Exhibit 99 (b)
AGREEMENT AND PLAN OF MERGER
among
PEOPLES HERITAGE FINANCIAL GROUP, INC.,
PHFG, INC. and
ATLANTIC BANCORP
dated as of June 24, 1997
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................... 1
ARTICLE II THE MERGER......................................... 6
2.1 The Merger.......................................... 6
2.2 Effective Time; Closing............................. 6
2.3 Effect on Outstanding Shares........................ 7
2.4 Shareholder Rights; Stock Transfers................. 8
2.5 Dissenting Shares................................... 8
2.6 Exchange Procedures................................. 8
2.7 Options............................................. 9
2.8 Withholding Rights.................................. 10
2.9 Additional Actions.................................. 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY... 11
3.1 Capital Structure................................... 11
3.2 Organization, Standing and Authority of the Company. 11
3.3 Company Subsidiaries................................ 12
3.4 Organization, Standing and Authority of Company
Subsidiaries........................................ 12
3.5 Authorized and Effective Agreement; Consents and
Approvals........................................... 12
3.6 Regulatory Reports.................................. 13
3.7 Financial Statements................................ 14
3.8 Material Adverse Change............................. 15
3.9 Environmental Matters............................... 15
3.10 Tax Matters......................................... 15
3.11 Legal Proceedings................................... 16
3.12 Compliance with Laws................................ 16
3.13 Certain Information................................. 17
3.14 Employee Benefit Plans.............................. 17
3.15 Certain Contracts................................... 19
3.16 Brokers and Finders................................. 20
3.17 Insurance........................................... 20
3.18 Properties.......................................... 20
3.19 Labor............................................... 21
3.20 Transactions with Affiliates........................ 21
3.21 Nonperforming and Classified Assets................. 21
3.22 Required Vote; Inapplicability of Antitakeover
Statutes; Fairness Opinion.......................... 22
3.23 Disclosures......................................... 22
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PHFG........... 23
4.1 Organization, Standing and Authority of PHFG........ 23
4.2 Organization, Standing, Authority and Ownership of
the PHFG Subsidiaries............................... 23
4.3 Authorized and Effective Agreement; Consents and
Approvals........................................... 23
4.4 Securities Documents................................ 24
4.5 Financial Statements................................ 24
4.6 Access to Funds..................................... 25
4.7 Legal Proceedings................................... 25
4.8 Certain Information................................. 25
4.9 Disclosures......................................... 26
ARTICLE V COVENANTS........................................... 26
5.1 Reasonable Best Efforts............................. 26
5.2 Shareholder Meeting................................. 26
5.3 Regulatory Matters.................................. 27
5.4 Investigation and Confidentiality................... 27
5.5 Press Releases...................................... 28
5.6 Business of the Company............................. 28
5.7 Current Information................................. 31
5.8 Benefit Plans and Arrangements...................... 32
5.9 Indemnification; Insurance.......................... 32
5.10 The Bank Merger..................................... 34
5.11 Disclosure Supplements.............................. 34
5.12 Failure to Fulfill Conditions....................... 34
ARTICLE VI CONDITIONS PRECEDENT............................. 34
6.1 Conditions Precedent - PHFG, Merger Sub and the
Company............................................. 34
6.2 Conditions Precedent - The Company.................. 35
6.3 Conditions Precedent - PHFG and Merger Sub.......... 36
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT............... 38
7.1 Termination......................................... 38
7.2 Effect of Termination............................... 39
7.3 Survival of Representations, Warranties and
Covenants........................................... 39
7.4 Waiver.............................................. 39
7.5 Amendment or Supplement............................. 39
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ARTICLE VIII MISCELLANEOUS.................................. 40
8.1 Expenses; Termination Fee........................... 40
8.2 Entire Agreement.................................... 42
8.3 Assignment; Successors.............................. 42
8.4 Notices............................................. 42
8.5 Alternative Structure............................... 43
8.6 Interpretation...................................... 43
8.7 Counterparts........................................ 44
8.8 Governing Law....................................... 44
8.9 Effectiveness....................................... 44
Exhibit A Form of Shareholder Agreement
Exhibit B Matters to be covered by opinion of counsel to PHFG
Exhibit C Matters to be covered by opinion of counsel to the Company
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AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of June 24, 1997, by and among
Peoples Heritage Financial Group, Inc. ("PHFG"), a Maine corporation, PHFG,
Inc. ("Merger Sub"), a Maine corporation and a wholly-owned subsidiary of
PHFG, and Atlantic Bancorp (the "Company"), a Maine corporation (the
"Agreement").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of PHFG and the Company have
determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transactions
provided for herein, subject to the terms and conditions set forth herein;
and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with
the transactions contemplated hereby; and
WHEREAS, as a condition and inducement to PHFG's willingness to enter
into this Agreement, the directors of the Company and certain shareholders
of the Company (such directors and shareholders collectively, the
"Shareholders") are concurrently entering into a Shareholder Agreement with
PHFG (collectively, the "Shareholder Agreement"), in the form attached
hereto as Exhibit A, pursuant to which, among other things, the
Shareholders agree to vote their shares of capital stock of the Company in
favor of this Agreement and the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
"Acquisition Transaction" shall have the meaning set forth in Section
5.6(b) hereof.
"Affiliate" shall have the meaning set forth in Section 3.20 hereof.
"Articles of Merger" shall have the meaning set forth in Section 2.2
hereof.
"Bank" shall mean Atlantic Bank National Association, a national bank
and a wholly-owned subsidiary of the Company.
"Bank Merger" and "Bank Merger Agreement" shall have the meanings set
forth in Section 5.10 hereof.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"Class A Common Stock, "Class B Common Stock" and "Class C Common
Stock" shall have the meanings set forth in Section 3.1 hereof.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company Capital Stock" shall mean the Company Preferred Stock and the
Company Common Stock.
"Company Common Stock" shall mean the common stock, par value $0.01
per share, of the Company.
"Company Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of the Company as of
December 31, 1996 and 1995 and the consolidated statements of income,
changes in shareholders' equity and cash flows (including related notes and
schedules, if any) of the Company for each of the three years ended
December 31, 1996, 1995 and 1994, (ii) the consolidated balance sheet
(including related notes and schedules, if any) of the Company as of March
31, 1997 and the consolidated statements of income (including related notes
and schedules, if any) of the Company for the three months ended March 31,
1997 and 1996 and (iii) the consolidated balance sheets of the Company
(including related notes and schedules, if any) and the consolidated
statements of income (including related notes and schedules, if any) of the
Company with respect to the quarterly and annual periods ended subsequent
to March 31, 1997 and delivered to PHFG pursuant to Section 5.7 hereof.
"Company Preferred Stock" shall mean the preferred stock, par value
$0.01 per share, of the Company.
"Company Option Plan" shall mean the Company's Employee Stock Option
Plan.
"Company Options" shall mean options to purchase shares of Class A
Common Stock granted pursuant to the Company Option Plan and the ▇▇▇▇▇▇▇
Option.
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"Confidentiality Agreement" shall have the meaning set forth in
Section 5.4(b) hereof.
"▇▇▇▇▇▇▇ Option" shall mean the non-qualified stock option to purchase
45,863 shares of Class A Common Stock granted by the Company to ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ pursuant to the Second Amendment, dated as of April 24, 1997, to
the Employment Agreement between the Company and ▇▇. ▇▇▇▇▇▇▇.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Dissenting Shares" shall have the meaning set forth in Section 2.5
hereof.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" shall mean the time specified pursuant to Section
2.2(a) hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from
the presence, or release into the environment, of any Materials of
Environmental Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with
any governmental entity relating to (1) the protection, preservation or
restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface or
subsurface soil, plant and animal life or any other natural resource),
and/or (2) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Materials of Environmental Concern. The term Environmental
Laws includes without limitation (1) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
9601, ET SEQ; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901, ET SEQ; the Clean Air Act, as amended, 42
U.S.C. 7401, ET SEQ; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. 1251, ET SEQ; the Toxic Substances Control Act,
as amended, 15 U.S.C. 9601, ET SEQ; the Emergency Planning and
Community Right to Know Act, 42 U.S.C. 1101, ET SEQ; the Safe
Drinking Water Act, 42 U.S.C. 300f, ET SEQ; and all comparable
state and local laws, and (2) any common law (including without limitation
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of,
the presence of or exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of Boston.
"FRB" shall mean the Board of Governors of the Federal Reserve System.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Massachusetts Board" shall mean the Massachusetts Board of Bank
Incorporation.
"Material Adverse Effect on the Company" shall mean any effect that
(i) is material and adverse to the financial condition, results of
operations or business of the Company and the Bank taken as a whole or (ii)
materially impairs the ability of either the Company or the Bank to
consummate the transactions contemplated by this Agreement (including
without limitation the Merger and the Bank Merger), provided, however, that
Material Adverse Effect shall not be deemed to include (i) the impact of
changes in (a) laws and regulations or interpretations thereof or (b)
generally accepted accounting principles, that in each case are generally
applicable to the banking industry or (ii) actions taken or to be taken by
the Company or the Bank upon the written request of PHFG pursuant to this
Agreement.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"MBCA" shall mean the Maine Business Corporation Act, as amended.
"MEGO Loans" shall mean the home improvement loans purchased by the
Company from MEGO Mortgage.
"Merger" shall have the meaning set forth in Section 2.1(a) hereof.
"Merger Consideration" shall have the meaning set forth in Section 2.3
hereof.
"MRSA" shall mean the Maine Revised Statutes Annotated.
"OCC" shall mean the Office of the Comptroller of the Currency of the
U.S. Department of the Treasury, or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
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"PHFG Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of PHFG as of
December 31, 1996 and 1995 and the consolidated statements of income,
shareholders' equity and cash flows (including related notes and schedules,
if any) of PHFG for each of the three years ended December 31, 1996, 1995
and 1994, (ii) the consolidated balance sheet (including related notes and
schedules, if any) of PHFG as of March 31, 1997 and the consolidated
statements of income, shareholders' equity and cash flows (including
related notes and schedules, if any) of PHFG for the three months ended
March 31, 1997 and 1996 and (iii) the consolidated balance sheets of PHFG
(including related notes and schedules, if any) and the consolidated
statements of income, shareholders' equity and cash flows (including
related notes and schedules, if any) of PHFG included in the Securities
Documents filed by the Acquiror with respect to the quarterly and annual
periods subsequent to March 31, 1997.
"PHB" shall mean Peoples Heritage Bank, a Maine-chartered universal
bank and a wholly-owned subsidiary of PHFG.
"Previously Disclosed" shall mean disclosed in (i) a letter dated the
date hereof delivered from the disclosing party to the other party
specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein, or (ii) a
letter dated after the date hereof from the disclosing party specifically
referring to this Agreement and describing in reasonable detail the matters
contained therein and delivered by the other party pursuant to Section 5.11
hereof. The inclusion of any matter in information Previously Disclosed
shall not be deemed an admission or otherwise to imply that any such matter
is material for purposes of this Agreement.
"Proxy Statement" shall mean the proxy statement to be delivered by
the Company to its shareholders in connection with the solicitation of
their approval of this Agreement and the transactions contemplated hereby,
including any amendment or supplement thereto.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"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.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations of the Commission promulgated thereunder.
"Series A Preferred Stock," "Series B Preferred Stock" and "Series C
Preferred Stock" shall have the meanings set forth in Section 3.1 hereof.
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"Subsidiary" and "Significant Subsidiary" shall have the meanings set
forth in Rule 1-02 of Regulation S-X of the Commission.
"Superintendent" shall mean the Superintendent of the Bureau of
Banking of the State of Maine.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2 hereof), Merger Sub shall merge
with and into the Company (the "Merger") in accordance with the applicable
provisions of the MBCA. The Company shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") of the Merger,
and shall continue its corporate existence under the laws of the State of
Maine as a wholly-owned subsidiary of PHFG. The name of the Surviving
Corporation shall continue to be "Atlantic Bancorp." Upon consummation of
the Merger, the separate corporate existence of Merger Sub shall terminate.
(b) From and after the Effective Time, the Merger shall have the
effects set forth in Section 905 of the MBCA.
(c) The Articles of Incorporation and Bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation, respectively, until
altered, amended or repealed in accordance with their terms and applicable
law.
(d) The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving
Corporation immediately following the Effective Time. Each of such
directors and officers shall hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation and applicable
provisions of the MBCA.
2.2 EFFECTIVE TIME; CLOSING
The Merger shall become effective upon the filing of articles of
merger (the "Articles of Merger") with the Secretary of State of the State
of Maine, unless a different date and time is specified as the effective
time in such Articles of Merger (the "Effective Time"). A
6
closing (the "Closing") shall take place immediately prior to the Effective
Time at 10:00 a.m., Eastern Time, on the fifth business day following
the satisfaction or waiver, to the extent permitted hereunder, of the
conditions to the consummation of the Merger specified in Article VI of
this Agreement (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), at the offices
of PHFG located at One Portland Square, Portland, Maine, or at such other
place, at such other time, or on such other date as the parties may
mutually agree upon. At the Closing, there shall be delivered to PHFG and
the Company the opinions, certificates and other documents required to be
delivered under Article VI hereof.
2.3 EFFECT ON OUTSTANDING SHARES
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of
a holder of shares of Company Capital Stock:
(a) each share of Company Common Stock issued and outstanding at
the Effective Time (other than (i) Dissenting Shares and (ii) shares of
Company Common Stock owned by the Company or PHFG or any of their
respective wholly-owned subsidiaries, other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) shall become
and be converted into the right to receive $17.00 in cash without interest
(the "Merger Consideration");
(b) each share of Company Preferred Stock issued and outstanding
at the Effective Time (other than (i) Dissenting Shares and (ii) shares of
Company Preferred Stock owned by the Company or PHFG or any of their
respective wholly-owned subsidiaries, other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) shall become
and be converted into the right to receive an amount in cash computed by
multiplying (i) the Merger Consideration by (ii) the number of shares of
Company Common Stock, including fractions of a share, into which such share
of Company Preferred Stock is convertible in accordance with its terms;
(c) each share of Company Capital Stock owned by the Company or
PHFG or any of their respective wholly-owned subsidiaries at the Effective
Time (other than shares held in a fiduciary capacity or in satisfaction of
a debt previously contracted) shall be cancelled and retired and shall not
represent capital stock of the Surviving Corporation, and no exchange or
payment shall be made with respect thereto; and
(d) each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be changed into a
share of Class A Common Stock of the Surviving Corporation and shall
thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation.
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2.4 SHAREHOLDER RIGHTS; STOCK TRANSFERS
Except as provided in Section 2.5 hereof, at the Effective Time,
holders of Company Capital Stock shall cease to be and shall have no rights
as shareholders of the Company, other than to receive the aggregate Merger
Consideration to which such holders are entitled pursuant to Section 2.3
hereof. After the Effective Time, there shall be no transfers on the stock
transfers books of the Company or the Surviving Corporation of shares of
Company Capital Stock.
2.5 DISSENTING SHARES
Each outstanding share of Company Capital Stock the holder of which
has perfected his right to dissent under the MBCA and has not effectively
withdrawn or lost such right as of the Effective Time (the "Dissenting
Shares") shall not be converted into or represent a right to receive the
Merger Consideration specified in Section 2.3 hereof, and the holder
thereof shall be entitled only to such rights as are granted by Section 909
of the MBCA. If any holder of Dissenting Shares shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the
Dissenting Shares held by such holder shall thereupon be treated as though
such Dissenting Shares had been converted into the right to receive the
aggregate Merger Consideration to which such holder would be entitled
pursuant to Section 2.3 hereof. The Company shall give PHFG prompt notice
upon receipt by the Company of any such written demands for payment of the
fair value of shares of Company Capital Stock and of withdrawals of such
demands and any other instruments provided pursuant to the MBCA. Any
payments made in respect of Dissenting Shares shall be made by the
Surviving Corporation.
2.6 EXCHANGE PROCEDURES
(a) At and after the Effective Time, each certificate (each a
"Certificate") previously representing shares of Company Capital Stock,
other than Dissenting Shares, shall represent only the right to receive the
aggregate Merger Consideration specified in Section 2.3 hereof.
(b) As of the Effective Time, PHFG shall deposit, or shall cause to
be deposited, with such bank or trust company reasonably acceptable to the
Company as PHFG may select, which may be a banking subsidiary of PHFG (the
"Exchange Agent"), the aggregate Merger Consideration to be paid to the
holders of shares of Company Capital Stock pursuant to Section 2.3 hereof
in exchange for outstanding shares of Company Capital Stock.
(c) Within five business days after the Effective Time, PHFG shall
cause the Exchange Agent to mail to each holder of record of a Certificate
or Certificates the following: (i) a letter of transmittal specifying that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent,
which shall be in a form and contain any other provisions as PHFG and the
Company may determine; and (ii) instructions for use in effecting the
surrender of
8
Certificates in exchange for the aggregate Merger Consideration to which
such holder is entitled pursuant to Section 2.3 hereof. Upon the proper
surrender of a Certificate to the Exchange Agent, together with a properly
completed and duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor a check
representing the aggregate Merger Consideration which such holder has the
right to receive in respect of the Certificate surrendered pursuant to
Section 2.3 hereof, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the Merger Consideration.
In the event of a transfer of ownership of any shares of Company Capital
Stock not registered in the transfer records of the Company, a check
for the aggregate Merger Consideration to which the holder thereof is
entitled pursuant to Section 2.3 hereof may be issued to the holder if
the Certificate representing such Company Capital Stock is presented to
the Exchange Agent, accompanied by documents sufficient, in the reasonable
discretion of PHFG and the Exchange Agent, (i) to evidence and effect such
transfer and (ii) to evidence that all applicable stock transfer taxes have
been paid.
(d) Any portion of the aggregate Merger Consideration or the proceeds
of any investments thereof that remains unclaimed by the shareholders of
the Company for six months after the Effective Time shall be repaid by the
Exchange Agent to PHFG. Any shareholders of the Company who have not
theretofore complied with this Section 2.6 shall thereafter look only to
PHFG for payment of the Merger Consideration deliverable in respect of each
share of Company Capital Stock such shareholder holds as determined
pursuant to Section 2.3 of this Agreement without any interest thereon. If
outstanding Certificates are not surrendered or the payments for them are
not claimed prior to the date on which such payments would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and
any other applicable law, become the property of PHFG (and to the extent
not in its possession shall be paid over to it), free and clear of all
claims or interest of any person previously entitled to such claims.
Notwithstanding the foregoing, none of PHFG, the Surviving Corporation, the
Exchange Agent or any other person shall be liable to any former holder of
Company Capital Stock for any amount delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) 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 PHFG or the Exchange Agent, the posting by such person of a bond in such
amount as the Exchange Agent may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
aggregate Merger Consideration deliverable in respect thereof pursuant to
Section 2.3 of this Agreement.
2.7 OPTIONS
At the Effective Time, each Company Option which is outstanding and
unexercised immediately prior to the Effective Time shall be terminated and
each grantee thereof shall be entitled to receive, in lieu of each share of
Class A Common Stock that would otherwise
9
have been issuable upon the exercise thereof, an amount in cash computed
by multiplying (i) the difference between (x) the Merger Consideration
and (y) the per share exercise price applicable to such Company Option
by (ii) the number of such shares of Class A Common Stock subject to such
Company Option. The Company agrees to take or cause to be taken all
action necessary to provide for such termination and payment effective at
or before the Effective Time. The Company agrees (i) to provide each holder
of a Company Option granted pursuant to the Company Option Plan the
notice referred to in Section 6(i)(B) of the Company Option Plan, (ii) to
provide to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ the notice referred to in Section 5(b) of
the ▇▇▇▇▇▇▇ Option and (iii) otherwise to take such actions as may
be required to ensure that outstanding Company Options are terminated
in the manner set forth in this Section 2.7 and are not exercised in
accordance with their terms prior to the Effective Time.
2.8 WITHHOLDING RIGHTS
PHFG (through the Exchange Agent, if applicable) shall be entitled to
deduct and withhold from any amounts otherwise payable pursuant to this
Agreement to any holder of Company Capital Stock or Company Options such
amounts as PHFG is required under the Code or any provision of state, local
or foreign tax law to deduct and withhold with respect to the making of
such payment. Any amounts so withheld shall be treated for all purposes of
this Agreement as having been paid to the holder of the Company Capital
Stock or Company Options, as applicable, in respect of which such deduction
and withholding was made by PHFG.
2.9 ADDITIONAL ACTIONS
If at any time after the Effective Time the Surviving Corporation
shall consider that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation its rights, title or
interest in, to or under any of the rights, properties or assets of Merger
Sub or the Company, or (ii) otherwise carry out the purposes of this
Agreement, each of Merger Sub and the Company and its proper officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties
or assets in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of Merger Sub, the
Company or otherwise to take any and all such action.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as Previously Disclosed, the Company represents and warrants to
PHFG as follows:
3.1 CAPITAL STRUCTURE
The authorized capital stock of the Company consists of (i) 11,150,000
shares of Company Common Stock, consisting of 10,350,000 shares, 400,000
shares and 400,000 shares of Class A Common Stock, Class B Common Stock and
Class C Common Stock, respectively, and (ii) 5,000,000 shares of Company
Preferred Stock, including 400,000 shares, 15,000 shares and 5,000 shares
of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock, respectively. As of the date hereof, (i) there are
3,189,406 shares of Company Common Stock issued and outstanding, consisting
of 2,886,680 shares, 35,339 shares and 267,387 shares of Class A Common
Stock, Class B Common Stock and Class C Common Stock, respectively, and no
shares of Company Common Stock are held as treasury shares; (ii) there are
406,875 shares of Company Preferred Stock issued and outstanding,
consisting of 398,700 shares, 6,175 shares and 2,000 shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock,
respectively, and no shares of Company Preferred Stock are held as treasury
shares; (iii) the outstanding shares of Company Preferred Stock are
convertible into an aggregate of 972,960 shares of Company Common Stock;
and (iv) the quarterly dividend rates on the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock are $0.2125 per
share, $22.50 per share and $22.50 per share, respectively, and there are
no accrued but unpaid dividends on such shares of Company Preferred Stock
other than for the current calendar quarter. All outstanding shares of
Company Capital Stock have been duly authorized and validly issued and are
fully paid and nonassessable and none of the outstanding shares of Company
Capital Stock has been issued in violation of the preemptive rights of any
person, firm or entity. The Company has Previously Disclosed each Company
Option outstanding as of the date hereof, including the number of shares
covered by each such Company Option and the exercise price thereof. Except
for (i) Company Options to purchase 147,868 shares of Class A Common Stock
as of the date hereof and (ii) the conversion rights of the holders of
issued and outstanding shares of Company Preferred Stock, Class B Common
Stock and Class C Common Stock as of the date hereof, there are no Rights
authorized, issued or outstanding with respect to the Company Capital
Stock.
3.2 ORGANIZATION, STANDING AND AUTHORITY OF THE COMPANY
The Company is a corporation duly organized and validly existing under
the MBCA with full corporate power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted and is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or
11
the conduct of its business requires such licensing or qualification,
except where the failure to be so licensed, qualified or in good standing
would not have a Material Adverse Effect on the Company. The Company is
duly registered as a bank holding company under the BHCA and the
regulations of the FRB thereunder. The Company has heretofore delivered
to PHFG true and complete copies of the Articles of Incorporation and
Bylaws of the Company as in effect as of the date hereof.
3.3 COMPANY SUBSIDIARIES
The only direct or indirect Subsidiary of the Company is the Bank.
Except for capital stock of the Bank, FHLB stock or as Previously
Disclosed, the Company does not own or have the right to acquire, directly
or indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association,
partnership, joint venture or other organization. The outstanding shares
of capital stock of the Bank have been duly authorized and validly issued,
are fully paid and nonassessable (except as provided in the National Bank
Act) and are directly owned by the Company free and clear of all liens,
claims, encumbrances, charges, restrictions or rights of third parties of
any kind whatsoever. No Rights are authorized, issued or outstanding with
respect to the capital stock or other ownership interests of the Bank and
there are no agreements, understandings or commitments relating to the
right of the Company to vote or to dispose of said shares or other
ownership interests.
3.4 ORGANIZATION, STANDING AND AUTHORITY OF COMPANY SUBSIDIARIES
The Bank (i) is a national bank duly organized and validly existing
under the laws of the United States; (ii) has full power and authority to
own or lease all of its properties and assets and to carry on its business
as now conducted; and (iii) is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed, qualified or in
good standing would not have a Material Adverse Effect on the Company. The
deposit accounts of the Bank are insured by the BIF to the maximum extent
permitted by the FDIA, and the Bank has paid all premiums and assessments
required by the FDIA and the regulations thereunder. The Company has
heretofore delivered to PHFG true and complete copies of the Articles of
Association and Bylaws of the Bank as in effect as of the date hereof.
3.5 AUTHORIZED AND EFFECTIVE AGREEMENT; CONSENTS AND APPROVALS
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and (subject to receipt of all necessary
governmental approvals and the approval of the Company's shareholders of
this Agreement) to perform all of its obligations under this Agreement.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of the
Company, except for the approval of this Agreement by the Company's
shareholders. This Agreement has been duly and validly
12
executed and delivered by the Company and constitutes a legal, valid
and binding obligation of the Company which is enforceable against the
Company in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger
and the Bank Merger), nor compliance by the Company with any of the
provisions hereof, (i) conflict with or result in a breach of any
provisions of the Articles of Incorporation or Bylaws of the Company or the
equivalent documents of the Bank, (ii) except as Previously Disclosed,
violate, conflict with or result in a breach of any term, condition or
provision of, or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property
or asset of the Company or the Bank pursuant to, any note, bond, mortgage,
indenture, deed of trust, lease, agreement or other instrument or
obligation to which the Company or the Bank is a party, or by which any of
their respective properties or assets may be bound or affected, or (iii)
subject to receipt of all required governmental and shareholder approvals,
violate any law, rule or regulation or any judgment, decree, order,
governmental permit or license applicable to the Company or the Bank,
excluding from the foregoing clauses (ii) and (iii) conflicts, breaches,
defaults or violations which, either individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
(c) Except for (i) the filing of applications and notices with, and
the consents, approvals and waivers of, as applicable, the FRB, the OCC,
the FDIC, the DOJ, the Superintendent and, if required, the Massachusetts
Board, (ii) the approval of this Agreement by the requisite vote of the
shareholders of the Company, (iii) the filing of Articles of Merger with
the Secretary of State of the State of Maine pursuant to the MBCA in
connection with the Merger and (iv) the approval of the Bank Merger
Agreement by the requisite vote of the Boards of Directors and shareholders
of the Bank and PHB, and except for such filings, authorizations or
approvals which are Previously Disclosed, no consents or approvals of or
filings or registrations with any Governmental Entity or with any third
party are necessary on the part of the Company or the Bank in connection
with (1) the execution and delivery by the Company of this Agreement and
the transactions contemplated hereby and (2) the execution and delivery by
the Bank of the Bank Merger Agreement and the consummation of the
transactions contemplated thereby.
3.6 REGULATORY REPORTS
Since formation of the Company and its acquisition of the Bank in
1994, each of the Company and the Bank has duly filed with the FRB and the
OCC, as the case may be, in correct form the monthly, quarterly and annual
reports required to be filed under applicable laws and regulations and such
reports were in all material respects complete and accurate and in
compliance with the requirements of applicable laws and regulations, and
the Company has previously delivered or made available to PHFG accurate and
complete copies
13
of all such reports. In connection with the most recent examinations of
the Company and the Bank by the FRB and the OCC, neither the Company nor
the Bank was required to correct or change any action, procedure or
proceeding which the Company believes in good faith has not been now
corrected or changed as required, other than corrections or changes which,
if not made, either individually or in the aggregate, would not have a
Material Adverse Effect on the Company. The most recent Federal regulatory
rating given to the Bank as to compliance with the CRA is "satisfactory."
To the best knowledge of the Company, since its last Federal regulatory
examination of CRA compliance, the Bank has not received any complaints as
to CRA compliance.
3.7 FINANCIAL STATEMENTS
(a) The Company has previously delivered or made available to PHFG
accurate and complete copies of the Company Financial Statements for all
periods ended prior to the date hereof, which in the case of the
consolidated balance sheets of the Company as of December 31, 1996 and 1995
and the consolidated statements of income, changes in shareholders' equity
and cash flows for each of the years ended December 31, 1996, 1995 and 1994
are accompanied by the audit report of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, independent
public accountants with respect to the Company. The Company Financial
Statements referred to herein, as well as the Company Financial Statements
to be delivered pursuant to Section 5.7 hereof, fairly present or will
fairly present, as the case may be, the consolidated financial condition of
the Company as of the respective dates set forth therein, and the
consolidated results of operations, changes in shareholders' equity and
cash flows of the Company for the respective periods or as of the
respective dates set forth therein.
(b) Each of the Company Financial Statements has been or will be, as
the case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as
stated therein, and except that unaudited Company Financial Statements may
not include all footnote disclosures required by generally accepted
accounting principles. The consolidated audits of the Company have been
conducted in accordance with generally accepted auditing standards. The
books and records of the Company and the Bank are being maintained in
material compliance with applicable legal and accounting requirements, and
such books and records accurately reflect in all material respects all
dealings and transactions in respect of the business, assets, liabilities
and affairs of the Company and the Bank.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of the Company as of
March 31, 1997 (including related notes) and (ii) of liabilities incurred
since such date in the ordinary course of business, neither the Company nor
the Bank has any liabilities, whether absolute, accrued, contingent or
otherwise, material to the financial condition, results of operations or
business of the Company on a consolidated basis.
14
3.8 MATERIAL ADVERSE CHANGE
Since March 31, 1997, (i) the Company and the Bank have conducted
their respective businesses in the ordinary and usual course and (ii) no
event has occurred or circumstances arisen that, individually or in the
aggregate, has had or is reasonably likely to have a Material Adverse
Effect on the Company.
3.9 ENVIRONMENTAL MATTERS
(a) To the best knowledge of the Company, the Company and the Bank
are in compliance with all Environmental Laws, except for any violations of
any Environmental Law which would not, individually or in the aggregate,
have a Material Adverse Effect on the Company. Neither the Company nor the
Bank has received any communication alleging that the Company or the Bank
is not in such compliance and, to the best knowledge of the Company, there
are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) To the best knowledge of the Company, none of the properties
owned, leased or operated by the Company or the Bank has been or is in
violation of or liable under any Environmental Law, except any such
violations or liabilities which would not individually or in the aggregate
have a Material Adverse Effect on the Company.
(c) To the best knowledge of the Company, there are no past or
present actions, activities, circumstances, conditions, events or incidents
that could reasonably form the basis of any Environmental Claim or other
claim or action or governmental investigation that could result in the
imposition of any liability arising under any Environmental Law against the
Company or the Bank or against any person or entity whose liability for any
Environmental Claim the Company or the Bank has or may have retained or
assumed either contractually or by operation of law, except such which
would not, individually or in the aggregate, have a Material Adverse Effect
on the Company.
(d) The Company has Previously Disclosed any environmental studies
conducted by it or the Bank since formation with respect to any properties
directly or indirectly owned by it as of the date hereof.
3.10 TAX MATTERS
(a) The Company and the Bank have timely filed all federal, state and
local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable
law to be filed by them (including, without limitation, estimated tax
returns, income tax returns, information returns and withholding and
employment tax returns) and have paid, or where payment is not required to
have been made, have set up
15
an adequate reserve or accrual for the payment of, all taxes required to be
paid in respect of the periods covered by such returns and, as of the
Effective Time, will have paid, or where payment is not required to have
been made, will have set up an adequate reserve or accrual for the payment
of, all taxes for any subsequent periods ending on or prior to the Effec-
tive Time. Neither the Company nor the Bank will have any material
liability for any such taxes in excess of the amounts so paid or reserves
or accruals so established.
(b) All federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other
tax returns filed by the Company and the Bank are complete and accurate in
all material respects. Neither the Company nor the Bank is delinquent in
the payment of any material tax, assessment or governmental charge, and
none of them has requested any extension of time within which to file any
tax returns in respect of any fiscal year or portion thereof which have not
since been filed. Except as Previously Disclosed, the federal, state and
local income tax returns of the Company and the Bank have been examined by
the applicable tax authorities (or are closed to examination due to the
expiration of the applicable statute of limitations) and no deficiencies
for any tax, assessment or governmental charge have been proposed, asserted
or assessed (tentatively or otherwise) against the Company or the Bank as a
result of such examinations or otherwise which have not been settled and
paid. There are currently no agreements in effect with respect to the
Company or the Bank to extend the period of limitations for the assessment
or collection of any tax. As of the date hereof, no audit, examination or
deficiency or refund litigation with respect to any such return is pending
or, to the best of the Company's knowledge, threatened.
(c) Neither the Company nor the Bank (i) is a party to any agreement
providing for the allocation or sharing of taxes, (ii) is required to
include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by the Company
or the Bank (nor does the Company have any knowledge that the Internal
Revenue Service has proposed any such adjustment or change of accounting
method) or (iii) has filed a consent pursuant to Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply.
3.11 LEGAL PROCEEDINGS
The Company has Previously Disclosed all existing or, to the knowledge
of the Company, threatened, legal, administrative, arbitral or other
proceedings, claims, actions, controversies or governmental investigations
of any nature against or involving the Company or the Bank, none of which
if determined adversely would, individually or in the aggregate, have a
Material Adverse Effect on the Company. Neither the Company nor the Bank
is a party to any order, judgment or decree which has or could reasonably
be expected to have a Material Adverse Effect on the Company.
3.12 COMPLIANCE WITH LAWS
(a) Each of the Company and the Bank has all permits, licenses,
certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and
foreign governmental or regulatory bodies that are necessary
16
in order to permit it to carry on its business as it is presently being
conducted and the absence of which could reasonably be expected to
have a Material Adverse Effect on the Company; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect; and to the best knowledge of the Company, no suspension or
cancellation of any of the same is threatened.
(b) Neither the Company nor the Bank currently is in violation of its
respective Articles of Incorporation, Articles of Association or Bylaws, or
of any applicable federal, state or local law or ordinance or any order,
rule or regulation of any federal, state, local or other governmental
agency or body (including, without limitation, all banking, securities,
municipal securities, safety, health, environmental, zoning, anti-
discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any Governmental Entity, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on
the Company; and neither the Company nor the Bank has received any notice
or communication from any federal, state or local governmental authority
asserting that the Company or the Bank is in violation of any of the
foregoing which could reasonably be expected to have a Material Adverse
Effect on the Company. Neither the Company nor the Bank is subject to any
regulatory or supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment which could
reasonably be expected to have a Material Adverse Effect on the Company,
and none of them has received any written communication from a Governmental
Entity requesting that they enter into any of the foregoing.
3.13 CERTAIN INFORMATION
The Proxy Statement, as of the date such Proxy Statement is mailed to
shareholders of the Company and up to and including the date of the meeting
of shareholders to which such Proxy Statement relates, 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
under which they were made, not misleading (excluding any information
relating specifically to PHFG which is expressly provided by PHFG to the
Company for inclusion therein).
3.14 EMPLOYEE BENEFIT PLANS
(a) The Company has Previously Disclosed all stock option, employee
stock purchase and stock bonus plans, qualified pension or profit-sharing
plans, any deferred compensation, bonus or group insurance contract or any
other incentive, welfare or employee benefit plan, as defined in Section
3(3) of ERISA, or agreement, understanding, practice or commitment, formal
or informal, sponsored, maintained or contributed to by the Company or the
Bank for the benefit of the current or former directors, officers,
employees or independent contractors of the Company or the Bank (the
"Company Employee Plans"). The Company has previously furnished or made
available to PHFG accurate and complete
17
copies of the Company Employee Plans together with (i) the most recent
actuarial and financial reports prepared with respect to any such plans
that are qualified plans, (ii) the most recent annual reports filed with
any governmental agency with respect to each such plan and (iii) all
rulings and determination letters and any open requests for rulings or
letters that pertain to any such plan that is a qualified plan.
(b) None of the Company, the Bank, any pension plan maintained by
either of them and qualified under Section 401 of the Code or, to the best
of the Company's knowledge, any fiduciary of such plan has incurred any
liability to the PBGC, the Department of Labor or the Internal Revenue
Service with respect to the coverage of any employees of the Company or the
Bank under any Company Employee Plan that has not been satisfied in full
and that would have a Material Effect on the Company. To the best of the
Company's knowledge, no reportable event under Section 4043(b) of ERISA has
occurred with respect to any Company Employee Plan that is a pension plan.
(c) Neither the Company nor the Bank participates in or has incurred
any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Company Employee Plan that is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a
"Company Pension Plan") which is intended to qualify under Section 401 of
the Code to the effect that (i) such plan is qualified under Section 401 of
the Code and (ii) the trust associated with such employee pension plan is
tax exempt under Section 501 of the Code. No such letter has been revoked
or, to the best of the Company's knowledge, is threatened to be revoked and
the Company does not know of any ground on which such revocation may be
based. Neither the Company nor the Bank has any material liability under
any such plan that is not reflected on the consolidated balance sheet of
the Company at March 31, 1997 included in the Company Financial Statements,
other than liabilities incurred in the ordinary course of business in
connection therewith subsequent to the date thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of
ERISA or Section 4975 of the Code) has occurred with respect to any Company
Employee Plan which would result in the imposition, directly or indirectly,
of a material excise tax on the Company or the Bank under Section 4975 of
the Code or otherwise have a Material Adverse Effect on the Company.
(f) Full payment has been made (or proper accruals have been
established to the extent required by generally accepted accounting
principles) of all contributions which are required for periods prior to
the date hereof, and full payment will be so made (or proper accruals will
be so established to the extent required by generally accepted accounting
principles) of all contributions which are due and payable after the date
hereof and prior to the Effective Time, under the terms of each Company
Employee Plan or ERISA; no accumulated funding deficiency (as defined in
Section 302 of ERISA or Section 412 of the
18
Code), whether or not waived, exists with respect to any Company Pension
Plan, and there is no "unfunded current liability" (as defined in Section
412 of the Code) with respect to any Company Pension Plan.
(g) The Company Employee Plans have been operated in compliance in
all material respects with the applicable provisions of ERISA, the Code,
all regulations, rulings and announcements promulgated or issued thereunder
and all other applicable governmental laws and regulations.
(h) There are no pending or, to the best knowledge of the Company,
threatened claims (other than routine claims for benefits) by, on behalf of
or against any of the Company Employee Plans or any trust related thereto
or any fiduciary thereof.
3.15 CERTAIN CONTRACTS
(a) Except as Previously Disclosed, neither the Company nor the Bank
is a party to, is bound or affected by, receives or is obligated to pay,
benefits under (i) any agreement, arrangement or commitment, including
without limitation any agreement, indenture or other instrument, relating
to the borrowing of money by the Company or the Bank (other than in the
case of the Bank deposits, FHLB advances, federal funds purchased and
securities sold under agreements to repurchase in the ordinary course of
business) or the guarantee by the Company or the Bank of any obligation;
(ii) any agreement, arrangement or commitment relating to the employment of
a consultant or the employment, election or retention in office of any
present or former director, officer or employee of the Company or the Bank,
other than any agreement, arrangement or commitment terminable at will and
without the payment of any penalty by the Company or the Bank, or the
termination of which otherwise would not have a Material Adverse Effect on
the Company; (iii) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may
become due to any director, officer or employee of the Company or the Bank
upon execution of this Agreement or upon or following consummation of the
transactions contemplated by this Agreement (either alone or in connection
with the occurrence of any additional acts or events); (iv) any agreement,
arrangement or understanding pursuant to which the Company or the Bank is
obligated to indemnify any director, officer, employee or agent of the
Company or the Bank; (v) any agreement, arrangement or understanding to
which the Company or the Bank is a party or by which either of the same is
bound which limits the freedom of the Company or the Bank to compete in any
line of business or with any person or entity; (vi) any supervisory
agreement, memorandum of understanding, consent order, cease and desist
order or condition of any regulatory order or decree with or by an
applicable federal or state regulatory agency; (vii) any lease of real or
personal property requiring payments of annual rental in excess of $15,000,
whether as lessor or lessee; or (viii) any other agreement, arrangement or
understanding which involves an annual payment of more than $15,000. A
copy of each such agreement, arrangement or understanding has been made
available to PHFG or, if oral, has been described in writing and Previously
Disclosed.
19
(b) Neither the Company nor the Bank is in default or in non-
compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on the Company, under any contract,
agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary
course of business or otherwise and whether written or oral, and there has
not occurred any event that with the lapse of time or the giving of notice,
or both, would constitute such a default or non-compliance.
3.16 BROKERS AND FINDERS
Except as Previously Disclosed, neither the Company nor the Bank, nor
any of their respective directors, officers, employees or agents, has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder's fees, and no broker
or finder has acted directly or indirectly for the Company or the Bank in
connection with this Agreement or the transactions contemplated hereby.
3.17 INSURANCE
Each of the Company and the Bank believes that it is insured, and
during each of the past three calendar years has been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by applicable laws and regulations. The
Company has Previously Disclosed to PHFG a list identifying all insurance
policies maintained by it or the Bank as of the date hereof. All of the
policies and bonds maintained by the Company and the Bank are in full force
and effect and all claims thereunder have been filed in a due and timely
manner and no such claim has been denied.
3.18 PROPERTIES
All real and personal property owned by the Company or the Bank or
presently used by either of them in their respective business is in
condition (ordinary wear and tear excepted) sufficient to carry on the
business of the Company and the Bank in the ordinary course of business
consistent with their past practices. The Company and the Bank have good
and marketable title free and clear of all liens, encumbrances, charges,
defaults or equities (other than equities of redemption under applicable
foreclosure laws) to all of the material properties and assets, real and
personal, reflected on the consolidated balance sheet as of March 31, 1997
included in the Company Financial Statements or acquired after such date,
other than properties sold by the Company in the ordinary course of
business, except (i) liens for current taxes not yet due or payable, (ii)
pledges to secure deposits and other liens incurred in the ordinary course
of its banking business and (iii) such imperfections of title, easements
and encumbrances, if any, as are not material in character, amount or
extent. All real and personal property which is material to the Company's
business on a consolidated basis and leased or licensed by the Company or
the Bank is held
20
pursuant to leases or licenses which are valid and enforceable in
accordance with their respective terms and such leases will not terminate
or lapse prior to the Effective Time. The Company has Previously
Disclosed a brief description of each material real property owned by
the Company or the Bank and used in the conduct of its business.
3.19 LABOR
No work stoppage involving the Company or the Bank is pending or, to
the best knowledge of the Company, threatened. Neither the Company nor the
Bank is involved in, or to the best knowledge of the Company threatened
with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding involving the employees of the Company or the
Bank which could reasonably be expected to have a Material Adverse Effect
on the Company. Employees of the Company and the Bank are not represented
by any labor union nor are any collective bargaining agreements otherwise
in effect with respect to such employees, and to the best of the Company's
knowledge, there have been no efforts to unionize or organize any employees
of the Company or the Bank since their formation.
3.20 TRANSACTIONS WITH AFFILIATES
Except as Previously Disclosed, there are no existing or pending
transactions, nor are there any agreements or understandings, with any
directors, officers or employees of the Company or the Bank or any person
or entity affiliated with any of them (collectively, "Affiliates"),
relating to, arising from or affecting the Company or the Bank, including
without limitation any transactions, arrangements or understandings
relating to the purchase or sale of goods or services, the lending of
monies or the sale, lease or use of any assets of the Company or the Bank.
3.21 NONPERFORMING AND CLASSIFIED ASSETS
(a) Each loan on the books and records of the Company, including
unfunded portions of outstanding lines of credit and loan commitments, was
made and has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business, is
evidenced in all material respects by appropriate and sufficient
documentation and, to the best knowledge of the Company, constitutes the
legal, valid and binding obligation of the obligor named therein, subject
to bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditor's rights and to general
equity principles.
(b) The Company has Previously Disclosed as of May 31, 1997: (i) any
written or, to the Company's knowledge, oral loan or similar agreement
under the terms of which the obligor is 60 or more days delinquent in
payment of principal or interest, or to the best of the Company's
knowledge, in default of any other provision thereof; (ii) each loan or
similar agreement which has been classified as "substandard," "doubtful" or
"loss" or designated "special mention" by the Company or an applicable
regulatory authority; (iii) a listing of the real estate owned acquired by
the Company by foreclosure or by deed-in-lieu
21
thereof; and (iv) the MEGO Loans, including their carrying value under
generally accepted accounting principles and the amount of specific
reserves, if any, which have been established by the Company against
the MEGO Loans, individually and in the aggregate.
3.22 REQUIRED VOTE; INAPPLICABILITY OF ANTITAKEOVER STATUTES; FAIRNESS
OPINION
(a) This Agreement and the transactions contemplated hereby are
required to be approved on behalf of the Company by (i) the affirmative
vote of the holders of at least a majority of the outstanding shares of
each of the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Class A Common Stock, the Class B Common
Stock and the Class C Common Stock, voting as separate classes, and (ii)
the affirmative vote of a majority of the total number of votes which may
be cast by the holders of the outstanding shares of Series A Preferred
Stock and the Class A Common Stock, voting as a single class.
(b) No "control share acquisition," "business combination
moratorium," "fair price" or other form of antitakover statute or
regulation, including without limitation Sections 611-A and 910 of the
MBCA, is applicable to this Agreement and the transactions contemplated
hereby or the Bank Merger Agreement and the transactions contemplated
thereby.
(c) The Company has received a written opinion of M.A. ▇▇▇▇▇▇▇▇ &
Co., Inc. dated the date hereof to the effect that, as of the date hereof,
the consideration to be received by the shareholders of the Company
pursuant to this Agreement is fair to such shareholders from a financial
point of view.
3.23 DISCLOSURES
None of the representations and warranties of the Company or any of
the written information or documents which are furnished by the Company to
PHFG pursuant to this Agreement or in connection with the transactions
contemplated hereby, when considered as a whole, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to be stated or necessary to make any such
information or document, at the time and in light of the circumstances
(including without limitation the nature and scope of the information
described in the representation, warranty, information or document), not
misleading. Copies of all documents Previously Disclosed or made available
to PHFG pursuant to this Article III are true, correct and complete copies
thereof and include all amendments, supplements and modifications thereto
and all waivers thereunder.
22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PHFG
PHFG represents and warrants to the Company as follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF PHFG
PHFG is a corporation duly organized and validly existing under the
laws of the State of Maine with full corporate power and authority to own
or lease all of its properties and assets and to carry on its business as
now conducted and is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in
good standing would not have a material adverse effect on the ability of
PHFG to consummate the transactions contemplated hereby. PHFG is duly
registered as a bank holding company under the BHCA and the regulations of
the FRB thereunder.
4.2 ORGANIZATION, STANDING, AUTHORITY AND OWNERSHIP OF THE PHFG
SUBSIDIARIES
Each PHFG Subsidiary which is a Significant Subsidiary (i) is duly
organized and validly existing under the laws of the jurisdiction of its
incorporation; (ii) has full power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted; and
(iii) is duly licensed or qualified to do business and is in good standing
in each jurisdiction in which its ownership or leasing of property or the
conduct of its business requires such qualification, except where the
failure to be so licensed, qualified or in good standing would have a
material adverse effect on the ability of Merger Sub or PHB to consummate
the transactions contemplated hereby and the Bank Merger Agreement.
4.3 AUTHORIZED AND EFFECTIVE AGREEMENT; CONSENTS AND APPROVALS
(a) Each of PHFG and Merger Sub has all requisite corporate power and
authority to enter into this Agreement and (subject to receipt of all
necessary governmental approvals) to perform all of its obligations under
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on
the part of PHFG and Merger Sub. This Agreement has been duly and validly
executed and delivered by PHFG and Merger Sub and constitutes a legal,
valid and binding obligation of PHFG and Merger Sub which is enforceable
against PHFG and Merger Sub in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
23
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger
and the Bank Merger), nor compliance by PHFG and Merger Sub with any of the
provisions hereof, (i) conflict with or result in a breach of any
provisions of the Articles of Incorporation or Bylaws of PHFG, Merger Sub
or any other PHFG Subsidiary, (ii) violate, conflict with or result in a
breach of any term, condition or provision of, or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge
or encumbrance upon any property or asset of PHFG, Merger Sub or any other
PHFG Subsidiary pursuant to, any note, bond, mortgage, indenture, deed of
trust, lease, agreement or other instrument or obligation to which PHFG,
Merger Sub or any other PHFG Subsidiary is a party, or by which any of
their respective properties or assets may be bound or affected, or (iii)
subject to receipt of all required governmental approvals, violate any law,
rule or regulation or any judgment, decree, order, governmental permit or
license applicable to PHFG, Merger Sub or any other PHFG Subsidiary.
(c) Except for (i) the filing of applications and notices with, and
the consents, approvals and waivers of, as applicable, the FRB, the OCC,
the FDIC, the DOJ, the Superintendent and, if required, the Massachusetts
Board, (ii) the filing of Articles of Merger with the Secretary of State of
the State of Maine pursuant to the MBCA in connection with the Merger and
(iii) the approval of the Bank Merger Agreement by the requisite votes of
the Board of Directors and shareholders of the Bank and PHB, no consents or
approvals of or filings or registrations with any Governmental Entity or
with any third party are necessary on the part of PHFG, Merger Sub or any
other PHFG Subsidiary in connection with (1) the execution and delivery by
PHFG and Merger Sub of this Agreement and the transactions contemplated
hereby and (2) the execution and delivery by PHB of the Bank Merger
Agreement and the consummation of the transactions contemplated thereby.
4.4 SECURITIES DOCUMENTS
PHFG has previously delivered or made available to the Company a
complete copy of all Securities Documents filed by PHFG pursuant to the
Securities Laws or mailed by PHFG to its shareholders as a class since
January 1, 1994. PHFG has timely filed with the Commission 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, at the time and in light of the circumstances under
which they were made, not misleading.
4.5 FINANCIAL STATEMENTS
PHFG has previously delivered or made available to the Company
accurate and complete copies of the PHFG Financial Statements for all
periods ended prior to the date hereof, which in the case of the
consolidated balance sheets of PHFG as of December 31,
24
1996 and 1995 and the consolidated statements of income, shareholders'
equity and cash flows for each of the years ended December 31, 1996,
1995 and 1994 are accompanied by the audit report of KPMG Peat Marwick
LLP, independent public accountants with respect to PHFG. The PHFG
Financial Statements fairly present or will fairly present, as the case may
be, the consolidated financial condition of PHFG as of the respective dates
set forth therein, and the consolidated results of operations, shareholders'
equity and cashflows of PHFG for the respective periods or as of the
respective dates set forth therein. Each of the PHFG Financial Statements
has been or will be, as the case may be, prepared in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except as stated therein. Except to the extent (i)
reflected, disclosed or provided for in the consolidated balance sheet of
PHFG as of March 31, 1997 (including related notes) and (ii) of liabilities
incurred since March 31, 1997 in the ordinary course of business, neither
PHFG nor any PHFG Subsidiary has any liabilities, whether absolute, accrued,
contingent or otherwise, which would have a material adverse effect on the
ability of PHFG to fulfill its obligations to pay for shares of Company
Capital Stock in accordance with the terms of Section 2.3 hereof.
4.6 ACCESS TO FUNDS
PHFG has, or on the date of the Closing will have, all funds necessary
to consummate the Merger and pay the aggregate Merger Consideration to
holders of Company Capital Stock pursuant to Section 2.3 hereof.
4.7 LEGAL PROCEEDINGS
There are no existing or, to the knowledge of PHFG, threatened, legal,
administrative, arbitral or other proceedings, claims, actions,
controversies or governmental investigations of any nature against or
involving PHFG or any PHFG Subsidiary which could reasonably be expected to
have a material adverse effect on the ability of PHFG, Merger Sub or PHB to
consummate the transactions contemplated hereby and by the Bank Merger
Agreement.
4.8 CERTAIN INFORMATION
None of the information relating to PHFG supplied or to be supplied by
PHFG to the Company expressly for inclusion in the Proxy Statement, as of
the date such Proxy Statement is mailed to shareholders of the Company and
up to and including the date of the meeting of shareholders to which such
Proxy Statement relates, will 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 under which they were made, not
misleading.
25
4.9 DISCLOSURES
None of the representations and warranties of PHFG or any of the
written information or documents furnished by PHFG to the Company pursuant
to this Agreement or in connection with the transactions contemplated
hereby, when considered as a whole, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material
fact required to be stated or necessary to make any such information or
document, at the time and in light of the circumstances (including without
limitation the nature and scope of the information described in the
representation, warranty, information or document), not misleading.
ARTICLE V
COVENANTS
5.1 REASONABLE BEST EFFORTS
Subject to the terms and conditions of this Agreement, each party to
this Agreement shall use its reasonable best efforts in good faith to take,
or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or advisable under applicable laws and regulations so as
to permit consummation of the Merger (including, without limitation,
satisfaction of the conditions to consummation of the Merger specified in
Article VI of this Agreement) and the Bank Merger on or before October 31,
1997 or, in the event that requisite regulatory and other approvals have
not yet been obtained, as promptly as practicable thereafter, and to
otherwise enable consummation of the transactions contemplated hereby, and
shall cooperate fully with the other party or parties hereto to that end.
5.2 SHAREHOLDER MEETING
The Company shall take all action necessary to have its shareholders
consider this Agreement and the transactions contemplated hereby at a
special meeting of shareholders which is called for the purpose as promptly
as practicable after the date hereof. Except to the extent legally
required for the discharge by the Board of Directors of its fiduciary
duties, as advised by counsel, the Board of Directors of the Company will
recommend that the shareholders of the Company approve this Agreement and
the transactions contemplated hereby. The parties hereto shall promptly
cooperate with each other in the preparation of the Proxy Statement, which
shall contain such information as is mutually agreeable to the parties.
26
5.3 REGULATORY MATTERS
(a) The parties hereto shall cooperate with each other and use their
best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations
of all Governmental Entities and third parties which are necessary or
advisable to consummate the transactions contemplated by this Agreement and
the Bank Merger Agreement (including the Merger and the Bank Merger). PHFG
and the Company 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 which appears in any filing made with or written materials
submitted to, any third party or any Governmental Entity in connection with
the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. 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.
(b) PHFG and the Company 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 statement, filing, notice or application made by or on behalf of
PHFG, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the transactions contemplated by
this Agreement and the Bank Merger Agreement.
(c) PHFG and the Company shall promptly furnish each other with
copies of written communications received by PHFG or the Company, 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 by this Agreement and the Bank Merger Agreement.
5.4 INVESTIGATION AND CONFIDENTIALITY
(a) The Company shall permit PHFG and its representatives reasonable
access to its properties and personnel, and shall disclose and make
available to PHFG all books, papers and records relating to the assets,
stock ownership, properties, operations, obligations and liabilities of the
Company and the Bank, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of
boards of directors (and any committees thereof) and shareholders,
organizational documents, bylaws, material contracts and agreements,
filings with any regulatory authority, accountants' work papers, litigation
files, loan files, plans affecting employees, and any other business
activities or prospects in which PHFG may have a reasonable interest,
provided that such access shall
27
be reasonably related to the transactions contemplated hereby and not
unduly interfere with normal operations and shall not violate any law or
agreement or constitute the waiver of any privilege. In the event that
the Company is prohibited by law or agreement from providing any of the
access referred to in the preceding sentence to PHFG, it shall use its
reasonable best efforts to obtain promptly waivers thereof so as to permit
such access. The Company shall make the directors, officers, employees
and agents and authorized representatives (including counsel and inde-
pendent public accountants) of the Company and the Bank available to confer
with PHFG and its representatives, provided that such access shall be
reasonably related to the transactions contemplated hereby and not unduly
interfere with normal operations.
(b) All information furnished to PHFG by the Company previously in
connection with the transactions contemplated by this Agreement or pursuant
hereto shall be held in confidence to the extent required by, and in
accordance with, the confidentiality agreement, dated May 28, 1997, between
the Company and PHFG (the "Confidentiality Agreement").
5.5 PRESS RELEASES
PHFG and the Company shall agree with each other as to the form and
substance of any press release related to this Agreement or the
transactions contemplated hereby, and consult with each other as to the
form and substance of other public disclosures which may relate to the
transactions contemplated by this Agreement, provided, however, that
nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which it
determines in good faith is required by law or regulation.
5.6 BUSINESS OF THE COMPANY
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by
this Agreement or the Bank Merger Agreement or with the prior written
consent of PHFG, the Company and the Bank shall carry on their respective
businesses in the ordinary course consistent with past practice. The
Company will use all reasonable efforts to (x) preserve its business
organization and that of the Bank intact, (y) keep available to itself and
PHFG the present services of the employees of the Company and the Bank and
(z) preserve for itself and PHFG the goodwill of the customers of the
Company and the Bank and others with whom business relationships exist.
Without limiting the generality of the foregoing, except with the prior
written consent of PHFG or as expressly contemplated hereby or the Bank
Merger Agreement, between the date hereof and the Effective Time, the
Company shall not, and shall cause the Bank not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, except for regular quarterly
cash dividends at the rates specified in Section 3.1 hereof on the
Series A Preferred Stock, the Series B Preferred Stock and
28
the Series C Preferred Stock and, subject to PHFG's agreement as
to the calculation of the amount, cash dividends thereon at such
rates for any partial quarterly period prior to the Effective Time,
and except that nothing contained herein shall be deemed to affect the
ability of the Bank to pay dividends on its capital stock to the
Company;
(ii) issue any shares of its capital stock, other than in the
case of the Company upon conversion of shares of Company Preferred
Stock, Class B Common Stock and Class C Common Stock in accordance
with their respective terms as of the date hereof; or issue, grant,
modify or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in
capitalization;
(iii)amend its Articles of Incorporation or Bylaws or equivalent
documents; impose, or suffer the imposition, on any share of stock
held by the Company in the Bank of any material lien, charge or
encumbrance or permit any such lien to exist; or waive or release any
material right or cancel or compromise any material debt or claim;
(iv) increase the rate of compensation of any of its directors,
executive officers or employees, or pay or agree to pay any bonus or
severance to, or provide any other new employee benefit or incentive
to, any of its directors, officers or employees, except (i) as may be
required pursuant to binding commitments existing on the date hereof
and Previously Disclosed and (ii) in the case of employees who are not
officers above the level of Vice President, such as may be granted in
the ordinary course of business consistent with past practice;
(v) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement related thereto, in respect of any of its directors,
officers or employees; or make any contributions to the Company's
401(k) Profit Sharing Plan, except in accordance with the Company's
past practice during 1997;
(vi) enter into (w) any agreement, arrangement or commitment not
made in the ordinary course of business, (x) any agreement, indenture
or other instrument relating to the borrowing of money by the Company
or the Bank (other than in the case of the Bank deposits, FHLB
advances, federal funds purchased and securities sold under agreements
to repurchase in the ordinary course of business) or guarantee by the
Company or the Bank of any such obligation, (y) any agreement,
arrangement or commitment relating to the employment of, or severance
of, an officer, employee or consultant or amend any such existing
agreement, provided that the Company or the Bank may employ an
employee in the ordinary course of business if the employment of such
employee is terminable by the Company or the Bank at will
29
without liability, other than as required by law, or (z) any contract,
agreement or understanding with a labor union;
(vii)change its method of accounting in effect for the year ended
December 31, 1996, except as required by changes in laws or
regulations or generally accepted accounting principles concurred in
by its and PHFG's independent public accountants, or change any of its
methods of reporting income and deductions for federal income tax
purposes from those employed in the preparation of its federal income
tax return for the year ended December 31, 1996, except as required by
changes in laws or regulations;
(viii)purchase or otherwise acquire, or sell or otherwise dispose
of, any assets or incur any liabilities other than in the ordinary
course of business consistent with past practice and policies;
(ix) make any capital expenditures, other than pursuant to
binding commitments existing on the date hereof and which are
Previously Disclosed and other than expenditures necessary to maintain
existing assets in good repair, provided that in no event may capital
expenditures exceed $25,000 in the aggregate;
(x) file any applications or make any contract with respect to
branching or site location or relocation;
(xi) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity;
(xii)engage in any transaction with an Affiliate, other than
transactions in the ordinary course of business consistent with past
practice and which are in compliance with the requirements of
applicable laws and regulations;
(xiii)enter into any futures contract, option contract, interest
rate caps, interest rate floors, interest rate exchange agreement or
other agreement for purposes of hedging the exposure of its interest-
earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xiv)discharge or satisfy any material lien or encumbrance or pay
any material obligation or liability (absolute or contingent) other
than at scheduled maturity or in the ordinary course of business;
(xv) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and
assignment of any such assets or rights;
(xvi)take any action that would result in any of the
representations and warranties of the Company contained in this
Agreement not to be true and correct
30
in any material respect at the Effective Time or that could reasonably
result in any material delay in consummation of the transactions con-
templated hereby; or
(xvii)agree to do any of the foregoing.
(b) The Company shall not authorize or permit any of its directors,
officers, employees or agents to directly or indirectly solicit, initiate
or encourage any inquiries relating to, or the making of any proposal which
constitutes, an Acquisition Transaction (as defined below), or, except to
the extent legally required for the discharge of the fiduciary duties of
the Board of Directors of the Company, as advised by counsel, (i) recommend
or endorse an Acquisition Transaction, (ii) participate in any discussions
or negotiations regarding an Acquisition Transaction or (iii) provide any
third party (other than PHFG) with any nonpublic information in connection
with any inquiry or proposal relating to an Acquisition Transaction. The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any
parties other than PHFG with respect to any of the foregoing, and will take
all actions necessary or advisable to inform the appropriate individuals or
entities referred to in the first sentence hereof of the obligations
undertaken in this Section 5.6(b). The Company will notify PHFG
immediately if any inquiries or proposals relating to an Acquisition
Transaction are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued
with, the Company, and the Company will promptly inform PHFG in writing of
all of the relevant details with respect to the foregoing. As used in this
Agreement, "Acquisition Transaction" shall mean (i) a merger or
consolidation, or any similar transaction, involving the Company or the
Bank, (ii) a purchase, lease or other acquisition of a substantial portion
of the assets or liabilities of the Company or the Bank or (iii) a purchase
or other acquisition (including by way of share exchange, tender offer,
exchange offer or otherwise) of more than 10% of any class or series of
equity securities of the Company or the Bank.
5.7 CURRENT INFORMATION
During the period from the date of this Agreement to the Effective
Time, the Company shall, upon the request of PHFG, cause one or more of its
designated representatives to confer on a monthly or more frequent basis
with representatives of PHFG regarding its financial condition, operations,
business and prospects and matters relating to the completion of the
transactions contemplated hereby. Concurrently with the filing thereof,
the Company will deliver to PHFG copies of the regular and periodic reports
filed by the Company and the Bank with the FRB and the OCC, as the case may
be. As soon as reasonably available, but in no event more than 25 days
after the end of each calendar quarter ending after the date of this
Agreement (other than the last quarter of each calendar year ending
December 31), the Company will deliver to PHFG an unaudited consolidated
balance sheet and a consolidated statement of income for such quarter and
the same quarter in the preceding year prepared in accordance with
generally accepted accounting principles, and, as soon as reasonably
available, but in no event more than 90 days after the end of each calendar
year, the Company will deliver to PHFG audited
31
consolidated financial statements which are comparable in nature and scope
to the audited Company Financial Statements at December 31, 1996 and 1995
and for each of the years ended December 31, 1996, 1995 and 1994.
5.8 BENEFIT PLANS AND ARRANGEMENTS
(a) As soon as administratively practicable after the Effective Time,
PHFG shall take all reasonable action so that employees of the Company and
the Bank shall be entitled to participate in the PHFG employee benefit
plans of general applicability, and until such time the Company Employee
Plans, with the exception of the Company Option Plan, shall remain in
effect. For purposes of determining eligibility to participate in and the
vesting of benefits under the PHFG employee benefit plans (other than
PHFG's defined benefit pension plan), PHFG shall recognize years of service
with the Company, the Bank and Casco Northern Bank, N.A. prior to the
Effective Time. PHFG shall provide employees of the Company and the Bank
with full credit for copayment and deductible amounts under any employee
benefit plans paid by such employees prior to the Effective Time and shall
not apply any preexisting condition limitations to such employees.
(b) All employees of the Company or the Bank as of the Effective Time
shall become employees of PHFG or PHB as of the Effective Time, provided
that PHFG and PHB shall have no obligation to continue the employment of
any such person and nothing contained in this Agreement shall give any
employee of the Company or the Bank a right to continuing employment with
PHFG or PHB after the Effective Time.
(c) PHFG agrees to cause PHB, as successor to the Bank upon
consummation of the Bank Merger, to honor the obligations of the Bank under
the Severance Agreements between the Bank and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Previously
Disclosed pursuant to Section 3.15 hereof (the "Severance Agreements").
The Company agrees that it will not, and will not permit the Bank to, make
any payment to an executive pursuant to a Severance Agreement which may be
required prior to the Effective Time (as a result of termination of an
executive's employment pursuant to Section 2.1(b) of the Severance
Agreement or otherwise) or thereafter without PHFG's prior written consent,
it being the intent of the parties that the amount of any such payment, in
combination with any other "parachute payment," as defined in Section
280G(b)(2) of the Code, to which an executive may be entitled (as a result
of the termination of a Company Option pursuant to Section 2.7 hereof or
otherwise) shall not exceed the maximum amount that is tax-deductible by
the Bank or any successor thereto under applicable federal and state law,
as required by Section 3.1 of the Severance Agreements.
5.9 INDEMNIFICATION; INSURANCE
(a) From and after the Effective Time through the sixth anniversary
of the Effective Time, PHFG agrees, and PHFG agrees to cause PHB (each an
"Indemnifying Party" and together the "Indemnifying Parties"), to indemnify
and hold harmless each present
32
and former director, officer or employee of the Company or the Bank, as
applicable, determined as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent to which such Indemnified Parties were entitled under the
Bylaws of the Company and the Bank, in each case as in effect on the date
hereof, provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period shall continue until the
final disposition of such claim. Without limiting the foregoing obligation,
PHFG also agrees that all limitations of liability existing in favor of any
of the foregoing Indemnified Parties in the MBCA, as in effect on the date
hereof, arising out of matters existing or occurring at or prior to the
Effective Time shall survive the Merger and shall continue in full force
and effect for a period of six years from the Effective Time, provided,
however, that all such rights in respect of any claim asserted or made
within such period shall continue until the final disposition of such
claim.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify the appropriate Indemnifying Party
thereof, but the failure to so notify shall not relieve the Indemnifying
Party of any liability it may have to such Indemnified Party if such
failure does not materially prejudice the Indemnifying Party. In the event
of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Indemnifying Party
shall have the right to assume the defense thereof and the Indemnifying
Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except
that if the Indemnifying Party elects not to assume such defense or counsel
for the Indemnified Parties advises that there are issues which raise
conflicts of interest between the Indemnifying Party and the Indemnified
Parties, the Indemnified Parties may retain counsel which is reasonably
satisfactory to the Indemnifying Party, and the Indemnifying Party shall
pay, promptly as statements therefor are received, the reasonable fees and
expenses of such counsel for the Indemnified Parties (which may not exceed
one firm in any jurisdiction); (ii) the Indemnified Parties will cooperate
in the defense of any such matter; (iii) the Indemnifying Party shall not
be liable for any settlement effected without its prior written consent;
and (iv) the Indemnifying Party shall have no obligation hereunder in the
event that a federal or state banking agency or a court of competent
jurisdiction shall determine that indemnification of an Indemnified Party
in the manner contemplated hereby is prohibited by applicable laws and
regulations.
(c) On or prior to the Effective Time, the Company, or if the Company
is unable to do so PHFG, shall purchase insurance coverage on substantially
the same terms and conditions as the liability insurance provided by the
Company for directors and officers of the Company and the Bank as of the
date hereof for a period of not less than one year following the Effective
Time.
33
5.10 THE BANK MERGER
The Company and PHFG shall take all action necessary and appropriate,
including causing the entering into of a merger agreement by the Bank and
PHB (the "Bank Merger Agreement"), to cause the Bank to merge with and into
PHB (the "Bank Merger"), in accordance with the applicable provisions of
the laws and regulations of the State of Maine and the United States,
immediately after consummation of the Merger. PHB shall be the surviving
corporation in the Bank Merger, and shall continue its corporate existence
under the laws of the United States as a direct, wholly-owned subsidiary of
PHFG. Upon consummation of the Bank Merger, the separate corporate
existence of the Bank shall cease.
5.11 DISCLOSURE SUPPLEMENTS
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and
delivered to the other party pursuant hereto with respect to any matter
hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in
materials Previously Disclosed to the other party or which is necessary to
correct any information in such materials which has been rendered
inaccurate thereby; no such supplement or amendment to such materials shall
be deemed to have modified the representations, warranties and covenants of
a party for the purposes of determining whether the conditions set forth in
Article VI hereof have been satisfied.
5.12 FAILURE TO FULFILL CONDITIONS
In the event that any of the parties hereto determines that a
condition to its respective obligations to consummate the transactions
contemplated hereby cannot be fulfilled on or prior to the termination of
this Agreement, it will promptly notify the other party or parties. Each
party will promptly inform the other party or parties of any facts
applicable to it that would be likely to prevent or materially delay
approval of the Merger or the Bank Merger by any Governmental Entity or
third party or which would otherwise prevent or materially delay completion
of the Merger or the Bank Merger.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT - PHFG, MERGER SUB AND THE COMPANY
The respective obligations of PHFG, Merger Sub and the Company to
effect the transactions contemplated by this Agreement shall be subject to
satisfaction of the following conditions at or prior to the Effective Time.
34
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions
contemplated hereby shall have been duly and validly taken by PHFG, Merger
Sub and the Company, including approval by the requisite votes of the
shareholders of the Company of this Agreement, and all corporate action
necessary to authorize the execution and delivery of the Bank Merger
Agreement and consummation of the transactions contemplated thereby shall
have been duly and validly taken by the Bank and PHB.
(b) All approvals, consents and waivers from any Governmental Entity
the approval, consent or waiver of which is required for the consummation
of the Merger and the Bank Merger shall have been received and all
statutory waiting periods in respect thereof shall have expired, provided,
however, that no approval, consent or waiver referred to in this Section
6.1(b) shall be deemed to have been received if it shall include any
condition or requirement that, individually or in the aggregate, would so
materially reduce the economic or business benefits of the transactions
contemplated by this Agreement to PHFG that had such condition or
requirement been known PHFG, in its reasonable judgment, would not have
entered into this Agreement.
(c) None of PHFG, the Company or their respective Subsidiaries shall
be subject to any statute, rule, regulation, order, injunction or decree
which shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger or the Bank Merger.
6.2 CONDITIONS PRECEDENT - THE COMPANY
The obligations of the Company to effect the transactions contemplated
by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by the Company
pursuant to Section 7.4 hereof.
(a) The representations and warranties of PHFG set forth in Article
IV hereof shall be true and correct as of the date of this Agreement and as
of the Effective Time as though made on and as of the Effective Time (or on
the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall
be deemed to have been satisfied even if such representations and
warranties are not true and correct unless the failure of any of the
representations and warranties to be so true and correct would have, or
could reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the ability of PHFG, Merger Sub or PHB, as
applicable, to consummate the Merger or the Bank Merger.
(b) PHFG shall have performed all material obligations and covenants
required to be performed by it on or prior to the Effective Time.
35
(c) PHFG shall have delivered to the Company a certificate, dated the
date of the Closing and signed by its Chief Executive Officer and Chief
Financial Officer, to the effect that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied.
(d) The Company shall have received an opinion or opinions of Elias,
Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., Washington, D.C., and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esq., Executive Vice President and General Counsel of PHFG, dated the date
of the Closing, that collectively address the matters set forth in Exhibit
B hereto.
(e) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the Merger or the
Bank Merger under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument to which the Company or the
Bank is a party or is otherwise bound shall have been obtained, except
those consents or approvals for which failure to obtain would not,
individually or in the aggregate, materially adversely affect the ability
of the Company or the Bank, as applicable, to consummate the Merger or the
Bank Merger.
(f) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the Merger or the Bank Merger.
(g) PHFG and Merger Sub shall have furnished the Company with such
certificates of its respective officers or others and such other documents
to evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2
as such conditions relate to PHFG and Merger Sub as the Company may
reasonably request.
6.3 CONDITIONS PRECEDENT - PHFG AND MERGER SUB
The obligations of PHFG and Merger Sub to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the
following conditions at or prior to the Effective Time unless waived by
PHFG and Merger Sub pursuant to Section 7.4 hereof.
(a) The representations and warranties of the Company set forth in
Article III hereof shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of the
Effective Time (or on the date when made in the case of any representation
and warranty which specifically relates to an earlier date), provided,
however, that notwithstanding anything herein to the contrary, this Section
6.3(a) shall be deemed to have been satisfied even if such representations
and warranties are not true and correct unless the failure of any of the
representations and warranties to be so true and correct would have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or on the ability of the Company,
PHFG, Merger Sub or PHB, as applicable, to consummate the Merger or the
Bank Merger.
36
(b) The Company shall have performed all material obligations and
covenants required to be performed by it on or prior to the Effective Time.
(c) The Company shall have delivered to PHFG a certificate, dated the
date of the Closing and signed by its Chief Executive Officer and Chief
Financial Officer, to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.
(d) PHFG shall have received an opinion or opinions of counsel
mutually acceptable to the Company and PHFG and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
Senior Vice President of the Company, dated the date of the Closing, that
collectively address the matters set forth in Exhibit C hereto.
(e) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the Merger or the
Bank Merger under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument to which the Company or the
Bank is a party or is otherwise bound shall have been obtained, except
those consents or approvals for which failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company or materially adversely affect the ability of the Company, PHFG,
Merger Sub or PHB, as applicable, to consummate the Merger or the Bank
Merger.
(f) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the Merger or the Bank Merger.
(g) Holders of a number of shares of outstanding Company Capital
Stock which, upon conversion in accordance with their terms, if applicable,
would represent 10.0% or more of the Class A Common Stock which would be
outstanding upon conversion of all outstanding shares of Company Preferred
Stock, Class B Common Stock and Class C Common Stock shall not have elected
to exercise dissenters' or appraisal rights under Section 909 of the MBCA.
(h) The Company shall have furnished PHFG with such certificates of
its officers or others and such other documents to evidence fulfillment of
the conditions set forth in Sections 6.1 and 6.3 as such conditions relate
to the Company as PHFG may reasonably request.
37
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by PHFG and Merger
Sub in writing if the Company has, or by the Company in writing if PHFG or
Merger Sub has, in any material respect, breached (i) any material covenant
or undertaking contained herein, or (ii) any representation or warranty
contained herein which in the case of the Company would have, or could
reasonably be expected to have, a Material Adverse Effect on the Company
and in the case of PHFG would have, or could reasonably be expected to
have, a material adverse effect on the ability of PHFG, Merger Sub or PHB,
as applicable, to consummate the Merger or the Bank Merger, in any case if
such breach has not been cured following written notice of such breach by
the earlier of 30 days after the date on which such written notice of such
breach is given to the party committing such breach or the Effective Time;
(c) at any time, by any party hereto in writing, if any of the
applications for prior approval referred to in Section 5.3 hereof are
denied or are approved in a manner which does not satisfy the requirements
of Section 6.1(b) hereof, and the time period for appeals and requests for
reconsideration has run, unless the failure of such occurrence shall be due
to the failure of the party seeking to terminate to perform or observe in
any material respect its agreements set forth herein to be performed or
observed by such party at or before the Effective Time;
(d) at any time, by any party hereto in writing, if the shareholders
of the Company do not approve this Agreement in the required manner by a
vote taken thereon at a meeting duly called for such purpose (including any
adjournments thereof) unless the failure of such occurrence shall be due to
the failure of the party seeking to terminate to perform or observe in any
material respect its agreements set forth herein to be performed or
observed by such party at or before such meeting of shareholders; and
(e) by any party hereto in writing, if the Effective Time has not
occurred by the close of business on the first anniversary of the date
hereof, provided that this right to terminate shall not be available to any
party whose failure to perform an obligation under this Agreement has been
the cause of, or resulted in, the failure of the Merger and the Bank Merger
to be consummated by such date.
38
7.2 EFFECT OF TERMINATION
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that
(i) Sections 5.4(b) and Section 8.1 hereof shall survive any such
termination and (ii) a termination pursuant to Section 7.1(b), (c), (d) or
(e) hereof shall not relieve the breaching party from liability for willful
breach of any covenant, undertaking, representation or warranty giving rise
to such termination.
7.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto shall expire on, and be terminated
and extinguished at, the Effective Time other than covenants that by their
terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 5.8(c) and 5.9 hereof),
provided that no such representations, warranties or covenants shall be
deemed to be terminated or extinguished so as to deprive PHFG or the
Company (or any director, officer or controlling person thereof) of any
defense at law or in equity which otherwise would be available against the
claims of any person, including, without limitation, any shareholder or
former shareholder of either PHFG or the Company.
7.4 WAIVER
Each party hereto by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of the Company) extend the time for the
performance of any of the obligations or other acts of the other party
hereto and may waive (i) any inaccuracies of the other party in the
representations or warranties contained in this Agreement or any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other party or, to the extent permitted
by law, satisfaction of any of the conditions precedent to its obligations
contained herein or (iii) the performance by the other party of any of its
obligations set forth herein, provided that any such waiver granted, or any
amendment or supplement pursuant to Section 7.5 hereof executed, after
shareholders of the Company have approved this Agreement shall not modify
either the amount or form of the Merger Consideration or otherwise
materially adversely affect any of such shareholders without the approval
of the shareholders who are so affected.
7.5 AMENDMENT OR SUPPLEMENT
This Agreement may be amended or supplemented at any time by mutual
agreement of PHFG, Merger Sub and the Company, subject to the proviso to
Section 7.4 hereof. Any such amendment or supplement must be in writing
and approved by their respective Boards of Directors.
39
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES; TERMINATION FEE
(a) Each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel, provided that in the event of a termination of
this Agreement resulting from a breach of a representation, warranty,
covenant or undertaking, the party committing such breach shall be liable
for the expenses of the other party without prejudice to any other rights
or remedies as may be available to the non-breaching party, including
without limitation any rights under Section 8.1(b) hereof.
(b) Notwithstanding any provision in this Agreement to the contrary,
in order to induce PHFG to enter into this Agreement and as a means of
compensating PHFG for the substantial direct and indirect monetary and
other costs incurred and to be incurred in connection with this Agreement
and the transactions contemplated hereby, the Company agrees to pay PHFG,
and PHFG shall be entitled to payment of, a fee (the "Fee") of $3,500,000
upon the occurrence of a Termination Event (as defined herein) so long as
the Termination Event occurs prior to a Fee Termination Event (as defined
herein). Such payment shall be made to PHFG in immediately available funds
within five business days after the occurrence of a Termination Event. A
Fee Termination Event shall be the first to occur of the following: (i) the
Effective Time, (ii) 18 months after termination of this Agreement in
accordance with its terms following the first occurrence of a Preliminary
Termination Event (as defined herein), (iii) termination of this Agreement
in accordance with the terms hereof prior to the occurrence of a
Termination Event or a Preliminary Termination Event (other than a
termination of this Agreement by PHFG pursuant to Section 7.1(b) hereof as
a result of a willful breach of any representation, warranty, covenant or
agreement of the Company) or (iv) 18 months after the termination of this
Agreement by PHFG pursuant to Section 7.1(b) hereof as a result of a
willful breach of any representation, warranty, covenant or agreement of
the Company.
(c) For purposes of this Agreement, a "Termination Event" shall mean
any of the following events:
(i) the Company or the Bank, without having received PHFG's
prior written consent, shall have entered into an agreement to engage
in an Acquisition Transaction with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act, and the rules and
regulations thereunder), other than PHFG or a Subsidiary of PHFG, or
the Board of Directors of the Company shall have recommended that the
shareholders of the Company approve or accept any Acquisition
Transaction with any person other than PHFG or a Subsidiary of PHFG;
40
(ii) any person, other than PHFG or a Subsidiary of PHFG, 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, or any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
25% or more of the aggregate voting power represented by the
outstanding Class A Common Stock and Series A Preferred Stock; or
(iii)one or more Shareholders shall have breached his or her
obligations pursuant to the Shareholder Agreement in a manner which
materially adversely affects the ability of the Company to obtain the
approval of the holders of the Company Capital Stock of this Agreement
or otherwise materially adversely affects the ability of the parties
hereto to consummate the transactions contemplated hereby.
(d) For purposes of this Agreement, a "Preliminary Termination Event"
shall mean any of the following events:
(i) any person (other than PHFG or Subsidiary of PHFG) 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 Company Capital Stock such that, upon
consummation of such offer, such person would own or control 10% or
more of the Company Capital Stock which, upon conversion in accordance
with their terms, if applicable, would represent 10.0% or more of the
Class A Common Stock which would be outstanding upon conversion of all
outstanding shares of Company Preferred Stock, Class B Common Stock
and Class C Common Stock (such an offer being referred to herein as a
"Tender Offer" and an "Exchange Offer," respectively);
(ii) (A) the holders of Company Capital Stock shall not have
approved this Agreement at the meeting of such shareholders held for
the purpose of voting on this Agreement, (B) such meeting shall not
have been held or shall have been canceled prior to termination of the
Agreement or (C) the Company's Board of Directors shall have withdrawn
or modified in a manner adverse to PHFG the recommendation of the
Company's Board of Directors with respect to the Agreement, in each
case after any person (other than PHFG or a Subsidiary of PHFG) shall
have (x) made, or disclosed an intention to make, a bona fide proposal
to the Company or its shareholders to engage in an Acquisition
Transaction, (y) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer
or (z) filed an application or given notice, whether in draft or final
form, under the BHCA, the Bank Merger Act, as amended, or the Change
in Bank Control Act of 1978, as amended, for approval to engage in an
Acquisition Transaction; or
(iii)the Company shall have breached any representation,
warranty, covenant or obligation contained in this Agreement and such
breach would entitle PHFG to terminate this Agreement under Section
7.1(b) hereof (without regard to
41
the cure period provided for therein unless such cure is promptly
effected without jeopardizing consummation of the Merger pursuant
to the terms of this Agreement) after any person (other than PHFG or
a Subsidiary of PHFG) shall have (x) made, or disclosed an intention
to make, a bona fide proposal to the Company or its shareholders to
engage in an Acquisition Transaction, (y) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer or (z) filed an application or given
notice, whether in draft or final form, under the BHCA, the Bank
Merger Act, as amended, or the Change in Bank Control Act of 1978,
as amended, for approval to engage in an Acquisition Transaction.
(e) The Company shall promptly notify PHFG in writing of the
occurrence of any Preliminary Termination Event or Termination Event.
8.2 ENTIRE AGREEMENT
This Agreement (including the Shareholder Agreement), the Bank Merger
Agreement and the Confidentiality Agreement contain the entire agreement
among the parties with respect to the transactions contemplated hereby and
supersede all prior arrangements or understandings with respect thereto,
written or oral.
8.3 ASSIGNMENT; SUCCESSORS
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person without the prior written consent
of the other party or parties. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and
their respective successors. Except as provided in Sections 5.8(c) and
Section 5.9 hereof, nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors, any rights, remedies, obligations or liabilities.
In the event that PHFG or any of its successors, (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers 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
shall assume the obligations set forth in Sections 5.8(c) and 5.9 hereof,
which obligations are expressly intended to be for the irrevocable benefit
of, and shall be enforceable by, each person covered thereby.
8.4 NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or
sent by overnight express or by registered or certified mail, postage
prepaid, addressed as follows:
42
If to PHFG or Merger Sub:
Peoples Heritage Financial Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn:▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman, President and Chief Executive Officer
With a required copy to:
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Company:
Atlantic Bancorp
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn:▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
President and Chief Executive Officer
With a required copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
8.5 ALTERNATIVE STRUCTURE
Notwithstanding any provision of this Agreement to the contrary, PHFG
may elect, subject to the filing of all necessary applications and the
receipt of all required regulatory approvals, to modify the structure of
the acquisition of the Company set forth herein, provided that (i) the
consideration to be paid to the holders of the Company Capital Stock is not
thereby changed in kind or reduced in amount as a result of such
modification and (ii) such modification will not materially delay or
jeopardize receipt of any required regulatory approvals or any other
condition to PHFG's and Merger Sub's obligations set forth in Sections 6.1
and 6.3 hereof.
8.6 INTERPRETATION
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
43
Agreement. The phrases "the date of this Agreement," "the date hereof"
and terms of similar import herein, unless the context otherwise requires,
shall be deemed to be the date first above written.
8.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Maine applicable to agreements made and entirely
to be performed within such jurisdiction except to the extent federal law
may be applicable.
8.9 EFFECTIVENESS
Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not become effective and a legally binding obligation of
PHFG and Merger Sub until each Shareholder listed on Schedule I to the
Shareholder Agreement (other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) has duly executed and
delivered a Shareholder Agreement to PHFG.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first
above written.
PEOPLES HERITAGE FINANCIAL
GROUP, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman, President
Chief Executive Officer
PHFG, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman, President
Chief Executive Officer
ATLANTIC BANCORP
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
45
EXHIBIT A
June 24, 1997
Peoples Heritage Financial Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Gentlemen:
The undersigned director or shareholder of Atlantic Bancorp (the
"Company") understands that Peoples Heritage Financial Group, Inc. ("PHFG")
is about to enter into an Agreement and Plan of Merger (the "Agreement")
with the Company. The Agreement provides for the merger of a newly-formed
subsidiary of PHFG with and into the Company (the "Merger") and the
conversion of outstanding shares of capital stock of the Company into cash
in accordance with the terms therein set forth. The outstanding capital
stock of the Company consists of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Class A Common Stock, Class B
Common Stock and Class C Common Stock (collectively, the "Company Capital
Stock").
In order to induce PHFG to enter into the Agreement, and intending to
be legally bound hereby, the undersigned represents, warrants and agrees
that at the meeting of the Company's shareholders contemplated by Section
5.2 of the Agreement and any adjournment thereof the undersigned will, in
person or by proxy, vote or cause to be voted in favor of the Agreement and
the Merger the shares of Company Capital Stock beneficially owned by the
undersigned individually or, to the extent of the undersigned's
proportionate voting interest, jointly with other persons, as well as (to
the extent of the undersigned's proportionate voting interest) any other
shares of Company Capital Stock over which the undersigned may hereafter
acquire beneficial ownership (collectively, the "Shares"). Subject to the
final paragraph of this agreement, the undersigned further agrees that he
will use his best efforts to cause any other shares of Company Capital
Stock over which he has or shares voting power to be voted in favor of the
Agreement and the Merger.
The undersigned represents and warrants that he has or shares the
beneficial ownership of the number of shares of Company Capital Stock set
forth opposite his name on Schedule I hereto.
The undersigned further represents, warrants and agrees that until the
earlier of (i) the consummation of the Merger or (ii) the termination of
the Agreement in accordance with its terms, the undersigned will not,
directly or indirectly:
(a) vote any of the Shares, or cause or permit any of the Shares
to be voted, in favor of any other merger, consolidation, plan of
liquidation, sale of assets, reclassification or other transaction
involving the Company or Atlantic Bank National Association (the
"Bank") which would have the effect of any person, other than PHFG or
an affiliate of PHFG, acquiring control over the Company, the Bank or
any substantial portion of the assets of the Company or the Bank. As
used herein, the term "control" means (1) the ability to direct the
voting of 10% or more of the outstanding voting securities of a person
having ordinary voting power in the election of directors or in the
election of any other body having similar functions or (2) the ability
to direct the management and policies of a person, whether through
ownership of securities, through any contract, arrangement or
understanding or otherwise.
(b) sell or otherwise transfer any of the Shares, or cause or
permit any of the Shares to be sold or otherwise transferred (i)
pursuant to any tender offer, exchange offer or similar proposal made
by any person, other than PHFG or an affiliate of PHFG, (ii) to any
person known by the undersigned to be seeking to obtain control of the
Company, the Bank or any substantial portion of the assets of the
Company or the Bank or to any other person, other than PHFG or an
affiliate of PHFG, under circumstances where such sale or transfer may
reasonably be expected to assist a person seeking to obtain such
control or (iii) for the principal purpose of avoiding the obligations
of the undersigned under this agreement.
It is understood and agreed that this agreement relates solely to the
capacity of the undersigned as a shareholder or other beneficial owner of
the Shares and is not in any way intended to affect the exercise by the
undersigned of the undersigned's responsibilities as a director or officer
of the Company or the Bank, if applicable. It is further understood and
agreed that this agreement is not in any way intended to affect the
exercise by the undersigned of any fiduciary responsibility which the
undersigned may have in respect of any Shares as of the date hereof.
Use of the masculine gender herein shall be considered to represent
the masculine, feminine or neuter gender whenever appropriate.
Very truly yours
_________________________
Name:
Accepted and Agreed to:
PEOPLES HERITAGE FINANCIAL GROUP, INC.
By: ----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman, President and Chief Executive Officer
2
Schedule I
Number of Shares Beneficially Owned of
Class A Class B Class C
Name of Shareholder Common Stock Common Stock Common Stock
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III 8,750 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 38,972 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 17,785 1,749 --
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 53,818(1) -- --
▇▇▇▇ P.M. ▇▇▇▇▇▇▇ 48,069 8,052 --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 43,843 3,672 --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -- -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 18,972 -- --
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ 48,069 6,120 --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 15,281 -- --
▇▇▇▇▇ ▇. ▇▇▇▇▇ 9,000 -- --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 500 -- --
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,758 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 193,247 5,246 --
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 96,575 -- --
▇▇▇▇▇▇ A.G. Monks 98,634 2,448 --
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ 70,100 -- --
Triumph Capital, L.P., II 127,793 -- 250,000
(1) Does not include options to purchase 66,368 shares of Class A
Common Stock.
Number of Shares Beneficially Owned of
Series A Series B Series C
Name of Shareholder Preferred Stock Preferred Stock Preferred Stock
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III 2,500 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 12,500 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ -- -- --
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -- -- --
▇▇▇▇ P.M. ▇▇▇▇▇▇▇ -- 1,150 --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ -- -- --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ -- -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 12,450 -- --
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ -- -- --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 8,800 -- --
▇▇▇▇▇ ▇. ▇▇▇▇▇ 4,000 -- --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ -- -- --
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 500 -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ -- -- --
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ -- 500 --
▇▇▇▇▇▇ A.G. Monks -- -- --
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ 70,100 -- --
Triumph Capital, L.P., II -- 2,000 2,000
EXHIBIT B
[MATTERS TO BE COVERED IN OPINION(S) OF COUNSEL TO BE DELIVERED TO THE
COMPANY PURSUANT TO SECTION 6.2(D) OF THE AGREEMENT]
(a) Each of PHFG, PHB and Merger Sub is duly incorporated and validly
existing under the laws of the State of Maine.
(b) The Agreement has been duly authorized, executed and delivered by
PHFG and Merger Sub and constitutes a valid and binding obligation of PHFG
and Merger Sub enforceable in accordance with its terms, except that the
enforceability of the obligations of PHFG and Merger Sub may be limited by
(i) bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors, (ii) equitable principles limiting the
right to obtain specific performance or other similar equitable relief and
(iii) considerations of public policy, and except that certain remedies may
not be available in the case of a nonmaterial breach of the Agreement.
(c) The Bank Merger Agreement has been duly authorized, executed and
delivered by PHB and constitutes a valid and binding obligation of PHB
enforceable in accordance with its terms, except that enforceability of the
obligations of PHB may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting the rights of
creditors, (ii) equitable principles limiting the right to obtain specific
performance or other similar equitable relief and (iii) considerations of
public policy, and except that certain remedies may not be available in the
case of a nonmaterial breach of the Bank Merger Agreement.
(d) All corporate and shareholder actions required to be taken by
PHFG and Merger Sub by law and their respective Articles of Incorporation
and Bylaws to authorize the execution and delivery of the Agreement and
consummation of the Merger have been taken, and all corporate and
shareholder actions required to be taken by PHB by law and its Articles of
Incorporation and Bylaws to authorize the execution and delivery of the
Bank Merger Agreement and consummation of the Bank Merger have been taken.
(e) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity or third party which are
necessary to be obtained by (i) PHFG and Merger Sub to permit the
execution, delivery and performance of the Agreement and consummation of
the Merger have been obtained and (ii) PHB to permit the execution,
delivery and performance of the Bank Merger Agreement and consummation of
the Bank Merger have been obtained.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers
of PHFG or any PHFG Subsidiary. The opinion of such counsel need refer
only to matters of Maine and federal law and may add other qualifications
and explanations of the basis of their opinion as may be reasonably
acceptable to the Company.
EXHIBIT C
[MATTERS TO BE COVERED IN OPINIONS OF COUNSEL TO BE DELIVERED TO PHFG
PURSUANT TO SECTION 6.3(D) OF THE AGREEMENT]
(a) Each of the Company and the Bank is duly incorporated and validly
existing under the laws of the State of Maine and the United States,
respectively.
(b) The authorized capital stock of the Company is as set forth in
Section 3.1 of the Agreement. As of the date hereof, there are (i) ______
shares of Company Common Stock issued and outstanding, consisting of _____
shares, 35,339 shares and 267,387 shares of Class A Common Stock, Class B
Common Stock and Class C Common Stock, respectively, and (ii) 406,875
shares of Company Preferred Stock issued and outstanding, consisting of
398,700 shares, 6,175 shares and 2,000 shares of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, respectively. All
of the outstanding shares of Company Capital Stock have been duly
authorized and validly issued and are fully paid and nonassessable, and the
shareholders of the Company have no preemptive rights with respect to any
shares of Company Capital Stock. All of the outstanding shares of capital
stock of the Bank have been duly authorized and validly issued, are fully
paid and nonassessable (except as provided in the National Bank Act) and,
to the knowledge of such counsel, are directly or indirectly owned by the
Company free and clear of all liens, claims, encumbrances, charges,
restrictions or rights of third parties of any kind whatsoever. To such
counsel's knowledge, except for (i) Company Options to purchase _______
shares of Class A Common Stock, which shall be cancelled on or before the
Effective Time pursuant to the Agreement, and (ii) the conversion rights of
the holders of issued and outstanding shares of Company Preferred Stock,
Class B Common Stock and Class C Common Stock, there are no Rights
authorized, issued or outstanding with respect to the capital stock of the
Company or the Bank.
(c) The Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except that the enforceability of
the obligations of the Company may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights
of creditors, (ii) equitable principles limiting the right to obtain
specific performance or other similar equitable relief and (iii)
considerations of public policy, and except that certain remedies may not
be available in the case of a nonmaterial breach of the Agreement.
(d) The Bank Merger Agreement has been duly authorized, executed and
delivered by the Bank and constitutes a valid and binding obligation of the
Bank enforceable in accordance with its terms, except that enforceability
of the obligations of the Bank may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights
of creditors, (ii) equitable principles limiting the right to obtain
specific performance or other similar equitable relief and (iii)
considerations of public policy, and except that certain remedies may not
be available in the case of a nonmaterial breach of the Bank Merger
Agreement.
(e) All corporate and shareholder actions required to be taken by the
Company by law and the Articles of Incorporation and Bylaws of the Company
to authorize the execution and delivery of the Agreement and consummation
of the Merger have been taken, and all corporate and shareholder actions
required to be taken by the Bank by law and its Articles of Association and
Bylaws to authorize the execution and delivery of the Bank Merger Agreement
and consummation of the Bank Merger have been taken.
(f) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity or third party which are
necessary to be obtained by (i) the Company to permit the execution,
delivery and performance of the Agreement and consummation of the Merger
have been obtained and (ii) the Bank to permit the execution, delivery and
performance of the Bank Merger Agreement and consummation of the Bank
Merger have been obtained.
(g) To such counsel's knowledge, there are no material legal or
governmental proceedings pending to which the Company or any Company
Subsidiary is a party or to which any property of the Company or any the
Company Subsidiary is subject and no such proceedings are threatened by
governmental authorities or by others.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers
of the Company or the Bank (in the case of the opinion of outside counsel
only). The opinion of such counsel need refer only to matters of Maine and
federal law and may add other qualifications and explanations of the basis
of their opinion as may be reasonably acceptable to PHFG.