Affiliation and Merger Agreement
Among
The 1855 Bancorp
Compass Bank for Savings
and
Sandwich Bancorp, Inc.
The Sandwich Co-operative Bank
February 2, 1998
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions.. . . . . . . . . . 1
ARTICLE II
THE MERGER
2.1 The Merger. . . . . . . . . . . . . . . 5
2.2 Effective Time. . . . . . . . . . . . . 5
2.3 Charter and By-laws . . . . . . . . . . 5
2.4 Directors and Officers of
Surviving Corporation . . . . . . . . 5
2.5 Trustees and Directors of 1855 Bancorp
and Compass Bank. . . . . . . . . . . 6
2.6 Additional Actions. . . . . . . . . . . 6
2.7 Effects of the Merger. . . . . . . . . 6
2.8 Possible Alternative Structures. . . . 6
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion Shares. . . . . . . . . . . . 7
3.2 Employee Stock Options. . . . . . . . . 7
3.3 Dissenting Shares.. . . . . . . . . . . 8
3.4 Surrender of Shares; Stock
Transfer Books. . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SANDWICH
4.1 Capital Structure.. . . . . . . . . . . 9
4.2 Organization, Standing and Authority
of Sandwich . . . . . . . . . . . . .10
4.3 Ownership of Sandwich Subsidiaries. . .10
4.4 Organization, Standing and Authority
of Sandwich Subsidiaries. . . . . . .10
4.5 Authorized and Effective Agreement. . .11
4.6 Securities Documents and Regulatory
Reports . . . . . . . . . . . . . . .12
4.7 Financial Statements. . . . . . . . . .12
4.8 Material Adverse Change . . . . . . . .13
4.9 Environmental Matters . . . . . . . . .13
4.10 Tax Matters. . . . . . . . . . . . . .13
4.11 Legal Proceedings. . . . . . . . . . .14
4.12 Compliance with Laws . . . . . . . . .14
4.13 Certain Information . . . . . . . . .15
4.14 Employee Benefit Plans . . . . . . . .15
4.15 Certain Contracts. . . . . . . . . . .17
4.16 Brokers and Finders. . . . . . . . . .18
4.17 Insurance. . . . . . . . . . . . . . .18
4.18 Loan Portfolio.. . . . . . . . . . . .18
4.19 Properties.. . . . . . . . . . . . . .18
4.20 Labor. . . . . . . . . . . . . . . .18
4.21 Required Vote; Inapplicability of
Antitakover Statutes . . . . . . ..19
4.22 Material Interests of Certain Persons. 19
4.23 Certain Transactions . . . . . . . . . 19
4.24 Disclosures. . . . . . . . . . . . . . 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF 1855 BANCORP
5.1 Capital Structure. . . . . . . . . . . .19
5.2 Organization, Standing and Authority
of 1855 Bancorp. . . . . . . . . . . .19
5.3 Ownership of the 1855 Bancorp
Subsidiaries . . . . . . . . . . . . .20
5.4 Organization, Standing and Authority
of the 1855 Bancorp Subsidiaries. . . 20
5.5 Authorized and Effective Agreement. . . 20
5.6 Regulatory Reports. . . . . . . . . . . 21
5.7 Financial Statements. . . . . . . . . . 22
5.8 Material Adverse Change . . . . . . . . 22
5.9 Environmental Matters. . . . . . . . . 22
5.10 Tax Matters. . . . . . . . . . . . . 23
5.11 Legal Proceedings. . . . . . . . . . . 23
5.12 Compliance with Laws . . . . . . . . . 23
5.13 Certain Information . . . . . . . . . 24
5.14 Employee Benefit Plans . . . . . . . . 24
5.15 Certain Contracts. . . . . . . . . . . 25
5.16 Brokers and Finders. . . . . . . . . . 26
5.17 Insurance. . . . . . . . . . . . . . 26
5.18 Properties.. . . . . . . . . . . . . . 26
5.19 Labor. . . . . . . . . . . . . . . . . 26
5.20 Ownership of Sandwich Common Stock.. . 26
5.21 Certain Transactions. . . . . . . . . 26
5.22 Disclosures. . . . . . . . . . . . . . 27
5.23 Disclosure Schedule. . . . . . . . . . 27
5.24 Merger Sub.. . . . . . . . . . . . . . 27
ARTICLE VI
COVENANTS OF SANDWICH
6.1 Conduct of Business . . . . . . . . . . 27
6.2 Current Information . . . . . . . . . . 30
6.3 Access to Properties and Records. . . . 30
6.4 Financial and Other Statements. . . . . 30
6.5 Disclosure Supplements. . . . . . . . . 31
6.6 Consents and Approvals of Third
Parties . . . . . . . . . . . . . . . 31
6.7 All Reasonable Efforts. . . . . . . . . 31
6.8 Failure to Fulfill Conditions . . . . . 31
6.9 No Solicitation . . . . . . . . . . . . 31
ARTICLE VII
COVENANTS OF 1855 BANCORP
7.1 Conduct of Business.. . . . . . . . . . 32
7.2 Current Information . . . . . . . . . . 32
7.3 Access to Properties and Records. . . . 32
7.4 Financial and Other Statements. . . . . 33
7.5 Disclosure Supplements. . . . . . . . . 33
7.6 Consents and Approvals of Third
Parties . . . . . . . . . . . . . . . 33
7.7 All Reasonable Efforts. . . . . . . . . 33
7.8 Failure to Fulfill Conditions . . . . . 34
7.9 Employee Benefits . . . . . . . . . . . 34
7.10 Directors and Officers Indemnification
and Insurance . . . . . . . . . . . . 35
7.11 Merger Sub . . . . . . . . . . . . . . 36
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 Sandwich Special Meeting . . . . . . . 37
8.2 Sandwich Proxy Materials . . . . . . . 37
8.3 Capital Offering . . . . . . . . . . . 37
8.4 Regulatory Approvals. . . . . . . . . . 39
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to Each Party's Obligations
under this Agreement. . . . . . . . 39
9.2 Conditions to the Obligations of 1855
Bancorp under this Agreement . . . . 39
9.3 Conditions to the Obligations of
Sandwich under this Agreement . . . 40
ARTICLE X
THE CLOSING
10.1 Time and Place. . . . . . . . . . . . 41
10.2 Deliveries at the Closing. . . . . . . 42
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. . . . . . . . . . . . . . 42
11.2 Effect of Termination. . . . . . . . . 43
11.3 1855 Bancorp Special Payment.. . . . . 44
11.4 Sandwich Change in Control Expense
Fee. . . . . . . . . . . . . . . . . 45
11.5 Amendment, Extension and Waiver. . . . 46
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality. . . . . . . . . . . 47
12.2 Public Announcements . . . . . . . . . 47
12.3 Survival . . . . . . . . . . . . . . . 47
12.4 Notices. . . . . . . . . . . . . . . . 47
12.5 Parties in Interest. . . . . . . . . . 48
12.6 Complete Agreement . . . . . . . . . . 48
12.7 Counterparts . . . . . . . . . . . . . 48
12.8 Severability . . . . . . . . . . . . . 48
12.9 Governing Law. . . . . . . . . . . . . 49
12.10 Interpretation. . . . . . . . . . . . 49
EXECUTION COPY
AFFILIATION AND MERGER AGREEMENT
AFFILIATION AND MERGER AGREEMENT ("Agreement"), dated as
of February 2, 1998, by and between The 1855 Bancorp, a
Massachusetts mutual holding company ("1855 Bancorp"), its
wholly-owned subsidiary, COMPASS BANK FOR SAVINGS, a
Massachusetts savings bank ("Compass Bank"), SANDWICH BANCORP,
INC., a Massachusetts corporation and bank holding company
("Sandwich"), and its wholly-owned subsidiary, THE SANDWICH CO-
OPERATIVE BANK, a Massachusetts co-operative bank ("Sandwich
Bank").
WHEREAS, the Board of Trustees of 1855 Bancorp, the Board
of Directors of Compass Bank and the Boards of Directors of
Sandwich and Sandwich Bank have determined that it is in the
best interests of their respective organizations and, with
respect to Sandwich, its stockholders to consummate, and have
approved, the business combination transactions provided for
herein, in which a newly-formed special-purpose subsidiary
("Merger Sub") of Compass Bank will, subject to the terms and
conditions set forth herein, merge (the "Merger") with Sandwich,
with Sandwich as the surviving corporation of the Merger; and
WHEREAS, as a condition to, and after the execution of,
this Agreement, 1855 Bancorp and certain of the officers and
directors of Sandwich and Sandwich Bank are entering into voting
agreements in the form attached hereto as Exhibit A; and
WHEREAS, immediately after consummation of the Merger, it
is anticipated that Sandwich will be liquidated and Sandwich
Bank will be merged with and into Compass Bank (the "Bank
Merger");
WHEREAS, the parties desire to make certain
representations, warranties and agreements in connection with
the Merger and to prescribe certain conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and
of other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings (unless the context
otherwise requires, both here and throughout this Agreement,
references to Articles and Sections refer to Articles and Sec-
tions of this Agreement).
"Bank Commissioner" shall mean the Commissioner of Banks
of the Commonwealth of Massachusetts.
"BHCA" shall mean the Bank Holding Company Act of 1956, as
amended.
"BIF" means the Bank Insurance Fund administered by the
FDIC or any successor thereto.
"Capital Offering" shall mean the offering and sale of up
to 49% of the common stock of the Mid-Tier Holding Company or of
Compass Bank or other acceptable forms of capital or capital
substitutes in comparable amount pursuant to applicable law for
purposes of funding the Merger.
"Certificate" shall have the meaning set forth in Section
3.4 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Compass Bank for Savings" shall mean Compass Bank, a
Massachusetts-chartered savings bank and a wholly-owned
subsidiary of 1855 Bancorp.
"Depositors Insurance Fund" shall mean the Depositors
Insurance Fund of the Mutual Savings Central Fund, Inc.
"Disclosure Schedule" shall mean a written, signed
disclosure schedule 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,
"Dissenting Shares" shall have the meaning set forth in
Section 3.3 hereof.
"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date on which the
Effective Time occurs.
"Effective Time" shall mean the date and time specified
pursuant to Section 2.2 hereof as the effective time of the
Merger.
"Environmental Claim" means any written notice from any
Governmental Entity 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 soil, 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
Environment Concern. The term Environmental Law includes
without limitation (1) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C.
Subsection9601, etseq; the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Subsection6901, et seq; the Clean Air
Act, as amended, 42 U.S.C. Subsection7401, et seq; the Federal
Water Pollution Control Act, as amended, 33 U.S.C.
Subsection1251, et seq; the Toxic Substances Control Act, as
amended, 15 U.S.C. Subsection9601, et seq; the Emergency
Planning and Community Right to Know Act, 42 U.S.C.
Subsection1101, et seq; the Safe Drinking Water Act, 42 U.S.C.
Subsection300f, 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.
"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 Federal Home Loan Bank.
2
"FRB" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Fixed Consideration" shall have the meaning set forth in
Section 3.1.1 hereof.
"Governmental Entity" shall mean any federal or state
court, administrative agency or commission or other governmental
authority or instrumentality.
"MBCL" shall mean the Massachusetts Business Corporation
Law, as amended.
"MHPF" shall mean the Massachusetts Housing Partnership
Fund.
"Massachusetts Board" shall mean the Massachusetts Board
of Bank Incorporation.
"Material Adverse Effect" shall mean, with respect to the
1855 Bancorp or Sandwich, respectively, any effect that (i) is
material and adverse to the financial condition, results of
operations or business of 1855 Bancorp and its Subsidiaries
taken as a whole or Sandwich and its Subsidiaries taken as a
whole, respectively, or (ii) materially impairs the ability of
either Sandwich, on the one hand, or 1855 Bancorp, on the other
hand, to consummate the transactions contemplated by this
Agreement; provided that "Material Adverse Effect" shall not be
deemed to include the impact of (a) changes in laws and
regulations particularly affecting banks, (b) changes in GAAP or
regulatory accounting principles generally applicable to
financial institutions and their holding companies, (c) actions
and omissions of a party (or any of its Subsidiaries) taken with
the prior written consent of the other party, (d) changes in
interest rates, and (e) the direct effects of compliance with
this Agreement on the operating performance of the parties
including expenses incurred by the parties hereto in
consummating the transactions contemplated by this Agreement,
including without limitation the expenses associated with the
termination of any of the Sandwich Employee Plans as and to the
extent contemplated herein.
"Materials of Environmental Concern" means pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum
products, and any other materials regulated under Environmental
Laws.
"Merger" shall mean the merger of Merger Sub with and into
Sandwich pursuant to the terms hereof.
"Merger Consideration" shall have the meaning set forth in
Section 3.1.1 hereof.
"Mid-Tier Holding Company" shall mean that Massachusetts
corporation that may be formed as a subsidiary of 1855 Bancorp
for the purpose of (i) serving as a "mid-tier holding company"
of Compass Bank and (ii) issuing up to 49% of its common stock
in the Capital Offering.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"Offering Document" shall have the meaning set forth in
Section 8.3.3.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Paying Agent" shall have the meaning set forth in Section
3.4.1 hereof.
"Previously Disclosed" shall mean disclosed in a
Disclosure Schedule dated on or prior to the date hereof.
3
"Proxy Statement" shall mean the proxy statement, as
amended or supplemented, to be delivered to shareholders of
Sandwich in connection with the solicitation of their approval
of this Agreement and the transactions contemplated hereby.
"Rights" shall mean warrants, options, rights, convertible
securities, stock appreciation rights and other arrangements or
commitments which obligate an entity to issue or dispose of any
of its capital stock or other ownership interests or which
provide for compensation based on the equity appreciation of its
capital stock.
"SAIF" means the Savings Association Insurance Fund
administered by the FDIC or any successor thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Sandwich Bank" shall mean Sandwich Co-operative Bank, a
Massachusetts-chartered co-operative bank and a wholly-owned
subsidiary of Sandwich.
"Sandwich Common Stock" shall mean the common stock, par
value $1.00 per share, of Sandwich.
"Sandwich Employee Plans" shall have the meaning set forth
in Section 4.14.1 hereof.
"Sandwich Financial Statements" shall mean (i) the audited
consolidated balance sheets (including related notes and
schedules, if any) of Sandwich Bank as of December 31, 1996,
1995 and 1994 and the consolidated statements of operations,
changes in stockholders' equity and cash flows (including
related notes and schedules, if any) of Sandwich Bank for each
of the three years ended December 31, 1996, 1995 and 1994 as
filed by Sandwich in its Securities Documents, and (ii) the
unaudited consolidated statements of financial condition of
Sandwich or Sandwich Bank (including related notes and
schedules, if any) and consolidated balance sheets, changes in
stockholders' equity and cash flows (including related notes and
schedules, if any) of Sandwich or Sandwich Bank included in the
Securities Documents filed by Sandwich or Sandwich Bank with
respect to the quarterly periods ended subsequent to December
31, 1996, and (iii) the unaudited consolidated balance sheets
(including related notes and schedules, if any) of Sandwich as
of December 31, 1997 and the consolidated statements of
operations, changes in stockholders' equity and cash flows
(including related notes and schedules, if any) of Sandwich for
the year ended December 31, 1997, a copy of which has been
provided to 1855 Bancorp.
"Sandwich Options" shall mean options to purchase shares
of Sandwich Common Stock granted pursuant to the Sandwich Option
Plans or as otherwise Previously Disclosed.
"Sandwich Option Plans" shall mean the following stock
option plans of Sandwich, as amended and as in effect as of the
date hereof: The Sandwich Bank 1986 Stock Option Plan and The
Sandwich Bank 1994 Stock Option and Incentive Plan.
"Sandwich Preferred Stock" shall mean the shares of
preferred stock, par value $1.00 per share, of Sandwich.
"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.
4
"Securities Laws" shall mean the Securities Act; the
Exchange Act; the Investment Company Act of 1940, as amended;
the Investment Advisers Act of 1940, as amended; the Trust
Indenture Act of 1939, as amended, and the rules and regulations
of the SEC promulgated thereunder.
"Share Insurance Fund" shall mean the share insurance fund
of the Co-operative Central Bank.
"Subsidiary" shall have the meanings set forth in Rule 1-
02 of Regulation S-X of the SEC.
"Surviving Corporation" shall have the meaning set forth in
Section 2.1 hereof.
"1855 Bancorp Employee Plans" shall have the meaning set
forth in Section 5.14.1 hereof.
"1855 Bancorp Financial Statements" shall mean the audited
consolidated statements of financial condition (including
related notes and schedules) of 1855 Bancorp as of October 31,
1997, 1996 and 1995 and the consolidated statements of
operations, shareholders' equity and cash flows (including
related notes and schedules, if any) of 1855 Bancorp for each of
the three years ended October 31, 1997, 1996 and 1995 as set
forth in 1855 Bancorp's annual report for the year ended October
31, 1997, a copy of which has been provided to Sandwich.
Other terms used herein are defined in the preamble and
elsewhere in this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER. As promptly as practicable following the
satisfaction or waiver of the conditions to the parties' respec-
tive obligations hereunder, and subject to the terms and condi-
tions of this Agreement, at the Effective Time: (a) unless
theretofore done, 1855 Bancorp shall cause Merger Sub to be
organized as a wholly-owned subsidiary of Compass Bank in accor-
dance with Massachusetts law; (b) Merger Sub shall be merged
with and into Sandwich, with Sandwich as the surviving
corporation (the "Surviving Corporation"); and (c) the separate
existence of Merger Sub shall cease and all of the rights,
privileges, powers, franchises, properties, assets, liabilities
and obligations of Merger Sub shall be vested in and assumed by
Sandwich.
2.2 EFFECTIVE TIME. The Merger shall be effected by the
filing of Articles of Merger with the Secretary of State of The
Commonwealth of Massachusetts in accordance with Massachusetts
law to become effective on the day of the closing ("Closing
Date") provided for in Article X hereof (the "Closing"). The
term "Effective Time" shall mean the time on the Closing Date
(or a subsequent date not later than the opening of business on
the next business day) when the Merger becomes effective as set
forth in the Articles of Merger.
2.3 CHARTER AND BY-LAWS. The Articles of Organization
and By-laws of the Surviving Corporation shall be the Articles
of Organization, as amended, and By-laws of Sandwich as in
effect immediately prior to the Effective Time, until thereafter
amended as provided therein and by applicable law.
2.4 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The
Directors of Merger Sub immediately prior to the Effective Time
shall be the initial Directors of the Surviving Corporation,
each to hold office in accordance with the Articles of
Organization and By-Laws of Surviving Corporation. The officers
of Merger Sub immediately prior to the Effective Time shall be
the
5
initial officers of Surviving Corporation, in each case
until their respective successors are duly elected or appointed
and qualified.
2.5 TRUSTEES AND DIRECTORS OF 1855 BANCORP AND COMPASS
BANK. Prior to or at the Effective Time:
2.5.1 Three directors of Sandwich (one of whom shall be
the President of Sandwich and the other two of whom shall be
designated by 1855 Bancorp after consultation with Sandwich)
shall be elected to the Board of Directors of Compass Bank;
2.5.2 The President of Sandwich shall be appointed to
the Executive Committee of Compass Bank;
2.5.3 Nine directors of Sandwich (three of whom shall
be the same individuals who are appointed as members of Compass
Bank's Board of Directors and the other six of whom shall be
designated by 1855 Bancorp after consultation with Sandwich)
shall be elected to the Board of Trustees of 1855 Bancorp; and
2.5.4 All of the directors of Sandwich shall be invited
to join the Board of Corporators of 1855 Bancorp, effective at
the next annual meeting of 1855 Bancorp.
2.6 ADDITIONAL ACTIONS. If, at any time after the Effec-
tive Time, Surviving Corporation shall consider or be advised
that any further assignments or assurances in law or any other
acts are necessary or desirable (a) to vest, perfect or confirm,
of record or otherwise, in Surviving Corporation, title to and
possession of any property or right of Merger Sub acquired or to
be acquired by reason of, or as a result of, the Merger, or
(b) otherwise to carry out the purposes of this Agreement,
Merger Sub and its proper officers and directors shall be deemed
to have granted to 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 property or rights in Surviving Corporation and otherwise
to carry out the purposes of this Agreement; and the proper
officers and directors of Surviving Corporation are fully autho-
rized in the name of Merger Sub or otherwise to take any and all
such action.
2.7 EFFECTS OF THE MERGER. At and after the Effective
Time, the Merger shall have the effects set forth in Chapter
156B, Section 80 of the General Laws of The Commonwealth of
Massachusetts, as amended.
2.8 POSSIBLE ALTERNATIVE STRUCTURES. Notwithstanding
anything to the contrary contained in this Agreement, prior to
the Effective Time, 1855 Bancorp shall be entitled to revise the
structure of the Merger, the Bank Merger and the other
transactions contemplated hereby and thereby, provided, that (i)
there are no material adverse federal or state income tax
consequences to Sandwich and its stockholders as a result of the
modification; (ii) the consideration to be paid to the holders
of Sandwich Common Stock under this Agreement is not thereby
changed in kind or reduced in amount; (iii) there are no
material adverse changes to the benefits and other arrangements
provided to or on behalf of Sandwich's directors, officers and
other employees; and (iv) such modification will not delay
materially or jeopardize receipt of any required regulatory
approvals or other consents and approvals relating to the
consummation of the Merger. 1855 Bancorp, Compass Bank,
Sandwich and Sandwich Bank agree to appropriately amend this
Agreement and any related documents in order to reflect any such
revised structure.
6
ARTICLE III
CONVERSION OF SHARES
3.1 CONVERSION SHARES. At the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub,
Sandwich or the holders of any of the shares of Sandwich Common
Stock (shares of Sandwich Common Stock being hereinafter
collectively referred to as "Shares"):
3.1.1 Each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares to be
cancelled pursuant to Section 3.1.2 and any Dissenting Shares
(as hereinafter defined)) shall be cancelled and shall be
converted automatically into the right to receive an amount
equal to $53.00 in cash for each Share (the "Fixed
Consideration"). In the event that the Effective Time has not
occurred on or prior to October 1, 1998, and the failure of the
Effective Time to have occurred on or prior to such anniversary
is not primarily attributable to acts or omissions by or
circumstances related to Sandwich, then the Fixed Consideration
shall be adjusted upwards by an amount determined by (A)
multiplying (1) the Fixed Consideration by (2) a percentage
interest rate determined for the period commencing on the day
after October 1, 1998, through and including the Effective Date
(the "Measurement Period") by averaging the discount rate,
expressed as a percentage, from face value on the [90-day
treasury ▇▇▇▇ rate] for the initial and each succeeding seven-
day period (or portion thereof) during the Measurement Period
based on the most recent auction of such 90-day treasury ▇▇▇▇ as
reported in the "Money Rates" column of The Wall Street
Journalor equivalent publication or information service, rounded
at the date the foregoing calculation is made at the Effective
Time, upwards to the nearest $.01, then (B) dividing the product
determined pursuant to clause (A) by 365, and then (C)
multiplying the amount obtained after the application of clauses
(A) and (B) by the number of calendar days in the Measurement
Period. The Fixed Consideration, to the extent adjusted as
provided above, is referred to herein as the "Merger
Consideration".
3.1.2 Each Share held in the treasury of Sandwich and
each Share owned by Merger Sub, 1855 Bancorp or any direct or
indirect wholly owned subsidiary of 1855 Bancorp or of Sandwich
immediately prior to the Effective Time shall be cancelled
without any conversion thereof and no payment or distribution
shall be made with respect thereto.
3.1.3 Each share of the common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of the common stock of the
Surviving Corporation.
3.2 EMPLOYEE STOCK OPTIONS. Prior to the Effective Time,
Sandwich shall, in accordance with the terms of the Sandwich
Option Plans, provide written notice to each holder of a then
outstanding stock option to purchase Shares pursuant to the
Sandwich Option Plans (whether or not such stock option is then
vested or exercisable), that such stock option shall be, as at
the date of such notice, exercisable in full and that such stock
option will be automatically canceled at the Effective Time and
that, if such stock option is not exercised or otherwise
terminated before the Effective Time, such holder shall be
entitled to receive in cancellation of such option a cash
payment from Sandwich at the Closing in an amount equal to the
excess of the Merger Consideration over the per share exercise
price of such stock option, multiplied by the number of Shares
covered by such stock option, subject to any required
withholding of taxes. Subject to the foregoing, the Sandwich
Option Plans and all options issued thereunder shall terminate
at the Effective Time. Sandwich hereby represents and warrants
to 1855 Bancorp that the maximum
7
number of Shares subject to issuance pursuant to the exercise of
stock options issued and outstanding under the Sandwich Option
Plans is not and shall not be at or prior to the Effective Time
more than 144,778.
3.3 DISSENTING SHARES.
3.3.1 Notwithstanding anything in this Agreement to
the contrary and unless otherwise provided by applicable law,
Shares that are issued and outstanding immediately prior to the
Effective Time and that are owned by stockholders who have
properly perfected their rights of appraisal within the meaning
of Section 85 of Chapter 156B of the Massachusetts General Laws
(the "Dissenting Shares"), shall not be converted into the right
to receive the Merger Consideration, unless and until such
stockholders shall have failed to perfect or shall have
effectively withdrawn or lost their right of payment under
applicable law, but, instead, the holders thereof shall be
entitled to payment of the appraised value of such Dissenting
Shares in accordance with the provisions of the Massachusetts
General Laws, Chapter 156B Subsection 85 et seq. If any such
holder
shall have failed to perfect or shall have effectively withdrawn
or lost such right of appraisal, each Share held by such
stockholder shall thereupon be deemed to have been converted
into the right to receive and become exchangeable for, at the
Effective Time, the Merger Consideration in the manner provided
in Section 2.8 hereof.
3.3.2 Sandwich shall give 1855 Bancorp (i) prompt
notice of any objections filed pursuant to Massachusetts General
Laws, Chapter 156B, Subsection 85 et seq., received by Sandwich,
withdrawals of such objections, and any other instruments served
in connection with such objections pursuant to the Massachusetts
General Laws and received by Sandwich and (ii) the opportunity
to direct all negotiations and proceedings with respect to
objections under the Massachusetts General Laws consistent with
the obligations of Sandwich thereunder. Sandwich shall not,
except with the prior written consent of 1855 Bancorp, (x) make
any payment with respect to any such objection, (y) offer to
settle or settle any such objections or (z) waive any failure to
timely deliver a written objection in accordance with the
Massachusetts General Laws.
3.4 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
3.4.1 Prior to the Effective Time, 1855 Bancorp or
Compass Bank shall designate a bank or trust company, reasonably
acceptable to Sandwich, to act as agent (the "Paying Agent") for
the holders of Shares in connection with the Merger to receive
the funds to which holders of Shares shall become entitled
pursuant to Section 3.1.1. Immediately prior to the Effective
Time, Compass Bank shall deposit, or cause to be deposited, with
the Paying Agent, for the benefit of the holders of certificates
evidencing such Shares (the "Certificates"), for exchange in
accordance with this Article III, such amount of cash as is
sufficient to pay the aggregate Merger Consideration which
holders of Shares are entitled to receive in exchange for
outstanding Shares.
3.4.2 Promptly after the Effective Time (but in no
event more than three business days thereafter), 1855 Bancorp
and Compass Bank shall cause to be mailed to each person who
was, at the Effective Time, a holder of record of Shares
entitled to receive the Merger Consideration a form of letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the
Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of
transmittal. Sandwich shall have the right to review the letter
of transmittal, the instructions and any accompanying letter.
Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly
executed in accordance with the instructions
8
thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger
Consideration for each Share formerly evidenced by such
Certificate, and such Certificate shall then be cancelled. No
interest shall accrue or be paid for the period following the
Effective Time on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of
such Certificate. If payment of the Merger Consideration is to
be made to a person other than the person in whose name the
surrendered Certificate is registered on the stock transfer
books of Sandwich, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other
taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of
the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such taxes either
have been paid or are not applicable.
3.4.3 At any time following the twelfth month after
the Effective Time, 1855 Bancorp or Compass Bank shall be
entitled to require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not
disbursed to holders of Shares (including, without limitation,
all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such
holders shall be entitled to look to 1855 Bancorp and Compass
Bank (subject to abandoned property, escheat and other similar
laws) only as general creditors thereof with respect to any
Merger Consideration that may be payable upon due surrender of
the Certificates held by them. Notwithstanding the foregoing,
neither 1855 Bancorp nor Compass Bank nor the Paying Agent shall
be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant
to any abandoned property, escheat or other similar law.
3.4.4 At the close of business on the Effective Date,
the stock transfer books of Sandwich shall be closed and
thereafter there shall be no further registration of transfers
of Shares on the records of Sandwich. From and after the
Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by
applicable law.
3.4.5 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 1855 Bancorp or Compass
Bank, upon the posting by such person of a bond in such amount
as 1855 Bancorp or Compass Bank may reasonably direct as
indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate, the
cash representing the Merger Consideration deliverable in
respect thereof pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SANDWICH
Sandwich hereby represents and warrants to 1855 Bancorp as
follows:
4.1 CAPITAL STRUCTURE. The authorized capital stock of
Sandwich consists of 15,000,000 shares of Sandwich Common Stock
and 5,000,000 shares of Sandwich Preferred Stock. As of the
date of this Agreement, 1,944,260 shares of Sandwich Common
Stock are issued and outstanding, no shares of Sandwich Common
Stock are directly or indirectly held by Sandwich as treasury
stock and no shares of Sandwich Preferred Stock are issued and
outstanding. All outstanding shares of
9
Sandwich Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable, and none of the
outstanding shares of Sandwich Common Stock has been issued in
violation of the preemptive rights of any person, firm or
entity. Except for Sandwich Options to acquire not more than
144,778 shares of Sandwich Common Stock, a schedule of which has
been Previously Disclosed, there are no Rights authorized,
issued or outstanding with respect to or relating to the capital
stock of Sandwich.
4.2 ORGANIZATION, STANDING AND AUTHORITY OF SANDWICH.
Sandwich is a corporation duly organized, validly existing and
in good standing under the laws of The Commonwealth of
Massachusetts 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 Sandwich. Sandwich
is duly registered as a bank holding company under the BHCA.
Sandwich has heretofore delivered to 1855 Bancorp true and
complete copies of the Articles of Organization and Bylaws of
Sandwich as in effect as of the date hereof.
4.3 OWNERSHIP OF SANDWICH SUBSIDIARIES. Sandwich has
Previously Disclosed the name, jurisdiction of incorporation and
percentage ownership of each direct or indirect Sandwich
Subsidiary. Except for (x) capital stock of the Sandwich
Subsidiaries, (y) securities and other interests held in a
fiduciary capacity and beneficially owned by third parties or
taken in consideration of debts previously contracted, and (z)
securities and other interests which are Previously Disclosed,
Sandwich does not own or have the right or obligation 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, other than investment securities
representing not more than 1% of any entity. The outstanding
shares of capital stock or other ownership interests of each
Sandwich Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, and are directly or
indirectly owned by Sandwich free and clear of all liens,
claims, encumbrances, charges, pledges, 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 Sandwich Subsidiaries
and there are no agreements, understandings or commitments
relating to the right of Sandwich to vote or to dispose of such
capital stock or other ownership interests.
4.4 ORGANIZATION, STANDING AND AUTHORITY OF SANDWICH
SUBSIDIARIES. Each of the Sandwich Subsidiaries is a bank,
corporation or partnership duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it
is organized. Each of the Sandwich Subsidiaries (i) 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 (ii)
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 Sandwich. The deposit accounts of Sandwich Bank are
insured by the BIF or, in the case of certain deposits, the
SAIF, to the maximum extent permitted by the FDIA, and by the
Share Insurance Fund for amounts in excess of FDIC limits.
Sandwich Bank has paid all deposit insurance premiums and
assessments required by the FDIC and the Share Insurance Fund.
Sandwich has heretofore delivered or made available to
10
1855 Bancorp true and complete copies of the Charter and Bylaws
of Sandwich Bank as in effect as of the date hereof.
4.5 AUTHORIZED AND EFFECTIVE AGREEMENT.
4.5.1 Sandwich 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
Sandwich's shareholders of this Agreement) to perform all of its
obligations hereunder. 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 Sandwich,
except for the approval of this Agreement by Sandwich's
shareholders. This Agreement has been duly and validly executed
and delivered by Sandwich and constitutes the legal, valid and
binding obligations of Sandwich, enforceable against Sandwich 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.
4.5.2 Except as Previously Disclosed, neither the
execution and delivery of this Agreement, nor consummation of
the transactions contemplated hereby, nor compliance by Sandwich
with any of the provisions hereof (i) does or will conflict with
or result in a breach of any provisions of the Articles of
Organization or Bylaws of Sandwich or the equivalent documents
of any Sandwich 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 Sandwich or any
Sandwich Subsidiary pursuant to, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Sandwich or any Sandwich
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 and shareholder
approvals, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Sandwich or any Sandwich
Subsidiary.
4.5.3 Except for (i) the filing of applications and
notices with, and the consents and approvals of, as applicable,
the FRB, the FDIC, the Massachusetts Board, the MHPF, the Co-
operative Central Bank and the Bank Commissioner, (ii) the
filing of the Proxy Statement with the SEC, (iii) the approval
of this Agreement by the requisite vote of the shareholders of
Sandwich, (iv) the filing of Articles of Merger with the
Secretary of State of the Commonwealth of Massachusetts pursuant
to the MBCL in connection with the Merger, and (v) review of the
Merger by the DOJ under federal antitrust laws, and except for
such filings, registrations, consents 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 Sandwich or Sandwich Bank in
connection with the execution and delivery by Sandwich of this
Agreement and the consummation by Sandwich of the transactions
contemplated hereby.
4.5.4 As of the date hereof, neither Sandwich nor
Sandwich Bank is aware of any reasons relating to Sandwich or
Sandwich Bank (including without limitation Community
Reinvestment Act compliance) why all consents and approvals
shall not be procured from all regulatory agencies having
jurisdiction over the transactions contemplated by this
Agreement as shall be necessary for (i) consummation of the
transactions contemplated by this Agreement and (ii) the
continuation by 1855 Bancorp after the Effective Time of the
business of each of 1855 Bancorp
11
and Sandwich as such business is carried on immediately prior to
the Effective Time, free of any conditions or requirements
which, in the reasonable opinion of Sandwich, could have a
Material Adverse Effect on 1855 Bancorp or Sandwich or
materially impair the value of Sandwich and Sandwich Bank to
1855 Bancorp.
4.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS
4.6.1 Since January 1, 1993, Sandwich has timely filed
with the SEC or the FDIC (as applicable) and the NASD all
Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the
Securities Laws and did not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
4.6.2 Since January 1, 1993, each of Sandwich and
Sandwich Bank has duly filed with the FRB, the Bank
Commissioner, the FDIC and any other applicable federal or state
banking authority, as the case may be, in correct form the
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. Except as Previously
Disclosed, in connection with the most recent examinations of
Sandwich and Sandwich Bank by the FRB, the Bank Commissioner and
the FDIC, neither Sandwich nor Sandwich Bank was required to
correct or change any action, procedure or proceeding which
Sandwich or Sandwich Bank believes has not been corrected or
changed as required as of the date hereof in all material
respects.
4.7 FINANCIAL STATEMENTS
4.7.1 Sandwich has previously delivered or made
available to 1855 Bancorp accurate and complete copies of the
Sandwich Financial Statements, which, in the case of the
consolidated statements of financial condition of Sandwich Bank
as of December 31, 1996, 1995 and 1994 and the consolidated
statements of operations, shareholders' equity and cash flows of
Sandwich Bank for each of the three years ended December 31,
1996, 1995 and 1994 are accompanied by the audit reports of KPMG
Peat Marwick LLP, independent public accountants with respect to
Sandwich. The Sandwich Financial Statements referred to herein,
as well as the Sandwich Financial Statements to be delivered
pursuant to Section 6.2 hereof, fairly present or will fairly
present, as the case may be, the consolidated financial
condition of Sandwich or Sandwich Bank, as the case may be, as
of the respective dates set forth therein, and the consolidated
results of operations, shareholders' equity and cash flows of
Sandwich for the respective periods or as of the respective
dates set forth therein.
4.7.2 Each of the Sandwich Financial Statements
referred to in Section 4.7.1 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. The audits of Sandwich and
the Sandwich Subsidiaries have been conducted in all material
respects in accordance with generally accepted auditing
standards. The books and records of Sandwich and the Sandwich
Subsidiaries 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 Sandwich and its Subsidiaries. The minute books
of Sandwich and each of its Subsidiaries contain complete and
accurate records of all meetings and other corporate actions
authorized at such meetings held or taken since January 1, 1993
to date of its stockholders and Board of Directors.
12
4.7.3 Except and to the extent (i) reflected,
disclosed or provided for in the consolidated statement of
financial condition of Sandwich as of December 31, 1997
(including related notes) and (ii) of liabilities incurred since
December 31, 1997 in the ordinary course of business, neither
Sandwich nor any Sandwich Subsidiary has any liabilities,
whether absolute, accrued, contingent or otherwise, material to
the financial condition, results of operations or business of
Sandwich on a consolidated basis.
4.8 MATERIAL ADVERSE CHANGE. Since December 31, 1997 (i)
Sandwich and its Subsidiaries have conducted their respective
businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with this Agreement, and
excluding the transactions contemplated hereby) and (ii) no
event has occurred or circumstance arisen that, individually or
in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on Sandwich.
4.9 ENVIRONMENTAL MATTERS. Except as Previously
Disclosed:
4.9.1 To the best of Sandwich's knowledge, Sandwich
and its Subsidiaries are in material compliance with all
Environmental Laws. Neither Sandwich nor any Sandwich
Subsidiary has received any communication alleging that Sandwich
or any Sandwich Subsidiary is not in such compliance and, to the
best knowledge of Sandwich, there are no present circumstances
that would prevent or interfere with the continuation of such
compliance.
4.9.2 To the best of Sandwich's knowledge, none of the
properties presently or formerly owned, leased or operated by
Sandwich or a Sandwich Subsidiary, or in which Sandwich or any
Sandwich Subsidiary has a lien or other security interest, has
been or is in material violation of or materially liable under
any Environmental Law.
4.9.3 To the best of Sandwich's knowledge, there are
no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the
basis of any material Environmental Claim or other claim or
action or governmental investigation that could result in the
imposition of any material liability arising under any
Environmental Law against Sandwich or a Sandwich Subsidiary or
against any person or entity whose liability for any
Environmental Claim Sandwich or a Sandwich Subsidiary has or may
have retained or assumed either contractually or by operation of
law.
4.9.4 Sandwich has not conducted any environmental
studies during the past five years with respect to any
properties owned by it or a Sandwich Subsidiary as of the date
hereof.
4.10 TAX MATTERS
4.10.1 Sandwich and its Subsidiaries 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 an adequate reserve
or accrual for the payment of, all material 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 material taxes for any
subsequent periods ending on or prior to the Effective Time.
Neither Sandwich nor a Sandwich Subsidiary will have any
material liability for any such taxes in excess of the amounts
so paid or reserves or accruals so established.
13
4.10.2 All federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns filed by
Sandwich and its Subsidiaries are complete and accurate in all
material respects. Neither Sandwich nor a Sandwich Subsidiary
is delinquent in the payment of any tax, assessment or
governmental charge or, except as Previously Disclosed, 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 Sandwich and its
Subsidiaries 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 Sandwich or a Sandwich Subsidiary 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
Sandwich or a Sandwich Subsidiary 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 such return is pending or, to the
best of Sandwich's knowledge, threatened.
4.10.3 Except as Previously Disclosed, neither
Sandwich nor any Sandwich Subsidiary (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 Sandwich or a Sandwich Subsidiary
(nor does Sandwich 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.
4.11 LEGAL PROCEEDINGS Except as Previously Disclosed,
there are no actions, suits, claims, governmental investigations
or proceedings instituted, pending or, to the best knowledge of
the senior officers and directors of Sandwich or any Sandwich
Subsidiary, threatened against Sandwich or a Sandwich Subsidiary
or against any asset, interest or right of Sandwich or a
Sandwich Subsidiary, or against any officer, director or
employee of any of them, and neither Sandwich nor a Sandwich
Subsidiary is a party to any order, judgment or decree.
4.12 COMPLIANCE WITH LAWS
4.12.1 Each of Sandwich and the Sandwich Subsidiaries
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 required 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 Sandwich; all such permits,
licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of Sandwich, no
suspension or cancellation of any of the same is threatened.
4.12.2 Neither Sandwich nor a Sandwich Subsidiary is
in violation of its respective Articles of Organization, Charter
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 (including without limitation
all regulatory capital requirements), 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
14
order, license, regulation or demand of any governmental agency,
any of which violations or defaults could reasonably be expected
to have a Material Adverse Effect on Sandwich; and neither
Sandwich nor a Sandwich Subsidiary has received any notice or
communication from any federal, state or local governmental
authority asserting that Sandwich or a Sandwich Subsidiary is in
violation of any of the foregoing which could reasonably be
expected to have a Material Adverse Effect on Sandwich. Neither
Sandwich nor a Sandwich Subsidiary is currently subject to any
regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written
commitment (other than those of general applicability to all
banks and holding companies thereof), and neither of them has
received any written communication requesting that it enter into
any of the foregoing. No regulatory agency has initiated any
proceeding or, to the best knowledge of Sandwich, investigation
into the business or operations of Sandwich or any of the
Sandwich Subsidiaries since prior to December 31, 1992.
Sandwich has not received any objection from any regulatory
agency to Sandwich's response to any violation, criticism or
exception with respect to any report or statement relating to
any examinations of Sandwich or any of the Sandwich
Subsidiaries.
4.13 CERTAIN INFORMATION None of the information relating
to Sandwich and its Subsidiaries supplied or to be supplied for
inclusion or incorporation by reference in (i) the Offering
Document will, at the time the Offering Document is mailed to
subscribers (and, if applicable, at the time the related Form
S-1 and any amendment thereto becomes effective under the
Securities Act), 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, and (ii) the Proxy Statement, as
of the date(s) such Proxy Statement is mailed to shareholders of
Sandwich 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,
provided that information as of a later date shall be deemed to
modify information as of an earlier date. The Proxy Statement
mailed by Sandwich to its shareholders in connection with the
meeting of shareholders at which this Agreement will be
considered by such shareholders will comply as to form in all
material respects with the Exchange Act and the rules and
regulations promulgated thereunder.
4.14 EMPLOYEE BENEFIT PLANS
4.14.1 Sandwich has Previously Disclosed all stock
option, employee stock purchase and stock bonus plans, qualified
pension or profit-sharing plans, any deferred compensation,
consultant, bonus or group insurance contract or any other
incentive, health and welfare or employee benefit plan or
agreement maintained for the benefit of employees or former
employees of Sandwich or any Sandwich Subsidiary (the "Sandwich
Employee Plans"), whether written or oral, and Sandwich has
previously furnished or made available to 1855 Bancorp accurate
and complete copies of the same together with (i) the most
recent actuarial and financial reports prepared with respect to
any qualified plans, (ii) the most recent annual reports filed
with any governmental agency, and (iii) all rulings and
determination letters and any open requests for rulings or
letters that pertain to any qualified plan.
4.14.2 None of Sandwich, any Sandwich Subsidiary, any
pension plan maintained by either of them and qualified under
Section 401 of the Code or, to the best of Sandwich's knowledge,
any fiduciary of such plan has incurred any material liability
to the PBGC or the Internal Revenue Service with respect to any
employees of Sandwich or a Sandwich Subsidiary. To the best of
15
Sandwich's knowledge, no reportable event under Section 4043(b)
of ERISA has occurred with respect to any such pension plan.
4.14.3 Neither Sandwich nor any Sandwich Subsidiary
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).
4.14.4 A favorable determination letter has been
issued by the Internal Revenue Service with respect to each
Sandwich Employee Plan which is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) (a "Sandwich Pension
Plan") which is intended to qualify under Section 401 of the
Code to the effect that such plan is qualified under Section 401
of the Code and 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 Sandwich's knowledge,
is threatened to be revoked and Sandwich does not know of any
ground on which such revocation may be based. Neither Sandwich
nor any Sandwich Subsidiary has any liability under any such
plan that is not reflected on the consolidated statement of
financial condition of Sandwich at December 31, 1997 included in
the Sandwich Financial Statements, other than liabilities
incurred in the ordinary course of business in connection
therewith subsequent to the date thereof.
4.14.5 To the best of Sandwich's knowledge, 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 Sandwich Employee Plan which would result in the
imposition, directly or indirectly, of a material excise tax
under Section 4975 of the Code or otherwise have a Material
Adverse Effect on Sandwich.
4.14.6 Full payment has been made (or proper accruals
have been established) 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) of all
contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each
Sandwich Employee Plan or ERISA; to the best of Sandwich's
knowledge, no accumulated funding deficiency (as defined in
Section 302 of ERISA or Section 412 of the Code), whether or not
waived, exists with respect to any Sandwich Pension Plan, and
there is no "unfunded current liability" (as defined in Section
412 of the Code) with respect to any Sandwich Pension Plan.
4.14.7 To the best of Sandwich's knowledge, the
Sandwich 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.
4.14.8 There are no pending or, to the best knowledge
of Sandwich, threatened claims (other than routine claims for
benefits) by, on behalf of or against any of the Sandwich
Employee Plans or any trust related thereto or any fiduciary
thereof.
4.14.9 Neither Sandwich nor 1855 Bancorp will be
required to make a Pension Payment as a result of the Merger.
The term "Pension Payment" shall mean the amount, if any, for
which Sandwich or its successor is or would be liable to the Co-
operative Banks Employees Retirement Association in connection
with the cessation of Sandwich's participation in said
Association's pension plan and its complete withdrawal from said
pension plan.
4.15 CERTAIN CONTRACTS
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4.15.1 Except as Previously Disclosed, neither
Sandwich nor a Sandwich Subsidiary is a party to, is bound or
affected by, receives, or is obligated to pay, benefits under
(a) any agreement, arrangement or commitment,
including without limitation any agreement, indenture or
other instrument, relating to the borrowing of money by
Sandwich or a Sandwich Subsidiary (other than in the case
of Sandwich Bank deposits, FHLB advances, federal funds
purchased and securities sold under agreements to
repurchase in the ordinary course of business) or the
guarantee by Sandwich or a Sandwich Subsidiary of any
obligation, other than by Sandwich Bank in the ordinary
course of its banking business,
(b) any agreement 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 Sandwich or a Sandwich Subsidiary,
(c) 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 Sandwich or a Sandwich Subsidiary
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);
(d) any agreement, arrangement or understanding
pursuant to which Sandwich or a Sandwich Subsidiary is
obligated to indemnify any director, officer, employee or
agent of Sandwich or a Sandwich Subsidiary;
(e) any agreement, arrangement or understanding to
which Sandwich or a Sandwich Subsidiary is a party or by
which any of the same is bound which limits the freedom of
Sandwich or a Sandwich Subsidiary to compete in any line of
business or with any person,
(f) any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and
desist order or condition of any regulatory order or decree
with or by the Bank Commissioner, the FDIC, the FRB or any
other regulatory agency,
(g) any agreement (other than any agreement with a
banking customer for the provision of banking services
entered into by any Sandwich Subsidiary in the ordinary
course of business) that involves a payment or series of
payments of more than $50,000 in any one year from or to
Sandwich or any Sandwich Subsidiary (unless such agreement
is cancellable by Sandwich upon payment of a termination
fee of not more than $40,000), or
(h) any other agreement, arrangement or
understanding which would be required to be filed as an
exhibit to the Sandwich's Annual Report on Form 10-K under
the Exchange Act and which has not been so filed.
4.15.2 Neither Sandwich nor any Sandwich Subsidiary is
in material default or non-compliance 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 material default or non-compliance.
4.16 BROKERS AND FINDERS Except as Previously Disclosed,
neither Sandwich nor any
17
Sandwich Subsidiary nor any of their respective directors,
officers or employees, has employed any broker or finder or
incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated
hereby.
4.17 INSURANCE. Each of Sandwich and its Subsidiaries is
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. Sandwich
has Previously Disclosed all policies of insurance maintained by
it or a Sandwich Subsidiary as of the date hereof and any claims
thereunder in excess of $50,000 since January 1, 1995. Neither
Sandwich nor any Sandwich Subsidiary has received any notice of
termination of any such insurance coverage or material increase
in the premiums therefor or has any reason to believe that any
such insurance coverage will be terminated or the premiums
therefor materially increased.
4.18 LOAN PORTFOLIO. Sandwich has Previously Disclosed
all of the loans in original principal amount in excess of
$200,000 of Sandwich or any Sandwich Subsidiary that as of the
date of this Agreement are classified by Sandwich or any Bank
Regulator as "Special Mention", "Substandard", "Doubtful",
"Loss" or "Classified," together with the aggregate principal
amount of and accrued and unpaid interest on such all loans by
category, it being understood that no representation is being
made that the FDIC, the Bank Commissioner or any other Bank
Regulator would agree with the loan classifications of Sandwich.
4.19 PROPERTIES. All real and personal property owned by
Sandwich or its Subsidiaries or presently used by any of them in
its respective business is in an adequate condition (ordinary
wear and tear excepted) and is sufficient to carry on the
business of Sandwich and its Subsidiaries in the ordinary course
of business consistent with their past practices. Sandwich has
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 statement of financial condition of Sandwich as
of December 31, 1997 included in the Sandwich Financial
Statements or acquired after such date, 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, (iii) such imperfections of title, easements
and encumbrances, if any, as are not material in character,
amount or extent and (iv) as reflected on the consolidated
statement of financial condition of Sandwich as of December 31,
1997 included in the Sandwich Financial Statements. All real
and personal property which is material to Sandwich's business
on a consolidated basis and leased or licensed by Sandwich or a
Sandwich Subsidiary is held pursuant to leases or licenses which
are valid and enforceable in accordance with their respective
terms and no such real property lease will terminate or lapse
prior to the Effective Time.
4.20 LABOR. No work stoppage involving Sandwich or a
Sandwich Subsidiary is pending or, to the best knowledge of
Sandwich, threatened. Neither Sandwich nor a Sandwich
Subsidiary is involved in, or threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of Sandwich or a Sandwich
Subsidiary which could have a Material Adverse Effect on
Sandwich. Employees of Sandwich and the Sandwich Subsidiaries
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 Sandwich's knowledge, there have
been no efforts to unionize or organize any employees of
Sandwich or any of the Sandwich Subsidiaries during the past
five years.
4.21 REQUIRED VOTE; INAPPLICABILITY OF ANTITAKOVER
STATUTES
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4.21.1 The affirmative vote of the holders of two
thirds of the issued and outstanding shares of Sandwich Common
Stock is necessary to approve this Agreement and the
transactions contemplated hereby on behalf of Sandwich.
4.21.2 Assuming the accuracy of the representation and
warranty of 1855 Bancorp contained in Section 5.20 hereof, no
"fair price," "moratorium," control share acquisition" or other
form of antitakeover statute or regulation, including without
limitation Chapters 110D and 110F of the MBCL, is applicable to
this Agreement and the transactions contemplated hereby.
4.22 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as
Previously Disclosed, to the knowledge of Sandwich, no officer
or director of Sandwich, or any "associate" (as such term is
defined in Rule 14a-1 under the Exchange Act) of any such
officer or director, (i) has any material interest in any
material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Sandwich or
any of the Sandwich Subsidiaries or (ii) is indebted to, or has
the right under a line of credit to borrow from, Sandwich or any
Sandwich Subsidiary in an amount exceeding $50,000.
4.23 CERTAIN TRANSACTIONS. Since December 31, 1996,
neither Sandwich nor any Sandwich Subsidiary has been a party to
any material off-balance-sheet transactions involving interest
rate and currency swaps, options and futures contracts, or any
other similar derivative transactions, except as Previously
Disclosed.
4.24 DISCLOSURES. None of the representations and
warranties of Sandwich or any of the written information or
documents furnished or to be furnished by Sandwich to 1855
Bancorp in connection with or pursuant to this Agreement or the
consummation of 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, in light of the circumstances, not
misleading.
4.25 DISCLOSURE SCHEDULE. The Sandwich Disclosure
Schedule sets forth, among other things, disclosures with
respect to or exceptions to Sandwich's representations and
warranties in this Article IV. The mere inclusion of an
exception in the Sandwich Disclosure Schedule shall not be
deemed an admission by Sandwich that such exception represents a
material fact, event or circumstance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF 1855 BANCORP
1855 Bancorp hereby represents and warrants to Sandwich as
follows:
5.1 CAPITAL STRUCTURE. 1855 Bancorp has no capital stock
issued and outstanding.
5.2 ORGANIZATION, STANDING AND AUTHORITY OF 1855 BANCORP.
1855 Bancorp is a mutual holding company duly organized, validly
existing and in good standing under the laws of The Commonwealth
of Massachusetts 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 1855 Bancorp. 1855
Bancorp is duly registered as a bank holding company under the
BHCA and the regulations of the FRB thereunder. 1855 Bancorp
has heretofore delivered to Sandwich true and
19
complete copies of the Articles of Organization and Bylaws of
1855 Bancorp as in effect as of the date hereof.
5.3 OWNERSHIP OF THE 1855 BANCORP SUBSIDIARIES. 1855
Bancorp has Previously Disclosed each direct or indirect 1855
Bancorp Subsidiary. The outstanding shares of capital stock of
each 1855 Bancorp Subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are
directly or indirectly owned by 1855 Bancorp free and clear of
all liens, claims, encumbrances, charges, pledges, 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 any 1855 Bancorp
Subsidiary and there are no agreements, understandings or
commitments relating to the right of 1855 Bancorp to vote or to
dispose of said shares or other ownership interests.
5.4 ORGANIZATION, STANDING AND AUTHORITY OF THE 1855
BANCORP SUBSIDIARIES. Each of the 1855 Bancorp Subsidiaries is
a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
organized. Each of the 1855 Bancorp Subsidiaries (i) 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 (ii)
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 1855 Bancorp. The deposit accounts of Compass Bank
are insured by the BIF or, in the case of certain deposits, the
SAIF, to the maximum extent permitted by the FDIA, and by the
Depositors Insurance Fund for amounts in excess of FDIC limits.
Compass Bank has paid all premiums and assessments required by
the FDIC and the Depositors Insurance Fund.
5.5 AUTHORIZED AND EFFECTIVE AGREEMENT.
5.5.1 1855 Bancorp has all requisite corporate power
and authority to enter into this Agreement and (subject to
receipt of all necessary governmental approvals and 1855
Bancorp's Corporators' approval of the Capital Offering) 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 1855 Bancorp and Compass Bank, except for the
approval of the Capital Offering by 1855 Bancorp's Corporators.
This Agreement has been duly and validly executed and delivered
by 1855 Bancorp and, assuming due authorization, execution and
delivery by Sandwich, constitutes a legal, valid and binding
obligation of 1855 Bancorp which is enforceable against 1855
Bancorp 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.
5.5.2 Neither the execution and delivery of this
Agreement, nor consummation of the transactions contemplated
hereby (including the Capital Offering) nor compliance by 1855
Bancorp with any of the provisions hereof (i) does or will
conflict with or result in a breach of any provisions of the
Articles of Organization or Bylaws of 1855 Bancorp or the
equivalent documents of any 1855 Bancorp 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
20
1855 Bancorp or any 1855 Bancorp Subsidiary pursuant to,
any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which 1855 Bancorp or any 1855 Bancorp 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, corporator and shareholder approvals, violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to 1855 Bancorp or any 1855 Bancorp Subsidiary.
5.5.3 Except for (i) the filing of applications and
notices with, and the consents and approvals of, as applicable,
the FRB, the FDIC, the Massachusetts Board, the MHPF, the
Depositors Insurance Fund, and the Bank Commissioner, (ii) the
filing and effectiveness of a Form S-1 Registration Statement
with the SEC by the Mid-Tier Subsidiary, if necessary, (iii)
compliance with applicable state securities or "blue sky" laws
in connection with the Capital Offering, (iv) the approval of
the Capital Offering by the requisite vote of the Corporators of
1855 Bancorp, (v) the filing of Articles of Merger with the
Secretary of State of the Commonwealth of Massachusetts pursuant
to the MBCL in connection with the Merger and (vi) review of the
Merger by the DOJ under federal antitrust laws, and except for
such filings, registrations, consents or approvals as 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 1855 Bancorp or any 1855
Bancorp Subsidiary in connection with the execution and delivery
by 1855 Bancorp of this Agreement and the consummation by 1855
Bancorp of the transactions contemplated hereby.
5.5.4 As of the date hereof, 1855 Bancorp is not aware
of any reasons relating to 1855 Bancorp or any of its
Subsidiaries (including without limitation Community
Reinvestment Act compliance) why all consents and approvals
shall not be procured from all regulatory agencies having
jurisdiction over the transactions contemplated by this
Agreement as shall be necessary for (i) consummation of the
transactions contemplated by this Agreement and (ii) the
continuation by 1855 Bancorp after the Effective Time of the
business of each of 1855 Bancorp and Sandwich as such business
is carried on immediately prior to the Effective Time, free of
any conditions or requirements which, in the reasonable opinion
of 1855 Bancorp, could have a Material Adverse Effect on 1855
Bancorp or Sandwich or materially impair the value of Sandwich
and Sandwich Bank to 1855 Bancorp.
5.6 REGULATORY REPORTS
5.6.1 1855 Bancorp is not required to file any
Securities Documents with the SEC.
5.6.2 Since January 1, 1993, each of 1855 Bancorp and
Compass Bank has duly filed with the FRB, the FDIC, and the Bank
Commissioner, as the case may be, in correct form the 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. In connection with the most recent examinations of
1855 Bancorp and Compass Bank by the FRB, the FDIC or the Bank
Commissioner, neither 1855 Bancorp nor Compass Bank was required
to correct or change any action, procedure or proceeding which
1855 Bancorp or Compass Bank believes has not been corrected or
changed as required as of the date hereof in all material
respects.
5.7 FINANCIAL STATEMENTS
5.7.1 1855 Bancorp has previously delivered or made
available to Sandwich accurate and complete copies of the 1855
Bancorp Financial Statements which, in the case of the
consolidated
21
statements of financial condition of 1855 Bancorp as of October
31, 1997, 1996 and 1995, and the consolidated statements of
operations, shareholders' equity and cash flows for each of the
three years ended October 31, 1997, 1996 and 1995 are
accompanied by the audit reports of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, independent
public accountants with respect to 1855 Bancorp. The 1855
Bancorp Financial Statements referred to herein, as well as the
1855 Bancorp Financial Statements to be delivered pursuant to
Section 7.2 hereof, fairly present or will fairly present, as
the case may be, the consolidated financial condition of 1855
Bancorp as of the respective dates set forth therein, and the
consolidated results of operations, shareholders' equity and
cash flows of 1855 Bancorp for the respective periods or as of
the respective dates set forth therein.
5.7.2 Each of the 1855 Bancorp Financial Statements
referred to in Section 5.7.1 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. The audits of 1855 Bancorp
and the 1855 Bancorp Subsidiaries have been conducted in all
material respects in accordance with generally accepted auditing
standards. The books and records of 1855 Bancorp and the 1855
Bancorp Subsidiaries are being maintained in material compliance
with applicable legal and accounting requirements, and all such
books and records accurately reflect in all material respects
all dealings and transactions in respect of the business,
assets, liabilities and affairs of 1855 Bancorp and the 1855
Bancorp Subsidiaries. The minute books of 1855 Bancorp and each
of its subsidiaries contain complete and accurate records of all
meetings and other corporate actions authorized at such meetings
held or taken since January 1, 1993 to date of its stockholders
and Board of Directors.
5.7.3 Except and to the extent (i) reflected,
disclosed or provided for in the consolidated statement of
financial condition of 1855 Bancorp as of October 31, 1997
(including related notes) and (ii) of liabilities incurred since
October 31, 1997 in the ordinary course of business, neither
1855 Bancorp nor any 1855 Bancorp Subsidiary has any
liabilities, whether absolute, accrued, contingent or otherwise,
material to the financial condition, results of operations or
business of 1855 Bancorp on a consolidated basis.
5.8 MATERIAL ADVERSE CHANGE. Since October 31, 1997, (i)
1855 Bancorp and its Subsidiaries have conducted their
respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this
Agreement, and excluding the transactions contemplated hereby)
and (ii) no event has occurred or circumstance arisen that,
individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on 1855 Bancorp.
5.9 ENVIRONMENTAL MATTERS. Except as Previously Disclosed:
5.9.1 To the best of 1855 Bancorp's knowledge, 1855
Bancorp and the 1855 Bancorp Subsidiaries are in material
compliance with all Environmental Laws. Neither 1855 Bancorp
nor any 1855 Bancorp Subsidiary has received any communication
alleging that 1855 Bancorp or any 1855 Bancorp Subsidiary is not
in such compliance and, to the best knowledge of 1855 Bancorp,
there are no present circumstances that would prevent or
interfere with the continuation of such compliance.
5.9.2 To the best of 1855 Bancorp's knowledge, none of
the properties owned, leased or operated by 1855 Bancorp or the
1855 Bancorp Subsidiaries, or in which Sandwich or any Sandwich
Subsidiary has a lien or other security interest, has been or is
in violation of or liable under any Environmental Law.
22
5.9.3 To the best of 1855 Bancorp's knowledge, there
are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the
basis of any material 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 1855 Bancorp or any 1855 Bancorp Subsidiary or against
any person or entity whose liability for any Environmental Claim
1855 Bancorp or any 1855 Bancorp Subsidiary has or may have
retained or assumed either contractually or by operation of law.
5.10 TAX MATTERS. 1855 Bancorp and the 1855 Bancorp
Subsidiaries 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 an adequate reserve or accrual for the payment
of, all material 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 material taxes for any subsequent periods ending
on or prior to the Effective Time. Neither 1855 Bancorp nor any
of the 1855 Bancorp Subsidiaries will have any material
liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established. As of the date hereof, no
audit, examination or deficiency or refund litigation with
respect to any federal, state and local (and, if applicable,
foreign) income, franchise, bank, excise, real property,
personal property and other tax returns filed by 1855 Bancorp
and the 1855 Bancorp Subsidiaries is pending or, to the best of
1855 Bancorp's knowledge, threatened.
5.11 LEGAL PROCEEDINGS. Except as Previously Disclosed,
there are no actions, suits, claims, governmental investigations
or proceedings instituted, pending or, to the best knowledge of
the senior officers and directors of 1855 Bancorp or any 1855
Subsidiary, threatened against 1855 Bancorp or any 1855 Bancorp
Subsidiary or against any asset, interest or right of 1855
Bancorp or any 1855 Bancorp Subsidiary, or against any officer,
director or employee of any of them, and neither 1855 Bancorp
nor any 1855 Bancorp Subsidiary is a party to any order,
judgment or decree.
5.12 COMPLIANCE WITH LAWS.
5.12.1 Each of 1855 Bancorp and each of the 1855
Bancorp Subsidiaries 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 required 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 1855 Bancorp; all
such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best
knowledge of 1855 Bancorp, no suspension or cancellation of any
of the same is threatened.
5.12.2 Neither 1855 Bancorp nor any of the 1855
Bancorp Subsidiaries is in violation of its respective Articles
of Organization, Charter or other chartering instrument 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 (including without limitation
all regulatory capital requirements), securities, municipal
securities, safety, health, environmental, zoning, anti-
discrimination, antitrust, and wage and hour laws,
23
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 agency, any of which violations or defaults
could reasonably be expected to have a Material Adverse Effect
on 1855 Bancorp; and neither 1855 Bancorp nor any 1855 Bancorp
Subsidiary has received any notice or communication from any
federal, state or local governmental authority asserting that
1855 Bancorp or any 1855 Bancorp Subsidiary is in violation of
any of the foregoing which could reasonably be expected to have
a Material Adverse Effect on 1855 Bancorp. Neither 1855 Bancorp
nor any 1855 Bancorp Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment
(other than those of general applicability to all banks or
holding companies thereof), and none of them has received any
written communication requesting that it enter into any of the
foregoing. No regulatory agency has initiated any proceeding
or, to the best knowledge of 1855 Bancorp, investigation into
the business or operations of 1855 Bancorp or any of the 1855
Bancorp Subsidiaries since prior to December 31, 1992. 1855
Bancorp has not received any objection from any regulatory
agency to 1855 Bancorp's response to any violation, criticism or
exception with respect to any report or statement relating to
any examinations of 1855 Bancorp or any of the 1855 Bancorp
Subsidiaries.
5.13 CERTAIN INFORMATION None of the information
relating to 1855 Bancorp and the 1855 Bancorp Subsidiaries to be
included or incorporated by reference in the Proxy Statement, as
of the date(s) such Proxy Statement is mailed to shareholders of
Sandwich and up to and including the date(s) 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,
provided that information as of a later date shall be deemed to
modify information as of an earlier date.
5.14 EMPLOYEE BENEFIT PLANS
5.14.1 1855 Bancorp 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, health
and welfare or employee benefit plan or agreement maintained for
the benefit of employees or former employees of 1855 Bancorp or
any 1855 Bancorp Subsidiary (the "1855 Bancorp Employee Plans"),
whether written or oral.
5.14.2 None of 1855 Bancorp, any 1855 Bancorp
Subsidiary, any pension plan maintained by any of them and
qualified under Section 401 of the Code or, to the best of 1855
Bancorp's knowledge, any fiduciary of such plan has incurred any
material liability to the PBGC or the Internal Revenue Service
with respect to any employees of 1855 Bancorp or any 1855
Bancorp Subsidiary. To the best of 1855 Bancorp's knowledge, no
reportable event under Section 4043(b) of ERISA has occurred
with respect to any such pension plan.
5.14.3 Neither 1855 Bancorp nor any 1855 Bancorp
Subsidiary 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).
5.14.4 A favorable determination letter has been
issued by the Internal Revenue Service with respect to each 1855
Bancorp Employee Plan which is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) (an "1855 Bancorp
Pension Plan") which is intended to qualify under Section 401 of
the Code
24
to the effect that such plan is qualified under Section 401 of
the Code and 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 1855 Bancorp's
knowledge, is threatened to be revoked and 1855 Bancorp does not
know of any ground on which such revocation may be based.
Neither 1855 Bancorp nor any 1855 Bancorp Subsidiary has any
liability under any such plan that is not reflected on the
consolidated statement of financial condition of 1855 Bancorp at
October 31, 1997 included in the 1855 Bancorp Financial
Statements, other than liabilities incurred in the ordinary
course of business in connection therewith subsequent to the
date thereof.
5.14.5 To the best of 1855 Bancorp's knowledge, 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 1855 Bancorp Employee Plan which would result in
the imposition, directly or indirectly, of a material excise tax
under Section 4975 of the Code or otherwise have a Material
Adverse Effect on 1855 Bancorp.
5.14.6 Full payment has been made (or proper accruals
have been established) 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) of all
contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each
1855 Bancorp Employee Plan or ERISA; to the best of 1855
Bancorp's knowledge, no accumulated funding deficiency (as
defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived, exists with respect to any 1855 Bancorp
Pension Plan, and there is no "unfunded current liability" (as
defined in Section 412 of the Code) with respect to any 1855
Bancorp Pension Plan.
5.14.7 To the best of 1855 Bancorp's knowledge, 1855
Bancorp 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.
5.14.8 There are no pending or, to the best knowledge
of 1855 Bancorp, threatened claims (other than routine claims
for benefits) by, on behalf of or against any of the 1855
Bancorp Employee Plans or any trust related thereto or any
fiduciary thereof.
5.15 CERTAIN CONTRACTS. Neither 1855 Bancorp nor any 1855
Bancorp Subsidiary is in material default or in non-compliance
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.
5.16 BROKERS AND FINDERS. Except as Previously Disclosed,
neither 1855 Bancorp nor any 1855 Bancorp Subsidiary, nor any of
their respective directors, officers or employees, has employed
any broker or finder or incurred any liability for any broker or
finder fees or commissions in connection with the transactions
contemplated hereby.
5.17 INSURANCE. 1855 Bancorp and each 1855 Bancorp
Subsidiary is 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.
5.18 PROPERTIES. All real and personal property owned by
1855 Bancorp or any 1855 Bancorp Subsidiary or presently used by
any of them in its respective business is in an adequate
25
condition (ordinary wear and tear excepted) and is sufficient to
carry on its business in the ordinary course of business
consistent with their past practices. 1855 Bancorp has 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 statement of financial condition of 1855 Bancorp as
of October 31, 1997 included in the 1855 Bancorp Financial
Statements or acquired after such date, 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, (iii) such imperfections of title, easements
and encumbrances, if any, as are not material in character,
amount or extent and (iv) as reflected on the consolidated
statement of financial condition of 1855 Bancorp as of October
31, 1997 included in the 1855 Bancorp Financial Statements. All
real and personal property which is material to 1855 Bancorp's
business on a consolidated basis and leased or licensed by 1855
Bancorp or an 1855 Bancorp Subsidiary is held pursuant to leases
or licenses which are valid and enforceable in accordance with
their respective terms and no such real property lease will
terminate or lapse prior to the Effective Time.
5.19 LABOR. No work stoppage involving 1855 Bancorp or
any 1855 Bancorp Subsidiary is pending or, to the best knowledge
of 1855 Bancorp, threatened. Neither 1855 Bancorp nor any 1855
Bancorp Subsidiary is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding involving its employees which could
have a Material Adverse Effect on 1855 Bancorp. Employees of
1855 Bancorp and the 1855 Bancorp Subsidiaries 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 1855 Bancorp's knowledge, there have been no
efforts to unionize or organize any employees of 1855 Bancorp or
any 1855 Bancorp Subsidiary during the past five years.
5.20 OWNERSHIP OF SANDWICH COMMON STOCK. As of the date
hereof, neither 1855 Bancorp nor, to its best knowledge, any of
its affiliates or associates (as such terms are defined under
the Exchange Act), (i) beneficially own, directly or indirectly,
or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of Sandwich Common Stock
which in the aggregate represent 5% or more of the outstanding
shares of Sandwich Common Stock (other than shares held in a
fiduciary capacity and beneficially owned by third parties,
shares taken in consideration of debts previously contracted.
5.21 CERTAIN TRANSACTIONS. Since December 31, 1996,
neither 1855 Bancorp nor any 1855 Bancorp Subsidiary has been a
party to any material off-balance-sheet transactions involving
interest rate and currency swaps, options and futures contracts,
or any other similar derivative transactions, except as
Previously Disclosed.
5.22 DISCLOSURES. None of the representations and
warranties of 1855 Bancorp or any of the written information or
documents furnished or to be furnished by 1855 Bancorp to
Sandwich in connection with or pursuant to this Agreement or the
consummation of 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, in light of the circumstances, not
misleading.
5.23 DISCLOSURE SCHEDULE. The 1855 Bancorp Disclosure
Schedule sets forth, among other things, disclosures with
respect to or exceptions to 1855 Bancorp's representations and
warranties in this Article V. The mere inclusion of an
exception in the 1855 Bancorp Disclosure Schedule shall
26
not be deemed an admission by 1855 Bancorp that such exception
represents a material fact, event or circumstance.
5.24 MERGER SUB. Upon its formation, Merger Sub will be
a corporation, duly organized, validly existing and in good
standing under the laws of Massachusetts, all of the outstanding
capital stock of which is, or will be prior to the Effective
Time, owned directly or indirectly by Compass Bank free and
clear of any lien, charge or other encumbrance. From and after
its incorporation, Merger Sub has not and will not engage in any
activities other than in connection with or as contemplated by
this Agreement.
5.24.1 Merger Sub has, or will have prior to the
Effective Time, all corporate power and authority to consummate
the transactions contemplated hereunder and carry out all of its
obligations with respect to such transactions. The consummation
of the transactions contemplated hereby has been, or will have
been prior to the Closing, duly and validly authorized by all
necessary corporate action in respect thereof on the part of
Merger Sub.
ARTICLE VI
COVENANTS OF SANDWICH
6.1 CONDUCT OF BUSINESS.
6.1.1 AFFIRMATIVE COVENANTS. During the period from
the date of this Agreement to the Effective Time, except with
the written consent of 1855 Bancorp, Sandwich will operate its
business, and it will cause each of the Sandwich Subsidiaries to
operate its business, only in the usual, regular and ordinary
course of business; use reasonable efforts to preserve intact
its business organization and assets and maintain its rights and
franchises; and take no action which would (i) materially
adversely affect the ability of 1855 Bancorp or Sandwich to
obtain any necessary approvals of governmental authorities
required for the transactions contemplated hereby or materially
increase the period of time necessary to obtain such approvals,
or (ii) materially adversely affect its ability to perform its
covenants and agreements under this Agreement.
6.1.2 NEGATIVE COVENANTS. Sandwich agrees that from
the date of this Agreement to the Effective Time, except as
otherwise specifically permitted or required by this Agreement,
or consented to by 1855 Bancorp in writing (which consent shall
not be unreasonably withheld), Sandwich will not, and will cause
each of the Sandwich Subsidiaries not to:
(a) change or waive any provision of its Charter or
By-laws;
(b) change the number of shares of its authorized
or issued capital stock (except for the issuance of
Sandwich Common Stock pursuant to the exercise of
outstanding stock options under the Sandwich Stock Option
Plans, as contemplated by Section 4.1 hereof);
(c) issue or grant any option, warrant, call, com-
mitment, subscription, right to purchase or agreement of
any character relating to the authorized or issued capital
stock of Sandwich or any of the Sandwich Subsidiaries, or
any securities convertible into shares of such stock;
except that Sandwich may issue shares of Sandwich Common
Stock or permit treasury shares to become outstanding to
satisfy presently outstanding options under and in accor-
dance with the terms of the Sandwich Stock Option Plans;
27
(d) effect any recapitalization, reclassification,
stock dividend, stock split or like change in
capitalization, or redeem, repurchase or otherwise acquire
any shares of its capital stock;
(e) declare or pay any dividends or other
distributions with respect to its capital stock except for
a quarterly cash dividend not in excess of $0.35 per share,
declared and paid in accordance with applicable law,
regulation and contractual and regulatory commitments and
for dividends paid by any Sandwich Subsidiary to Sandwich;
(f) enter into, amend in any material respect or
terminate any contract or agreement (including without
limitation any settlement agreement with respect to litiga-
tion) except in the ordinary course of business consistent
with past practice; provided, however, that Sandwich shall
have the right, on or before the Effective Time, to amend
(i) its Supplemental Retirement Plans to nullify section
10.01(b) thereof, (ii) its defined benefit Pension Plan to
ensure that any excess funding projected as of the
Effective Time inures solely to the benefit of Sandwich's
employees who are plan participants (but only to the extent
that 1855 Bancorp receives confirmation from CBERA, or
otherwise receives confirmation, in each case reasonably
satisfactory to it, that such amendment will not result in
any liability, contingent or otherwise, to 1855 Bancorp or
its Subsidiaries), and (iii) each employment agreement to
permit the employee who is party to the agreement to elect,
more than 90 days before the Effective Time, to receive
severance benefits in designated annual installments over a
future period of up to two years after the Effective Time,
with interest accruing at the prevailing one-year constant
maturity treasury rate;
(g) except in the ordinary course of business
consistent with past practice, incur any material
liabilities or material obligations, whether directly or by
way of guaranty, including any obligation for borrowed
money whether or not evidenced by a note, bond, debenture
or similar instrument (other than FHLB advances not
exceeding 110% of the December 31, 1997 level), or acquire
any equity, debt, or other investment securities;
(h) make any capital expenditures in excess of
$25,000 individually or $100,000 in the aggregate, other
than pursuant to Previously Disclosed binding commitments
existing on the date hereof;
(i) make or commit to make any commercial or
commercial real estate loan or loans to one borrower
(including such borrower's related interests) in an
aggregate principal balance (or with an aggregate
commitment) of $1,000,000 or more;
(j) grant any increase in rates of compensation to
its employees, except merit increases in accordance with
past practices and general increases to employees as a
class in accordance with past practice or as required by
law; grant any increase in rates of compensation to, or pay
or agree to pay any bonus or severance to, or provide any
other new employee benefit or incentive to its directors or
to its officers who are currently covered by employment or
severance agreements with Sandwich except for
nondiscretionary payments required by such agreements and
except for increases in officer compensation rates by no
more than 4.5% on an aggregate basis; enter into any
employment, severance or similar agreements or arrangements
with any director or employee; adopt or amend in any
material respect or terminate any employee benefit plan,
pension plan or incentive plan except as required by law or
the terms of such plan or as provided in Section 6.1.2, or
permit the vesting of any material amount of benefits under
any such plan other than
28
pursuant to the provisions thereof as in effect on the date
of this Agreement; or make any contributions to Sandwich's
deferred compensation plans, supplemental executive
retirement plans, grantor trust, defined benefit Pension
Plan or 401(k) Plan not in the ordinary course of business
consistent with past practice; or make any contributions to
Sandwich's Employee Stock Ownership Plan, other than
contributions, based on Sandwich's accrual levels in effect
for 1998 on the date of this Agreement, for the period
ending on the Effective Time; or make any cash bonus
payments pursuant to Sandwich's Management Incentive
Compensation Plan, other than (i) accrued but unpaid
amounts from March through December 1997 and amounts to be
accrued in January and February 1998 equal to $24,167 per
month, and (ii) the budgeted amount accruing from March 1,
1998 through the earlier to occur of December 31, 1998 or
the Effective Time (it being understood that the monthly
budgeted amount is equal to $24,167 and that such amount
will be paid prior to the Effective Time to then-current
employees of Sandwich or any Subsidiary); or make any
contributions to Sandwich's Grantor Trust other than
nondiscretionary contributions required by the terms of the
applicable Benefit Plan;
(k) make application for the opening or closing of
any, or open or close any, branch or automated banking
facility;
(l) make any equity investment or commitment to
make such an investment in real estate or in any real
estate development project, other than in connection with
foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course
of business consistent with customary banking practices;
(m) except as the fiduciary duties of the Board of
Directors otherwise requires (as determined in good faith
upon the advice of legal counsel), merge into, consolidate
with, affiliate with, or be purchased or acquired by, any
other Person, or permit any other to be merged,
consolidated or affiliated with it or be purchased or
acquired by it, or, except to realize upon collateral in
the ordinary course of its business, acquire a significant
portion of the assets of any other Person, or sell a
significant portion of its assets;
(n) make any material change in its accounting
methods or practices, except changes as may be required by
GAAP or by regulatory requirements;
(o) enter into any off-balance sheet transaction
involving interest rate and currency swaps, options and
futures contracts, or any other similar derivative
transactions;
(p) knowingly take any action that would result in
the representations and warranties of Sandwich contained in
this Agreement not being true and correct on the date of
this Agreement or at any future date on or prior to the
Closing Date; or
(q) agree to do any of the foregoing.
6.2 CURRENT INFORMATION. During the period from the date
of this Agreement to the Effective Time, Sandwich will cause one
or more of its representatives to confer with representatives of
1855 Bancorp and report the general status of its ongoing
operations at such times as 1855 Bancorp may reasonably request.
Sandwich will promptly notify 1855 Bancorp of any material
change in the normal course of its business or in the operation
of its properties and, to the extent permitted by applicable
law, of any governmental complaints, investigations or hearings
(or communications indicating that the same may be
contemplated), or the institution or the threat of material
litigation involving Sandwich. Sandwich will also provide 1855
Bancorp such information
29
with respect to such events as 1855 Bancorp may reasonably
request from time to time. As soon as reasonably available, but
in no event more than 45 days after the end of each calendar
quarter ending after the date of this Agreement
(other than the last quarter of each fiscal year ending December
31), the Sandwich will deliver to 1855 Bancorp its quarterly
report on Form 10-Q under the Exchange Act, and, as soon as
reasonably available, but in no event more than 90 days after
the end of each fiscal year, Sandwich will deliver to 1855
Bancorp its Annual Report on Form 10-K. Within 25 days after
the end of each month, Sandwich will deliver to 1855 Bancorp a
consolidated balance sheet and a consolidated statement of
operations, without related notes, for such month.
6.3 ACCESS TO PROPERTIES AND RECORDS. Sandwich shall
permit 1855 Bancorp reasonable access upon reasonable notice to
its properties and those of the Sandwich Subsidiaries, and shall
disclose and make available to 1855 Bancorp during normal
business hours all of its books, papers and records relating to
the assets, stock ownership, properties, operations, obligations
and liabilities, including, but not limited to, all books of
account (including the general ledger), tax records, minute
books of directors' and stockholders' meetings, organizational
documents, by-laws, material contracts and agreements, filings
with any regulatory authority, litigation files, plans affecting
employees, and any other business activities or prospects in
which 1855 Bancorp may have a reasonable interest; provided,
however, that Sandwich shall not be required to take any action
that would provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights
or business interests or confidences of any customer or other
person or would result in the waiver by it of the privilege
protecting communications between it and any of its counsel.
Sandwich shall provide and shall request its auditors to provide
1855 Bancorp with such historical financial information
regarding it (and related audit reports and consents) as 1855
Bancorp may reasonably request for securities disclosure
purposes.
6.4 FINANCIAL AND OTHER STATEMENTS.
6.4.1 Promptly upon receipt thereof, Sandwich will
furnish to 1855 Bancorp copies of each annual, interim or
special audit of the books of Sandwich and the Sandwich
Subsidiaries made by its independent accountants and copies of
all internal control reports submitted to Sandwich by such
accountants in connection with each annual, interim or special
audit of the books of Sandwich and the Sandwich Subsidiaries
made by such accountants.
6.4.2 As soon as practicable, Sandwich will furnish to
1855 Bancorp copies of all such financial statements and reports
as it or any Subsidiary shall send to its stockholders, the SEC,
the Bank Commissioner, the FDIC or any other regulatory
authority, except as legally prohibited thereby.
6.4.3 Sandwich will advise 1855 Bancorp promptly of
the receipt of any examination report of any federal or state
regulatory or examination authority with respect to the
condition or activities of Sandwich or any of the Sandwich
Subsidiaries.
6.4.4 With reasonable promptness, Sandwich will
furnish to 1855 Bancorp such additional financial data as 1855
Bancorp may reasonably request, including without limitation,
detailed monthly financial statements and loan reports.
6.5 DISCLOSURE SUPPLEMENTS. From time to time prior to
the Effective Time, Sandwich will promptly supplement or amend
the Disclosure Schedules delivered in connection herewith
pursuant to Article IV with respect to any material 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 such
30
Disclosure Schedules or which is necessary to correct any
information in such Schedules which has been rendered inaccurate
thereby. No supplement or amendment to such Schedules shall
have any effect for the purpose of determining satisfaction of
the conditions set forth in Article IX.
6.6 CONSENTS AND APPROVALS OF THIRD PARTIES. Sandwich
shall use all reasonable efforts to obtain as soon as
practicable all consents and approvals of any other Persons
necessary or desirable for the consummation of the transactions
contemplated by this Agreement. Without limiting the generality
of the foregoing, Sandwich shall utilize the services of a
professional proxy soliciting firm to help obtain the
shareholder vote required to be obtained by it hereunder.
6.7 ALL REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, Sandwich agrees to use all
reasonable efforts to take, or cause to be taken, all corporate
or other action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement.
6.8 FAILURE TO FULFILL CONDITIONS. In the event that
Sandwich determines that a condition to its obligation to com-
plete the Merger cannot be fulfilled and that it will not waive
that condition, it will promptly notify 1855 Bancorp.
6.9 NO SOLICITATION. Unless and until this Agreement
shall have been properly terminated by either party pursuant to
Section 11.1 hereof, neither Sandwich nor any of its
subsidiaries shall (and Sandwich and Sandwich Bank shall use all
commercially reasonable efforts to cause its representatives,
including, but not limited to, investment bankers, attorneys and
accountants, not to), directly or indirectly, encourage,
solicit, initiate or participate in any discussions or
negotiations with, or, provide any information to, any
corporation, partnership, person or other entity or group (other
than 1855 Bancorp and its affiliates or Representatives)
concerning any merger, tender offer, sale of substantial assets,
sale of shares of capital stock or debt securities or similar
transaction involving Sandwich or Sandwich Bank (an "Acquisition
Transaction"); provided, however that Sandwich and its
representatives shall be permitted to participate in discussions
or negotiations with, or provide information to, any other
corporation, partnership, person or other entity or group with
respect to an Acquisition Transaction if the Board of Directors
of Sandwich determines (in good faith upon the advice of outside
counsel) that their fiduciary duties require them to do so.
Notwithstanding the foregoing, nothing contained in this Section
6.9 shall prohibit Sandwich or its Board of Directors from
taking and disclosing to Sandwich's stockholders a position with
respect to a tender offer by a third party pursuant to Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from
making such disclosure to Sandwich's stockholders which, in the
judgment of the Board of Directors (upon the advice of counsel),
may be required under applicable law or is necessary in order to
comply with its fiduciary obligations. Sandwich will
immediately communicate to 1855 Bancorp the terms of any
proposal, discussion, negotiation or inquiry relating to an
Acquisition Transaction and the identity of the party making
such proposal or inquiry which it may receive in respect of any
such transaction (which shall mean that any such communication
shall be delivered no less promptly than by telephone within 24
hours of Sandwich's receipt of any such proposal or inquiry) or
its receipt of any request for information from the FRB, the
DOJ, or any other governmental agency or authority with respect
to a proposed Acquisition Transaction. Sandwich shall continue
to consult with 1855 Bancorp after receipt of such proposal or
commencement of such discussion or negotiation relating to an
Acquisition Transaction, and will not take any action with
respect to such proposed Acquisition Transaction except after
reasonable consultation with 1855 Bancorp.
31
ARTICLE VII
COVENANTS OF 1855 BANCORP
7.1 Conduct of Business. During the period from the date
of this Agreement to the Effective Time, except with the written
consent of Sandwich and except as provided below, 1855 Bancorp
will take no action which would (i) materially adversely affect
the ability of 1855 Bancorp or Sandwich to obtain any necessary
approvals of governmental authorities required for the transac-
tions contemplated hereby or materially increase the period of
time necessary to obtain such approvals, or (ii) materially
adversely affect its ability to perform its covenants and agree-
ments under this Agreement, or (iii) result in the repre-
sentations and warranties of 1855 Bancorp contained in this
Agreement not being true and correct on the date of this
Agreement or at any future date on or prior to the Closing Date;
provided that nothing herein contained shall preclude 1855
Bancorp from taking any action Previously Disclosed.
7.2 CURRENT INFORMATION. During the period from the date
of this Agreement to the Effective Time, 1855 Bancorp will cause
one or more of its representatives to confer with
representatives of Sandwich and report the general status of its
ongoing operations at such times as Sandwich may reasonably
request. 1855 Bancorp will promptly notify Sandwich of any
material change in the normal course of its business or in the
operation of its properties and, to the extent permitted by
applicable law, of any governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material
litigation involving 1855 Bancorp. 1855 Bancorp will also
provide Sandwich such information with respect to such events as
Sandwich may reasonably request from time to time. As soon as
reasonably available, but in no event more than 45 days after
the end of each calendar quarter ending after the date of this
Agreement (other than the last quarter of each fiscal year
ending October 31), the 1855 Bancorp will deliver to Sandwich a
consolidated balance sheet and a consolidated statement of
operations, without related notes, for such quarter prepared in
accordance with generally accepted accounting principles, and
within 25 days after the end of each month, 1855 Bancorp will
deliver to Sandwich a consolidated balance sheet and a
consolidated statement of operations, without related notes, for
such month prepared in accordance with generally accepted
accounting principles.
7.3 ACCESS TO PROPERTIES AND RECORDS. 1855 Bancorp shall
permit Sandwich reasonable access upon reasonable notice to its
properties and those of its subsidiaries, and shall disclose and
make available to Sandwich during normal business hours all of
its books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities,
including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' and
stockholders' meetings, organizational documents, by-laws,
material contracts and agreements, filings with any regulatory
authority, litigation files, plans affecting employees, and any
other business activities or prospects in which Sandwich may
have a reasonable interest; provided, however, that 1855 Bancorp
shall not be required to take any action that would provide
access to or to disclose information where such access or
disclosure would violate or prejudice the rights or business
interests or confidences of any customer or other person or
would result in the waiver by it of the privilege protecting
communications between it and any of its counsel.
7.4 FINANCIAL AND OTHER STATEMENTS.
7.4.1 Promptly upon receipt thereof, 1855 Bancorp will
furnish to Sandwich copies of each annual, interim or special
audit of the books of 1855 Bancorp and its subsidiaries made by
its independent accountants and copies of all internal control
reports submitted to 1855 Bancorp by such
32
accountants in connection with each annual, interim or special
audit of the books of 1855 Bancorp and its subsidiaries made by
such accountants.
7.4.2 As soon as practicable, 1855 Bancorp will
furnish to Sandwich copies of all such financial statements and
reports as it or any Subsidiary shall send to the Bank
Commissioner, the FDIC, the FRB or any other regulatory
authority, except as legally prohibited thereby.
7.4.3 1855 Bancorp will advise Sandwich promptly of
the receipt of any examination report of any federal or state
regulatory or examination authority with respect to the
condition or activities of 1855 Bancorp or any of its
subsidiaries.
7.4.4 With reasonable promptness, 1855 Bancorp will
furnish to Sandwich such additional financial data as Sandwich
may reasonably request, including without limitation, detailed
monthly financial statements and loan reports.
7.5 DISCLOSURE SUPPLEMENTS. From time to time prior to
the Effective Time, 1855 Bancorp will promptly supplement or
amend the Disclosure Schedules delivered in connection herewith
pursuant to Article V with respect to any material 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 such Disclosure Schedules or which is necessary
to correct any information in such Schedules which has been
rendered inaccurate thereby. No supplement or amendment to such
Schedules shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Article IX.
7.6 CONSENTS AND APPROVALS OF THIRD PARTIES. 1855 Bancorp
shall use all reasonable efforts to obtain as soon as
practicable all consents and approvals of any other Persons
necessary or desirable for the consummation of the transactions
contemplated by this Agreement, including, without limitation,
the approval of its Corporators of the Capital Offering.
7.7 ALL REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, 1855 Bancorp agrees to use all
reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated by this
Agreement.
7.8 FAILURE TO FULFILL CONDITIONS. In the event that 1855
Bancorp determines that a condition to its obligation to
complete the Merger cannot be fulfilled and that it will not
waive that condition, it will promptly notify Sandwich.
7.9 EMPLOYEE BENEFITS.
7.9.1 All employees of Sandwich and its Subsidiaries
as of the Effective Time shall become employees of 1855 Bancorp
or an 1855 Bancorp Subsidiary as of the Effective Time. Nothing
in this Agreement shall give any employee of Sandwich or its
Subsidiaries a right to continuing employment with 1855 Bancorp
or any Subsidiary thereof after the Effective Time. Any
employee of Sandwich or any Sandwich Subsidiary whose employment
with 1855 Bancorp or any 1855 Bancorp Subsidiary is terminated
by 1855 Bancorp within one year after the Effective Time shall
be entitled to receive (i) a lump-sum severance benefit in an
amount equal to two-weeks' pay for each year of employment (with
partial years of service included in the calculation on a
pro-rated basis), up to a maximum of 26 weeks' pay, and (ii)
continuation of health benefits, on the same terms and
conditions applicable to 1855 Bancorp's active employees, for
the same number of weeks factored into the calculation of
severance payments, and thereafter COBRA benefits for an
additional
33
period of time determined as though the Sandwich employee
terminates employment upon expiration of the period covered by
said continued health benefits.
7.9.2 As soon as practicable after the Effective Time,
1855 Bancorp shall provide or cause to be provided to all
employees of Sandwich and any Sandwich Subsidiary who remain
employed by 1855 Bancorp or any 1855 Bancorp Subsidiary after
the Effective Time with employee benefits which, in the
aggregate, are no less favorable than those generally afforded
to other employees of 1855 Bancorp or the 1855 Bancorp
Subsidiaries holding similar positions, subject to the terms and
conditions under which those employee benefits are made
available to such employees, provided, however, that (i) for
purposes of determining eligibility for and vesting of such
employee benefits only (and not for pension benefit accrual
purposes), service with Sandwich or any Sandwich Subsidiary
prior to the Effective Time shall be treated as service with an
"employer" as if such persons had been employees of 1855
Bancorp, to the extent permissible under the terms of 1855
Bancorp's Employee Plans, (ii) this Section 7.9 shall not be
construed to limit the ability of 1855 Bancorp and its
Subsidiaries to terminate the employment of any employee or to
review employee benefits programs from time to time and to make
such changes as they deem appropriate, and (iii) 1855 Bancorp or
a Subsidiary shall continue to provide post-retirement medical
benefits to former employees of Sandwich who as of the Effective
Time are receiving post-retirement medical benefits in
accordance with Sandwich's Previously Disclosed retiree health
care Plans I, II, and III, (iv) 1855 Bancorp shall honor any and
all vacation leave (but not sick leave) accrued by Sandwich's
employees, except to the extent of any duplication of benefits,
and (v) no preexisting condition exclusion that is currently
inapplicable to a Sandwich employee and/or the employee's
covered dependents shall affect their rights to health benefits
or coverage under 1855 Bancorp's plans, to the extent
permissible under such plans.
7.9.3 Sandwich has Previously Disclosed to 1855
Bancorp certain employment and change of control agreements,
deferred compensation plans, Grantor Trust Agreement,
Supplemental Retirement Plans and Split Dollar Insurance
Agreements (collectively, "Benefit Agreements"). Following the
Effective Time, 1855 Bancorp shall honor or cause its
Subsidiaries to honor in accordance with their terms all such
Previously Disclosed Benefit Agreements and assume or cause its
Subsidiaries to assume all duties, liabilities and obligations
under such agreements and arrangements. 1855 Bancorp agrees
that (i) the consummation of the transactions contemplated
hereby constitutes a "Change in Control" as defined in the
Benefit Agreements, and (ii) each of Sandwich's officers who is
party to an employment agreement with Sandwich will be deemed to
have suffered a material change in their responsibilities and
supervision as of the Effective Time, it being understood that
the President of Sandwich shall terminate employment as of the
Effective Time and receive payments under Section 11(a) of his
Employment at such time.
7.9.4 The allocated assets of Sandwich's Employee
Stock Ownership Plan shall be distributed as soon as
administratively practicable after the later of the Effective
Time and the receipt of a favorable determination letter, which
Sandwich may request at any time after the date of this
Agreement, from the Internal Revenue Service as to the effect of
the plan's termination on its tax-qualified status under
sections 401, 409, and 4975 of the Code. Participants in the
Employee Stock Ownership Plan shall have the right to transfer
their distributions into any tax-qualified defined contribution
plan that 1855 Bancorp maintains, but only if and to the extent
that such plan accepts rollover contributions or trustee-to-
trustee transfers from other tax-qualified plans.
7.10 DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE.
34
7.10.1 1855 Bancorp shall maintain, or shall cause
Compass Bank to maintain, in effect for six years from the
Effective Time, if available, the current directors' and
officers' liability insurance policies maintained by Sandwich
(provided, that 1855 Bancorp may substitute therefor policies of
at least the same coverage containing terms and conditions which
are not materially less favorable) with respect to matters
occurring prior to the Effective Time; provided, however, that
in no event shall 1855 Bancorp be required to expend pursuant to
this Section 7.10.1 more than $60,000 in the aggregate. In
connection with the foregoing, Sandwich agrees to provide such
insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior
claims.
7.10.2 From and after the Effective Time, 1855 Bancorp
shall, or shall cause Compass Bank to, indemnify, defend and
hold harmless each person who is now, or who has been at any
time before the date hereof or who becomes before the Effective
Time, an officer or director of Sandwich or the Sandwich
Subsidiaries or any of their respective subsidiaries (the
"Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorney's fees), liabilities or
judgments or amounts that are paid in settlement (which
settlement shall require the prior written consent of 1855
Bancorp, which consent shall not be unreasonably withheld) of or
in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, or administrative (each
a "Claim"), in which an Indemnified Party is, or is threatened
to be made, a party or witness in whole or in part on or arising
in whole or in part out of the fact that such person is or was a
director, officer or employee of Sandwich or any of its
subsidiaries if such Claim pertains to any matter of fact
arising, existing or occurring before the Effective Time
(including, without limitation, the Merger and the other
transactions contemplated hereby), regardless of whether such
Claim is asserted or claimed before, or at or after, the
Effective Time (the "Indemnified Liabilities"), to the fullest
extent permitted under applicable state or federal law in effect
as of the date hereof or as amended applicable to a time before
the Effective Time and under Sandwich's and Sandwich Bank's
Articles of Organization or Charter and By-Laws. 1855 Bancorp
shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full
extent permitted by applicable state or federal law in effect as
of the date hereof or as amended applicable to a time before the
Effective Time upon receipt of an undertaking to repay such
advance payments if he shall be adjudicated or determined to be
not entitled to indemnification in the manner set forth below.
Any Indemnified Party wishing to claim indemnification under
this Section 7.10.2 upon learning of any Claim, shall notify
1855 Bancorp (but the failure so to notify 1855 Bancorp shall
not relieve it from any liability which it may have under this
Section 7.10.2, except to the extent such failure materially
prejudices 1855 Bancorp) and shall deliver to 1855 Bancorp the
undertaking referred to in the previous sentence. In the event
of any such Claim (whether arising before or after the Effective
Time) (1) 1855 Bancorp shall have the right to assume the
defense thereof (in which event the Indemnified Parties will
cooperate in the defense of any such matter) and upon such
assumption 1855 Bancorp shall not be liable to any Indemnified
Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if 1855 Bancorp
elects not to assume such defense, or counsel for the
Indemnified Parties reasonably advises the Indemnified Parties
that there are or may be (whether or not any have yet actually
arisen) issues which raise conflicts of interest between 1855
Bancorp and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them, and 1855 Bancorp
shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties, (2) 1855 Bancorp shall be obligated
pursuant to this paragraph to pay for only one firm of counsel
for all Indemnified Parties whose reasonable fees and expenses
shall be
35
paid promptly as statements are received, (3) 1855 Bancorp shall
not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably
withheld) and (4) no Indemnified Party shall be entitled to
indemnification hereunder with respect to a matter as to which
(x) he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was
in the best interests of Sandwich or any Subsidiary, or (y) in
the event that a proceeding is compromised or settled so as to
impose any liability or obligation upon an Indemnified Party, if
there is a determination that with respect to said matter said
Indemnified Party did not act in good faith in the reasonable
belief that his action was in the best interests of Sandwich or
any Subsidiary. The determination shall be made by a majority
vote of the trustees of 1855 Bancorp who were formerly directors
of Sandwich and who are not involved in such proceeding (the
"Former Sandwich Directors"), or, if a majority of the Former
Sandwich Directors are involved in the proceeding, by a
committee of three disinterested Former Sandwich Directors
chosen by all of the Former Sandwich Directors for the purpose
of making such determination.
7.10.3 In the event that either 1855 Bancorp or
Compass Bank or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not
be the continuing or surviving bank or entity of such
consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the
successors and assigns of 1855 Bancorp shall assume the
obligations set forth in this Section 7.10.
7.10.4 The obligations of 1855 Bancorp provided under
this Section 7.10 are intended to be enforceable against 1855
Bancorp directly by the Indemnified Parties and shall be binding
on all respective successors and permitted assigns of 1855
Bancorp.
7.11 MERGER SUB. Prior to the Effective Time, 1855
Bancorp will take any and all necessary action to cause (i)
Merger Sub to be organized, (ii) Merger Sub to become a direct
or indirect wholly-owned subsidiary of 1855 Bancorp, (iii) the
directors and stockholder or stockholders of Merger Sub to
approve the transactions contemplated by this Agreement, and
(iv) Merger Sub to execute one or more counterparts of this
Agreement and to deliver at least one such counterpart so
executed to Sandwich, whereupon Merger Sub shall become a party
to and be bound by this Agreement.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 SANDWICH SPECIAL MEETING. Sandwich will (i) as
promptly as practicable, take all steps necessary to duly call,
give notice of, convene and hold a meeting of its stockholders
(the "Sandwich Stockholders Meeting") for the purpose of
approving this Agreement and the Merger, and for such other
purposes as may be, in Sandwich's reasonable judgment, necessary
or desirable, (ii) subject to the fiduciary responsibility of
the Board of Directors of Sandwich as advised by counsel,
recommend to its stockholders the approval of the aforementioned
matters to be submitted by it to its stockholders, and (iii)
cooperate and consult with 1855 Bancorp with respect to each of
the foregoing matters.
8.2 SANDWICH PROXY MATERIALS. As soon as practicable
after the date hereof, Sandwich shall file the Sandwich Proxy
Statement with the SEC under the Exchange Act and shall use all
reasonable efforts to have the Sandwich Proxy Statement cleared
by the SEC. 1855 Bancorp and Sandwich shall cooperate with each
other in the preparation of the Sandwich Proxy Statement; 1855
36
Bancorp shall provide Sandwich with any information concerning
it that Sandwich may reasonably request in connection with the
Proxy Statement and Sandwich shall notify 1855 Bancorp promptly
of the receipt of any comments of the SEC with respect to the
Sandwich Proxy Statement and of any requests by the SEC for any
amendment or supplement thereto or for additional information
and shall provide to 1855 Bancorp promptly copies of all
correspondence between Sandwich or any representative of
Sandwich and the SEC. Sandwich shall give 1855 Bancorp and its
counsel the opportunity to review the Sandwich Proxy Statement
prior to its being filed with the SEC and shall give 1855
Bancorp and its counsel the opportunity to review all amendments
and supplements to the Sandwich Proxy Statement and all
responses to requests for additional information and replies to
comments prior to their being filed with, or sent to, the SEC.
Each of 1855 Bancorp and Sandwich agrees to use all reasonable
efforts, after consultation with the other party hereto, to
respond promptly to all such comments of and requests by the SEC
and to cause the Sandwich Proxy Statement and all required
amendments and supplements thereto to be mailed to the holders
of Sandwich Common Stock entitled to vote at the Sandwich
Stockholders Meeting referred to in Section 8.1 hereof at the
earliest practicable time. 1855 Bancorp shall promptly notify
Sandwich if at any time it becomes aware that the Proxy
Statement contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
In such event, Sandwich and 1855 Bancorp shall cooperate in the
preparation of a supplement or amendment to such Proxy Statement
which corrects such misstatement or omission, and shall cause
the same to be filed with the SEC and to be mailed to Sandwich's
stockholders.
8.3 CAPITAL OFFERING. Commencing promptly after the date
of this Agreement, 1855 Bancorp and Compass Bank will take all
reasonable steps necessary to effect the Capital Offering and
1855 Bancorp shall use its best efforts to satisfy the
conditions to closing set forth in Section 9.2.5 (provided that
in no event shall 1855 Bancorp or Compass Bank (or the Mid-Tier
Subsidiary) be required to undertake a full conversion to stock
form or otherwise issue more than 49% of its capital stock). If
the Capital Offering is to be effected through the Mid-Tier
Holding Company, such steps shall include, without limitation,
organizing the Mid-Tier Holding Company as a newly-created
subsidiary of 1855 Bancorp and contributing all of the capital
stock of Compass Bank to the Mid-Tier Holding Company. In
addition, without limiting the generality of the foregoing, 1855
Bancorp shall cause the following to be done:
8.3.1 1855 Bancorp shall duly call, give notice of,
convene and hold a special meeting of its Board of Corporators
as soon as practicable for the purpose of approving the Capital
Offering. The Board of Trustees of 1855 Bancorp will recommend
to the Corporators the approval of the Capital Offering.
8.3.2 Compass Bank will use all reasonable efforts to
prepare and file all required regulatory applications required
in connection with the Capital Offering, including, without
limitation, filing applications with the Bank Commissioner, the
FDIC and the FRB (to the extent that the Capital Offering is
effected through the Mid-Tier Holding Company).
8.3.3 1855 Bancorp shall prepare as promptly as
practicable, and Sandwich shall co-operate in the preparation
of, a prospectus or offering circular (the "Offering Document")
meeting all requirements of applicable federal and state
securities and banking laws and regulations. If the Capital
Offering is to be effected through the Mid-Tier Holding Company,
1855 Bancorp shall incorporate such Offering Document into a
Form S-1 Registration Statement ("Form S-1") satisfying all
applicable requirements of the Securities Act, and the rules and
regulations thereunder, and shall
37
use its reasonable best efforts to have the Form S-1 declared
effective under the Securities Act as promptly as practicable
after such filing.
8.3.4 Sandwich shall provide 1855 Bancorp with any
information concerning it that 1855 Bancorp may reasonably
request in connection with the Offering Document, and Sandwich
shall promptly notify 1855 Bancorp if at any time it becomes
aware that the Offering Document or the Form S-1 contains any
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances
under which they were made, not misleading. In such event,
Sandwich and 1855 Bancorp shall cooperate in the preparation of
a supplement or amendment to such Offering Document, which
corrects such misstatement or omission, and shall cause an
amended Form S-1 to be filed with the SEC (if applicable).
Sandwich shall provide to 1855 Bancorp a "comfort" letter from
the independent certified public accountants for Sandwich, dated
as of the date of the Offering Document and updated as of the
date of consummation of the Capital Offering, with respect to
certain financial information regarding Sandwich, each in form
and substance which is customary in transactions such as the
Capital Offering, and shall cause its counsel to deliver to the
placement agent for the Capital Offering such opinions as 1855
Bancorp may reasonably request.
8.3.5 1855 Bancorp shall give Sandwich and its counsel
the opportunity to review the Offering Document prior to its
being filed with the Bank Commissioner and FDIC (and the SEC, if
applicable) and shall give Sandwich and its counsel the
opportunity to review all amendments and supplements to the
Offering Document and all responses to requests for additional
information and replies to comments prior to their being filed
with, or sent to, the Bank Commissioner, the FDIC (and the SEC,
if applicable). Each of 1855 Bancorp and Sandwich agrees to use
all reasonable efforts, after consultation with the other party
hereto, to respond promptly to all such comments of and requests
by the Bank Commissioner, FDIC and the SEC and to cause the
Offering Document and all required amendments and supplements
thereto to be mailed to the qualified depositors of Compass Bank
at the earliest practicable time.
8.4 REGULATORY APPROVALS. Each of Sandwich and 1855
Bancorp will cooperate with the other and use all reasonable
efforts to promptly prepare all necessary documentation, to
effect all necessary filings and to obtain all necessary
permits, consents, approvals and authorizations of all third
parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement, including without
limitation the Merger, the Bank Merger and the Capital Offering.
Sandwich and 1855 Bancorp will furnish each other and each
other's counsel with all information concerning themselves,
their subsidiaries, directors, officers and stockholders and
such other matters as may be necessary or advisable in
connection with the Offering Document, the Proxy Statement and
any application, petition or any other statement or application
made by or on behalf of Sandwich or 1855 Bancorp to any
governmental body in connection with the Capital Offering, the
Merger, the Bank Merger, and the other transactions contemplated
by this Agreement. Sandwich and 1855 Bancorp shall have the
right to review and approve in advance all characterizations of
the information relating to 1855 Bancorp or Sandwich, as the
case may be, and any of their respective subsidiaries, which
appear in any filing made in connection with the transactions
contemplated by this Agreement with any governmental body. In
addition, Sandwich and 1855 Bancorp shall each furnish to the
other for review a copy of each such filing made in connection
with the transactions contemplated by this Agreement with any
governmental body prior to its filing.
38
ARTICLE IX
CLOSING CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. The respective obligations of each party under this
Agreement shall be subject to the fulfillment at or prior to the
Effective Time of the following conditions, none of which may be
waived:
9.1.1 STOCKHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby shall have been approved in
accordance with applicable law, Articles of Organization,
By-laws and NASD policy by the requisite vote of the
stockholders of Sandwich.
9.1.2 INJUNCTIONS. None of the parties hereto shall
be subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits the
consummation of the transactions contemplated by this Agreement.
9.1.3 REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of all governmental bodies required
to consummate the transactions contemplated by this Agreement
shall have been obtained and shall remain in full force and
effect and all waiting periods relating to such approvals,
authorizations or consents shall have expired; and no such
approval, authorization or consent shall include any condition
or requirement, not reasonably foreseen as of the date of this
Agreement, that would, in the good faith reasonable judgment of
the Board of Directors of 1855 Bancorp and Sandwich, materially
and adversely affect the business, operations, financial
condition, property or assets of the combined enterprise or of
Sandwich or Sandwich Bank or otherwise materially impair the
value of Sandwich or Sandwich Bank to 1855 Bancorp.
9.2 CONDITIONS TO THE OBLIGATIONS OF 1855 BANCORP UNDER
THIS AGREEMENT. The obligations of 1855 Bancorp under this
Agreement shall be further subject to the satisfaction, at or
prior to the Effective Time, of the following conditions:
9.2.1 REPRESENTATIONS AND WARRANTIES. The represen-
tations and warranties of Sandwich set forth in Article IV
hereof shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (or on the date when made in
the case of any representation and warranty which specifically
relates to an earlier date), except as otherwise contemplated by
this Agreement or consented to in writing by 1855 Bancorp;
provided, however, that (i) in determining whether or not the
condition contained in this Section 9.2.1 shall be satisfied, no
effect shall be given to any exceptions in such representations
and warranties relating to materiality or Material Adverse
Effect and (ii) the condition contained in this Section 9.2.1
shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse
Effect on Sandwich and the Sandwich Subsidiaries, taken as a
whole; and Sandwich shall have delivered to 1855 Bancorp a
certificate of Sandwich to such effect signed by the Chief
Executive Officer and the Chief Financial Officer of Sandwich as
of the Effective Time.
9.2.2 AGREEMENTS AND COVENANTS. Sandwich shall have
performed in all material respects all obligations and complied
in all material respects with all agreements or covenants of
Sandwich to be performed or complied with by it at or prior to
the Effective Time under this Agreement, except to the extent
that any failure to perform or comply shall not individually, or
in the aggregate, have a Material Adverse Effect on Sandwich and
the Sandwich Subsidiaries, taken as a whole, or materially
adversely affect consummation of the Merger and other
transactions contemplated hereby, and 1855 Bancorp shall have
received a certificate signed on behalf of
39
Sandwich by the Chief Executive Officer and Chief Financial
Officer of Sandwich to such effect dated as of the Effective
Time.
9.2.3 PERMITS, AUTHORIZATIONS, ETC. Sandwich and the
Sandwich Subsidiaries shall have obtained any and all material
permits, authorizations, consents, waivers, clearances or
approvals required for the lawful consummation of the Merger by
Sandwich, the failure to obtain which would have a Material
Adverse Effect on Sandwich and the Sandwich Subsidiaries, taken
as a whole.
9.2.4 LEGAL OPINION. 1855 Bancorp shall have received
an opinion, dated the Closing Date, from Housley Kantarian and
▇▇▇▇▇▇▇▇▇ P.C., counsel to Sandwich, in the form attached hereto
as Exhibit B.
9.2.5 CAPITAL OFFERING. 1855 Bancorp shall have
consummated the Capital Offering, and such Capital Offering
shall have resulted in net proceeds to Compass Bank or the
Mid-Tier Holding Company sufficient to enable Compass Bank to
remain "well-capitalized" under applicable federal banking law
and otherwise to meet regulatory capital requirements, in each
case after giving effect to the Merger.
Sandwich will furnish 1855 Bancorp with such certificates
of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 9.2 as
1855 Bancorp may reasonably request.
9.3 CONDITIONS TO THE OBLIGATIONS OF SANDWICH UNDER THIS
AGREEMENT. The obligations of Sandwich under this Agreement
shall be further subject to the satisfaction, at or prior to the
Effective Time, of the following conditions:
9.3.1 REPRESENTATIONS AND WARRANTIES. The represen-
tations and warranties of 1855 Bancorp set forth in Article V
hereof shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (or on the date when made in
the case of any representation and warranty which specifically
relates to an earlier date), except as otherwise contemplated by
this Agreement or consented to in writing by Sandwich;
provided, however, that (i) in determining whether or not the
condition contained in this Section 9.3.1 shall be satisfied, no
effect shall be given to any exceptions in such representations
and warranties relating to materiality or Material Adverse
Effect and (ii) the condition contained in this Section 9.3.1
shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse
Effect on 1855 Bancorp; and 1855 Bancorp shall have delivered to
Sandwich a certificate of 1855 Bancorp to such effect signed by
the Chief Executive Officer and the Chief Financial Officer of
1855 Bancorp as of the Effective Time;
9.3.2 AGREEMENTS AND COVENANTS. 1855 Bancorp shall
have performed in all material respects all obligations and
complied in all material respects with all agreements or
covenants of 1855 Bancorp to be performed or complied with by it
at or prior to the Effective Time under this Agreement except to
the extent that any failure to perform or comply shall not
individually, or in the aggregate, have a Material Adverse
Effect on 1855 Bancorp and the 1855 Bancorp Subsidiaries, taken
as a whole, or materially adversely affect consummation of the
Merger and other transactions contemplated hereby, and Sandwich
shall have received a certificate signed on behalf of 1855
Bancorp by the Chief Executive Officer and Chief Financial
Officer of 1855 Bancorp to such effect dated as of the Effective
Time.
40
9.3.3 PERMITS, AUTHORIZATIONS, ETC. 1855 Bancorp and
its subsidiaries shall have obtained any and all material
permits, authorizations, consents, waivers, clearances or
approvals required for the lawful consummation of the Merger by
1855 Bancorp and the Bank Merger by Compass Bank, the failure to
obtain which would have a Material Adverse Effect on 1855
Bancorp and its subsidiaries, taken as a whole.
9.3.4 LEGAL OPINION. Sandwich shall have received an
opinion from ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to 1855 Bancorp,
dated the Closing Date, in the form attached hereto as Exhibit
C.
9.3.5 PAYMENT OF MERGER CONSIDERATIONS. 1855 Bancorp
shall have delivered to the Paying Agent on or before the
Closing Date the aggregate amount of the Merger Consideration in
immediately available funds to be paid to holders of the
Sandwich common stock pursuant to Article III of this Agreement
and the Paying Agent shall provide Sandwich with a certificate
evidencing such delivery.
1855 Bancorp will furnish Sandwich with such certificates
of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 9.3 as
Sandwich may reasonably request.
ARTICLE X
THE CLOSING
10.1 TIME AND PLACE. Subject to the provisions of
Articles IX and XI hereof, the Closing of the transactions
contemplated hereby shall take place at the offices of ▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
at 10:00 a.m. on a date specified by 1855 Bancorp at least three
business days prior to such date. The Closing Date shall be as
soon as practicable after the later to occur of the consummation
of the Capital Offering or the receipt of last required approval
for the Merger and the Bank Merger and the expiration of the
last of all required waiting periods under such approvals, or at
such other place, date or time as 1855 Bancorp and Sandwich may
mutually agree upon.
10.2 DELIVERIES AT THE CLOSING. At the Closing there
shall be delivered to 1855 Bancorp and Sandwich the opinions,
certificates, and other documents and instruments required to be
delivered under Article IX hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after
approval of the Merger by the stockholders of Sandwich:
11.1.1 At any time by the mutual written agreement of
1855 Bancorp and Sandwich;
11.1.2 By either Sandwich or 1855 Bancorp (provided,
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the
part of the other party, which breach by its nature cannot be
cured prior to the Effective Time or within 30 business days
after written notice by 1855 Bancorp to Sandwich (or by Sandwich
to 1855 Bancorp) of such breach (for purposes of this Section
11.1.2 a material breach shall be deemed to be a breach which
has, either individually or in the aggregate, a Material
41
Adverse Effect on the party making such representations or
warranties (provided, that no effect shall be given to any
qualification relating to materiality or a Material Adverse
Effect in such representations and warranties) or a Material
Adverse Effect on the business, operations, financial condition,
property or assets of the combined enterprise or which
materially adversely affects consummation of the Merger and the
other transactions contemplated hereby, including the Capital
Offering);
11.1.3 By either Sandwich or 1855 Bancorp (provided,
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material failure to perform
or comply with any of the covenants or agreements set forth in
this Agreement on the part of the other party, which failure
shall not have been cured within 30 business days after written
notice by 1855 Bancorp to Sandwich (or by Sandwich to 1855
Bancorp) of such failure (for purposes of this Section 11.1.3 a
material failure to perform or comply shall be deemed to be a
failure which has, either individually or in the aggregate, a
Material Adverse Effect on the party so failing or on the
business, operations, financial condition, property or assets of
the combined enterprise or which materially adversely affects
consummation of the Merger and the other transactions
contemplated hereby, including the Capital Offering);
11.1.4 At the election of either 1855 Bancorp or
Sandwich, if the Closing shall not have occurred on or before
December 31, 1998 (the "Termination Date"), or such later date
as shall have been agreed to in writing by 1855 Bancorp and
Sandwich; provided, that no party may terminate this Agreement
pursuant to this Section 11.1.4 if the failure of the Closing to
have occurred on or before said date was due to such party's
breach of any of its obligations under this Agreement, and
provided, further, that the Termination Date may be extended for
an additional two-month period by either party by written notice
to the other party (given not later than one week prior to the
Termination Date) if the Closing shall not have occurred because
of failure to have obtained approval from one or more regulatory
authorities whose approval is required in connection with this
Agreement and the transactions contemplated hereby (including,
without limitation, in connection with the Capital Offering)
under circumstances in which neither party has the right to
terminate this Agreement pursuant to Section 11.1.6 hereof;
11.1.5 By either Sandwich or 1855 Bancorp if the
stockholders of Sandwich shall have voted at the Sandwich
stockholders meeting on the transactions contemplated by this
Agreement and such vote shall not have been sufficient to
approve such transactions;
11.1.6 By either Sandwich or 1855 Bancorp (i) if final
action has been taken by a regulatory authority whose approval
is required in connection with this Agreement and the
transactions contemplated hereby (other than the Capital
Offering), which final action (x) has become unappealable and
(y) does not approve this Agreement or the transactions
contemplated hereby, or (ii) if any court of competent
jurisdiction or other governmental authority shall have issued
an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger or the Bank Merger
and such order, decree, ruling or other action shall have become
final and nonappealable;
11.1.7 By either Sandwich or 1855 Bancorp (i) if
final action has been taken by a regulatory authority whose
approval is required in connection with the Capital Offering,
which final action (x) has become unappealable and (y) does not
approve the Capital Offering, or (ii) if any court of competent
jurisdiction or other governmental authority shall have issued
an order, decree,
42
ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Capital Offering and such order,
decree, ruling or other action shall have become final and
nonappealable; or
11.1.8 By Sandwich or 1855 Bancorp if a Payment Event
occurs.
11.2 EFFECT OF TERMINATION.
11.2.1 In the event of termination of this Agreement
pursuant to any provision of Section 11.1, this Agreement shall
forthwith become void and have no further force, except that (i)
the provisions of Sections 1.1, 11.3, 11.4, 12.1, 12.2, 12.6,
12.9, 12.10, this Section 11.2, and any other Section which, by
its terms, relates to post-termination rights or obligations,
shall survive such termination of this Agreement and remain in
full force and effect.
11.2.2 If this Agreement is terminated, expenses and
damages of the parties hereto shall be determined as follows:
(a) Subject to Sections 11.3 and 11.4, termination
of this Agreement pursuant to Section 11.1 (other than
termination pursuant to Sections 11.1.2 and 11.1.3 as a
result of a willful breach or gross negligence by a party
hereto) shall be without liability, cost or expense on the
part of any party to the other.
(b) In the event of a termination of this Agreement
pursuant to Section 11.1.2 or 11.1.3 hereof resulting from
the willful conduct or gross negligence of a party, such
party shall be obligated to reimburse the other party for
up to $1,000,000 of out-of-pocket costs and expenses,
including, without limitation, reasonable legal, accounting
and investment banking fees and expenses, incurred by such
other party in connection with the entering into of this
Agreement and the carrying out of any and all acts
contemplated hereunder (collectively referred to as
"Costs"). The payment of Costs is not an exclusive remedy,
but is in addition to any other rights or remedies
available to the parties hereto at law or in equity or as
is contemplated herein. Notwithstanding anything to the
contrary herein, if (i) Sandwich makes the payment
contemplated in Section 11.4 of this Agreement or (ii) if
1855 Bancorp makes the payment contemplated in Section 11.3
of this Agreement, such party shall not have any further
liability to the other party (or its Subsidiaries), whether
for Costs, breach or otherwise.
11.2.3 Except as provided in Sections 11.2.2, 11.3 and
11.4, whether or not the Merger is consummated, all Costs
incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such
costs and expenses.
11.2.4 In no event shall any officer, agent or
director of Sandwich, any Sandwich Subsidiary, 1855 Bancorp or
any 1855 Bancorp Subsidiary, be personally liable thereunder for
any default by any party in any of its obligations hereunder
unless any such default was intentionally caused by such
officer, agent or director.
11.3 1855 BANCORP SPECIAL PAYMENT. As a condition of
Sandwich's willingness to, and in order to induce Sandwich to,
enter into this Agreement, and to reimburse Sandwich for
incurring the damages, costs and expenses related to entering
into this Agreement and consummating the transactions
contemplated by this Agreement, 1855 Bancorp hereby agrees to
pay to Sandwich, as liquidated damages and in lieu of any other
rights or remedies under this Agreement, a payment in the amount
of $4,000,000 (the "Special Payment") if and only if (i) the
Merger is not consummated and the Agreement is terminated in
accordance with its terms due to the failure of the condition
set
43
forth in Section 9.2.5 of this Agreement, or (ii) the Agreement
is terminated pursuant to Section 11.1.7, or (iii) 1855 Bancorp
otherwise does not consummate the Capital Offering by no later
than December 31, 1998 (subject to the two month extension
contemplated in Section 11.1.4 herein), or (iv) Sandwich has
terminated this Agreement in accordance with Section 11.1.2 or
11.1.3 because 1855 Bancorp has intentionally or willfully
breached any of its representations or warranties herein or
intentionally and willfully failed to perform or comply with any
of its covenants or agreements herein, to such extent as to
permit such termination (such reasons for termination being
hereinafter referred to as the "Special Payment Event").
Notwithstanding the foregoing, 1855 Bancorp shall have no
obligation to make any Special Payment to Sandwich if the
Special Payment Event is primarily due to a breach of a
representation or warranty of Sandwich (subject to the standard
set forth in Section 11.1.2 of this Agreement) or a breach by
Sandwich one or more covenants in this Agreement (subject to the
standard set forth in Section 11.1.3 of this Agreement), which
breach of representation, warranty or covenant directly or
adversely affects 1855 Bancorp's ability to consummate the
Merger or satisfy the condition set forth in Section 9.2.5 of
this Agreement.
11.3.1 PAYMENTS REQUIRED. Any payment required to be
made under this Section 11.3 shall be paid by 1855 Bancorp to
Sandwich by wire transfer of immediately available funds to an
account designated by Sandwich within five business days after
demand by Sandwich.
11.3.2 EXCLUSIVITY OF REMEDY. Notwithstanding
anything to the contrary set forth in this Agreement, if 1855
Bancorp pays or causes to be paid to Sandwich the Special
Payment, neither 1855 Bancorp nor Compass Bank will have any
further obligations or liabilities to Sandwich or Sandwich Bank
with respect to this Agreement or the transactions contemplated
by this Agreement.
11.4 SANDWICH CHANGE IN CONTROL EXPENSE FEE. As a
condition of 1855 Bancorp's willingness to, and in order to
induce 1855 Bancorp to, enter into this Agreement, and to
reimburse 1855 Bancorp for incurring the damages, costs and
expenses related to entering into this Agreement and
consummating the transactions contemplated by this Agreement,
Sandwich hereby agrees to pay to 1855 Bancorp, as liquidated
damages, and in lieu of any other rights or remedies under this
Agreement, a payment in the amount of $4,000,000 (the "Expense
Fee") if and only if a Payment Event (as hereinafter defined)
shall have occurred before the Expense Fee Termination Date (as
hereinafter defined) determined in accordance with Section
11.4.3.
11.4.1 "PAYMENT EVENT" shall mean any of the following
events:
(a) Without 1855 Bancorp's prior written consent,
Sandwich shall have authorized, proposed, or entered into,
or publicly announced an intention to authorize, propose,
or enter into an agreement with any person (other than 1855
Bancorp or any 1855 Bancorp Subsidiary) to effect (A) a
merger, consolidation or similar transaction involving
Sandwich or any Sandwich Subsidiary, (B) the disposition,
by sale, lease, exchange or otherwise, of assets of
Sandwich or any Sandwich Subsidiary representing in either
case 15% or more of the consolidated assets of Sandwich and
the Sandwich Subsidiaries, or (C) the issuance, sale or
other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 15% or more of the voting power of
Sandwich or any Sandwich Subsidiary (any of the foregoing a
"Change of Control Transaction"); or
(b) any person (other than 1855 Bancorp or any 1855
Bancorp Subsidiary) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of or the right to
acquire beneficial ownership of, or any "group" (as such
term is defined in Section 13(d)(3) of the Exchange Act)
shall have been formed
44
which beneficially owns or has the right to acquire beneficial
ownership of, 34% or more of the then outstanding shares of
Sandwich Common Stock.
11.4.2 A "TIME EXTENSION EVENT" means any of the
following events:
(a) any person (other than 1855 Bancorp or any 1855
Bancorp Subsidiary) 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 Sandwich Common Stock such that,
upon consummation of such offer, such person would own or
control 10% or more of the then outstanding shares of
Sandwich Common Stock (such an offer being referred to
herein as a "Tender Offer" and an "Exchange Offer,"
respectively); or
(b) following the public announcement of an
Acquisition Proposal, the holders of Sandwich Common Stock
shall not have approved this Agreement at the meeting of
such stockholders held for the purpose of voting on this
Agreement (the term "Acquisition Proposal" is defined to
mean (x) a bona fide proposal by any person (other than
1855 Bancorp or any subsidiary of 1855 Bancorp) shall have
been made to Sandwich or its stockholders to engage in a
Change of Control Transaction, (y) any person (other than
1855 Bancorp or any subsidiary of 1855 Bancorp) shall have
stated its intention to Sandwich or its stockholders to
make a proposal to engage in a Change of Control
Transaction if this Agreement terminates or (z) any person
(other than 1855 Bancorp or any subsidiary of 1855 Bancorp)
shall have filed an application or notice with any
Governmental Entity to engage in a Change of Control
Transaction); or
(c) following the occurrence of an Acquisition
Proposal:
(i) the meeting of Sandwich stockholders held
for the purpose of voting on this Agreement shall
not have been held or shall have been canceled prior
to termination of this Agreement,
(ii) Sandwich's Board of Directors shall have
withdrawn or modified in a manner adverse to 1855
Bancorp the recommendation of Sandwich's Board of
Directors with respect to this Agreement and the
Merger; or
(iii) Sandwich shall have willfully or
intentionally breached any representation, warranty,
covenant or obligation contained in this Agreement
and such breach would entitle 1855 Bancorp to
terminate this Agreement under Section 11.1.2 or
11.1.3 hereof (without regard to 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).
11.4.3 DURATION OF 1855 BANCORP'S RIGHTS WITH RESPECT
TO EXPENSE FEE. Notwithstanding any other provision of this
Agreement, the provisions of this Section 11.4 shall remain in
effect and shall be enforceable by 1855 Bancorp or any successor
in interest until the "Expense Fee Termination Date", which
shall be the earliest to occur of:
(a) The Effective Time of the Merger,
(b) The date that is 12 months after termination of
this Agreement following the occurrence of a Time Extension
Event;
45
(c) The date on which the Agreement is terminated in
accordance with its terms, but only if such termination
takes place prior to the occurrence of a Payment Event or a
Time Extension Event.
11.4.4 PAYMENTS REQUIRED. Any payment required to be
made under this Section 11.4 shall be paid by Sandwich to 1855
Bancorp by wire transfer of immediately available funds to an
account designated by 1855 Bancorp within five business days
after demand by 1855 Bancorp. In the event of a termination
under circumstances that would trigger a payment under this
Section 11.4, the standstill provisions contained in the
Confidentiality Agreement shall terminate.
11.4.5 EXCLUSIVITY OF REMEDY. Notwithstanding anything
to the contrary set forth in this Agreement, if Sandwich pays or
causes to be paid to 1855 Bancorp or to Compass Bank the Expense
Fee, neither Sandwich nor Sandwich Bank will have any further
obligations or liabilities to 1855 Bancorp or Compass Bank with
respect to this Agreement or the transactions contemplated by
this Agreement.
11.5 AMENDMENT, EXTENSION AND WAIVER. Subject to applica-
ble law, at any time prior to the Effective Time (whether before
or after approval thereof by the stockholders of Sandwich), the
parties hereto may (a) amend this Agreement, (b) extend the time
for the performance of any of the obligations or other acts of
any other party hereto, (c) waive any inaccuracies in the repre-
sentations and warranties contained herein or in any document
delivered pursuant hereto, or (d) waive compliance with any of
the agreements or conditions contained herein; provided,
however, that after any approval of this Agreement and the
transactions contemplated hereby by the stockholders of
Sandwich, there may not be, without further approval of such
stockholders, any amendment of this Agreement which reduces the
amount or changes the form of consideration to be delivered to
Sandwich's stockholders pursuant to this Agreement. This
Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Any agreement
on the part of a party hereto to any extension or waiver shall
be valid only if set forth in an instrument in writing signed on
behalf of such party, but such waiver or failure to insist on
strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE XII
MISCELLANEOUS
12.1 CONFIDENTIALITY. Except as specifically set forth
herein, 1855 Bancorp and Sandwich mutually agree to be bound by
the terms of the Confidentiality Agreements previously executed
by the parties hereto, which Agreements are hereby incorporated
herein by reference. The parties hereto agree that such Confi-
dentiality Agreements shall continue in accordance with their
respective terms, notwithstanding the termination of this Agree-
ment.
12.2 PUBLIC ANNOUNCEMENTS. Sandwich and 1855 Bancorp
shall cooperate with each other in the development and
distribution of all news releases and other public information
disclosures with respect to this Agreement, except as may be
otherwise required by law, and neither Sandwich nor 1855 Bancorp
shall issue any joint news releases with respect to this
Agreement unless such news releases have been mutually agreed
upon by the parties hereto, except as required by law.
12.3 SURVIVAL. All representations, warranties and
covenants in this Agreement or in any instrument delivered
pursuant hereto or thereto shall expire on, and be terminated
and extinguished
46
at, the Effective Date other than covenants that by
their terms are to survive or be performed after the Effective
Date.
12.4 NOTICES. All notices or other communications hereun-
der shall be in writing and shall be deemed given if delivered
by receipted hand delivery or mailed by prepaid registered or
certified mail (return receipt requested) or by cable, telegram,
telex or fax addressed as follows:
If to Sandwich or Sandwich Bank, to:
▇▇▇ ▇▇▇ ▇▇▇▇'▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With required ▇▇▇▇▇ to each of :
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Housley Kantarian & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to 1855 Bancorp or to Compass Bank, to:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With required copies to each of:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as shall be furnished in writing by any
party, and any such notice or communication shall be deemed to
have been given as of the date so mailed.
12.5 PARTIES IN INTEREST. This Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided,
however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other
party, and that (except as otherwise expressly provided in this
Agreement or as is contemplated in Section 7.9 of this
Agreement)
47
nothing in this Agreement is intended to confer upon
any other Person any rights or remedies under or by reason of
this Agreement.
12.6 COMPLETE AGREEMENT. This Agreement, including the
Exhibits and Disclosure Schedules hereto and the documents and
other writings referred to herein or therein or delivered
pursuant hereto or thereto, contains the entire agreement and
understanding of the parties with respect to its subject matter.
There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties other than those
expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings (other than
the Confidentiality Agreements referred to in Section 12.1
hereof) between the parties, both written and oral, with respect
to its subject matter.
12.7 COUNTERPARTS. This Agreement may be executed in one
or more counterparts all of which shall be considered one and
the same agreement and each of which shall be deemed an
original.
12.8 SEVERABILITY. In the event that any one or more
provisions of this Agreement shall for any reason be held
invalid, illegal or unenforceable in any respect, by any court
of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement and the parties shall use their reasonable efforts to
substitute a valid, legal and enforceable provision which,
insofar as practical, implements the purposes and intents of
this Agreement.
12.9 GOVERNING LAW. This Agreement shall be governed by
the laws of Massachusetts, without giving effect to its
principles of conflicts of laws.
12.10 INTERPRETATION. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a
Section of or Exhibit to this Agreement unless otherwise
indicated. The recitals hereto constitute an integral part of
this Agreement. References to Sections include subsections,
which are part of the related Section (e.g., a section numbered
"Section 5.5.1" would be part of "Section 5.5" and references to
"Section 5.5" would also refer to material contained in the
subsection described as "Section 5.5.1"). The table of contents,
index and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation". The
phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires,
shall be deemed to refer to the date set forth in the Recitals
to this Agreement.
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
48
IN WITNESS WHEREOF, 1855 Bancorp, Compass Bank, Sandwich
and Sandwich Bank have caused this Agreement to be executed
under seal by their duly authorized officers as of the date
first set forth above.
THE 1855 BANCORP
[SEAL] By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
President and CEO
[SEAL] By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Treasurer
COMPASS BANK FOR SAVINGS
[SEAL] By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
President and CEO
[SEAL] By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Treasurer
SANDWICH BANCORP, INC.
[SEAL] By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
President and CEO
[SEAL] By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Treasurer
THE SANDWICH CO-OPERATIVE BANK
[SEAL] By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
President and CEO
[SEAL] By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Treasurer
49