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AGREEMENT AND PLAN OF MERGER
By and Between
SEACOAST FINANCIAL SERVICES CORPORATION
And
HOME PORT BANCORP, INC.
Dated as of July 20, 2000
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TABLE OF CONTENTS
Article I Definitions........................................................1
1.01 CERTAIN DEFINITIONS..................................................1
1.02 OTHER DEFINITIONAL MATTERS...........................................4
Article II THE MERGER........................................................4
2.01 THE MERGER...........................................................4
2.02 EFFECTIVE TIME.......................................................5
2.03 EFFECT OF THE MERGER.................................................5
2.04 CORPORATE CHARTER....................................................5
2.05 BY-LAWS..............................................................5
2.06 DIRECTORS AND OFFICERS...............................................5
2.07 TAX CONSEQUENCES.....................................................5
2.08 NANTUCKET BANK.......................................................5
Article III CONVERSION OF SECURITIES.........................................6
3.01 CONVERSION OF SECURITIES.............................................6
3.02 STOCK OPTIONS........................................................6
3.03 PAYMENT PROCEDURES...................................................6
3.04 RETURN OF EXCHANGE FUND..............................................7
3.05 LOST OR STOLEN CERTIFICATES..........................................8
Article IV REPRESENTATIONS AND WARRANTIES OF THE SELLER......................8
4.01 ORGANIZATION AND QUALIFICATION; SELLER'S SUBSIDIARIES................8
4.02 CORPORATE CHARTER; BY-LAWS; CORPORATE RECORDS........................9
4.03 CAPITALIZATION.......................................................9
4.04 AUTHORITY...........................................................10
4.05 NO CONFLICT.........................................................10
4.06 CONSENTS AND APPROVALS..............................................10
4.07 COMPLIANCE..........................................................11
4.08 REPORTS.............................................................11
4.09 FINANCIAL STATEMENTS................................................12
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS................................13
4.11 ABSENCE OF LITIGATION...............................................14
4.12 EMPLOYEE BENEFIT PROGRAMS...........................................14
4.13 LABOR MATTERS.......................................................17
4.14 PROPERTY AND LEASES.................................................17
4.15 TAXES AND TAX RETURNS...............................................18
4.16 CERTAIN CONTRACTS...................................................20
4.17 LOAN PORTFOLIO......................................................21
4.18 INVESTMENT SECURITIES...............................................22
4.19 DERIVATIVE TRANSACTIONS.............................................22
4.20 INSURANCE...........................................................22
4.21 ENVIRONMENTAL MATTERS...............................................23
4.22 INTELLECTUAL PROPERTY...............................................24
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4.23 FIDUCIARY ACCOUNTS..................................................24
4.24 AGREEMENTS WITH BANK REGULATORS.....................................24
4.25 MATERIAL INTERESTS OF CERTAIN PERSONS...............................25
4.26 BROKERS' FEES; OPINIONS.............................................25
4.27 PROXY STATEMENT.....................................................25
4.28 SELLER INFORMATION..................................................26
4.29 STATE TAKEOVER LAWS.................................................26
4.30 DISCLOSURE..........................................................26
Article V REPRESENTATIONS AND WARRANTIES OF THE BUYER.......................26
5.01 CORPORATE ORGANIZATION..............................................26
5.02 AUTHORITY...........................................................26
5.03 NO CONFLICT.........................................................27
5.04 CONSENTS AND APPROVALS..............................................27
5.05 COMPLIANCE..........................................................27
5.06 FINANCIAL STATEMENTS................................................28
5.07 ABSENCE OF LITIGATION...............................................28
5.08 AGREEMENTS WITH BANK REGULATORS.....................................28
5.09 BUYER INFORMATION...................................................29
5.10 CAPITAL, FINANCING..................................................29
Article VI CONDUCT OF BUSINESS PENDING THE MERGER...........................29
6.01 COVENANTS OF THE SELLER.............................................29
6.02 CERTAIN CHANGES AND ADJUSTMENTS.....................................32
6.03 PAYMENT OF DIVIDENDS................................................32
6.04 COVENANT OF THE BUYER...............................................33
Article VII ADDITIONAL AGREEMENTS...........................................33
7.01 REGULATORY MATTERS..................................................33
7.02 ACCESS TO INFORMATION...............................................34
7.03 STOCKHOLDER MEETING.................................................36
7.04 LEGAL CONDITIONS TO MERGER..........................................36
7.05 NO SOLICITATION.....................................................36
7.06 EMPLOYEE BENEFIT MATTERS............................................37
7.06(a) Provision of Benefits.........................................37
7.06(b) New Employment Agreements.....................................37
7.06(c) Consultant Agreement..........................................37
7.06(d) Continuation of Plans.........................................37
7.06(e) Parachute Payments............................................37
7.07 DIRECTORS' AND OFFICERS' INSURANCE..................................38
7.08 FINANCIAL AND OTHER STATEMENTS......................................38
7.09 FURTHER ACTION......................................................39
7.10 PUBLIC ANNOUNCEMENTS................................................39
7.11 ADDITIONAL AGREEMENTS...............................................39
7.12 UPDATE OF DISCLOSURE SCHEDULES......................................39
7.13 CURRENT INFORMATION.................................................39
7.14 DIRECTORS OF SELLER'S BANK..........................................40
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7.15 VOTING AGREEMENTS...................................................40
Article VIII CONDITIONS TO THE MERGER.......................................41
8.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.........41
8.01(a) Stockholder Approval..........................................41
8.01(b) Regulatory Approvals..........................................41
8.01(c) No Orders, Injunctions or Restraints; Illegality..............41
8.02 CONDITIONS TO OBLIGATIONS OF THE BUYER..............................41
8.02(a) Representations and Warranties................................41
8.02(b) Agreements and Covenants......................................42
8.02(c) Consents Under Agreements.....................................42
8.02(d) No Burdensome Condition.......................................42
8.02(e) Investment Banker Opinion.....................................42
8.02(f) Employment Agreements.........................................42
8.02(g) Consultant Agreement..........................................42
8.02(h) Voting Agreements.............................................42
8.02(i) Termination of Certain Existing Agreements....................42
8.02(j) Tax Opinion...................................................42
8.02(k) No Parachute Payments.........................................42
8.03 CONDITIONS TO OBLIGATIONS OF THE SELLER.............................43
8.03(a) Representations and Warranties................................43
8.03(b) Agreements and Covenants......................................43
8.03(c) Investment Banker Opinion.....................................43
Article IX TERMINATION, AMENDMENT AND WAIVER................................43
9.01 TERMINATION.........................................................43
9.02 EFFECT OF TERMINATION; EXPENSES.....................................45
9.03 SELLER SPECIAL PAYMENT..............................................45
9.04 BUYER SPECIAL PAYMENT...............................................46
9.05 AMENDMENT...........................................................47
9.06 WAIVER..............................................................47
Article X GENERAL PROVISIONS................................................47
10.01 CLOSING............................................................47
10.02 ALTERNATIVE STRUCTURE..............................................47
10.03 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.........48
10.04 NOTICES............................................................48
10.05 SEVERABILITY.......................................................49
10.06 ENTIRE AGREEMENT...................................................49
10.07 NO THIRD PARTY BENEFICIARIES.......................................49
10.08 ASSIGNMENT.........................................................49
10.09 PARTIES IN INTEREST................................................49
10.10 SPECIFIC PERFORMANCE...............................................50
10.11 GOVERNING LAW......................................................50
10.12 HEADINGS...........................................................50
10.13 INTERPRETATION.....................................................50
10.14 COUNTERPARTS.......................................................50
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 20, 2000 (this
"Agreement"), by and between SEACOAST FINANCIAL SERVICES CORPORATION, a
Massachusetts corporation (the "Buyer"), and HOME PORT BANCORP, INC., a Delaware
corporation (the "Seller").
WHEREAS, the Boards of Directors of the Buyer and the Seller have each
determined that it is in the best interests of their respective companies and
their stockholders for the Seller to merge with and into the Buyer (the
"Merger"), subject to the terms and conditions set forth herein;
WHEREAS, as a condition and inducement to the Buyer to enter into, and
after the execution of, this Agreement, the Buyer and the Seller are entering
into the Stock Option Agreement (the "Stock Option Agreement"), attached hereto
as Exhibit 1, pursuant to which the Seller has granted an option (the "Stock
Option") to purchase shares of the "Seller Common Stock" (as defined in Section
1.01(v)) to the Buyer; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and to prescribe certain conditions
to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Buyer and Seller agree as follows:
Article I Definitions
1.01. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person, including, without limitation,
any partnership or joint venture in which the person (either alone, or through
or together with any subsidiary) has, directly or indirectly, an interest of 15%
or more (provided that such 15% threshold shall be 10% for purposes of the
definition of Acquisition Transaction (as set forth in Section 1.01(b)) and for
purposes of Section 9.03(a)).
(b) "Acquisition Transaction" shall mean (i) a merger, consolidation or
similar transaction involving the Seller, the Seller's Bank or any of Seller's
Subsidiaries, (ii) the disposition, by sale, lease, exchange or otherwise, of
assets of the Seller, the Seller's Bank or any of Seller's Subsidiaries
representing 24.9% or more of the consolidated assets of the Seller, the
Seller's Bank and Seller's Subsidiaries, in a single transaction or series of
transactions, other than sales of mortgages into the secondary market in the
ordinary course of business consistent with past practice, (iii) the issuance,
sale or other disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities representing 24.9% or more of
the voting power of the Seller, the Seller's Bank or any of Seller's
Subsidiaries, (iv) any person
(other than the Buyer or any affiliate of the Buyer) shall have commenced (as
such term is defined in Rule 14d-2 under the Exchange Act) or shall have filed a
registration statement under the Securities Act, with respect to, a tender offer
or exchange offer to purchase any shares of Seller Common Stock such that, upon
consummation of such offer, such person would own or control 24.9% or more of
the then outstanding shares of Seller Common Stock, or (v) any person (other
than the Buyer or any affiliate of the Buyer) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange
Act) of, or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under the Exchange Act) shall have been formed which shall
have acquired beneficial ownership of, or the right to acquire beneficial
ownership of, 24.9% or more of the then outstanding shares of Seller Common
Stock.
(c) "beneficial owner" with respect to any shares of Seller Common
Stock means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially
owns, directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates or person with whom
such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares.
(d) "business day" means any day on which the principal offices of the
FDIC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of Boston.
(e) "Buyer Special Payment" shall have the meaning defined in Section
9.04(a).
(f) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
(g) "Corporate Charter" shall mean a corporation's Articles of
Organization, Certificate of Incorporation, or equivalent organizational
documents.
(h) "Employment Agreements" shall have the meaning defined in Section
7.06(b).
(i) "Existing Consulting Agreement" shall have the meaning defined in
Section 7.06(c).
(j) "Existing Employment Agreements" shall have the meaning defined in
Section 7.06(b).
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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(l) "Expenses" shall have the meaning defined in Section 9.02(b).
(m) "Expiration Date" shall have the meaning defined in Section
9.01(b).
(n) "Investment Banker" shall have the meaning defined in Section 4.26.
(o) "knowledge" as used herein in the context of the Seller shall mean
knowledge of any of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ or any member of
the Board of Directors of the Seller and as used herein in the context of the
Buyer shall mean knowledge of the Buyer or its subsidiaries.
(p) "Material Adverse Effect" shall have the following meanings in this
Agreement:
(i) When used in connection with the Seller, the Seller's Bank, or
any of the Seller's Subsidiaries, the term "Material Adverse Effect" means
any change or effect that is or would be materially adverse to (i) the
business, assets, liabilities, financial condition or results of operations
of the Seller, the Seller's Bank and the Seller's Subsidiaries taken as a
whole, other than any such change or effect attributable to or resulting
from (x) changes in interest rates or general economic conditions affecting
banks generally, (y) changes in federal or state banking or tax laws or
regulations affecting banks generally or (z) changes in generally accepted
or regulatory accounting principles applicable to banks or their holding
companies generally; or (ii) the ability of the Seller, the Seller's Bank
or the Seller's Subsidiaries to consummate the transactions contemplated
hereby; and
(ii) When used in connection with the Buyer or the Buyer's Bank, the
term "Material Adverse Effect" means any change or effect that is or would
be materially adverse to (i) the business, assets, liabilities, financial
condition or results of operations of the Buyer and the Buyer's Bank taken
as a whole, other than any such change or effect attributable to or
resulting from (x) changes in interest rates or general economic conditions
affecting banks generally, (y) changes in federal or state banking or tax
laws or regulations affecting banks generally or (z) changes in generally
accepted or regulatory accounting principles applicable to banks or their
holding companies generally; or (ii) the ability of the Buyer to consummate
the transactions contemplated hereby.
(q) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government.
(r) "Requisite Regulatory Approvals" shall have the meaning defined in
Section 8.01(b).
(s) "Securities Act" shall mean the Securities Act of 1933, as amended.
(t) "Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
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(u) "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
(v) "Seller Common Stock" means the common stock, par value $.01 per
share, of the Seller.
(w) "Seller Disclosure Schedule" shall have the meaning defined in the
preamble to Article IV.
(x) "Seller Financial Statements" shall mean (i) the audited
consolidated balance sheets (including related notes and schedules, if any) of
Seller as of December 31, 1997, 1998 and 1999 and the consolidated statements of
operations, changes in stockholders' equity and cash flows (including related
notes and schedules, if any) of Seller for each of the three years ended
December 31, 1997, 1998 and 1999 as filed by Seller, in its Securities Documents
and (ii) the unaudited consolidated financial statements of the Seller, the
Seller's Bank and the Seller's Subsidiaries as of June 30, 2000 and June 30,
1999, and the related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the six month periods then ended.
(y) "Seller's Bank" shall have the meaning defined in Section 4.01(a).
(z) "Seller's Subsidiaries" shall have the meaning defined in Section
4.01(a).
(aa) "Seller Special Payment" shall have the meaning defined in Section
9.03(a).
(bb) "subsidiary" or "subsidiaries" of the Surviving Corporation, the
Buyer, the Seller or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries, except as
otherwise defined herein.
(cc) "Surviving Corporation" shall have the meaning defined in Section
2.01.
1.02. Other Definitional Matters. Unless the context otherwise requires, a
term defined anywhere in this Agreement has the same meaning throughout; all
references to "the Agreement" or "this Agreement" are to this Agreement as
modified, supplemented or amended from time to time; and terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa.
Article II THE MERGER
2.01. The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL") and the
Massachusetts Business Corporation Law (the "MBCL"), at the Effective Time (as
defined in Section 2.02 hereof), the Seller shall merge with and into the Buyer.
Buyer shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger, and shall continue its corporate
existence under the laws of The Commonwealth of Massachusetts.
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The name of the Surviving Corporation shall continue to be Seacoast Financial
Services Corporation. Upon consummation of the Merger, the separate corporate
existence of the Seller shall terminate.
2.02. Effective Time. As promptly as practicable after all of the
conditions set forth in Article VIII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, the Buyer
and the Seller shall duly execute and file a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware
(the "Delaware Secretary"), in accordance with the DGCL, and articles of merger
(the "Articles of Merger") with the Secretary of State of The Commonwealth of
Massachusetts (the "Massachusetts Secretary"), in accordance with the MBCL. The
Merger shall become effective on the date (the "Effective Date") and at such
time (the "Effective Time") as set forth in the Certificate of Merger and the
Articles of Merger.
2.03. Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided herein and in the applicable provisions of the DGCL and the
MBCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of the Buyer and the Seller shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Buyer and the Seller shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
2.04. Corporate Charter. Unless otherwise determined by the Buyer prior to
the Effective Time, at the Effective Time, the Corporate Charter of the Buyer as
in effect immediately prior to the Effective Time shall be the Corporate Charter
of the Surviving Corporation until thereafter further amended as provided by law
and such Corporate Charter.
2.05. By-Laws. Unless otherwise determined by the Buyer prior to the
Effective Time, the By-Laws of the Buyer, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Corporate Charter of the Surviving
Corporation and such By-Laws.
2.06. Directors and Officers. The directors of the Buyer immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Corporate Charter and
By-Laws of the Surviving Corporation, and the officers of the Buyer immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
2.07. Tax Consequences. It is intended by the parties that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code,
and that this Agreement shall constitute a "plan of reorganization" for the
purposes of Section 368 of the Code.
2.08. Nantucket Bank. The Buyer confirms that it will maintain Nantucket
Bank in existence as a separate subsidiary for a period of at least two years
following the Effective Time; provided, however, that in no event shall the
foregoing prevent the Buyer from taking any action in the reasonable best
interests of the Buyer or in accordance with or based upon regulatory
considerations, safe and sound banking practices, or the fiduciary duties of the
Buyer's directors.
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Article III CONVERSION OF SECURITIES
3.01. Conversion of Securities.
(a) At the Effective Time, each share of the Seller Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares of
Seller Common Stock to be cancelled pursuant to Section 3.01(b)) shall be
converted into the right to receive cash in the amount of $37.00 (the "Merger
Consideration") pursuant to the procedures set forth in Section 3.03.
(b) At the Effective Time, all shares of Seller Common Stock that are
owned by the Seller as treasury stock and all shares of Seller Common Stock that
are owned directly or indirectly by the Buyer or the Seller or any of their
respective subsidiaries (other than shares of Seller Common Stock held directly
or indirectly in trust accounts, managed accounts and the like or otherwise held
in a fiduciary capacity that are beneficially owned by third parties (referred
to herein as "Trust Account Shares") and other than any shares of Seller Common
Stock held by Buyer or the Seller or any of their respective subsidiaries in
respect of a debt previously contracted (referred to herein as "DPC Shares"))
shall be canceled and shall cease to exist.
(c) As a result of the Merger and without any action on the part of the
holders thereof, all shares of Seller Common Stock shall cease to be
outstanding, shall be canceled and retired and shall cease to exist and each
holder of a certificate (a "Certificate" and, collectively, the "Certificates")
representing any shares of Seller Common Stock (other than those shares of
Seller Common Stock to be canceled pursuant to Section 3.01(b)) shall thereafter
cease to have any rights with respect to such shares of Seller Common Stock,
except the right to receive, without interest, the Merger Consideration upon the
surrender of such Certificate.
3.02. Stock Options. Prior to the Effective Time, the Seller shall, in
accordance with the terms of the Home Port Directors' Restricted Stock Option
Plan (the "Director Option Plan"), provide written notice to each holder of a
then outstanding stock option to purchase shares pursuant to the Director Option
Plan (whether or not such stock option is then vested or exercisable), that such
stock option shall be, as at the date of such notice, exercisable in full and
that such stock option will terminate at the Effective Time and that, if such
stock option is not exercised or otherwise terminated before the Effective Time,
such holder shall be entitled to receive in cancellation of such option a cash
payment from the Seller at the Closing in an amount equal to the excess of the
Merger Consideration over the per share exercise price of such stock option,
multiplied by the number of shares covered by such stock option, subject to any
required withholding of taxes. Subject to the foregoing, the Director Option
Plan and all options issued thereunder shall terminate at the Effective Time.
The Seller hereby represents and warrants to Purchaser that the maximum number
of shares subject to issuance pursuant to the exercise of stock options issued
and outstanding under the Director Option Plan is not and shall not be at or
prior to the Effective Time more than 30,000.
3.03. Payment Procedures.
(a) Immediately prior to the Effective Time, (i) the Buyer shall
deposit, or shall cause to be deposited, with a bank or trust company selected
by the Buyer and reasonably acceptable to the Seller on or prior to the
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Effective Time (the "Paying Agent"), for the benefit of the holders of shares of
Seller Common Stock, for exchange in accordance with this Article III, cash in
an amount equal to the total Merger Consideration (such cash shall hereinafter
be referred to as the "Exchange Fund").
(b) As soon as practicable after the Effective Time, and in no event
later than three business days thereafter (which date shall be referred to as
the "Mailing Date"), Buyer shall cause the Paying Agent to mail to each holder
of record of a Certificate or Certificates at the Effective Time a form letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent) (the "Transmittal Form") containing
instructions for use in effecting the surrender of the Certificates. The Seller
shall have the right to approve the Transmittal Form.
(c) Each Transmittal Form shall permit the holder (or in the case of
nominee record holders, the beneficial owner through appropriate and customary
documentation and instructions) to receive the Merger Consideration for each
share of Seller Common Stock. A Transmittal Form shall be deemed properly
completed only if accompanied by one or more Certificates representing all
shares of Seller Common Stock covered by such Transmittal Form, together with
duly executed transmittal materials included with the Transmittal Form. Neither
the Buyer nor the Paying Agent shall be under any obligation to notify any
person of any defect in a Transmittal Form.
(d) Upon surrender of a Certificate for exchange and cancellation to
the Paying Agent, together with the Transmittal Form, duly executed, the holder
of such Certificates shall be entitled to receive in exchange therefor a check
representing the amount of cash which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of Article II
and Article III.
(e) At and after the Effective Time, there shall be no transfers on the
stock transfer books of the Seller of the shares of Seller Common Stock which
were outstanding immediately prior to the Effective Time and if, after the
Effective Time, Certificates are presented for transfer, they shall be canceled
against delivery of the Merger Consideration as hereinabove provided.
(f) The provisions of Section 3.01 and Section 3.03 assume that there
will be 1,871,890 shares of Seller Common Stock outstanding or issuable upon the
exercise of options or warrants or otherwise, at the Effective Time. If there is
any change in this number as of the Effective Time, the provisions of Section
3.01 and Section 3.03, including the Merger Consideration will be appropriately
adjusted.
3.04. Return of Exchange Fund. Any portion of the Exchange Fund that
remains unclaimed by the former stockholders of the Seller six months after the
Effective Time shall be delivered to the Buyer. Any former stockholders of the
Seller who have not theretofore complied with this Article III shall thereafter
look only to the Buyer for payment of any consideration payable as a result of
the Merger pursuant to this Agreement, without any interest thereon. None of the
Buyer, the Seller, the Paying Agent or any other person shall be liable to any
former holder of shares of Seller Common Stock for any shares of stock or cash
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
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3.05. Lost or Stolen Certificates. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Buyer, the posting by such person of a bond in such reasonable
amount as the Buyer may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent or the Buyer will
issue in exchange for such lost, stolen or destroyed Certificate the cash to
which such person is entitled).
Article IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in a specific section of the Disclosure Schedule
previously delivered by the Seller to the Buyer (the "Seller Disclosure
Schedule"), the Seller hereby represents and warrants to the Buyer as follows:
4.01. Organization and Qualification; Seller's Subsidiaries.
(a) The Seller is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Delaware and a bank holding
company registered with the Board of Governors of the Federal Reserve System
(the "FRB") under the Bank Holding Company Act of 1956, as amended. Seller is
duly qualified to do business and is in good standing as a foreign corporation
in The Commonwealth of Massachusetts. Nantucket Bank is a state chartered
savings bank and wholly-owned subsidiary of the Seller (the "Seller's Bank"),
duly organized and validly existing under the laws of The Commonwealth of
Massachusetts. The deposit accounts of the Seller's Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by law and all premiums and assessments required in connection
therewith have been paid by the Seller's Bank. Each subsidiary (as defined in
Section 1.01(bb)) of the Seller (other than the Seller's Bank) (collectively,
the "Seller's Subsidiaries") is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. The Seller, the Seller's Bank and each of the
Seller's Subsidiaries each has the requisite power and authority and all
necessary governmental approvals to own, lease and 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 and is in good standing in each
jurisdiction where 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 have
obtained such approval or to be so licensed or qualified and be in good standing
would not, either individually or in the aggregate, have a Material Adverse
Effect.
(b) A true and complete list of all the Seller's Subsidiaries, together
with the jurisdiction of incorporation or organization of each Subsidiary and
the percentage of the outstanding capital stock or other ownership interest by
the Seller or the Seller's Bank of each Subsidiary, is set forth in Section 4.01
of the Seller Disclosure Schedule. Except as set forth in Section 4.01 of the
Seller Disclosure Schedule, neither the Seller nor the Seller's Bank directly or
indirectly owns five percent or more of the capital stock or other equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.
8
4.02. Corporate Charter; By-Laws; Corporate Records. The Seller has
heretofore made available to the Buyer a complete and correct copy of the
Corporate Charter and the By-Laws or equivalent organizational documents, each
as amended to date, of the Seller, the Seller's Bank and each of the Seller's
Subsidiaries. Such Corporate Charter, By-Laws and equivalent organizational
documents are in full force and effect. None of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries is in violation of any provision of its
Corporate Charter or equivalent organizational documents or of its By-Laws. The
minute books of the Seller, the Seller's Bank and each of the Seller's
Subsidiaries contain in all material respects true and correct records of all
meetings held or true and complete records of all other corporate actions taken
since January 1, 1997 of their respective stockholders and boards of directors
(including committees of their respective boards of directors).
4.03. Capitalization.
(a) The authorized capital stock of the Seller consists of 10,000,000
shares of Seller Common Stock and 2,000,000 shares of serial Preferred Stock
("Seller Preferred Stock"), par value $.01 per share. As of the date hereof, (i)
1,841,890 shares of Seller Common Stock are issued and outstanding, all of which
are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof, (ii) 483,604 shares of Seller Common Stock are held in the treasury of
the Seller, (iii) no shares of Seller Common Stock are held by Seller's Bank or
any of the Seller's Subsidiaries, (iv) no shares of Seller Preferred Stock have
been issued or are outstanding, and (v) 366,536 shares of Seller Common Stock
are reserved for future issuance pursuant to the Stock Option Agreement. Each
issued and outstanding share of capital stock of each Subsidiary is duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. Each
share of capital stock of each Subsidiary owned by the Seller or the Seller's
Bank or any of the other Seller's Subsidiaries is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Seller's, the Seller's Bank's or such other Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
(b) The authorized capital stock of the Seller's Bank consists of
1,000,000 shares of common stock, par value $1.00 per share (the "Seller's Bank
Common Stock") and 500,000 shares of serial Preferred Stock ("Seller's Bank
Preferred Stock"). As of the date hereof, (i) 100,000 shares of Seller's Bank
Common Stock are issued and outstanding, all of which are owned by the Seller
free and clear of any encumbrance or lien (except for directors' qualifying
shares, if any) and all of which are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, (ii) no shares of the Seller's Bank Common
Stock are held in the treasury of the Seller's Bank or are held by any of the
Seller's Subsidiaries, and (iii) no shares of Seller's Bank Preferred Stock have
been issued or are outstanding.
(c) Except for the Stock Option Agreement and for options to acquire
not more than 30,000 shares of Seller Common Stock pursuant to the Director
Option Plan, a schedule of which is set forth at Section 4.03 of the Seller
Disclosure Schedule, there are no outstanding subscriptions, options, warrants,
calls or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Seller, the Seller's
9
Bank or any of the Seller's Subsidiaries or obligating the Seller, the Seller's
Bank or any of the Seller's Subsidiaries to issue or sell any shares of capital
stock of, or other equity interests in, the Seller, the Seller's Bank or any of
the Seller's Subsidiaries. There are no outstanding contractual obligations of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of, or other equity
interests in, the Seller, the Seller's Bank or any of the Seller's Subsidiaries
or to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any Subsidiary.
4.04. Authority. The Seller has full corporate power and authority to
execute and deliver this Agreement and, subject to the approval of the Seller's
stockholders, 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 unanimous vote of the
Board of Directors of the Seller (the "Seller Board"). The Seller Board has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Seller's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of the Seller's stockholders, no other corporate proceedings on the part of
the Seller are necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Seller and constitutes a valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms.
4.05. No Conflict. Neither the execution, delivery and performance of this
Agreement by the Seller, nor the consummation by the Seller of the transactions
contemplated hereby, nor compliance by the Seller with any of the terms or
provisions hereof, will (i) conflict with, violate or result in a breach of any
provision of the Corporate Charter or By-Laws of the Seller or the articles of
organization, by-laws or equivalent organizational documents of the Seller's
Bank or any of the Seller's Subsidiaries, (ii) conflict with, violate or result
in a breach of any statute, code, ordinance, rule, regulation, order, writ,
judgment, injunction or decree applicable to the Seller, the Seller's Bank or
any of the Seller's Subsidiaries, or by which any property or asset of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is bound or
affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event, which, with notice or lapse of time, or both, would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of the Seller, the Seller's
Bank or any of the Seller's Subsidiaries pursuant to any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Seller, the Seller's Bank or any of the Seller's
Subsidiaries is a party, or by which the Seller, the Seller's Bank or any of the
Seller's Subsidiaries is bound or affected, except, in the case of clause (iii)
above, for any such conflicts, violations, breaches, defaults or other
occurrences which would not, either individually or in the aggregate, have a
Material Adverse Effect.
4.06. Consents and Approvals. The execution, delivery and performance of
this Agreement by the Seller does not require any consent, approval,
authorization or permit of, or filing with or notification to, any court,
administrative agency or commission or other governmental or regulatory
authority or instrumentality, domestic or foreign, including, without
limitation, any Bank Regulator (each a "Governmental Entity") or with any third
party, except (i) for applicable requirements, if any, of the Exchange Act,
10
state takeover laws, and filing and recordation of appropriate merger documents
as required by the laws of The Commonwealth of Massachusetts and the State of
Delaware, (ii) for consents and approvals of or filings, registrations or
negotiations with the FRB, the FDIC, the Massachusetts Board of Bank
Incorporation (the "BBI"), and the Massachusetts Housing Partnership Fund, (iii)
the filings required by this Agreement and (iv) where failure to obtain any such
consent, approval, authorization or permit, or to make any such filing or
notification, would not prevent or significantly delay consummation of the
Merger or otherwise prevent the Seller from performing its obligations under
this Agreement, or would not, either individually or in the aggregate, have a
Material Adverse Effect. The Seller is not aware of any reason why the
approvals, consents and waivers of Governmental Entities referred to herein and
in Section 8.01(b) should not be obtained.
4.07. Compliance. The Seller, the Seller's Bank and each of the Seller's
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to, and have complied with and are not in conflict with, or in default
or violation of, (a) any statute, code, ordinance, law, rule, regulation, order,
writ, judgment, injunction or decree, published policies and guidelines of any
Governmental Entity, applicable to the Seller, the Seller's Bank or any of the
Seller's Subsidiaries or by which any property or asset of the Seller, the
Seller's Bank or any of the Seller's Subsidiaries is bound or affected or (b)
any note, bond, mortgage, indenture, deed of trust, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is a party or by
which the Seller, the Seller's Bank or any of the Seller's Subsidiaries or any
property or asset of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries is bound or affected, except for any such non-compliance,
conflicts, defaults or violations that would not, either individually or in the
aggregate, have a Material Adverse Effect; and none of the Seller, the Seller's
Bank or any of the Seller's Subsidiaries knows of, or has received notice of,
any material violations of any of the above. Without limiting the generality of
the foregoing, none of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries has been advised of the existence of any facts or circumstances
which would cause the Seller's Bank to be deemed not to be in satisfactory
compliance with the Community Reinvestment Act of 1977, as amended, and the
regulations promulgated thereunder.
4.08. Reports.
(a) Since January 1, 1997, the Seller has timely filed with the SEC and
the NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Seller, the Seller's Bank and each of the Seller's Subsidiaries
has timely filed and made available to the Buyer true and complete copies of all
forms, reports and documents required to be filed by each of them with all
appropriate federal or state governmental or regulatory authorities charged with
the supervision of banks or bank holding companies or engaged in the insurance
of bank deposits, including without limitation, the Commissioner of Banks of The
Commonwealth of Massachusetts (the "Massachusetts Commissioner"), the FRB, and
the FDIC (collectively, the "Bank Regulators") since January 1, 1997, and have
11
paid all fees and assessments due and payable in connection therewith. Such
reports as of their respective date of filing complied in all material respects
with the requirements of all laws, rules and regulations enforced or promulgated
by such Bank Regulators. Except for normal periodic examinations conducted by
the FDIC, the Massachusetts Commissioner or any other Bank Regulator in the
regular course of the business of the Seller, the Seller's Bank and the Seller's
Subsidiaries (the "Bank Examinations"), no Bank Regulator has initiated any
proceeding or, to the knowledge of the Seller, investigation into the business
or operations of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries since December 31, 1996. The Seller, the Seller's Bank and the
Seller's Subsidiaries have not received any objection from any regulatory agency
to any of their responses to any violation, criticism or exception by any Bank
Regulator with respect to any report or statement relating to any examinations,
which objection remains unresolved.
4.09. Financial Statements.
(a) The Seller has previously made available to the Buyer, for copying,
originals of the Seller Financial Statements, which, in the case of the audited
statements, are accompanied by the audit report of KPMG LLP, independent public
accountants for the Seller. Each of the Seller Financial Statements referred to
in this Section 4.09 (including the related notes, where applicable) fairly
presents (subject, in the case of the unaudited statements, to audit adjustments
normal in nature and amount and the addition of customary notes), and the
financial statements referred to in Section 7.08 hereof each will fairly
present, the results of the consolidated operations and changes in stockholders'
equity and consolidated financial position of the Seller, the Seller's Bank and
the Seller's Subsidiaries for the respective periods or as of the respective
dates therein set forth; each of the Seller Financial Statements (including the
related notes, where applicable) has been prepared, and the financial statements
referred to in Section 7.08 hereof will be prepared, in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as indicated in the notes thereto or, in the case
of unaudited statements, as permitted by Form 10-Q under the Exchange Act. The
audits of the Seller, the Seller's Bank and the Seller's Subsidiaries have been
conducted in all material respects in accordance with generally accepted
auditing standards. Without limiting the generality of the foregoing, (x) the
allowance for possible loan losses included in the Seller Financial Statements
was, and the allowance for possible loan losses to be included in the financial
statements referred to in Section 7.08 hereof will be, determined in accordance
with GAAP and is, and will be, adequate to provide for losses relating to or
inherent in the loan and lease portfolios of the Seller, the Seller's Bank and
the Seller's Subsidiaries (including without limitation commitments to extend
credit), and (y) the Other Real Estate Owned ("OREO") included in the Seller
Financial Statements was, and the OREO included in the financial statements
referred to in Section 7.08 hereof will be, carried net of reserves at the lower
of cost or market value in accordance with GAAP or the regulations or other
requirements of the FDIC and the Massachusetts Commissioner. The books and
records of the Seller, the Seller's Bank and the Seller's Subsidiaries are true
and complete in all material respects and have been, and are being, maintained
in all material respects in accordance with applicable legal and accounting
requirements.
(b) The consolidated balance sheet of the Seller, the Seller's Bank and
the Seller's Subsidiaries as of December 31, 1999 and as of June 30, 2000,
including the notes thereto, each makes adequate provision for all material
liabilities and obligations of every nature (whether accrued, absolute,
12
contingent or otherwise and whether due or to become due) of the Seller, the
Seller's Bank and the Seller's Subsidiaries as of December 31, 1999 and as of
June 30, 1999, respectively, and except as and to the extent set forth on such
consolidated balance sheet, none of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries has any material liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise and whether due or to become
due) which would be required to be reflected or disclosed on a balance sheet, or
in the notes thereto, prepared in accordance with GAAP.
(c) To the knowledge of the Seller, no facts or circumstances exist
which would give the Seller reason to believe that a material liability or
obligation that, in accordance with GAAP applied on a consistent basis, should
have been reflected or disclosed on such balance sheet, was not so reflected or
disclosed.
4.10. Absence of Certain Changes or Events. Since December 31, 1999, except
as contemplated by this Agreement, the Seller, the Seller's Bank and the
Seller's Subsidiaries have conducted their businesses only in the ordinary
course and in manners consistent with past practice and, since December 31,
1999, except as set forth in Section 4.10 of the Seller Disclosure Schedule,
there has not been (a) either individually or in the aggregate, any Material
Adverse Effect, (b) any material damage, destruction or loss with respect to any
property or asset of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, (c) any change by the Seller, the Seller's Bank or any of the
Seller's Subsidiaries in its accounting methods, principles or practices, other
than changes required by applicable law or GAAP or regulatory accounting as
concurred in by the Seller's independent accountants, (d) any revaluation by the
Seller, the Seller's Bank or any of the Seller's Subsidiaries of any asset,
including, without limitation, any writing down of the value of inventory or
writing off of notes or accounts receivable, other than in the ordinary course
of business consistent with past practice, (e) any entry by the Seller, the
Seller's Bank or any of the Seller's Subsidiaries into any contract or
commitment (other than with respect to Loans, as hereinafter defined) of more
than $200,000, (f) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries except in the ordinary course of business in an
amount consistent with past practice or any redemption, purchase or other
acquisition of any of its securities, (g) except as would have been permitted by
Section 6.01(b)(ix) hereof, any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any directors, officers or
employees of the Seller, the Seller's Bank or any of the Seller's Subsidiaries,
or any grant of severance or termination pay, or any contract or arrangement
entered into to make or grant any severance or termination pay, any payment of
any bonus, or the taking of any other material action not in the ordinary course
of business with respect to the compensation or employment of directors,
officers or employees of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, (h) any strike, work stoppage, slowdown or other labor
disturbance, (i) any material election made by the Seller, the Seller's Bank or
any of the Seller's Subsidiaries for federal or state income tax purposes, (j)
any change in the credit policies or procedures of the Seller, the Seller's Bank
or any of the Seller's Subsidiaries, the effect of which was or is to make any
such policy or procedure materially less restrictive in any material respect,
(k) any material liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise and whether due or to become due), including
13
without limiting the generality of the foregoing, liabilities as guarantor under
any guarantees or liabilities for taxes, other than in the ordinary course of
business consistent with past practice, (l) any forgiveness or cancellation of
any indebtedness or contractual obligation other than in the ordinary course of
business consistent with past practice, (m) except with respect to funds
borrowed by the Seller, the Seller's Bank or any of the Seller's Subsidiaries,
any mortgage, pledge, lien or lease of any assets, tangible or intangible, of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries with a value
in excess of $25,000 in the aggregate (n) any acquisition or disposition of any
assets or properties having a value in excess of $100,000, or any contract for
any such acquisition or disposition entered into, or (o) any lease of real or
personal property entered into, other than in connection with foreclosed
property or in the ordinary course of business consistent with past practice.
4.11. Absence of Litigation. None of the Seller, the Seller's Bank or any
of the Seller's Subsidiaries is a party to any, and there are no pending, or to
the knowledge of the Seller, threatened legal, administrative, arbitral or other
claims, actions, proceedings or investigations of any nature, against the
Seller, the Seller's Bank or any of the Seller's Subsidiaries or any property or
asset of the Seller, the Seller's Bank or any of the Seller's Subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, which, either individually or in the
aggregate, would have a Material Adverse Effect and no facts or circumstances
have come to the Seller's attention which have caused it to believe that a
material claim, action, proceeding or investigation against or affecting the
Seller, the Seller's Bank or any of the Seller's Subsidiaries could reasonably
be expected to occur. None of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries, or any property or asset of the Seller, the Seller's Bank
or any of the Seller's Subsidiaries, is subject to any order, writ, judgment,
injunction, decree, determination or award which restricts its ability to
conduct business in any area in which it presently does business or has or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.12. Employee Benefit Programs.
(a) Section 4.12(a) of the Seller Disclosure Schedule sets forth a list
of every material Employee Program that has been maintained by the Seller, the
Seller's Bank or an Affiliate at any time during the three years preceding this
Agreement.
(b) Each Employee Program which has ever been maintained by the Seller,
the Seller's Bank or an Affiliate and which has been intended to qualify under
Section 401(a) or 501(c)(9) of the Internal Revenue Code of 1986, as amended
(the "Code"), has received a favorable determination or approval letter from the
Internal Revenue Service ("IRS") regarding its qualification under such section
and has, in fact, been qualified under the applicable section of the Code from
the effective date of such Employee Program through and including the Closing
Date (or, if earlier, the date that all of such Employee Program's assets were
distributed). No event or omission has occurred which would cause any Employee
Program to lose its qualification or otherwise fail to satisfy the relevant
requirements to provide tax-favored benefits under the applicable Code Section
(including without limitation Code Sections 105, 125, 401(a) and 501(c)(9)).
Each asset held under any such Employee Program may be liquidated or terminated
without the imposition of any redemption fee, surrender charge or comparable
liability. No partial termination (within the meaning of Section 411(d)(3) of
14
the Code) has occurred with respect to any Employee Program that is qualified
under Section 401(a) of the Code.
(c) None of the Seller, the Seller's Bank or any Affiliate knows, nor
should any of them reasonably know, of any material failure of any party to
comply with any laws applicable with respect to the Employee Programs that are
currently maintained by the Seller, the Seller's Bank or any Affiliate. With
respect to any Employee Program currently maintained by the Seller, the Seller's
Bank or any Affiliate, there has been no (i) "prohibited transaction," as
defined in Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Code Section 4975, (ii) material failure to comply with
any provision of ERISA, other applicable law, or any agreement, or (iii)
non-deductible contribution, which, in the case of any of (i), (ii), or (iii),
could subject the Seller, the Seller's Bank or any Affiliate to material
liability either directly or indirectly (including, without limitation, through
any obligation of indemnification or contribution) for any damages, penalties,
or taxes, or any other loss or expense. No litigation or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or threatened with
respect to any such Employee Program. All payments and/or contributions required
to have been made (under the provisions of any agreements or other governing
documents or applicable law) with respect to all Employee Programs ever
maintained by the Seller, the Seller's Bank or any Affiliate, for all periods
prior to the Closing Date, either have been made or have been accrued (and all
such unpaid but accrued amounts are described on Section 4.12(c) of the Seller
Disclosure Schedule).
(d) None of the Seller, the Seller's Bank nor any Affiliate has
incurred any liability under title IV of ERISA which has not been paid in full
prior to the Closing. There has been no "accumulated funding deficiency"
(whether or not waived) with respect to any Employee Program ever maintained by
the Seller, the Seller's Bank or any Affiliate and subject to Code Section 412
or ERISA Section 302. With respect to any Employee Program maintained by the
Seller, the Seller's Bank or an Affiliate and subject to title IV of ERISA,
there has been no (nor will be any as a result of the transaction contemplated
by this Agreement) (i) "reportable event," within the meaning of ERISA Section
4043, or the regulations thereunder (for which notice the notice requirement is
not waived under 29 C.F.R. Part 2615) and (ii) no event or condition which
presents a material risk of plan termination or any other event that may cause
the Seller, the Seller's Bank or any Affiliate to incur liability or have a lien
imposed on its assets under title IV of ERISA. No Employee Program maintained by
the Seller, the Seller's Bank or an Affiliate and subject to title IV of ERISA
(other than a Multiemployer Plan) has any "unfunded benefit liabilities" within
the meaning of ERISA Section 4001(a)(18), as of the Closing Date. Neither the
Seller, the Seller's Bank nor any Affiliate has ever maintained a Multiemployer
Plan. None of the Employee Programs ever maintained by the Seller, the Seller's
Bank or any Affiliate has ever provided health care or any other non-pension
benefits to any employees after their employment is terminated (other than as
required by part 6 of subtitle B of title I of ERISA) or has ever promised to
provide such post-termination benefits.
(e) With respect to each Employee Program maintained by the Seller, the
Seller's Bank or any Subsidiary within the three years preceding the Closing
Date, complete and correct copies of the following documents (if applicable to
such Employee Program) have previously been delivered to the Buyer: (i) all
15
documents embodying or governing such Employee Program, and any funding medium
for the Employee Program (including, without limitation, trust agreements) as
they may have been amended to the date hereof; (ii) the most recent IRS
determination or approval letter with respect to such Employee Program under
Code Section 401(a) or 501(c)(9), and any applications for determination or
approval subsequently filed with the IRS; (iii) the three most recently filed
IRS Forms 5500, with all applicable schedules and accountants' opinions attached
thereto; (iv) the three most recent actuarial valuation reports completed with
respect to such Employee Program; (v) the summary plan description for such
Employee Program (or other descriptions of such Employee Program provided to
employees) and all modifications thereto; (vi) any insurance policy (including
any fiduciary liability insurance policy or fidelity bond) related to such
Employee Program; (vii) any registration statement or other filing made pursuant
to any federal or state securities law and (viii) all correspondence to and from
any state or federal agency within the last six years with respect to such
Employee Program.
(f) Each Employee Program required to be listed on Section 4.12(a) of
the Seller Disclosure Schedule may be amended, terminated, or otherwise modified
by the Seller, the Seller's Bank or the Affiliate to the greatest extent
permitted by applicable law, including the elimination of any and all future
benefit accruals under any Employee Program and no employee communications or
provision of any Employee Program document has failed to effectively reserve the
right of the Seller, the Seller's Bank or the Affiliate to so amend, terminate
or otherwise modify such Employee Program.
(g) Each Employee Program currently maintained by the Seller or the
Seller's Bank (including each non-qualified deferred compensation arrangement)
is maintained in compliance with all applicable requirements of federal and
state securities laws including (without limitation, if applicable) the
requirements that the offering of interests in such Employee Program be
registered under the Securities Act of 1933 and/or state "Blue Sky" laws.
(h) Each Employee Program currently maintained by the Seller, the
Seller's Bank or an Affiliate has complied with the applicable notification and
other applicable requirements of the Consolidated Omnibus Budget Reconciliation
Act of 1985, Health Insurance Portability and Accountability Act of 1996, the
Newborns' and Mothers' Health Protection Act of 1996, the Mental Health Parity
Act of 1996, and the Women's Health and Cancer Rights Act of 1998.
(i) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans within
the meaning of ERISA Section 3(3), including, but not limited to, multiple
employer welfare arrangements (within the meaning of ERISA Section 3(40)),
plans to which more than one unaffiliated employer contributes and employee
benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; (B) all stock option plans, stock purchase plans, bonus
or incentive award plans, severance pay policies or agreements, deferred
compensation agreements, supplemental income arrangements, vacation plans,
and all other employee benefit plans, agreements, and arrangements
(including any informal arrangements) not described in (A) above, including
without limitation, any arrangement intended to comply with Code Section
120, 125, 127, 129 or 137; and (C) all plans or arrangements providing
compensation to employee and non-employee directors. In the case of an
Employee Program funded through a trust described in Code Section 401(a) or
16
an organization described in Code Section 501(c)(9), or any other funding
vehicle, each reference to such Employee Program shall include a reference
to such trust, organization or other vehicle.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides benefits under or through such
Employee Program, or has any obligation (by agreement or under applicable
law) to contribute to or provide benefits under or through such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses, dependents, or
beneficiaries).
(iii) An entity is an "Affiliate" of the Seller if it would have ever
been considered a single employer with the Seller under ERISA Section
4001(b) or part of the same "controlled group" as the Seller for purposes
of ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means an employee pension or welfare
benefit plan to which more than one unaffiliated employer contributes and
which is maintained pursuant to one or more collective bargaining
agreements.
4.13. Labor Matters. No work stoppage involving the Seller, the Seller's
Bank or any of the Seller's Subsidiaries is pending or, to the knowledge of the
Seller, threatened. None of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries is involved in, or, to the 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
interfere in any material respect with the respective business activities of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries. No employees of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries are
represented by any labor union, and, to the knowledge of the Seller, no labor
union is attempting to organize employees of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries.
4.14. Property and Leases.
(a) The Seller, the Seller's Bank and each of the Seller's Subsidiaries
each has good and marketable title to all the real property and all other
property owned by it and included in the consolidated balance sheet of the
Seller, the Seller's Bank and the Seller's Subsidiaries included in audited
financial statements for the period ended December 31, 1999. Each parcel of real
property, and each item of personal property, owned or leased by the Seller, the
Seller's Bank or any of the Seller's Subsidiaries (i) is owned or leased free
and clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third
parties of any kind (collectively, "Liens"), other than (A) Liens for current
taxes and assessments not yet past due or which are being contested in good
faith, (B) inchoate mechanics' and materialmen's Liens for construction in
progress, (C) workmen's, repairmen's, warehousemen's and carriers' Liens arising
in the ordinary course of business of the Seller, the Seller's Bank or such
Subsidiary consistent with past practice, (D) all matters of record, Liens and
other imperfections of title and encumbrances which, either individually or in
the aggregate, would not be material, and (E) those items that secure public or
statutory obligations or any discount with, borrowing from, or obligations to
any Federal Reserve Bank or Federal Home Loan Bank, interbank credit facilities,
or any transaction by a
17
Subsidiary acting in a fiduciary capacity (collectively, "Permitted Liens"), and
(ii) is neither subject to any governmental decree or order to be sold nor is
being condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of the Seller,
has any such condemnation, expropriation or taking been proposed. None of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries has received any
notice of violation of any applicable zoning regulation, ordinance or other law,
order, regulation or requirement relating to its properties.
(b) All leases of real property leased for the use or benefit of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries to which the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is a party
requiring rental payments in excess of $25,000 during the period of the lease,
and all amendments and modifications thereto, are in full force and effect, and
there exists no default under any such lease by the Seller, the Seller's Bank or
any of the Seller's Subsidiaries, nor, to the knowledge of the Seller, any event
which with notice or lapse of time or both would constitute a material default
thereunder by the Seller, the Seller's Bank or any of the Seller's Subsidiaries.
4.15. Taxes and Tax Returns. To the knowledge of Seller and except as set
forth in Section 4.15 of the Seller Disclosure Schedules:
(a) Each of the Seller, the Seller's Bank and the Seller's Subsidiaries
has filed all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all respects. All Taxes owed by Seller, the
Seller's Bank and the Seller's Subsidiaries (whether or not shown on any Tax
Return) have been paid. None of the Seller, the Seller's Bank or the Seller's
Subsidiaries currently is the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Seller, the Seller's Bank or the Seller's Subsidiaries do
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the
Seller, the Seller's Bank or the Seller's Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax.
(b) Each of the Seller, the Seller's Bank and the Seller's Subsidiaries
has withheld and paid all material Taxes required to have been withheld and paid
in connection with amounts paid or owing or credited to the account of any
customer, employee, independent contractor, creditor, stockholder, or other
third party.
(c) No director or officer (or employee responsible for Tax matters) of
the Seller, the Seller's Bank or the Seller's Subsidiaries expects any authority
to assess any additional material Taxes for any period for which Tax Returns
have been filed. There is no dispute or claim concerning any Tax Liability of
the Seller, the Seller's Bank or the Seller's Subsidiaries either (A) claimed or
raised by any authority in writing or (B) as to which any of the directors and
officers (and employees responsible for Tax matters) of the Seller, the Seller's
Bank or the Seller's Subsidiaries has knowledge based upon personal contact with
any agent of such authority. Section 4.15(c) of the Seller Disclosure Schedule
lists all federal, state, local, and foreign income Tax Returns filed with
respect to the Seller, the Seller's Bank or the Seller's Subsidiaries for
taxable periods ending on or after December 31, 1992, indicates those income Tax
Returns that have been audited, and indicates those income Tax Returns that
18
currently are the subject of audit. The Seller has delivered to the Buyer
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Seller, the Seller's Bank or the Seller's Subsidiaries since December 31, 1992.
(d) None of the Seller, the Seller's Bank or any Subsidiary has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(e) None of the Seller, the Seller's Bank or any Seller's Subsidiary
has filed a consent under Section 341(f) of the Code, concerning collapsible
corporations. No property of the Seller, the Seller's Bank or any Seller's
Subsidiary is property that the Seller, the Seller's Bank or any Subsidiary is
or will be required to be treated as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954 (as in
effect prior to the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Code Section 168(h). None of the Seller, the Seller's Bank
or any Seller's Subsidiary has been required to include in income any adjustment
pursuant to Code Section 481 by reason of a voluntary change in accounting
method initiated by the Seller, the Seller's Bank or any Seller's Subsidiary.
None of the Seller, the Seller's Bank or any Seller's Subsidiary has made any
payments, is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Code Section 280G or Code Section 162(m). None of the
Seller, the Seller's Bank or any Seller's Subsidiary has been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). None of
the Seller, the Seller's Bank or any Seller's Subsidiary is a party to any Tax
allocation or sharing agreement. None of the Seller, the Seller's Bank or any
Seller's Subsidiary (A) has been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common parent of
which was the Seller) or (B) has any Liability for the Taxes of any person
(other than the Seller, the Seller's Bank or any Subsidiary) under Treasury
Regulations Section 1.1506-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(f) The unpaid Taxes of the Seller, the Seller's Bank and each
Subsidiary (A) did not, as of December 31, 1999, exceed by any material amount
the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the unaudited consolidated balance sheet of Seller and its
Seller's Subsidiaries as of December 31, 1999 (rather than in any notes thereto)
and (B) do not exceed by any material amount that reserve as adjusted for the
passage of time through the Closing Date.
(g) For purposes of this Section 4.15
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a).
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and
payable, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary
Course of Business and not incurred in connection with the borrowing of
money.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, net worth, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any
kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not, and includes amounts for which the Seller, the
Seller's Bank or any Subsidiary is liable in its own right or as transferee
of the assets of, or successor to, any corporation, person, association,
partnership, joint venture, or other entity.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
4.16. Certain Contracts.
(a) Except as set forth in Section 4.16(a) of the Seller Disclosure
Schedule, none of the Seller, the Seller's Bank or any Subsidiary is a party to
or bound by any contract, arrangement, commitment or understanding (whether
written or oral): (i) with respect to the employment of any director, officer,
employee or consultant, (ii) which, upon the consummation of the transactions
contemplated by this Agreement, will result in any payment (whether of severance
pay or otherwise) becoming due from the Seller, the Seller's Bank, or any of its
Seller's Subsidiaries to any officer or employee thereof, (iii) which is a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC)
to be performed after the date of this Agreement, (iv) which is a consulting or
other agreement (including agreements entered into in the ordinary course and
data processing, software programming and licensing contracts) not terminable on
60 days or less notice involving the payment of more than $50,000 per annum, (v)
which materially restricts the conduct of any line of business by the Seller,
the Seller's Bank, or any of the Seller's Subsidiaries, (vi) with or to a labor
union or guild (including any collective bargaining agreement), or (vii)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. The Seller has previously
20
delivered to the Buyer true and complete copies of all employment, consulting
and deferred compensation agreements which are in writing and to which the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is a party. Each
contract, arrangement, commitment or understanding of the type described in this
Section, whether or not set forth in Section 4.16(a) of the Seller Disclosure
Schedule, is referred to herein as a "Seller Contract".
(b) Except as set forth in Section 4.16(b) of the Seller Disclosure
Schedule, (i) to the knowledge of the Seller, each Seller Contract is legal,
valid and binding upon the Seller, the Seller's Bank or such Subsidiary, as the
case may be, and in full force and effect, (ii) the Seller, the Seller's Bank
and each of the Seller's Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each such Seller
Contract, and (iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material default on the
part of the Seller, the Seller's Bank or any of the Seller's Subsidiaries under
any such Seller Contract.
4.17. Loan Portfolio. Except as set forth in Section 4.17 of the Seller
Disclosure Schedule, none of the Seller, the Seller's Bank or any Subsidiary is
a party to any written or oral (a) loan agreement, note or borrowing arrangement
(including, without limitation, leases and credit enhancements) (collectively,
"Loans") as to which the obligor is, as of the date of this Agreement, over 90
days delinquent in payment of principal or interest, or (b) Loan with any
director, executive officer or, to the knowledge of the Seller, five percent
stockholder of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, or to the knowledge of the Seller, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. To the knowledge of the Seller, all of the Loans originated and held
on the date hereof and at the Effective Time by the Seller, the Seller's Bank
and the Seller's Subsidiaries, and any other Loans purchased and held currently
and at the Effective Time by the Seller, the Seller's Bank and the Seller's
Subsidiaries, were solicited, originated and exist, and will exist at the
Effective Time, in material compliance with all applicable loan policies and
procedures of the Seller, the Seller's Bank and the Seller's Subsidiaries.
Section 4.17 of the Seller Disclosure Schedule sets forth as of the date hereof,
(i) all of the Loans in original principal amount in excess of $50,000 of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries that as of the
date of this Agreement are classified as "Other Loans Specially Mentioned,"
"Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Watch list" or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan and the
identity of the obligor thereunder, and (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the Seller, the Seller's
Bank and the Seller's Subsidiaries that as of the date of this Agreement are
classified as such, together with the aggregate principal amount of such Loans
by category, it being understood that no representation is being made that the
FDIC or the Massachusetts Commissioner would agree with the loan classifications
contained in Section 4.17 of the Seller Disclosure Schedule. The Seller shall
promptly inform the Buyer in writing of any Loan the original principal balance
of which exceeds $50,000 that becomes classified in the manner described in this
Section 4.17, or any Loan the classification of which is materially and
adversely changed at any time after the date of this Agreement. The information
(including electronic information and information contained on tapes and
computer disks) with respect to the Loans furnished to Buyer by the Seller is
true and complete in all material respects.
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4.18. Investment Securities. Section 4.18 of the Seller Disclosure Schedule
sets forth the book and market value as of June 30, 2000 of the investment
securities, mortgage backed securities and securities held for sale by the
Seller, the Seller's Bank and the Seller's Subsidiaries. Section 4.18 of the
Seller Disclosure Schedule also sets forth the names of all the joint ventures
in which the Seller, the Seller's Bank or any of the Seller's Subsidiaries has
an investment (whether or not such joint ventures remain active). Except for
pledges to secure public and trust deposits, Federal Reserve borrowings,
repurchase agreements and reverse repurchase agreements entered into in
arms-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the Seller
Balance Sheet for the period ended December 31, 1999, and none of the material
investments made by the Seller, the Seller's Bank or any of the Seller's
Subsidiaries since December 31, 1999, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the ability
of the entity holding such investment freely to dispose of such investment at
any time. The Seller and the Seller's Bank have (i) properly reported as such
any investment securities which are required under GAAP to be classified as
"available for sale" at the lower of cost or market, and (ii) accounted for any
decline in the market value of its marketable equity securities portfolio in
accordance with Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 12 and Staff Accounting Bulletin No. 59, including
without limitation the recognition through the Seller's consolidated statement
of operations of any unrealized loss with respect to any individual marketable
equity security as a realized loss in the accounting period in which a decline
in the market value of such security is determined to be "other than temporary."
4.19. Derivative Transactions. None of the Seller, the Seller's Bank or the
Seller's Subsidiaries is engaged in transactions in or involving forwards,
futures, options on futures, swaps or similar off-balance sheet derivative
instruments except as agent on the order and for the account of others other
than Federal Home Loan Bank advances or in connection with mortgage loan
secondary market activities in the ordinary course of business consistent with
the Seller's Bank's past practices.
4.20. Insurance. The Seller has made available to the Buyer true and
complete copies of all material policies of insurance of the Seller, the
Seller's Bank and the Seller's Subsidiaries currently in effect. All of the
policies relating to insurance maintained by each of the Seller, the Seller's
Bank and the Seller's Subsidiaries with respect to its material properties and
the conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and none of
the Seller, the Seller's Bank or the Seller's Subsidiaries has received any
notice of cancellation with respect thereto. All life insurance policies on the
lives of any of the current and former officers of the Seller or the Seller's
Bank which are maintained by the Seller or the Seller's Bank or which are
otherwise included as assets on the books of the Seller or the Seller's Bank (i)
are, or will at the Effective Time be, owned by the Seller or the Seller's Bank,
free and clear of any claims thereon by the officers or members of their
families, except with respect to the death benefits thereunder, as to which the
Seller and the Seller's Bank agree that there will not be an amendment prior to
the Effective Time without the consent of the Buyer, and (ii) are accounted for
properly as assets on the books of the Seller or the Seller's Bank, as
applicable, in accordance with GAAP in all material respects. None of the
Seller, the Seller's Bank or the Seller's Subsidiaries has any material
liability for unpaid premiums or premium adjustments not properly reflected on
the Seller's consolidated financial statements described in Section 4.09 and
Section 7.08.
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4.21. Environmental Matters. Each of the Seller, the Seller's Bank and the
Seller's Subsidiaries and, to the knowledge of the Seller, makes the following
representations without independent investigation for the purposes of this
Agreement:
(a) The Participation Facilities and the Loan Properties (each defined
below), are, and have been, in material compliance with all applicable
environmental laws and with all rules, regulations, standards and requirements
of the United States Environmental Protection Agency (the "EPA") and of state
and local agencies with jurisdiction over pollution or protection of the
environment.
(b) There is no suit, claim, action or proceeding pending or, to the
knowledge of the Seller, threatened, before the EPA or any other Governmental
Entity or other forum in which the Seller, the Seller's Bank or any of the
Seller's Subsidiaries or any Participation Facility has been or, with respect to
threatened proceedings, may be, named as a defendant, responsible party or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor), with any environmental law, rule, regulation, standard or
requirement or (ii) relating to the release into or presence in the Environment
(as defined below) of any Hazardous Materials (as defined below) or Oil (as
defined below) whether or not occurring at or on a site owned, leased or
operated by the Seller, the Seller's Bank or any of the Seller's Subsidiaries or
any Participation Facility except as have not been or are not reasonably likely
to be, either individually or in the aggregate, material.
(c) To the knowledge of the Seller, the Seller's Bank and the Seller's
Subsidiaries, there is no suit, claim, action or proceeding pending or
threatened, before the EPA or any other Governmental Entity or other forum in
which any Loan Property has been or, with respect to threatened proceedings, may
be, named as a defendant, responsible party or potentially responsible party (i)
for alleged noncompliance (including by any predecessor) with any environmental
law, rule, regulation, standard or requirement or (ii) relating to the release
into or presence in the Environment of any Hazardous Material or Oil whether or
not occurring at or on a site owned, leased or operated by a Loan Property,
except where such noncompliance or release has not been or is not reasonably
likely to be, either individually or in the aggregate, material.
(d) None of the Seller, the Seller's Bank, any of the Seller's
Subsidiaries, nor to their knowledge any Participation Facility or any Loan
Property, has received any notice regarding a matter on which a suit, claim,
action or proceeding as described in subsection (b) or (c) of this Section 4.21
could reasonably be based. No facts or circumstances have come to the Seller's
attention which have caused it to believe that a material suit, claim, action or
proceeding as described in subsection (b) or (c) of this Section 4.21 could
reasonably be expected to occur.
(e) During the period of (i) the Seller's, the Seller's Bank's or any
of the Seller's Subsidiaries' ownership or operation of any of their respective
current properties, (ii) the Seller's, the Seller's Bank's or any of the
Seller's Subsidiaries' participation in the management of any Participation
Facility, or (iii) the Seller's, the Seller's Bank's or any of the Seller's
Subsidiaries' holding of a security interest in a Loan Property, there has been
no release or presence in the Environment of Hazardous Material or Oil in, on,
under or affecting such property or, to the knowledge of the Seller, such
Participation Facility or Loan Property, except where such release or presence
is not or is not reasonably like to be, either individually or in the aggregate,
23
material. To the knowledge of the Seller, prior to the period of (x) the
Seller's, the Seller's Bank's or any of the Seller's Subsidiaries' ownership or
operation of any of their respective current properties or any previously owned
or operated properties, (y) the Seller's, the Seller's Bank's or any of the
Seller's Subsidiaries' participation in the management of any Participation
Facility, or (z) the Seller's, the Seller's Bank's or any of the Seller's
Subsidiaries' holding of a security interest in a Loan Property, there was no
release or presence of Hazardous Material or Oil in, on, under or affecting any
such property, Participation Facility or Loan Property, except where such
release or presence is not or is not reasonably likely to be, either
individually or in the aggregate, material.
(f) The following definitions apply for purposes of this Section 4.21:
(i) "Loan Property" means any property in which the Seller, the Seller's Bank or
any of the Seller's Subsidiaries holds a security interest, and, where required
by the context, said term means the owner or operator of such property; (ii)
"Participation Facility" means any facility in which the Seller, the Seller's
Bank or any of the Seller's Subsidiaries participates or has participated in the
management and, where required by the context, said term means the owner or
operator of such property; (iii) "Hazardous Material" means any pollutant,
contaminant, or hazardous substance or hazardous material as defined in or
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. ss.9601 et seq., or any other federal, state, or local
environmental law, regulation, or requirement; (iv) "Oil" means oil or petroleum
of any kind or origin or in any form, as defined in or pursuant to the Federal
Clean Water Act, 33 U.S.C. ss. 1251 et seq., or any other federal, state, or
local environmental law, regulation, or requirement; and (v) "Environment" means
any soil, surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air, and any other environmental medium.
4.22. Intellectual Property. The Seller, the Seller's Bank and each of the
Seller's Subsidiaries owns or possesses valid and binding licenses and other
rights to use without payment of any material amount all material patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and none of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. The Seller, the Seller's Bank and each of the
Seller's Subsidiaries have performed in all material respects all the
obligations required to be performed by them and are not in default under any
contract, agreement, arrangement or commitment relating to any of the foregoing.
4.23. Fiduciary Accounts. The Seller, the Seller's Bank and the Seller's
Subsidiaries each has properly administered in all material respects all
accounts for which it acts as a fiduciary, including but not limited to accounts
for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of the
governing documents and applicable law. The Seller, the Seller's Bank and the
Seller's Subsidiaries have maintained adequate and complete books and records
concerning all fiduciary accounts for at least seven years prior to the date
hereof or such longer period as may be required by applicable law. None of the
Seller, the Seller's Bank, the Seller's Subsidiaries or their respective
officers, directors or employees has committed any breach of trust with respect
to any fiduciary account. The accountings for each such fiduciary account are
true and correct in all material respects and accurately reflects the assets of
such fiduciary account.
4.24. Agreements with Bank Regulators. None of the Seller, the Seller's
Bank or any of the Seller's Subsidiaries is a party to any written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
24
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, any Bank Regulator which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its loan loss allowances or reserves, its credit policies or its
management, nor has the Seller, the Seller's Bank or any Subsidiary been
informed by any Bank Regulator that it is contemplating issuing or requesting
any such order, directive, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission. None of the Seller,
the Seller's Bank or any of the Seller's Subsidiaries is a party to any
agreement or arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to which the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is entitled to
receive financial assistance or indemnification from any governmental agency.
4.25. Material Interests of Certain Persons. No officer or director of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries, 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, the Seller's Bank or any of the Seller's
Subsidiaries that would be required to be disclosed in a proxy statement to
stockholders under Regulation 14A of the Exchange Act.
4.26. Brokers' Fees; Opinions. No broker, finder or investment banker,
other than Sandler, ▇'▇▇▇▇▇ & Partners, L.P. (the "Investment Banker"), is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement or the Stock Option
Agreement based upon arrangements made by or on behalf of the Seller. The fee
payable to the Investment Banker in connection with the transactions
contemplated by this Agreement is as described in an engagement letter between
the Seller and the Investment Banker, a true and complete copy of which has
heretofore been furnished to the Buyer. The Seller has previously received the
opinion of the Investment Banker to the effect that, as of the date of such
opinion, the Merger Consideration to be received by the stockholders of the
Seller pursuant to the Merger is fair, from a financial point of view, to such
stockholders, and such opinion has not been amended or rescinded as of the date
of this Agreement.
4.27. Proxy Statement. The information contained in the proxy statement to
be sent to the stockholders of the Seller in connection with the Stockholders'
Meeting (the "Proxy Statement") will not, on the date the Proxy Statement (or
any amendment or supplement thereto) is first mailed to stockholders of the
Seller or at the time of the Stockholders' Meeting, contain any statement which,
at such time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact, or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, the Seller makes no representation or warranty
with respect to any information to be supplied by the Buyer which is contained
in any of the foregoing documents. The Proxy Statement will comply in all
material respects as to form and content with the requirements of the Exchange
Act and the rules and regulations thereunder.
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4.28. Seller Information. The information supplied by the Seller or the
Seller's Bank for inclusion in the Proxy Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
4.29. State Takeover Laws. The Board of Directors of the Seller has
approved the transactions contemplated by this Agreement and the Stock Option
Agreement and taken all other requisite action such that the provisions of Ch.
110F of the Massachusetts General Laws and applicable provisions of the DGCL and
the provisions of the Seller's Corporate Charter relating to special voting
requirements for certain business combinations will not apply to this Agreement
or the Stock Option Agreement or any of the transactions contemplated hereby or
thereby.
4.30. Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any Schedule, certificate, list or
other writing furnished to the Buyer pursuant to the provisions hereof, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances in which they are made, not misleading.
No information believed by the Seller to be material to the Merger and which is
necessary to make the representations and warranties herein contained, taken as
a whole, not misleading, to the knowledge of the Seller, has been withheld from,
or has not been delivered in writing to, the Buyer.
Article V REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller that:
5.01. Corporate Organization. The Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts and a bank holding company registered with the FRB under the Bank
Holding Company Act of 1956, as amended. Compass Bank is a savings bank and
wholly-owned (except for directors qualifying shares) subsidiary of the Buyer
(the "Buyer's Bank") duly organized and validly existing under the laws of The
Commonwealth of Massachusetts. The deposit accounts of the Buyer's Bank are
insured by the FDIC to the fullest extent permitted by law and all premiums and
assessments required in connection therewith have been paid by the Buyer's Bank.
The Buyer and the Buyer's Bank each has the requisite power and authority and
all necessary governmental approvals to own, lease and 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 and is in good standing in each
jurisdiction where 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 and be in good standing would not, either individually or
in the aggregate, have a Material Adverse Effect.
5.02. Authority. 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 of Directors of the Buyer (the "Buyer Board").
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This Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms.
5.03. No Conflict. Neither the execution, delivery and performance of this
Agreement by the Buyer, nor the consummation by the Buyer of the transactions
contemplated hereby, nor compliance by the Buyer with any of the terms or
provisions hereof, will (i) conflict with, violate or result in a breach of any
provision of the Corporate Charter or By-Laws of the Buyer or the articles of
organization or by-laws of the Buyer's Bank, (ii) conflict with, violate or
result in a breach of any statute, code, ordinance, rule, regulation, order,
writ, judgment, injunction or decree applicable to the Buyer or the Buyer's
Bank, or by which any property or asset of the Buyer or the Buyer's Bank is
bound or affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event, which, with notice or lapse of time, or both, would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of the Buyer or the Buyer's
Bank pursuant to any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Buyer or the Buyer's
Bank is a party, or by which the Buyer or the Buyer's Bank is bound or affected,
except, in the case of clause (iii) above, for any such conflicts, violations,
breaches, defaults or other occurrences which would not, either individually or
in the aggregate, have a Material Adverse Effect.
5.04. Consents and Approvals. The execution, delivery and performance of
this Agreement by the Buyer does not require any consent, approval,
authorization or permit of, or filing with or notification to any Governmental
Entity or with any third party, except (i) for the applicable requirements, if
any, of the Exchange Act, state takeover laws, and filing and recordation of
appropriate merger documents as required by the laws of the Commonwealth of
Massachusetts and the State of Delaware, (ii) for consents and approvals of or
filings, registrations or negotiations with the FRB, the FDIC, the BBI, and the
Massachusetts Housing Partnership Fund, (iii) the filings required by this
Agreement and (iv) where failure to obtain any such consent, approval,
authorization or permit, or to make any such filing or notification, would not
prevent or significantly delay consummation of the Merger or otherwise prevent
the Buyer from performing its obligations under this Agreement, or would not,
either individually or in the aggregate, have a Material Adverse Effect. The
Buyer is not aware of any reason why the approvals, consents and waivers of
Governmental Entities referred to herein and in Section 8.01(b) should not be
obtained.
5.05. Compliance. The Buyer and the Buyer's Bank hold, and have at all
times within the last six years, held, all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
conflict with, or in default or violation of, (a) any statute, code, ordinance,
law, rule, regulation, order, writ, judgment, injunction or decree, published
policies and guidelines of any Governmental Entity, applicable to the Buyer or
the Buyer's Bank or by which any property or asset of the Buyer or the Buyer's
Bank is bound or affected or (b) any note, bond, mortgage, indenture, deed of
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trust, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Buyer or the Buyer's Bank is a party or by
which the Buyer or the Buyer's Bank or any property or asset of the Buyer or the
Buyer's Bank is bound or affected, except for any such non-compliance,
conflicts, defaults or violations that would not, either individually or in the
aggregate, have a Material Adverse Effect; and neither the Buyer nor the Buyer's
Bank knows of, or has received notice of, any violation of any of the above.
Without limiting the generality of the foregoing, neither the Buyer nor the
Buyer's Bank has been advised of the existence of any facts or circumstances
which would cause the Buyer's Bank to be deemed not to be in satisfactory
compliance with the Community Reinvestment Act of 1977, as amended, and the
regulations promulgated thereunder.
5.06. Financial Statements. The Buyer has previously made available to the
Seller copies of (i) the consolidated balance sheets of the Buyer and its
subsidiaries as of December 31 for the fiscal years 1998 and 1999 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1997 through 1999, inclusive, as reported in the
Buyer's 1999 Annual Report on Form 10-K, and (ii) the unaudited consolidated
financial statements of the Buyer and its subsidiaries as of March 31, 2000 and
March 31, 1999 as reported on the Buyer's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000, and the related unaudited consolidated statements
of income, changes in stockholders' equity and cash flows for the three month
period then ended. The December 31, 1999 consolidated balance sheet of the Buyer
(including the related notes, where applicable) fairly presents in all material
respects the consolidated financial position of the Buyer and its subsidiaries
as of the date thereof, and the other financial statements referred to in this
Section 5.06 (including the related notes where applicable) fairly present in
all material respects, (subject, in the case of the unaudited statements, to
audit adjustments normal in nature and amount and the addition of customary
notes) in all material respects, the results of the consolidated operations and
changes in shareholders' equity and consolidated financial position of the Buyer
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 prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q under the Exchange Act.
5.07. Absence of Litigation. Neither the Buyer nor any of its subsidiaries
is a party to any, and there are no pending, or to the knowledge of the Buyer,
threatened legal, administrative, arbitral or other claims, actions, proceedings
or investigations of any nature, against the Buyer or any of its subsidiaries or
any property or asset of the Buyer or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, which, either individually or in the aggregate, would have
a Material Adverse Effect and no facts or circumstances have come to the Buyer's
attention which have caused it to believe that a material claim, action,
proceeding or investigation against or affecting the Buyer or any of its
subsidiaries could reasonably be expected to occur. Neither the Buyer nor its
subsidiaries, or any property or asset of the Buyer or any of its subsidiaries,
is subject to any order, writ, judgment, injunction, decree, determination or
award which restricts its ability to conduct business in any area in which it
presently does business or has or could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
5.08. Agreements with Bank Regulators. Neither the Buyer nor the
Buyer's Bank is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
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subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any Bank Regulator which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy, its
loan loss allowances or reserves, its credit policies or its management, nor has
the Buyer or the Buyer's Bank been informed by any Bank Regulator that it is
contemplating issuing or requesting any such order, directive, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither the Buyer nor the Buyer's Bank is a party to any
agreement or arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to which the
Buyer or the Buyer's Bank is entitled to receive financial assistance or
indemnification from any governmental agency.
5.09. Buyer Information. The information supplied by the Buyer or the
Buyer's Bank for inclusion in the Proxy Statement (or any amendments or
supplements thereto) will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
5.10. Capital, Financing. On the date hereof, the Buyer is, at a minimum,
"adequately capitalized," as such term is defined in the rules and regulations
promulgated by the FRB and the FDIC, as the case may be. The Buyer will have
available to it sources of capital and financing sufficient to fulfill its cash
obligations hereunder.
Article VI CONDUCT OF BUSINESS PENDING THE MERGER
6.01. Covenants of the Seller.
(a) The Seller covenants and agrees that, except as contemplated by this
Agreement, between the date of this Agreement and the Effective Time, unless the
Buyer shall otherwise agree in writing, the business of the Seller, the Seller's
Bank and the Seller's Subsidiaries shall be conducted only in, and the Seller,
the Seller's Bank and the Seller's Subsidiaries shall not take any action except
in, the usual, regular and ordinary course of business and in a manner
consistent with prudent banking practice and generally to conduct their business
in substantially the same way as heretofore conducted, and without limiting the
foregoing, to continue to operate in the same geographic markets serving the
same market segments and without significant increase in the rate of growth of
the Seller's, the Seller's Bank's or the Seller's Subsidiaries' loan portfolio.
The Seller shall use its reasonable best efforts to preserve substantially
intact the business organization of the Seller, the Seller's Bank and the
Seller's Subsidiaries, to keep available the present services of the officers,
employees and consultants of the Seller, the Seller's Bank and the Seller's
Subsidiaries and to preserve the current relationships and goodwill of the
Seller, the Seller's Bank and the Seller's Subsidiaries with customers,
suppliers and other persons with which the Seller, the Seller's Bank or any of
the Seller's Subsidiaries have business relationships, including without
limitation, implementing a deposit retention program in furtherance thereof.
(b) By way of amplification and not limitation of clause (a) above, except
as contemplated by this Agreement and the Stock Option Agreement, the Seller
shall not, nor shall the Seller permit the Seller's Bank or any of the Seller's
Subsidiaries, between the date of this Agreement and the Effective Time,
directly or indirectly to do, or publicly announce an intention to do, any of
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the following without the prior written consent of the Buyer through its
representative, its Chief Executive Officer (which consent shall not be
unreasonably withheld):
(i) amend or otherwise change its Corporate Charter or By-laws or
equivalent organizational documents;
(ii) issue, deliver, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, delivery, sale, pledge, disposition, grant or
encumbrance of, any shares of capital stock of any class of the Seller, the
Seller's Bank or any of the Seller's Subsidiaries, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest, of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries, or enter
into any agreement with respect to any of the foregoing;
(iii) split, combine or reclassify any shares of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
except upon the exercise or fulfillment of rights or options issued or
existing pursuant to employee benefit plans, programs or arrangements, all
to the extent outstanding and in existence on the date of this Agreement;
(iv) repurchase, redeem or otherwise acquire any shares of the
capital stock of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, or any securities convertible into or exercisable for any
shares of the capital stock of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries;
(v) enter into any new line of business or materially expand the
business currently conducted by the Seller, the Seller's Bank and the
Seller's Subsidiaries or file any application to relocate or terminate the
operations of any banking office of the Seller's Bank;
(vi) acquire or agree to acquire, by merging or consolidating with,
or by purchasing an equity interest in or a portion of the assets of, or by
any other manner, any business or any corporation, partnership, other
business organization or any division thereof or any material amount of
assets;
(vii) except for advances from the Federal Home Loan Bank in an
amount not to exceed $90 million outstanding at any one time, incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any individual, corporation or other entity, or
make any loan or advance, other than in the ordinary course of business
consistent with past practice;
(viii) authorize any single capital expenditure which is in excess of
$25,000 or capital expenditures which are, in the aggregate, in excess of
$50,000 for the Seller, the Seller's Bank and the Seller's Subsidiaries
taken as a whole, except for written contractual commitments entered into
prior to the date of this Agreement as disclosed in the Seller Disclosure
Schedule;
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(ix) (A) except as required by applicable law, (x) adopt, amend,
renew or terminate any plan or any agreement, arrangement, plan or policy
between the Seller, the Seller's Bank or any of the Seller's Subsidiaries
and one or more of its current or former directors, officers or employees,
or (y) increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan
or agreement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares);
or (B) enter into, modify or renew any employment, severance or other
agreement with any director, officer or employee of the Seller, the
Seller's Bank or any of the Seller's Subsidiaries, or establish, adopt,
enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement providing for any benefit to
any director, officer or employee;
(x) take any action with respect to accounting methods, principles or
practices, other than changes required by applicable law or GAAP or
regulatory accounting as concurred in by the Seller's independent
accountants;
(xi) make any tax election or settle or compromise any federal,
state, local or foreign tax liability;
(xii) pay, discharge or satisfy any claim, liability or obligation,
other than the payment, discharge or satisfaction, in the ordinary course
of business and consistent with past practice;
(xiii) make any new or additional equity investment or commitment to
make such an investment in real estate or in any real estate development
project, other than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in the ordinary course
of business consistent with past practice;
(xiv) sell any securities in its investment portfolio, except in the
ordinary course of business, or engage in transactions in or involving
forwards, futures, options on futures, swaps or similar derivative
instruments;
(xv) sell, lease, encumber, assign or otherwise dispose of, or agree
to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements or purchase or
sell any loans in bulk;
(xvi) take any action that is intended or reasonably can be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or any of the
conditions to the consummation of the Merger and the other transactions
contemplated by this Agreement set forth in Article VIII not being
satisfied in any material respect, or in any material violation of any
provision of this Agreement or the Stock Option Agreement, except, in every
case, as may be required by applicable law;
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(xvii) commit any act or omission which constitutes a material breach
or default by the Seller, the Seller's Bank or any of the Seller's
Subsidiaries under any Regulatory Agreement or under any material contract
or material license to which any of them is a party or by which any of them
or their respective properties is bound;
(xviii) foreclose upon or take a deed or title to any commercial real
estate without first conducting a Phase I environmental assessment of the
property or foreclose upon any commercial real estate if such environmental
assessment indicates the presence of Hazardous Material in amounts which,
if such foreclosure were to occur, would be material;
(xix) enter into or renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of or make any commitment with
respect to, (A) any contract, agreement or lease for office space,
operations space or branch space to which the Seller, the Seller's Bank or
any of the Seller's Subsidiaries is a party or by which the Seller, the
Seller's Bank or any of the Seller's Subsidiaries or its respective
properties is bound; (B) any lease, contract or agreement other than in the
ordinary course of business consistent with past practice including
renewals of leases to existing tenants of the Seller, the Seller's Bank or
any Subsidiary; (C) regardless of whether consistent with past practices,
any lease, contract, agreement or commitment, other than Loans, involving
an aggregate payment by or to the Seller, the Seller's Bank or any of the
Seller's Subsidiaries of more than $50,000 or requiring performance by the
Seller, the Seller's Bank or any of the Seller's Subsidiaries of any
obligations at any time more than one year after the time of execution;
(xx) change in any material respect its loan policies or procedures,
except as required by regulatory authorities; or
(xxi) agree to do any of the foregoing.
6.02. Certain Changes and Adjustments. Prior to the Closing (as defined in
Section 10.01 hereof), the Buyer and the Seller shall consult and cooperate with
each other concerning the Seller's Bank's loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) to reflect Buyer's plans with respect to the conduct of the Seller's
Bank's business following the Merger; provided, however, that the Seller and the
Seller's Bank shall not be obligated to take any action pursuant to this Section
which is inconsistent with GAAP and unless and until the Buyer acknowledges, and
the Seller and the Seller's Bank are satisfied, that all conditions to Seller's
obligation to consummate the Merger have been satisfied. No action taken by the
Seller or the Seller's Bank pursuant to this Section or the consequences
resulting therefrom shall be deemed to be a breach of any representation,
warranty, agreement or covenant herein or constitute a Material Adverse Effect.
6.03. Payment of Dividends. During the period from the date of this
Agreement and continuing through December 31, 2000, the Seller shall not make
any distribution (by way of dividend or otherwise) with respect to its capital
stock. During the period from January 1, 2000 through the Effective Time, the
Seller shall not make any distribution (by way of dividend or otherwise) with
respect to its capital stock except for the declaration and payment of regular
quarterly dividends in February and May, each in the amount of $0.25 per share
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of Common Stock. The Seller represents that during calendar year 2000 the only
distributions it has made or declared with respect to its capital stock are two
regular dividends, each in the amount of $0.25 per share of Common Stock.
6.04. Covenant of the Buyer. During the period from the date of this
Agreement and continuing until the Effective Time, the Buyer shall not, and
shall not permit any of its subsidiaries to, take any action that is intended or
which reasonably can be expected to result in any of its representations and
warranties set forth in this Agreement being untrue in any material respect, or
in any of the conditions to the Merger or other transactions contemplated in
this Agreement as set forth in Article VIII not being satisfied in any material
respect, or in a material violation of any provision of this Agreement or the
Stock Option Agreement, except, in every case, as may be required by applicable
law.
Article VII ADDITIONAL AGREEMENTS
7.01. Regulatory Matters.
(a) The Seller shall promptly prepare and file with the SEC the Proxy
Statement. The Seller shall make the draft Proxy Statement available to the
Buyer for review promptly after preparation thereof, and shall respond to all of
the Buyer's comments and suggestions for revisions to such Proxy Statement.
Promptly after completion of the Proxy Statement, the Seller shall mail the
Proxy Statement to its shareholders.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). The Seller and the Buyer
shall have the right to review in advance, and to the extent practicable each
will consult with the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to the Seller or
the Buyer, as the case may be, and any of their respective subsidiaries, which
appear in any filing made with or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein. Each of the Buyer and the Seller represents and warrants to
the other that it is not aware of any reason why the approvals, consents and
waivers of Governmental Entities referred to herein and in Section 4.06 and
Section 5.04 should not be obtained.
(c) The Buyer and the Seller shall, upon request, furnish each other
with all information concerning themselves, their respective subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or any other
33
statement, filing, notice or application made by or on behalf of the Buyer, the
Seller or any of their respective subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated hereby.
(d) The Buyer and the Seller shall promptly furnish each other with
copies of written communications received by the Buyer or the Seller, as the
case may be, or any of their respective subsidiaries from, or delivered by any
of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
7.02. Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, the Seller shall, and shall cause the Seller's Bank
and each of the Seller's Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the Buyer, access, during
normal business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
the Seller shall, and shall cause the Seller's Bank and the Seller's
Subsidiaries to, make available to the Buyer all other information concerning
its business, properties and personnel as the Buyer may reasonably request
(other than information which the Seller is not permitted to disclose under
applicable law). Neither the Seller nor the Seller's Bank nor any of the
Seller's Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of the Seller's, the Seller's Bank's or the Seller's Subsidiaries'
customers, jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Without limiting the generality of the foregoing, the Seller shall
cooperate with the Buyer in compiling the following with respect to each of the
Seller, the Seller's Bank and each Subsidiary (or, in the case of clause (B)
below, with respect to the Seller's Bank and each Subsidiary) as of the most
recent practicable date (as well as on an estimated pro forma basis as of the
Effective Date giving effect to the consummation of the transactions
contemplated hereby): (A) the basis of the Seller, the Seller's Bank and each
Subsidiary in its assets; (B) the basis of the stockholder(s) of the Seller's
Bank and each Subsidiary in its stock, or the amount of any excess loss account
(as defined in Treasury Regulations Section 1.1502-19); (C) the amount of any
net operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Seller, the
Seller's Bank and any Subsidiary; and (D) the amount of any deferred gain or
loss allocable to the Seller, the Seller's Bank or any Subsidiary arising out of
any deferred intercompany transaction (as defined in Treasury Regulations
Section 1.1502-13).
(c) All information furnished by the Seller to the Buyer or its
representatives pursuant hereto shall be treated as the sole property of the
Seller and, if the Merger shall not occur, the Buyer and its representatives
shall return to the Seller or destroy all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. The Buyer shall, and shall use
its reasonable efforts to cause its representatives to, keep confidential all
34
such information, and shall not directly or indirectly use such information for
any competitive or other commercial purpose. The obligation to keep such
information confidential shall continue from the date the proposed Merger is
abandoned and shall not apply to (i) any information which (x) was already in
the Buyer's possession prior to the disclosure thereof by the Seller; (y) was
then generally known to the public; or (z) was disclosed to the Buyer by a third
party not bound by an obligation of confidentiality or (ii) disclosures made as
required by law. It is further agreed that, if in the absence of a protective
order or the receipt of a waiver hereunder the Buyer is nonetheless, in the
opinion of its counsel, compelled to disclose information concerning the Seller
to any tribunal or governmental body or agency or else stand liable for contempt
or suffer other censure or penalty, the Buyer may disclose such information to
such tribunal or governmental body or agency without liability hereunder.
(d) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, Buyer shall, and shall cause the Buyer's Bank and
its subsidiaries to, afford to the officers, employees, accountants, counsel and
other representatives of the Seller and the Seller's Bank, access, during normal
business hours during the period prior to the Effective Time, to such
information regarding the Buyer and its subsidiaries as shall be reasonably
necessary for the Seller to fulfill its obligations pursuant to this Agreement
to prepare the Proxy Statement or which may be reasonably necessary for the
Seller to confirm that the representations and warranties of the Buyer contained
herein are true and correct and that the covenants of the Buyer contained herein
have been performed in all material respects. Neither the Buyer nor any of its
subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of the
Buyer's customers, jeopardize the attorney-client privilege of the institution
in possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(e) All information furnished by the Buyer to the Seller or its
representatives pursuant hereto shall be treated as the sole property of the
Buyer and, if the Merger shall not occur, the Seller and its representatives
shall return to the Buyer or destroy all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. The Seller shall, and shall use
its reasonable efforts to cause its representatives to, keep confidential all
such information, and shall not directly or indirectly use such information for
any competitive or other commercial purpose. The obligation to keep such
information confidential shall continue from the date the proposed Merger is
abandoned and shall not apply to (i) any information which (x) was already in
the Seller's possession prior to the disclosure thereof by the Buyer; (y) was
then generally known to the public; or (z) was disclosed to the Seller by a
third party not bound by an obligation of confidentiality or (ii) disclosures
made as required by law. It is further agreed that, if in the absence of a
protective order or the receipt of a waiver hereunder the Seller is nonetheless,
in the opinion of its counsel, compelled to disclose information concerning the
Buyer to any tribunal or governmental body or agency or else stand liable for
contempt or suffer other censure or penalty, the Seller may disclose such
information to such tribunal or governmental body or agency without liability
hereunder.
35
(f) No investigation by any of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein or any condition to the obligations of the parties hereto.
7.03. Stockholder Meeting. The Seller shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its stockholders to be
held as soon as is reasonably practicable for the purpose of voting upon the
approval of this Agreement. The Seller will, through its Board of Directors,
recommend to its stockholders approval of this Agreement and the transactions
contemplated hereby and such other matters as may be submitted to its
stockholders in connection with this Agreement; provided, however, that nothing
contained in this Section 7.03 shall prohibit the Seller's Board of Directors
from failing to call such a meeting, adjourning such a meeting or failing to
make such recommendation or modifying or withdrawing its recommendation, if such
Board shall have concluded in good faith with the advice of counsel that such
action is required to prevent such Board from breaching its fiduciary duties to
the stockholders of the Seller.
7.04. Legal Conditions to Merger. Each of the Buyer and the Seller shall,
and shall cause each of its subsidiaries to, use its reasonable best efforts (a)
to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
or its subsidiaries with respect to the Merger and, subject to the conditions
set forth in Article VIII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by the Seller or the Buyer or any of their respective subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
7.05. No Solicitation. The Seller shall not and shall cause the Seller's
Bank and the Seller's Subsidiaries to not, directly or indirectly, through any
officer, director, agent or otherwise, solicit or initiate the submission of any
proposal or offer from any person relating to any acquisition or purchase of all
or (other than in the ordinary course of business) any material portion of the
assets of, or any equity interest in, the Seller, the Seller's Bank or the
Seller's Subsidiaries or any business combination with the Seller, the Seller's
Bank or the Seller's Subsidiaries or, except to the extent determined by the
Seller Board, with the advice of its independent counsel, to be required by
fiduciary obligations under applicable law, participate in any negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate,
any effort or attempt by any other person to do or seek any of the foregoing.
The Seller immediately shall cease and cause to be terminated and shall cause
the Seller's Bank and the Seller's Subsidiaries to cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Seller shall notify the
Buyer and cause the Seller's Bank or the Seller's Subsidiaries to notify the
Buyer promptly if any such proposal or offer, or any inquiry or contact with any
person with respect thereto, is made and shall, in any such notice to the Buyer,
indicate in reasonable detail the terms and conditions of such proposal, offer,
inquiry or contact. The Seller agrees and shall cause the Seller's Bank and the
Seller's Subsidiaries not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Seller,
the Seller's Bank or the Seller's Subsidiaries is a party.
36
7.06. Employee Benefit Matters.
(a) Provision of Benefits. As soon as practicable after the Effective
Time, the Buyer agrees to provide the employees of the Seller's Bank with types
and levels of employee benefits that, in the aggregate, are substantially
equivalent to those maintained by the Seller for similarly situated employees.
(b) New Employment Agreements. The Buyer has prepared employment
agreements (commencing as of the Effective Date) to be entered into between
Seller's Bank and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Neath, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ V in the form attached hereto as Exhibit 7.06(b) (the
"Employment Agreements"). As of the date of this Agreement the Seller's Bank and
the following individuals have entered into Employment Agreements: Messrs
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇. The Seller agrees to cause the Seller's Bank to
cause the existing employment agreements ("Existing Employment Agreements")
between each of the four foregoing individuals and the Seller's Bank to be
terminated by mutual consent and without cost or expense to the Seller's Bank or
any party to this Agreement immediately prior to the Effective Time.
(c) Consultant Agreement. As of the date of this Agreement, the Seller
has caused the consulting agreement dated as of May 1, 1998 between the Seller
and ▇▇▇▇ ▇▇▇▇▇ ("Existing Consulting Agreement") to be terminated (such
termination to be effective as of the Effective Date) by mutual consent and has
agreed to make a lump sum payment to ▇▇. ▇▇▇▇▇ on the Effective Date in an
amount that would not result in the payment of an "excess parachute payment"
within the meaning of Section 280G of the Code. Not later than fifteen days
after the date of this Agreement Buyer and ▇▇. ▇▇▇▇▇ will enter into a mutually
acceptable three-year agreement (commencing as of the Effective Date) pursuant
to which ▇▇. ▇▇▇▇▇ would serve as a consultant with respect to Nantucket Bank
("Consultant Agreement"). Once agreed upon, the Consultant Agreement will be
attached hereto as Exhibit 7.06(c).
(d) Continuation of Plans. Notwithstanding anything to the contrary
contained herein, the Buyer shall have sole discretion with respect to the
determination as to whether or when to terminate, merge or continue any employee
benefit plans and programs of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries; provided, however, that the Buyer shall continue to
maintain such plans (other than stock based or incentive plans or stock funds in
retirement plans) until the Seller Employees are permitted to participate in the
Buyer's or its Affiliates' plans. As of the date of this Agreement such Buyer
plans provide for employee benefits in the aggregate no less beneficial than
those made available by the Seller.
(e) Parachute Payments. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall the Seller or any of the Seller's
Subsidiaries take any action or make any payments that would result, either
individually or in the aggregate, in the payment of an "excess parachute
payment" within the meaning of Section 280G of the Code or that would result,
either individually or in the aggregate, in payments that would be nondeductible
pursuant to Section 162(m) of the Code.
37
7.07. Directors' and Officers' Insurance.
(a) The Buyer shall use its reasonable best efforts to maintain in
effect for six years from the Effective Time, if available, the current
directors' and officers' liability insurance policy maintained by the Seller
(provided that the Buyer may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Buyer be required to expend
pursuant to this Section 7.07(a) more than the amount equal to 150% of the
current annual amount expended by the Seller to maintain or procure insurance
coverage pursuant hereto. In connection with the foregoing, the Seller agrees to
provide such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
(b) The Buyer agrees to indemnify current and former directors or
officers of the Seller to the same extent that such directors or officers are
entitled to indemnification as of the date of this Agreement under the Seller's
Corporate Charter and/or By-laws to the full extent permitted under applicable
law for a period of six years from the Effective Time, provided that in the
event that any claim is asserted or made by such current or former director or
officer within such six year period, the right to indemnification in respect of
such claim shall continue until the disposition of such claim. The provisions of
this Section 7.07 are specifically for the benefit of those present and former
directors and officers entitled to indemnification as of the date of this
Agreement under the Seller's By-Laws.
(c) In the event that the Buyer or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving bank or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of the Buyer shall assume the obligations set forth in
this Section 7.07.
7.08. Financial and Other Statements. Notwithstanding anything to the
contrary in Section 7.02, during the term of this Agreement, the Seller shall
provide to the Buyer the following documents and information:
(a) As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter ending after the date of this Agreement,
the Seller will deliver to the Buyer the Seller Bank's quarterly Call Report as
filed with the appropriate Bank Regulator. As soon as reasonably available, but
in no event more than 90 days after the end of each fiscal year ending after the
date of this Agreement, the Seller will deliver to the Buyer the Seller Bank's
consolidated and audited financial statements for the fiscal year then ended.
(b) Promptly upon receipt thereof, the Seller will furnish to the Buyer
copies of all internal control reports submitted to the Seller or the Seller's
Bank by independent auditors in connection with each annual, interim or special
audit of the books of the Seller or the Seller's Bank made by such auditors.
(c) As soon as practicable, the Seller and the Seller's Bank will
furnish to the Buyer copies of all such financial statements and reports as they
shall send to their stockholder(s), the SEC, the Massachusetts Commissioner, the
FDIC, the FRB, or any other regulatory authority, to the extent any such reports
furnished
38
to any such regulatory authority are not confidential and except as legally
prohibited under applicable laws and regulations, and all press releases.
(d) With reasonable promptness, the Seller and the Seller's Bank will
furnish to the Buyer such additional financial data as the Buyer may reasonably
request.
7.09. Further Action. The Buyer and the Seller each shall, and shall cause
their subsidiaries to, use reasonable best efforts (a) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and, subject to the conditions set forth in Article VIII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by the Seller
or the Buyer or any of their respective subsidiaries in connection with the
Merger and any of the other transactions contemplated by this Agreement.
7.10. Public Announcements. Except as otherwise required by law or the
rules of NASDAQ, so long as this Agreement is in effect, neither the Buyer nor
the Seller shall, or shall they permit any of their subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
7.11. Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective subsidiaries shall take all such necessary action
as may be reasonably requested by the Buyer.
7.12. Update of Disclosure Schedules. From time to time prior to the
Effective Time, the Seller will promptly supplement or amend the Seller
Disclosure Schedule to reflect any matter which, if 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 been rendered inaccurate
thereby. No supplement or amendment to the Seller Disclosure Schedule shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Section 8.02(a) hereof or the compliance by the Seller with the
covenants set forth in Article VI and Article VII hereof.
7.13. Current Information.
(a) During the period from the date of this Agreement to the Effective
Time, the Seller will cause one or more of its designated representatives (i) to
confer on a regular and frequent basis (at least monthly) with representatives
of Buyer to report on (x) the general status of the ongoing operations of the
Seller and the Seller's Bank, (y) the status of, and the action proposed to be
taken with respect to, those Loans held by the Seller or the Seller's Bank
which, either individually or in combination with one or more other Loans to the
same borrower thereunder, have an aggregate original principal amount of
39
$250,000 or more and are classified or non- performing assets, and (z) the
status of, and the action proposed to be taken with respect to, foreclosed
property and other real estate owned by the Seller or the Seller's Bank, and
(ii) to cooperate and communicate with respect to the manner in which the
business of the Seller and the Seller's Bank is conducted, including but not
limited to, the disposition of certain assets after the Effective Time, the type
and mix of products and services, personnel matters, branches, the granting of
credit, and problem loan management, reserve adequacy, securities investments
and accounting. During the period from the date of this Agreement to the
Effective Time, the Seller and the Seller's Bank shall provide the Buyer with
sufficient information to review new extensions of credit, renewals and
restructurings having an original principal amount of $200,000 and information
detailing overall asset quality. The Seller shall also ensure that the Seller's
Bank allows the Buyer to designate one of its officers to attend the Seller's
Bank credit committee meetings and be a non-voting attendee thereof.
(b) The Seller and the Seller's Bank will promptly notify the Buyer of
any material change in the normal course of business or in the operation of the
properties of the Seller or the Seller's Bank and of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of litigation
involving them and will keep the Buyer reasonably informed of such events.
(c) To the extent not covered by paragraphs (a) and (b) above, the
Seller and the Seller's Bank shall give prompt notice to the Buyer, and the
Buyer shall give prompt notice to the Seller, of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
reasonably likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, and (ii) any
failure of the Seller, the Seller's Bank or the Buyer, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, that the delivery of
any notice pursuant to this paragraph (c) shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
7.14. Directors of Seller's Bank. As sole stockholder of Seller's Bank
immediately following the Effective Time, the Buyer agrees to ensure that the
Directors of the Seller's Bank immediately prior to the Effective Time shall be
the Directors of the Seller's Bank for a period of one year (or until their term
of office expires, whichever is later) following the Effective Time; provided,
however, that immediately following the Effective Time, the number of members of
the Board of Directors of the Seller's Bank shall be expanded by up to three
members and the vacancies so created shall immediately thereafter be filled by a
person or persons designated by the Buyer. The Seller and the Buyer agree to
cause the Seller's Bank to hold regular meetings of its Board of Directors not
more than one time per month. Loan Committee meetings, which shall not be
considered meetings of the Board of Directors, may be held as frequently as the
Seller's Bank deems appropriate.
7.15. Voting Agreements. The Seller agrees to cause each of its directors
and officers to execute and deliver (individually, and to the extent applicable
in their respective capacities as trustee) concurrently with the execution of
this Agreement a voting agreement in the form of Exhibit 7.15 hereto.
40
Article VIII CONDITIONS TO THE MERGER
8.01. Conditions to Each Party's Obligations to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative vote
of the stockholders of the Seller to the extent required by Delaware Law and the
Corporate Charter of the Seller;
(b) Regulatory Approvals. All necessary approvals, authorizations and
consents of all Governmental Entities required to consummate the Merger shall
have been obtained and remain in full force and effect, and all waiting periods
relating to such approvals, authorizations and consents shall have expired or
been terminated (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(c) No Orders, Injunctions or Restraints; Illegality. No order,
injunction or decree (whether temporary, preliminary or permanent) issued by
federal or state governmental authority or other agency or commission or federal
or state court of competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect and no proceeding
initiated by any governmental entity seeking an Injunction shall be pending. No
statute, rule, regulation, order, injunction or decree (whether temporary,
preliminary or permanent) shall have been enacted, entered, promulgated or
enforced by any federal or state governmental authority or other agency or
commission or federal or state court of competent jurisdiction, which prohibits,
restricts or makes illegal the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
8.02. Conditions to Obligations of the Buyer. The obligation of the Buyer
to effect the Merger is also subject to the satisfaction or waiver by the Buyer
at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Seller in this Agreement which is qualified as to materiality
shall be true and correct and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, as applicable, and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Time, it being understood that such representations and warranties shall be
deemed to be true and correct in all material respects unless the failure or
failures of such representations and warranties to be so true and correct
represent, either individually or in the aggregate, a Material Adverse Effect on
the Seller, provided, however, that for purposes of determining satisfaction of
this condition, no effect shall be given to an exception in such representations
and warranties relating to materiality, a Material Adverse Effect or the
knowledge of the Seller. The Buyer shall have received a certificate to such
effect signed by the Chief Executive Officer and the Chief Financial Officer of
the Seller dated as of the Effective Date.
41
(b) Agreements and Covenants. The Seller shall have performed in all
material respects all obligations and complied in all material respects with all
agreements or covenants of the Seller to be performed or complied with by it at
or prior to the Effective Date under this Agreement, and the Buyer shall have
received a certificate to such effect signed by the Chief Executive Officer and
Chief Financial Officer of the Seller dated as of the Effective Date.
(c) Consents Under Agreements. The consent, approval or waiver of each
person (other than Requisite Regulatory Approvals contemplated in Section
7.01(c)) whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Seller or any of its Seller's Subsidiaries
under any loan or credit agreement, note mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained, and none of such
permits, consents, waivers, clearances, approvals and authorizations shall
contain any term or condition which would materially impair the value of the
Seller to the Buyer.
(d) No Burdensome Condition. The Seller and the Seller's Subsidiaries
shall have resolved all violations, criticisms or exceptions by any Bank
Regulator with respect to any Bank Examination; and none of the Requisite
Regulatory Approvals shall impose any term, condition or restriction upon the
Buyer, the Seller, the Surviving Corporation, or any of their respective
subsidiaries that the Buyer reasonably determines would materially impair the
value of the Seller to the Buyer or be materially burdensome (a "Burdensome
Condition").
(e) Investment Banker Opinion. The Buyer shall have received a copy of
the opinion of the Seller's Investment Banker, dated as of the date of this
Agreement, that the Merger Consideration to be received by the stockholders of
the Seller pursuant to the Merger is fair to such shareholders from a financial
point of view.
(f) Employment Agreements. The Employment Agreements shall have been
executed and delivered by the stipulated parties thereto and be in full force
and effect.
(g) Consultant Agreement. The Consultant Agreement shall have been
executed and delivered by the stipulated parties thereto and be in full force
and effect.
(h) Voting Agreements. The Voting Agreements shall have been executed
and delivered by the stipulated parties thereto and be in full force and effect.
(i) Termination of Certain Existing Agreements. The Existing Employment
Agreements shall each have been terminated without cost to Seller's Bank or any
party to this Agreement, and the Existing Consulting Agreement shall have been
terminated in consideration of the payment described in Section 7.06(c).
(j) Tax Opinion. The Buyer shall have received the opinion of ▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇ LLP, dated as of the Effective Date, that the Merger constitutes a
tax-free reorganization described in section 368(a)(1) of the Code.
(k) No Parachute Payments. Neither Seller or any of the Seller's
Subsidiaries shall have taken any action or made any payments that would result,
either individually or in the aggregate, in the payment of an "excess parachute
payment" within the meaning of Section 280G of the Code or that would result,
either individually or in the aggregate, in payments that would be nondeductible
pursuant to Section 162(m) of the Code.
42
8.03. Conditions to Obligations of the Seller. The obligations of the
Seller to effect the Merger are also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Buyer in this Agreement which is qualified as to materiality
shall be true and correct and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, as applicable, and (except to the extent such
representations and warranties speak as of an earlier date) as of the Effective
Date, it being understood that such representations and warranties shall be
deemed to be true and correct in all material respects unless the failure or
failures of such representations and warranties to be so true and correct
represent, either individually or in the aggregate, a Material Adverse Effect on
the Seller, provided, however, that for purposes of determining satisfaction of
this condition, no effect shall be given to an exception in such representations
and warranties relating to materiality, a Material Adverse Effect or the
knowledge of the Seller. The Seller shall have received a certificate signed by
the Chief Executive Officer and Chief Financial Officer of the Buyer to such
effect dated as of the Effective Date.
(b) Agreements and Covenants. The Buyer shall have performed in all
material respects all obligations and complied in all material respects with all
of the respective agreements or covenants to be performed or complied by such
party under this Agreement and the Seller shall have received a certificate
signed by the Chief Executive Officer and Chief Financial Officer of the Buyer
to such effect dated as of the Effective Date.
(c) Investment Banker Opinion. The Seller shall have received the
opinion of the Seller's Investment Bankers, dated as of the date of this
Agreement, that the Merger Consideration to be received by the stockholders of
the Seller pursuant to the Merger is fair to such shareholders from a financial
point of view.
Article IX TERMINATION, AMENDMENT AND WAIVER
9.01. Termination. This Agreement may be terminated and the Merger and the
other transactions contemplated by this Agreement may be abandoned at any time
prior to the Effective Time, notwithstanding any requisite approval and adoption
of this Agreement and the transactions contemplated in this Agreement by the
stockholders of the Seller:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Buyer and the Seller;
(b) by either the Buyer or the Seller if (i) the Effective Time shall
not have occurred on or before March 31, 2001 or such later date as the parties
may have agreed upon in writing (the "Expiration Date"); provided, however, that
the right to terminate this Agreement under this Section 9.01(b) shall not be
available to any party whose failure to fulfill any material obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date;
43
(c) by either the Buyer or the Seller (i) ninety days after the date on
which any request or application for a regulatory approval required to
consummate the Merger shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such requisite
regulatory approval, unless within the ninety day period following such denial
or withdrawal a petition for rehearing or an amended application has been filed
with such Governmental Entity; provided, however, that no party shall have the
right to terminate this Agreement pursuant to this Section 9.01(c) (i) if such
denial or request or recommendation for withdrawal shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein or (ii) if any court of
competent jurisdiction or other governmental authority shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(d) by either 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) if there shall have been a material breach
of any of the representations or warranties set forth in this Agreement on the
part of the other party, which breach by its nature cannot be cured prior to the
Effective Time or within thirty business days following receipt by the breaching
party of written notice of such breach from the other party hereto (for purposes
of this Section 9.01(d) a material breach shall be deemed to be a breach which
has, either individually or in the aggregate, a Material Adverse Effect on the
party making such representations or warranties or on the business, operations,
financial condition, property or assets of the combined enterprise or which
materially adversely affects consummation of the Merger and the other
transactions contemplated hereby, provided, however, that no effect shall be
given to any qualification relating to materiality, a Material Adverse Effect or
knowledge in such representations and warranties);
(e) by either 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) if there shall have been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the other party, which breach shall not have been cured within thirty business
days following receipt by the breaching party of written notice of such breach
from the other party hereto (for purposes of this Section 9.01(e) a material
breach shall be deemed to be a failure which has, either individually or in the
aggregate, a Material Adverse Effect on the party so failing or on the business,
operations, financial condition, property or assets of the combined enterprise
or which materially and adversely affects consummation of the Merger and the
other transactions contemplated hereby, provided, however, that no effect shall
be given to any qualification relating to materiality in any such covenant);
(f) by either the Buyer or the Seller (provided, that if the terminating party
is the Seller, the Seller shall not be in material breach of any of its
obligations under Section 7.03) if any approval of the stockholders of the
Seller required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
stockholders or at any adjournment or postponement thereof, or by the Buyer, if
such meeting of stockholders shall not have been held or shall have been
canceled prior to the Expiration Date; or
44
(g) by the Buyer, if the Seller Board shall not have publicly recommended to the
stockholders of the Seller that such stockholders vote in favor of the approval
of this Agreement, the Merger and the other transactions contemplated hereby or
shall have withdrawn or modified such recommendation in a manner adverse to the
Buyer.
9.02. Effect of Termination; Expenses.
(a) In the event of the termination of this Agreement pursuant to
Section 9.01, this Agreement shall forthwith become void (except as set forth in
Section 10.03), and there shall be no liability on the part of any party hereto,
except (i) each party shall remain liable in any action at law or otherwise for
any liabilities or damages arising out of its gross negligence or willful breach
of any provision of this Agreement, (ii) as otherwise provided in this Section
9.02, and (iii) as provided in Section 9.03 and Section 9.04.
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by the
gross negligence or willful breach of a party hereto, such party shall be liable
to the other party for all out-of-pocket costs and expenses (but in no event in
an amount in excess of $500,000), including, without limitation, the reasonable
fees and expenses of lawyers, accountants and investment bankers, incurred by
such other party in connection with the entering into of this Agreement and the
carrying out of any and all acts contemplated hereunder ("Expenses"). The
payment of Expenses is not an exclusive remedy, but is in addition to any other
rights or remedies available to the parties hereto at law or in equity.
(c) Except as otherwise provided in this Section 9.02 or in Section
9.03 or Section 9.04, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such expenses, whether or not any of the transactions
contemplated by this Agreement is consummated.
9.03. Seller Special Payment.
(a) Payment Amount. As a condition of the Buyer's willingness, and in
order to induce the Buyer, to enter into this Agreement and to reimburse the
Buyer for incurring the damages, costs and expenses related to entering into
this Agreement and consummating the transactions contemplated by this Agreement,
the Seller will make a cash payment to the Buyer, as liquidated damages and in
lieu of any other rights or remedies under this Agreement, in the amount of
$3,500,000 (the "Seller Special Payment") if and only if:
(i) (x) the Buyer or the Seller has terminated this Agreement
pursuant to Section 9.01(f), or (y) the Buyer has terminated this Agreement
pursuant to Section 9.01(g), and the events described in clause (A) or (B),
below, shall have taken place:
(A) within twelve months of any such termination or other event
specified in (i) above, (a) the Seller or the Seller's Bank shall have entered
into an agreement to engage in an Acquisition Transaction (as defined in Section
1.01(b)) with any person other than the Buyer or any affiliate of the Buyer or
(b) the Seller Board or any committee thereof shall have authorized, approved,
recommended, publicly proposed or failed to publicly oppose an Acquisition
Transaction or recommended that stockholders of the
45
Seller authorize, approve or accept any Acquisition Transaction with any person
other than the Buyer or any affiliate of the Buyer, or
(B) at the time of such termination or event giving rise to such
termination, it shall have been publicly announced that any person (other than
the Buyer or any affiliate of the Buyer) shall have (a) made, or disclosed an
intention to make, a bona fide offer to engage in an Acquisition Transaction, or
(b) filed an application (or given a notice), whether in draft or final form,
under the BHC Act or the Change in Bank Control Act of 1978, for approval to
engage in an Acquisition Transaction;
or
(ii) the Buyer has terminated this Agreement pursuant to Section
9.01(d) or Section 9.01(e) and the breach of the representation, warranty,
covenant or agreement under Section 9.01(d) or Section 9.01(e) was caused
by the willful conduct or gross negligence of the Seller.
(b) Payment Required. Any payment required under this Section 9.03 will
be (i) payable by the Seller to the Buyer (by wire transfer of immediately
available funds to an account designated by the Buyer) within five business days
after demand by the Buyer and (ii) net of any other payments made by the Seller
to the Buyer pursuant to the provisions of Section 9.02(b). In the event of a
termination under circumstances that would trigger a payment under this Section
9.03, any standstill provisions contained in the Confidentiality Agreement shall
terminate.
(c) Exclusivity of Remedy. Notwithstanding anything to the contrary set
forth in this Agreement, if the Seller pays or causes to be paid to the Buyer
the Seller Special Payment, neither the Seller nor any affiliate will have any
further obligations or liabilities to the Buyer or the Buyer Bank or any other
person with respect to this Agreement or the transactions contemplated by this
Agreement, it being understood, however, that payment of the Seller Special
Payment shall not have any effect on the respective rights and obligations of
the parties pursuant to the Stock Option Agreement.
9.04. Buyer Special Payment.
(a) Payment Amount. As a condition of the Seller's willingness to, and
in order to induce the Seller to, enter into this Agreement, and to reimburse
the Seller for incurring the damages, costs and expenses related to entering
into this Agreement and consummating the transactions contemplated by this
Agreement, the Buyer hereby agrees to pay to the Seller, as liquidated damages
and in lieu of any other rights or remedies under this Agreement, a cash payment
in the amount of $3,500,000 (the "Buyer Special Payment") if and only if the
Seller has terminated this Agreement in accordance with Section 9.01(d) or
Section 9.01(e) and the breach of the representation, warranty, covenant or
agreement under Section 9.01(d) or Section 9.01(e) was caused by the willful
conduct or gross negligence of the Buyer.
(b) Payments Required. Any payment required to be made under this
Section 9.04 shall be (i) paid by the Buyer to the Seller by wire transfer of
immediately available funds to an account designated by the Seller within five
business days after demand by the Seller and (ii) net of any other payments made
46
by the Buyer to the Seller pursuant to the provisions of Section 9.02(b).
(c) Exclusivity of Remedy. Notwithstanding anything to the contrary set
forth in this Agreement, if the Buyer pays or causes to be paid to the Seller
the Buyer Special Payment, neither the Buyer nor any affiliate will have any
further obligations or liabilities to the Seller or the Seller Bank or any other
person with respect to this Agreement or the transactions contemplated by this
Agreement, it being understood, however, that payment of the Buyer Special
Payment shall not have any effect on the respective rights and obligations of
the parties pursuant to the Stock Option Agreement.
9.05. Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after the approval and
adoption of this Agreement and the transactions contemplated hereby, no
amendment may be made which would reduce the amount or change the type of
consideration into which each share of Seller Common Stock shall be converted
upon consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
9.06. Waiver. At any time prior to the Effective Time, any party hereto may
(i) extend the time for the performance of any obligation or other act of any
other party hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein; provided, however, that after the approval and adoption of this
Agreement and the approval of the transactions contemplated hereby by the
stockholders of the Seller there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which would reduce the amount or change the form of the consideration into which
each Share shall be converted upon consummation of the Merger delivered to the
Seller's stockholders hereunder other than as contemplated by this Agreement.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby, but such extension
or waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
Article X GENERAL PROVISIONS
10.01. Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 9:00 a.m. on a date to
be specified by the parties, within ten business days after the satisfaction or
waiver (subject to applicable law) of the latest to occur of the conditions set
forth in Section 8.01 (the "Closing Date"), at the offices of ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another
time, date or place is agreed to in writing by the parties hereto.
10.02. Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, the Buyer shall be
entitled to revise the structure of the Merger and the other transactions
contemplated hereby and thereby, provided that (i) there are no material adverse
47
federal or state income tax consequences to the Seller and its stockholders as a
result of the modification; (ii) the consideration to be paid to the holders of
shares of Seller Common Stock under this Agreement is not thereby changed in
kind or reduced in amount; (iii) there are no material adverse changes to the
benefits and other arrangements provided to or on behalf of the Seller's
directors, officers and other employees; and (iv) such modification will not be
likely to delay materially or jeopardize receipt of any required regulatory
approvals or other consents and approvals relating to the consummation of the
Merger. This Agreement and any related documents shall be appropriately amended
in order to reflect any such revised structure.
10.03. Non-Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be, except that the agreements set forth in Article II and
Article III and Sections 7.06, Section 7.07 and Section 7.14 shall survive the
Effective Time indefinitely and those set forth in Sections 7.02(c) and in
Section 7.02(e), Article IX and Article X hereof shall survive termination
indefinitely.
10.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 10.04):
if to the Buyer:
Seacoast Financial Services Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
48
if to the Seller:
Home Port Bancorp, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
10.05. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
10.06. Entire Agreement. This Agreement (including the Disclosure Schedules
and Exhibits) and the Stock Option Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof except for the
Confidentiality Agreement.
10.07. No Third Party Beneficiaries. This Agreement, together with the
other documents and instruments referred to herein and therein, between Buyer
and Seller is not intended to confer any rights or remedies upon any person
other than the parties hereto.
10.08. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
10.09. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement (other
than Section 7.06), express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
49
10.10. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or federal court sitting in the City of Boston.
10.12. Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.13. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits, Annexes or Schedules, such reference shall be to a Section
of or Exhibit, Annex or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be July 20, 2000.
10.14. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
* * * * *
50
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement
to be executed as a sealed instrument as of the date first written above by
their respective officers thereunto duly authorized.
HOME PORT BANCORP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title:President and Chief Executive
Officer
Attest:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Secretary
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Title:Chief Financial Officer and
Treasurer
SEACOAST FINANCIAL SERVICES
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Title:President and Chief Executive
Officer
Attest:
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Clerk
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Title:Chief Financial Officer and
Treasurer