions contemplated by
this Agreement and the Bank Merger Agreement as a "reorganization" within the
meaning of Section 368(a) of the Code; provided, however, that nothing herein
-------- -------
shall limit the ability of the Buyer to exercise its rights under the Seller
Option Agreement.
5.12 Stock Exchange Listing. The Buyer shall use all reasonable
----- -------- -------
efforts to cause the shares of the Buyer Common Stock to be issued in connection
with the Acquisition Merger to be approved for listing on the NYSE and the BSE,
subject to official notice of issuance, as of or prior to the Effective Time.
5.13 Employment and Benefit Matters.
---------- --- ------- -------
(a) Initial Employment. Upon the Effective Time all the
------- ----------
employees of Savings Bank will remain employees of Savings Bank, with the
exception of the eleven persons identified in Section 5.13 of the Seller
Disclosure Schedule (the "Excluded Employees"), and will be subject to the
employment arrangements and pay
-46-
practices, including without limitation benefits, generally made available
by Buyer and the Bank to employees of the Bank. The parties acknowledge
that Buyer has provided to Seller and/or its advisers copies of Buyer's
Reduction in Force (i.e., severance) policy ("RIF Policy"), the terms of
----------
which shall apply to the employees of Savings Bank, other than the Excluded
Employees, after the Effective Time. A copy of Buyer's RIF Policy is
attached hereto as Exhibit E.
---------
(b) Maintenance of Plans; Benefits Service Credit. Subject to
----------- -- ----- -------- ------- ------
Section 5.13(a) above, as promptly as practicable after the Effective Time,
Buyer agrees to provide the employees of Seller and its affiliates with
benefits maintained by Buyer and its affiliates from time to time for the
benefit of their employees similarly situated. Buyer shall cause each such
plan, program or arrangement to treat the prior service of each such
employee with the Seller or its affiliates, to the extent such prior
service is recognized under the comparable plan, program or arrangement of
the Seller, as service rendered to Buyer or its affiliate, as the case may
be, for purposes of eligibility to participate, vesting, rate of accrual
under Buyer's cash balance retirement plan and eligibility for special
benefits under each such plan, program or arrangement of Buyer, but not for
benefit accrual attributable to any period before the Effective Time.
Without limiting the foregoing, Buyer and its affiliates shall not treat
any employee of Seller or any of its affiliates as a "new" employee for
purposes of any exclusion under any health or similar plan of Buyer or any
of its affiliates for a preexisting medical condition.
(c) Employment Obligations. Following the Effective Time and/or
----------- -- ----- -------- ------- ------
the Bank Merger Effective Time, as applicable, Buyer shall, or shall cause
the Bank to, honor in accordance with their terms all employment,
severance, split dollar life insurance and other compensation contracts
between Seller or any subsidiary thereof and any director, officer or
employee thereof, and all provisions for benefits or other amounts earned
or accrued through the Effective Time under the Seller Pension Plans or the
Seller Benefit Plans. Buyer shall not cause or permit Seller's defined
benefit pension plan to be terminated or combined with another plan unless
the amount, if any, by which the value of the assets of the said plan at
the date of termination or combination exceeds the liabilities of the said
plan at that date shall first have been allocated among persons who were
participants in the said plan before the Effective Time.
5.14 Directors' and Officers' Indemnification. Buyer agrees that all
--------- --- --------
rights to indemnification existing in favor, and all limitations on the personal
liability, of any director, officer or other employee of Seller or any of its
subsidiaries provided for in Seller's articles of organization or by-laws or the
charter or by-laws or similar organizational documents of any of Seller's
subsidiaries as in effect as of the date hereof with respect to matters
occurring prior to the Effective Time shall survive the Acquisition Merger and
the Bank Merger and shall continue in full force and effect for a period of not
less than six (6) years from the Closing Date; provided, however, that all
-------- -------
rights to indemnification in respect
-47-
of any claim asserted or made within such period shall continue until the
disposition of such claim. In the event Buyer or the Surviving Corporation or
any of its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case, to
the extent necessary, proper provision shall be made so that the successors and
assigns of Buyer or the Surviving Corporation, as the case may be, assume the
obligations set forth in this Section 5.14.
5.15 Accountants' Letters. The Seller shall cause to be delivered to the
----------- -------
Buyer "comfort" letters from the Seller's independent public accountants, dated
the date on which the Buyer Registration Statement (or last amendment thereto)
shall become effective and dated the Closing Date, relating to the information
about Seller included in the Buyer Registration Statement and addressed to the
Buyer, in form and substance which is reasonably satisfactory to the Buyer and
customary in transactions of the nature contemplated hereby.
5.16 Maintenance of Records. Through the Effective Time, the Seller will
----------- -- -------
maintain the Records in the same manner and with the same care that the Records
have been maintained prior to the execution of this Agreement. The Buyer may, at
its own expense, make such copies of and excerpts from the Records as it may
deem desirable. All Records, whether held by the Buyer or the Seller, shall be
maintained for such periods as are required by law, unless the parties shall,
applicable law permitting, agree in writing to a different period. From and
after the Effective Time, the Buyer shall be solely responsible for continuing
maintenance of the Records.
5.17 Leases. Seller shall consult with Buyer before renewing or
------
extending any material lease of Seller or any subsidiary of real property or
relating to furniture, fixtures or equipment that is currently in effect but
that would otherwise expire on or prior to the Effective Time. Seller shall not
cancel, terminate or take other action that is likely to result in any
cancellation or termination of any such lease without first consulting with
Buyer.
5.18 Pre-Closing Transactions. The Seller shall use all reasonable
----------- ------------
efforts to complete those Pre-Closing Transactions that are mandatory prior to
the close of business on the Measurement Date, which shall be completed in
accordance with all applicable laws and regulations. Seller's consummation of
the Pre-Closing Transactions and its management of the assets, liabilities and
operations that are the subject of the Pre-Closing Transactions (including but
not limited to the sale, lease, transfer, assignment, encumbrance or disposition
of any assets that are the subject of any Pre-Closing Transactions, the waiver
of any legal or equitable rights with respect to such assets, the investment and
reinvestment of proceeds from the sale of such assets, and any and all hedging
activities with respect to such assets or proceeds therefrom, including the
issuance or purchase of options) shall not be included within, or otherwise
affected by, the restrictions and limitations contained in Section 5.01 above.
-48-
5.19 Bank Merger. The parties shall take and cause the Bank and the
---- ------
Savings Bank, as applicable, to take all necessary and appropriate actions to
effect the Bank Merger immediately after the Effective Time in accordance with
the requirements of all applicable laws and regulations and the terms of the
Bank Merger Agreement.
5.20 Resignations. Seller shall cause to be delivered at the Effective
------------
Time, if requested by Buyer, written resignations of each of the persons who are
then serving as directors of Seller and the Savings Bank, respectively.
5.21 Disposition of Commercial Real Estate Loan Portfolio. In connection
----------- -- ---------- ---- ------ ---- ---------
with Seller's completion of the Pre-Closing Transactions in accordance with
Section 5.18 hereof, Seller shall seek to complete or cause the Savings Bank to
complete, as the case may be, the disposition of its entire portfolio of
commercial and multi-family real estate loans (the "CRE Loans") by the later of
--- -----
the date on which the parties have received the last of the Requisite Regulatory
Approvals or June 1, 1996; provided, however, if all of the CRE Loans have not
been disposed of by Seller as of such later date, then Seller shall take all
necessary and appropriate actions to cause all of the then-remaining CRE Loans
to be disposed of by auction to the highest bidder by not later than July 1,
1996 and Buyer or a party to be designated by Buyer shall be permitted, at
Buyer's option, to participate in such auction proceeding and to purchase, if
Buyer or such designee is the highest bidder, the CRE Loans to be sold
thereunder.
ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations Under This Agreement. The
---------- -- ---- ------- ----------- ----- ---- ---------
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
none of which may be waived:
(a) Seller's Stockholders' Approval. This Agreement and the
-------- ------------ --------
transactions contemplated hereby shall have been approved by the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of the Seller Common Stock in accordance with applicable law.
(b) Governmental Consents. All authorizations, consents,
------------ --------
orders or approvals of, or declarations or filings with, and all
expirations of waiting periods imposed by, any governmental or regulatory
authority or agency which are necessary for the consummation of the
transactions contemplated by this Agreement and the Bank Merger Agreement,
including without limitation the Acquisition Merger and the Bank Merger,
shall have been filed, occurred or been obtained (all such authorizations,
orders, declarations, approvals, filings and consents and the lapse of all
such waiting periods being referred to as the "Requisite Regulatory
--------- ----------
Approvals")
---------
-49-
and all such Requisite Regulatory Approvals shall be in full force and
effect. In addition, the Buyer shall have received all state securities or
blue sky permits and other authorizations necessary to issue the Buyer
Common Stock in connection with the Acquisition Merger in accordance with
all applicable state securities or blue sky laws.
(c) Buyer Registration Statement. The Buyer Registration
----- ------------ ---------
Statement shall have become effective under the Securities Act and shall
not be subject to a stop order or a threatened stop order.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions contemplated
----------
by this Agreement shall be in effect.
6.02 Conditions to the Obligations of Buyer Under This Agreement.
---------- -- --- ----------- -- ----- ----- ---- ---------
The obligations of the Buyer under this Agreement shall be further subject to
the satisfaction or waiver by the Buyer, at or prior to the Effective Time, of
the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
------- -- -------- ------- -------
occurred any change in the business, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of the Seller or
any of its subsidiaries which has had, individually or in the aggregate, a
Material Adverse Effect on the Seller.
(b) Representations and Warranties; Performance of Obligations.
--------------- --- ---------- ----------- -- -----------
The obligations of the Seller required to be performed by it at or prior to
the Effective Time pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and the
representations and warranties of the Seller contained in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as of the
Effective Time (except as otherwise specifically contemplated by this
Agreement and except as to any representation or warranty which
specifically relates to an earlier date) and the Buyer shall have received
a certificate to that effect signed by the chairman or president and the
chief financial officer or chief accounting officer of the Seller.
(c) Third-Party Approvals. Any and all permits, consents,
----------- ---------
waivers, clearances, approvals and authorizations of all non-governmental
and non-regulatory third parties which are necessary in connection with the
consummation of the transactions contemplated by this Agreement and are
required to be received or obtained by the Seller or the Savings Bank,
shall have been obtained by the Seller or the Savings Bank, as applicable,
other than permits, consents, waivers, clearances, approvals and
authorizations the failure of which to obtain would neither make it
impossible to consummate the transactions contemplated by this Agreement
and the
-50-
Bank Merger Agreement nor result in any Material Adverse Effect on the
Buyer after the Effective Time and the Bank Merger Effective Time.
(d) Tax Opinion. The Buyer shall have received an opinion
--- -------
dated the Closing Date from its counsel, ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, or other
counsel acceptable to the Buyer and the Seller, substantially to the effect
that, on the basis of facts and representations set forth therein, or set
forth in writing elsewhere and referred to therein, for federal income tax
purposes the transactions contemplated by this Agreement constitute a
reorganization as described in Section 368(a) of the Code and addressing
such other substantial federal income tax effects of such transactions as
the Buyer may reasonably require and which are customary in transactions of
a like character. In rendering any such opinion, such counsel may rely, to
the extent they deem necessary or appropriate, upon opinions of other
counsel, representations of an officer or officers of the Seller and the
Buyer or any of their affiliates and representations of one or more
shareholders of the Seller.
(e) Pre-Closing Transactions. All of the Pre-Closing
----------- ------------
Transactions that Seller is required to have completed on or prior to the
close of business on the Measurement Date in accordance with the terms of
Section 5.18 hereof shall have been so completed in their entirety.
In addition to the foregoing, the Seller will furnish the Buyer with such
additional certificates, instruments or other documents in the name or on behalf
of the Seller, executed by appropriate officers or others, including without
limitation certificates or correspondence of governmental agencies or
authorities or nongovernmental third parties, to evidence fulfillment of the
conditions set forth in this Section 6.02 as the Buyer may reasonably request.
6.03 Conditions to the Obligations of Seller Under This Agreement.
---------- -- --- ----------- -- ------ ----- ---- ---------
The obligations of the Seller under this Agreement shall be further subject to
the satisfaction or waiver by the Seller, at or prior to the Effective Time, of
the following conditions:
(a) Absence of Material Adverse Changes. There shall not have
------- -- -------- ------- -------
occurred any change in the business, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of the Buyer or
any of its subsidiaries which has had, individually or in the aggregate, a
Material Adverse Effect on the Buyer.
(b) Representations and Warranties; Performance of Obligations.
--------------- --- ---------- ----------- -- -----------
The obligations of the Buyer required to be performed by it at or prior to
the Effective Time pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and the
representations and warranties of the Buyer contained in this Agreement
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made at and as
-51-
of the Effective Time (except as otherwise specifically contemplated by
this Agreement and except as to any representation or warranty which
specifically relates to an earlier date) and the Seller and the Savings
Bank shall have received a certificate to that effect signed by the vice
chairman and the chief financial officer (or other authorized officer(s))
of the Buyer.
(c) Third-Party Approvals. Any and all permits, consents,
----------- ---------
waivers, clearances, approvals and authorizations of all non-governmental
and non-regulatory third parties which are necessary in connection with the
consummation of the transactions contemplated by this Agreement and are
required to be received or obtained by the Buyer, shall have been obtained
by the Buyer, other than permits, consents, waivers, clearances, approvals
and authorizations the failure of which to obtain would neither make it
impossible to consummate the transactions contemplated by this Agreement
nor result in a Material Adverse Effect on the Buyer after the Effective
Time.
(d) Tax Opinion. The Seller shall have received an opinion
--- -------
dated the Closing Date from its counsel, Ropes & ▇▇▇▇, or other counsel
acceptable to the Buyer and the Seller, substantially to the effect that,
on the basis of facts and representations set forth therein, or set forth
in writing elsewhere and referred to therein, for federal income tax
purposes the transactions contemplated by this Agreement constitute a
reorganization as described in Section 368(a) of the Code and that no gain
or loss will be recognized by the stockholders of the Seller upon the
receipt, pursuant to this Agreement, of the Buyer Common Stock in
connection with the Acquisition Merger (it being understood that such
opinion will not extend to cash received in lieu of fractional share
interests or cash received by dissenters, if any) and addressing such other
substantial federal income tax effects of such transaction as the Seller
may reasonably require and which are customary in transactions of a like
character. In rendering any such opinion, such counsel may rely, to the
extent they deem necessary or appropriate, upon opinions of other counsel
and upon representations of an officer or officers of the Seller and the
Buyer or any of their affiliates.
(e) NYSE Listing. The shares of the Buyer Common Stock issuable
---- -------
upon the Effective Time shall have been authorized for listing on the NYSE
upon official notice of issuance.
In addition to the foregoing, the Buyer will furnish the Seller with such
additional certificates, instruments or other documents in the name or on behalf
of the Buyer, executed by appropriate officers or others, including without
limitation certificates or correspondence of governmental agencies or
authorities or nongovernmental third parties, to evidence fulfillment of the
conditions set forth in this Section 6.03 as the Seller may reasonably request.
-52-
ARTICLE VII
CLOSING
-------
7.01. Time and Place. Subject to the provisions of Articles VI and VIII
---- --- -----
hereof, the closing of the transactions contemplated by this Agreement shall
take place at the Boston, Massachusetts offices of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ at
10:00 A.M., local time, on such date that is not later than the fifth business
day after the date on which all of the conditions contained in Article VI hereof
are satisfied or waived; or at such other place, at such other time, or on such
other date as Seller and Buyer may mutually agree upon for such closing to take
place.
7.02. Deliveries at the Closing. Subject to the provisions of Articles VI
---------- -- --- -------
and VIII hereof, at the closing contemplated by Section 7.01 above there shall
be delivered to Seller and Buyer and their respective subsidiaries as
applicable, the opinions, certificates, and other documents and instruments
required to be delivered under Article VI hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
----------- --------- --- ------
8.01 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time, whether before or after approval of this Agreement and the
transactions contemplated hereby by the Seller's stockholders:
(a) by mutual written consent of the Seller and the Buyer
authorized by their respective Boards of Directors;
(b) by the Seller or the Buyer if the Effective Time shall not
have occurred on or prior to December 31, 1996 (the "Termination Date") or
----------- ----
such later date as shall have been agreed to in writing by the Buyer and
the Seller;
(c) by the Buyer or the Seller (i) thirty days after the date
on which any request or application for a Requisite Regulatory Approval
shall have been denied, unless within the thirty-day period following such
denial a petition for rehearing or an amended application has been filed
with such governmental regulatory authority or agency, except that no party
shall have the right to terminate this Agreement pursuant to this clause
(i) if such denial shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe in any material respects the
covenants and agreements of such party set forth herein, or (ii) if any
governmental or regulatory authority or agency, or court of competent
jurisdiction, shall have issued a final permanent order or Injunction
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement
-53-
and the time for appeal or petition for reconsideration of such order or
Injunction shall have expired without such appeal or petition being granted
or such order or Injunction shall otherwise have become final and non-
appealable;
(d) by the Buyer or the Seller (provided that the terminating
party is not then in material breach of any representation, warranty,
covenant or other agreement contained herein or in the Seller Option
Agreement), in the event of a material breach by the other party of any
representation, warranty, covenant or other agreement contained herein or
in the Seller Option Agreement which breach is not cured after forty-five
(45) days written notice thereof is given to the party committing such
breach; or
(e) by Buyer or Seller (provided that the terminating party is
not then in material breach of any representation, warranty or covenant or
other agreement contained herein or in the Seller Option Agreement), if the
approval of Seller's stockholders specified in Section 5.05 above shall not
have been obtained by reason of Seller's failure to have obtained the
requisite stockholder vote at a duly held meeting of Seller's stockholders
or at any adjournment thereof.
8.02 Effect of Termination. In the event of termination of this
------ -- -----------
Agreement by either the Seller or the Buyer as provided above, this Agreement
shall forthwith become null and void (other than Sections 5.02(b) and 9.01
hereof, which shall remain in full force and effect) and there shall be no
further liability on the part of any of the parties hereto or their respective
officers or directors to the others, except (a) any liability of any party under
said Sections 5.02(b) and 9.01, (b) that the Seller Option Agreement shall be
governed by its own terms as to termination, and (c) in the event of a willful
breach of any representation, warranty, covenant or agreement contained in this
Agreement, in which case, the breaching party shall remain liable for any and
all damages, costs and expenses, including all reasonable attorneys' fees,
sustained or incurred by the non-breaching party as a result thereof or in
connection therewith or with the enforcement of its rights hereunder.
8.03 Amendment, Extension and Waiver. Subject to applicable law and as
--------- --------- --- ------
may be authorized by their respective Boards of Directors, at any time prior to
the consummation of the transactions contemplated by this Agreement or
termination of this Agreement in accordance with the provisions of Section 8.01
hereof, whether before or after approval of this Agreement and the transactions
contemplated hereby by the stockholders of the Seller, the parties may, (a)
amend this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (c) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI (other than Section 6.01) hereof. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto. Any agreement on the part of a party hereto to
any extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party, but such waiver or failure to
-54-
insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
MISCELLANEOUS
-------------
9.01 Expenses. Except as may otherwise be agreed to hereunder or in
--------
other writing by the parties, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses; provided, however, that, if
-------- -------
this Agreement is properly terminated under Section 8.01 above, and neither
party has any liability to the other under Section 8.02(c) (in which case the
breaching party shall be fully liable to the other in accordance with the
provisions thereof), all such costs and expenses incurred in connection with the
preparation, filing and distribution of the Buyer Registration Statement and the
Proxy Statement shall be borne equally by the Buyer and the Seller.
9.02 Non-Survival. None of the representations, warranties, covenants
------------
and agreements of the parties shall survive after the Effective Time, except for
the agreements and covenants contained or referred to in Article II, Section
5.02(b), the last sentence of Section 5.07 and Sections 5.11, 5.13, 5.14, 8.02,
9.01 and 9.02, which agreements and covenants shall survive the Effective Time.
9.03 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
(a) If to the Seller, to:
The Boston Bancorp
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive Officer
Copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
-55-
(b) If to the Buyer, to:
Bank of Boston Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Director,
Mergers & Acquisitions
and
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., General Counsel
Copy to:
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
delivered to the recipient party.
9.04 Parties in Interest. This Agreement shall be binding upon and shall
------- -- --------
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
-------- -------
interests or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties, and that nothing in this
Agreement, except for Sections 5.13 and 5.14 above (which are expressly intended
to provide rights to, and to be enforceable by, Seller's directors, officers and
other employees to the extent applicable thereto), is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement.
9.05 Entire Agreement. This Agreement, including the documents and
------ ---------
other writing referred to herein or delivered pursuant hereto, including the
Seller Disclosure Schedule, the Seller Option Agreement, the Seller
Stockholders' Agreement and the Bank Merger Agreement, is complete, and all
promises, representations, understandings, warranties and agreements with
reference to the subject matter hereof, and all inducements to the making of
this Agreement relied upon by either party hereto, have been expressed herein.
This Agreement (including the aforementioned documents and writings) supersedes
any prior or contemporaneous agreement or understanding between the parties
hereto, oral or written, pertaining to any such matters, including without
limitation the Confidentiality Agreement, which agreements or understandings
shall be of no further force or effect for any persons.
-56-
9.06 Counterparts. This Agreement may be executed in counterparts, all
------------
of which shall be considered one and the same agreement and each of which shall
be deemed to be an original and shall become effective when a counterpart has
been signed by each of the parties and delivered to each of the other parties.
9.07 Governing Law. This Agreement shall be governed by the laws of the
--------- ---
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of laws thereof.
9.08 Captions. The Article and Section headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.09 Effect of Investigations. No investigation by the parties hereto
------ -- --------------
made heretofore or hereafter, whether pursuant to this Agreement or otherwise
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such
investigation, subject, however, to Section 9.02 hereof.
9.10 Severability. In the event that any one or more provisions of this
------------
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purposes and
intents of this Agreement.
9.11 Specific Enforceability. The parties recognize and hereby
-------- --------------
acknowledge that it is impossible to measure in money the damages that would
result to a party by reason of the failure of either of the parties to perform
any of the obligations imposed on it by this Agreement. Accordingly, if any
party should institute an action or proceeding seeking specific enforcement of
the provisions hereof, each party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists.
9.12 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
------ -- ---- -----
WAIVES ANY RIGHTS THAT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS OR ACTIONS OF
ANY OF THEM RELATING THERETO.
-57-
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Reorganization to be executed as a sealed instrument by their duly authorized
officers as of the day and year first above written.
BANK OF BOSTON CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Director
THE BOSTON BANCORP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇
President and Chief Executive
Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Treasurer