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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BOSTONFED BANCORP, INC.
AND
BROADWAY CAPITAL CORP.
DATED AS OF THE 20TH DAY OF SEPTEMBER, 1996
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TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER
Section 1.01 Structure of the Merger................................ 1
Section 1.02 Purchase Price......................................... 2
Section 1.03 Effect on Outstanding Shares........................... 2
Section 1.04 Exchange Procedures.................................... 3
Section 1.05 Options and Rights..................................... 5
Section 1.06 Secondary Merger....................................... 5
Section 1.07 Modification of Structure.............................. 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01 Representations and Warranties of the Seller........... 5
Section 2.02 Representations and Warranties of the Purchaser and
Acquisition Corp....................................... 19
ARTICLE III
CONDUCT PENDING THE MERGER
Section 3.01 Conduct of the Seller's Business Prior to the
Effective Time..........................................22
Section 3.02 Forbearance by the Seller...............................23
Section 3.03 Conduct of the Purchaser's Business Prior to
the Effective Time......................................27
ARTICLE IV
COVENANTS
Section 4.01 No Solicitation........................................ 27
Section 4.02 Certain Policies of the Seller; Balance Sheet.......... 28
Section 4.03 Access and Information................................. 29
Section 4.04 Employees and Directors................................ 30
Section 4.05 Certain Filings, Consents and Arrangements............. 31
Section 4.06 Anti-takeover Provisions............................... 31
Section 4.07 Additional Agreements.................................. 31
Section 4.08 Publicity...............................................32
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Section 4.09 Notification of Certain Matters........................ 32
Section 4.10 Directors' Insurance................................... 32
Section 4.11 Shareholders' Meeting. ............................... 32
Section 4.12 Dissenters' Rights. .................................. 33
Section 4.13 Continuation of Leases................................. 33
Section 4.14 Subsequent Financial Statements........................ 33
Section 4.15 Current Information ....................................33
ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.01 Conditions to Each Party's Obligations................. 34
Section 5.02 Conditions to the Obligations of the Purchaser
under this Agreement................................... 34
Section 5.03 Conditions to the Obligations of the Seller.............36
ARTICLE VI
TERMINATION
Section 6.01 Termination.............................................38
Section 6.02 Effect of Termination.................................. 39
Section 6.03 Termination Fee........................................ 39
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.01 Effective Date and Effective Time...................... 39
Section 7.02 Deliveries at the Closing.............................. 39
ARTICLE VIII
OTHER MATTERS
Section 8.01 Certain Definitions; Interpretation.................... 40
Section 8.02 Survival............................................... 40
Section 8.03 Amendment.............................................. 40
Section 8.04 Waiver................................................. 40
Section 8.05 Counterparts........................................... 41
Section 8.06 Governing Law.......................................... 41
Section 8.07 Expenses............................................... 41
Section 8.08 Notices................................................ 41
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Section 8.09 Entire Agreement; Etc.................................. 42
Section 8.10 Assignment............................................. 42
Section 8.11 Schedules Not Admissions............................... 42
LIST OF EXHIBITS
Exhibit A Plan of Merger
Exhibit B Shareholder Agreement
Exhibit C Employment Agreement
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This is an AGREEMENT AND PLAN OF MERGER, dated as of the 20th day of
September, 1996 (this "Agreement"), by and among BOSTONFED BANCORP, INC., a
Delaware corporation (the "Purchaser") and BROADWAY CAPITAL CORP., a
Massachusetts corporation (the "Seller").
INTRODUCTORY STATEMENT
The Boards of Directors of the Purchaser and the Seller have approved, and
deem it advisable and in the best interests of their respective companies and
their shareholders to consummate the business combination transaction provided
for herein in which a subsidiary of Purchaser ("Acquisition Corp.") will,
subject to the terms and conditions set forth herein, merge with and into the
Seller.
The Purchaser and the Seller desire to make certain representations,
warranties and agreements in connection with the business combination
transaction provided for herein and to prescribe various conditions to such
transaction.
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
THE MERGER
SECTION 1.01 STRUCTURE OF THE MERGER. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined in Section 7.01):
Acquisition Corp. shall merge (the "Merger") with and into the Seller pursuant
to a Plan of Merger substantially in the form attached as Exhibit A, which
qualifies as a reorganization under Section 368 of the Internal Revenue Code of
1986, as amended; the separate existence of Acquisition Corp. shall cease;
Seller shall be the surviving corporation in the Merger (the "Surviving
Corporation") and shall then be a wholly owned subsidiary of Purchaser; and all
of the property (real, personal and mixed), rights, powers and duties and
obligations of Acquisition Corp. shall be taken and deemed to be transferred to
and vested in Seller, as the Surviving Corporation in the Merger, without
further act or deed, all in accordance with the applicable laws of the
Commonwealth of Massachusetts. At the Effective Time (as defined in Section
7.01), the Articles of Organization and Bylaws of the Seller shall be amended in
their entirety to conform to the Articles of Organization and Bylaws of
Acquisition Corp. in effect immediately prior to the Effective Time and shall
become the Articles of Organization and Bylaws of the Surviving Corporation. At
the Effective Time, the directors and officers of Acquisition Corp. shall become
the directors and officers of the Surviving Corporation.
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SECTION 1.02 PURCHASE PRICE.
(a) The aggregate purchase price (the "Purchase Price") to be paid by the
Purchaser to the stockholders of the Seller pursuant to Section 1.03 shall be
$369.31 per share of the Seller's issued and outstanding shares of common stock,
par value $0.01 per share (the "Seller Common Stock") as of the Effective Time
multiplied by the number of then issued and outstanding shares (which shall not
exceed 59,570 such shares) of Seller Common Stock (the "Base Price"), adjusted
as set forth in paragraph (b) below and as set forth in Section 3.03(b) of this
Agreement.
(b) The Base Price shall be reduced by:
(i) Any costs in excess of $190,000 incurred or paid by the Seller
in connection with this Agreement and the business combination transaction
contemplated herein. Such costs include, but are not limited to, legal and
accounting fees and expenses (including any such fees and expenses for tax
advice and counsel); the cost of any fairness opinion; any investment banker,
finders, or other similar fees and expenses but not including the payment
identified in Section 4.04(c) hereof; and
(ii) Any dividend paid by the Seller to its shareholders after June
30, 1996 in excess in the aggregate of $134,430 in dividends per quarter;
provided, however, to the extent that additional shares of Seller Common Stock
are issued on or prior to December 31, 1996 pursuant to the exercise of
presently outstanding options to purchase such shares of Seller Common Stock,
the aggregate dividends which may thereafter be paid in a quarter would be
increased by $3 per share for each such additional share of Seller Common Stock
issued on or before December 31, 1996; and
(iii) Any bonuses or similar payments to employees made between June
30, 1996 and the Closing in excess of an aggregate of $250,000; and
(iv) Any amount paid upon the exercise of Stock Appreciation Rights
or similar rights ("SARs") after June 30, 1996 in excess of the aggregate of
$1,688,188.
(c) The "Per Share Purchase Price" shall be the Purchase Price (as
adjusted pursuant to paragraph (b) above and as set forth in Section 3.03(b) of
this Agreement) divided by the number of issued and outstanding shares of Seller
Common Stock at the Effective Time.
SECTION 1.03 EFFECT ON OUTSTANDING SHARES.
(a) By virtue of the Merger, automatically and without any action on the
part of the holder thereof, each share of Seller Common Stock, issued and
outstanding at the Effective Time (which shares of Seller Common Stock shall not
exceed a total of 59,570 shares), other than (i) shares held directly or
indirectly by the Purchaser (other than shares held in a fiduciary capacity or
in satisfaction of a debt previously contracted) (ii) shares held
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as treasury stock of the Seller (iii) shares underlying unexercised stock
options and (iv) shares as to which dissenters' rights have been asserted and
duly perfected in accordance with the provisions of the laws of the Commonwealth
of Massachusetts, shall become and be converted into the right to receive the
Per Share Purchase Price in cash without interest (the "Merger Consideration").
As of the Effective Time, each share of Seller Common Stock held directly or
indirectly by the Purchaser (other than shares held in a fiduciary capacity or
in satisfaction of a debt previously contracted), and each share of Seller
Common Stock held as treasury stock of the Seller shall be cancelled and retired
and cease to exist, and no exchange or payment shall be made with respect
thereto. Any shares as to which dissenters' rights have been asserted and duly
perfected in accordance with the provisions of the laws of the Commonwealth of
Massachusetts also shall be cancelled and retired and cease to exist, and the
holder of such shares shall only be entitled to the dissenters' rights provided
by law. Each option to purchase Seller Common Stock outstanding immediately
prior to the Effective Time, shall be cancelled and shall only be entitled to
the right to receive the cash payment as set forth in Section 1.05.
(b) The shares of common stock of Acquisition Corp. issued and outstanding
immediately prior to the Effective Time shall become shares of the Surviving
Corporation after the Merger and shall thereafter constitute all of the issued
and outstanding shares of the capital stock of the Surviving Corporation.
SECTION 1.04 EXCHANGE PROCEDURES.
(a) At and after the Effective Time, each certificate previously
representing shares of Seller Common Stock (the "Certificate") (except as
specifically set forth in Section 1.03) shall represent only the right to
receive the Merger Consideration in cash without interest and shall be deemed
cancelled and null and void.
(b) At the Effective Time, the Purchaser shall deposit, or shall cause to
be deposited, with such bank or trust company as selected by the Purchaser and
reasonable acceptable to Seller as exchange agent (the "Exchange Agent"), for
the benefit of the holders of shares of Seller Common Stock, for exchange in
accordance with this Section 1.04, an amount of cash sufficient to pay the
Purchase Price pursuant to Section 1.03.
(c) As soon as practicable but not later than three (3) business days
after the Effective Time, the Purchaser shall cause the Exchange Agent to mail
or deliver to each holder of record of a Certificate or Certificates a letter of
transmittal specifying instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon the proper surrender
of a Certificate or Certificates to the Exchange Agent, together with a properly
completed and duly executed letter of transmittal, the holder of such
Certificate or Certificates shall be entitled to promptly receive in exchange
therefore by check an amount equal to the product of the Per Share Purchase
Price and the number of shares of Seller Common Stock represented by the
Certificate or Certificates surrendered pursuant to the provisions hereof.
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No interest will be paid or accrued on the Merger Consideration. In
the event of a transfer of ownership of any shares of Seller Common Stock not
registered in the transfer records of the Seller, payment of the Merger
Consideration may be issued to the transferee if the Certificate representing
such Seller Common Stock is presented to the Exchange Agent, accompanied by
documents sufficient, in the discretion of the Purchaser and the Exchange Agent
(i) to evidence and effect such transfer, and (ii) to evidence that all
applicable stock transfer taxes have been paid.
(d) From and after the Effective Time, there shall be no transfers on the
stock transfer records of the Seller of any shares of Seller Common Stock that
were outstanding immediately prior to the Effective Time. If after the Effective
Time Certificates are presented to the Purchaser or Seller, they shall be
cancelled and exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this Section 1.04.
(e) Any portion of the Purchase Price or the proceeds of any investments
thereof that remains unclaimed by the shareholders of the Seller for 3 months
after the Effective Time shall be repaid by the Exchange Agent to the Purchaser.
Any shareholders of the Seller who have not theretofore complied with this
Section 1.04 shall thereafter look only to the Purchaser for payment of their
Per Share Purchase Price deliverable in respect of each share of Seller Common
Stock such shareholder holds as determined pursuant to this Agreement without
any interest thereon. Notwithstanding the foregoing, none of the Purchaser, the
Exchange Agent or any other person shall be liable to any former holder of
Seller Common Stock for any amount required to be delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(f) Shareholders of the Seller shall look only to the Purchaser for
payment of the Merger Consideration deliverable in respect of each share of
Seller Common Stock such shareholder holds as determined pursuant to this
Agreement, without any interest thereon. Notwithstanding the foregoing, neither
of the Purchaser or Seller or any other person shall be liable to any former
holder of Seller Common Stock for any amount delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(g) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Purchaser, the posting by such person of a bond in such amount as the Purchaser
may reasonably direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Purchaser will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration deliverable in
respect thereof pursuant to this Agreement.
(h) The Purchaser and Seller are hereby authorized to adopt additional
policies and procedures with respect to the matter referred to in this Section
1.04 not inconsistent with the provisions of this Agreement and which do not
adversely affect the stockholders of Seller.
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SECTION 1.05 OPTIONS AND RIGHTS.
(a) The Seller agrees to take or cause to be taken all action necessary so
that prior to the Effective Time all outstanding options to purchase and stock
appreciation right ("SAR") with respect to shares of Seller Common Stock shall
be exercised prior to the Effective Time. After the Effective Time, all stock
options and SARs shall be cancelled and shall be entitled to no consideration.
SECTION 1.06 SECONDARY MERGER. At the election of the Purchaser, the
Surviving Corporation and the Purchaser shall enter into a plan of merger (which
shall be a plan of complete liquidation and dissolution of the Surviving
Corporation for purposes of Sections 332(a) and 337(a) of the Internal Revenue
Code of 1986, as amended (the "Code")) pursuant to which the Surviving
Corporation will be merged with and into the Purchaser immediately after the
Effective Time (the "Secondary Merger"). The documentation relating to the
Secondary Merger shall provide that the directors of the Purchaser as the
surviving entity of the Secondary Merger shall be all of the respective
directors of the Purchaser immediately prior to such merger.
SECTION 1.07 MODIFICATION OF STRUCTURE. Notwithstanding any provision of
this Agreement to the contrary, Purchaser may elect to modify the structure of
the transactions contemplated hereby so long as (i) there are no material
adverse federal or state income tax consequences to the Seller and its
stockholders or to holders of Seller Options to purchase Seller Common Stock as
a result of such modification; (ii) the consideration to be paid to holders of
Seller Common Stock or Seller Options under this Agreement is not thereby
changed in kind or reduced in amount because of such modification; and (iii)
such modification will not be likely to delay materially or jeopardize receipt
of any required regulatory approvals.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby represents and warrants to the Purchaser and Acquisition Corp. that:
(A) ORGANIZATION.
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(i) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Massachusetts. Except for
Broadway National Bank ("Seller Bank"), Seller has no direct or indirect
subsidiaries. Each of the Seller and Seller Bank is duly qualified to do
business and is in good standing in Massachusetts and in each other jurisdiction
in which the nature of the business conducted or the properties or assets owned
or leased by it makes such qualification necessary and where the failure to be
so qualified would have a Material Adverse Effect (as defined in Section
2.01(h)). The minute
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books of the Seller and Seller Bank accurately record, in all material respects,
all material corporate actions of its stockholders and Board of Directors
(including Committees thereof). Prior to the execution of this Agreement, Seller
has delivered to Purchaser true and correct copies of the Articles of
Organization or Charter and Bylaws of Seller and Seller Bank. The Seller is a
registered bank holding company under the Bank Holding Company Act. Each of the
Seller and Seller Bank has the corporate power and authority to carry on its
business as it is now conducted and to own, lease and operate its properties.
The Seller has the corporate power and authority to execute and deliver this
Agreement and, subject to the receipt of all requisite shareholder and
regulatory approvals, the power to consummate the transactions contemplated
hereby.
(ii) Seller Bank is a national bank, duly organized, validly
existing and in good standing under the laws of the United States. Seller owns
100% of the outstanding shares of the capital stock of Seller Bank, free and
clear of claims, liens, encumbances or restrictions. Seller Bank has no direct
or indirect subsidiaries and there are no agreements or understandings with
respect to the voting or disposition of any such shares so held. (Seller Bank is
sometimes referred to herein as the "Subsidiary".)
(iii) The Seller and the Subsidiary hold all material licenses,
certificates, permits, franchises and rights from all appropriate federal, state
or other public authorities necessary for the conduct of its and their business.
The Seller and the Subsidiary have each conducted its business so as to comply
in all material respects with all applicable federal, state and local statutes,
ordinances, regulations or rules, and neither the Seller nor its Subsidiary is
presently charged with, or, to the Seller's knowledge, under governmental
investigation with respect to, any actual or alleged material violations of any
statute, ordinance, regulation or rule; and neither the Seller nor the
Subsidiary is the subject of any pending or, to the Seller's knowledge,
threatened material proceeding by any regulatory authority having jurisdiction
over its business, properties or operations.
(iv) For purposes of this Agreement, the term subsidiary or
subsidiaries shall mean any entity (whether corporations, partnerships, or
similar organizations), in which the Seller owns, directly or indirectly, 10% or
more of the ownership interests as of the date of this Agreement.
(B) CAPITAL STRUCTURE.
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(i) The authorized capital stock of the Seller consists of four
hundred thousand (400,000) shares of Seller Common Stock, par value $0.01 per
share and no other shares of capital stock. As of September 20, 1996: (A) 44,810
shares of Seller Common Stock were issued and outstanding, (B) 14,760 shares of
Seller Common Stock were reserved for issuance pursuant to outstanding stock
options, and (c) 15,190 shares of Seller Common Stock were held by the Seller in
its treasury. In addition, as of September 20, 1996, the Seller had outstanding
SARs relating to: (I) an aggregate of 4,380 shares of Seller Common Stock which,
upon exercise in accordance with their terms of exercise, entitled the holder to
a cash payment per share of Seller Common Stock to which such SARs related equal
to the
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"fair market value" of a share of Seller Common Stock on the date of exercise of
such SARs minus $127.29, and (II) an aggregate of 3,000 shares of Seller Common
Stock which, upon exercise in accordance with their terms of exercise, entitled
the holder to a cash payment per share of Seller Common Stock to which such SARs
related equal to the "fair market value" of a share of Seller Common Stock on
the date of exercise of such SARs minus $159.93. All outstanding shares of
Seller Common Stock are validly issued, fully paid and nonassessable and not
subject to any preemptive rights. The Disclosure Schedule 2.01(b)(i) sets forth
a complete and accurate list of all options to purchase Seller Common Stock
outstanding, including the dates of grant, exercise prices, dates of vesting,
dates of termination and shares subject to option for each grant and of all SARs
outstanding and the terms and conditions thereof.
(ii) As of the date of this Agreement, except for this Agreement and
as set forth in the Disclosure Schedule 2.01(b)(i), neither the Seller nor its
Subsidiary is a party to or is bound by any outstanding subscriptions, options,
warrants, calls, rights, convertible securities, commitments or agreements of
any character obligating the Seller or its Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, any additional shares of capital stock
of the Seller or its Subsidiary or obligating the Seller or its Subsidiary to
grant, extend or enter into any such option, warrant, call, right, convertible
security, commitment or agreement. Except as set forth in paragraph (i) above,
no other SARs or equivalent rights are outstanding. As of the date hereof, there
are no outstanding contractual obligations of the Seller or its Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Seller or its Subsidiary.
(iii) Disclosure Schedule 2.01(b)(iii) sets forth the name and address of
each owner of Seller Common Stock, the number of shares owned by such person and
the corresponding percentage ownership.
(C) AUTHORITY. The Seller has all requisite corporate power and authority
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to enter into this Agreement and, subject to approval of this Agreement by the
requisite vote or consent of the shareholders of the Seller and requisite
approvals by federal or state banking regulators, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and, subject
to the receipt of all requisite shareholder and regulatory approvals, the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Seller. This Agreement has
been duly executed and delivered by the Seller and, assuming due execution and
delivery by the Purchaser, constitutes a valid and binding obligation of the
Seller, enforceable in accordance with its terms subject to applicable
conservatorship, receivership, bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (including without limitation specific
performance), whether applied in a court of law or a court of equity.
(D) SHAREHOLDER APPROVAL. The affirmative vote or consent of two-thirds of
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the shares of Seller Common Stock outstanding and entitled to vote at the time
of a duly called meeting of the shareholders (or action by consent) is the only
shareholder action required by
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Seller for approval of this Agreement and to consummate the transactions
contemplated hereby.
(E) NO VIOLATIONS. Subject to approval of this Agreement by the requisite
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Regulatory Agencies as referred to in Section 2.01(g) ii), the execution,
delivery and performance of this Agreement by the Seller do not, and the
consummation of the transactions contemplated hereby by the Seller will not,
constitute (i) a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of the Seller or the Subsidiary or to which
the Seller or its Subsidiary (or their respective properties) is subject, (ii) a
breach or violation of, or a default under, the Certificate or Articles of
Incorporation or Organization or Charter or Bylaws of the Seller or the
Subsidiary or (iii) a breach or violation of, or a default under (or an event
which with due notice or lapse of time or both would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance (a "Lien") upon the properties or assets of the Seller or its
Subsidiary under, any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instrument or
obligation to which the Seller or its Subsidiary is a party, or to which their
respective properties or assets may be bound or affected.
(F) CONSENTS. Except as set forth in Schedule 2.01(f), as such Schedule
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may be modified by agreement of the Parties including pursuant to Section 1.07
of this Agreement, no filing or registration with, or authorization, consent or
approval of, any public body or authority or any other party is necessary for
the consummation by the Seller of the Merger or the other transactions
contemplated by this Agreement.
(G) FINANCIAL STATEMENTS AND REPORTS.
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(i) Neither the Seller nor its Subsidiary is or has been subject to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and neither has not been required to file reports
thereunder with the U.S. Securities and Exchange Commission ("SEC") or other
Federal agency. Seller has previously delivered to Purchaser copies of (a) the
Consolidated Financial Statements of Seller and its Subsidiary as of December
31, 1995 and 1994 and the years then ended, including Consolidated Balance
Sheets, Consolidated Statements of Income and related Consolidated Statements of
Changes in Stockholder Equity, and Cash Flows and Notes thereto, accompanied by
the audit report of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Company, P.C., independent public
accountants with respect to Seller. As of their respective dates, neither such
financial statements, nor any subsequent Seller or Seller Bank financial
statements, Seller or Seller Bank regulatory reports or other document filed
subsequent to December 31, 1995 with the Federal Reserve Board, the OCC or FDIC,
contained or will contain any untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The December 31, 1995 Consolidated Balance Sheet of
Seller (including related notes where applicable) fairly presents the
consolidated financial position of Seller and its subsidiaries as of the date
thereof, and the other financial statements referred to in this Section 2.01(g)
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(including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 4.14 hereof will fairly present
(subject, in the case of unaudited statements, to recurring audit adjustments
normal in nature and amount), and the results of the consolidated income and
other financial statements of Seller and Subsidiary for the respective fiscal
periods or other Federal agency as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable) comply,
and the financial statements referred to in Section 4.14 hereof will comply, in
all material respects with applicable accounting requirements and each such
statement (including the related notes, where applicable) has been, and the
financial statements referred to in Section 4.14 hereof will be, prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved. The books and records of Seller and Seller
Bank have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements and reflect
only actual transactions.
(ii) The Seller and its Subsidiary have each filed all material
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December 31,
1991 with (A) the Federal Reserve Board, (B) the OCC, (C) the FDIC, (D) the
Commonwealth of Massachusetts and (E) any other state or federal banking
regulatory authority to which such reports are required to be filed,
(collectively, the "Regulatory Agency or Agencies"), and have paid all fees and
assessments due and payable in connection therewith, except for those fees and
assessments that would not be material or which are not yet due and payable.
(H) ABSENCE OF CERTAIN CHANGES OR EVENTS. From December 31, 1995, to the
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date hereof: (i) the Seller and its Subsidiary have not, except as set forth
in the Disclosure Schedule 2.01(h), incurred any material liability, other than
in the ordinary course of their business consistent with past practice, and (ii)
there has not been any condition, event, change or occurrence that, individually
or in the aggregate, has had, or is reasonably likely to have, a Material
Adverse Effect on the Seller and Seller Bank taken as a whole. "Material Adverse
Effect" means a material adverse effect upon the financial condition, results of
operations, assets or business of Seller or its Subsidiary, taken as a whole,
including but not limited to an increase in the allowance for loan losses, write
down of loans or other real estate owned ("OREO"), reduction in market value of
the investment securities portfolio, legal action, or non-recurring or
extraordinary cost, or other similar cost which amounts, in the aggregate, equal
or exceed $500,000.
(I) BUSINESS OF SELLER. Since December 31, 1995, Seller and its Subsidiary
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conducted their businesses only in the ordinary course. For purposes of the
foregoing, among other things, Seller or its Subsidiary has not, since December
31, 1995, controlled expenses through (i) elimination of employee benefits, (ii)
deferral of routine maintenance of real property or leased premises, (iii)
elimination of reserves where the liability related to such reserve has
remained, (iv) reduction of capital improvements from previous levels, (v)
failure to depreciate capital assets in accordance with past practice or to
eliminate capital assets which are no longer used in the business of Seller,
(vi) capitalized loan production expenses
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other than in accordance with Statement of Financial Accounting Standard No. 91,
or (vii) extraordinary reduction or deferral of ordinary or necessary expenses.
(J) TAXES. All federal, state, local and foreign tax returns, as defined
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below, required to be filed by or on behalf of the Seller or its Subsidiary have
been duly and timely filed or requests for extensions have been timely filed
(and any such extension shall have been granted and not have expired). All
taxes, as defined below, shown on such returns, and all taxes required to be
shown on returns for which extensions have been granted, have been paid in full
or adequate provision has been made for any such taxes on the Seller's balance
sheet as of December 31, 1995 (in accordance with GAAP). Neither Seller nor
Seller Bank has had an audit examination by the applicable taxing authority of
the Commonwealth of Massachusetts or the Internal Revenue Service within the
previous ten years. As of the date of this Agreement, there is no audit
examination, deficiency, claim or assessment, or refund litigation with respect
to any taxes of the Seller or its Subsidiary that could reasonably be expected
to result in a Material Adverse Effect on the Seller, and no claim or assessment
has been made by any authority in a jurisdiction where the Seller or its
Subsidiary do not file tax returns and the Seller or any such Subsidiary is
subject to taxation. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation relating
to the Seller or its Subsidiary have been paid in full or adequate provision has
been made for any such taxes on the Seller's balance sheet as of June 30, 1996
(in accordance with GAAP). Except as set forth in Disclosure Schedule 2.01(j),
the Seller and its Subsidiary have complied with the Tax Identification Number
reporting requirements and have not executed an extension or waiver of any
statute of limitations on the assessment or collection of any material tax due
that is currently in effect. Except as set forth in Disclosure Schedule 2.01(j),
the Seller and its Subsidiary have withheld and paid all taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party, and the
Seller and its Subsidiary have timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the Code
and similar applicable state and local information reporting requirements,
except in each case for such failure to withhold, pay or comply that would not,
individually or in the aggregate, result in a Material Adverse Effect on the
Seller.
"Taxes" shall mean all taxes, charges, fees, levies, penalties or other
assessments imposed by any United States federal, state, local, or foreign
taxing authority, including, but not limited to, income, excise, property,
sales, transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable thereto. "Tax
Return" shall mean any return, report, information return or other documents
(including any related or supporting information) with respect to Taxes.
(K) ABSENCE OF CLAIMS. Except as set forth in Disclosure Schedule 2.01(k),
-----------------
neither Seller nor its Subsidiary is a party to any pending litigation, legal,
administrative, arbitration or other proceeding, claims, actions, investigations
or inquiries or controversy before any court or governmental agency ("Claim"),
and Seller is not aware of any pending Claim against
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Seller, its Subsidiary, or to which Seller's or its Subsidiary's assets are
subject, and, to the Seller's knowledge, no such Claim has been threatened.
(L) ABSENCE OF REGULATORY ACTIONS. Except as set forth in Disclosure
-----------------------------
Schedule 2.01(l), neither the Seller nor its Subsidiary is a party to any cease
and desist order, written agreement or memorandum of understanding with, or a
party to any commitment letter or similar written undertaking to, or is subject
to any condition, order or directive by, or is a recipient of any extraordinary
supervisory letter from, federal or state governmental authorities charged with
the supervision or regulation of depository institutions or depository
institution holding companies or engaged in the insurance of bank and/or savings
and loan deposits ("Bank Regulatory Agency") nor has it been advised by any Bank
Regulatory Agency that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar written undertaking or
condition. In connection with the most recent examinations of the Seller and/or
Seller Bank, Seller and Seller Bank have not been informed or ordered by any
Bank Regulatory Agency, whether by written communication or otherwise, to amend
or change in any material way Seller's or Seller Bank's Reports, accounting
methods, methods of operation, or business practices, or to classify any loans
not previously classified or to charge-off any loans, or increase Seller Bank's
allowance for loan losses, or to take or discontinue any activity or action.
(M) AGREEMENTS.
----------
(i) Except for this Agreement and except as disclosed in Disclosure
Schedule 2.01(m)(i), neither the Seller nor its Subsidiary is a party to a
written or, to the Seller's knowledge, oral (A) consulting agreement not
terminable on thirty (30) days' or less notice, and providing for payments in
excess of $5,000 per annum, (B) agreement with any director, executive officer
or other key employee of the Seller or its Subsidiary the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving the Seller or its Subsidiary of the nature contemplated
by this Agreement, (C) agreement with respect to any director, executive officer
or employee of the Seller or its Subsidiary providing for other than at-will
employment, (D) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan, stock purchase plan, or any
other non-qualified compensation plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, (E) agreement containing
covenants that limit the ability of the Seller or its Subsidiary to compete in
any line of business or with any person, or that involve any restriction on the
geographic area in which or method by which, the Seller (including any successor
thereof) or its Subsidiary may carry on its business (other than as may be
required by law or any Regulatory Agency), (F) agreement which by its terms
limits the payment of dividends by Seller or its Subsidiary, (G) instrument
evidencing or related to indebtedness for borrowed money, whether directly or
indirectly, by way of purchase money obligation, conditional sale, lease
purchase, guaranty or otherwise, in respect of which Seller or its
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Subsidiary is an obligor to any person, which instrument evidences or relates to
indebtedness (other than deposits, bankers acceptances, and "treasury tax and
loan" accounts established in the ordinary course of business and transactions
in "federal funds") or which contains financial covenants or other restrictions
(other than those relating to the payment of principal and interest when due)
which would be applicable on or after the Effective Time to Purchaser, or any of
Purchaser's subsidiaries; (H) contract (other than this Agreement) limiting the
freedom of Seller or Seller Bank to engage in any type of banking or
bank-related business permissible under law; (I) contract, plan or arrangement
which provides for payments of benefits payable to any participant therein or
party thereto, and which might render any portion of any such payments or
benefits subject to disallowance of deduction therefor as a result of the
application of Code Section 280G; or (J) agreement for investment banking
services or services related to the sale, merger or acquisition of the Seller or
its Subsidiary.
(ii) All the contracts, plans, arrangements and instruments listed
in Disclosure Schedule 2.01(m)(i) are in full force and effect on the date
hereof and neither Seller nor, to the knowledge of Seller, any other party to
any such contract, plan, arrangement or instrument, has breached any provisions
of, or is in material default in any respect under any term of, any such
contract, plans, arrangement or instrument. Except as otherwise described in
Disclosure Schedule 2.01(m)(i), no plan, employment agreement, termination
agreement, or similar agreement or arrangement to which Seller or its Subsidiary
may be liable (i) contains provisions which permit an employee or independent
contractor to terminate it without cause and continue to accrue benefits
thereunder; (ii) provides for acceleration in the vesting of benefits thereunder
upon the occurrence of a change in ownership or control of Seller or its
Subsidiary; (iii) provides for benefits which may cause the disallowance of a
federal income tax deduction under Code Section 280G; or (iv) requires Seller or
its Subsidiary to provide a benefit in the form of Seller Common Stock or
determined by reference to the value of Seller Common Stock.
(iii) Neither the Seller nor its Subsidiary is in default under or
in violation of any provision, and is not aware of any fact or circumstance that
has been or could be alleged to constitute a material default or violation, of
any note, bond, indenture, mortgage, deed of trust, loan agreement or other
agreement to which it is a party or by which it is bound or to which its
respective properties or assets is subject.
(N) LABOR MATTERS. Neither the Seller nor its Subsidiary is a party to, or
-------------
is bound by, any collective bargaining agreement, contract, or other agreement
or understanding with a labor union or labor organization with respect to its
employees. Neither the Seller nor its Subsidiary is the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages and conditions
of employment, nor is the management of the Seller aware of any strike, other
labor dispute or organizational effort involving the Seller or its Subsidiary
that is pending or threatened.
(O) EMPLOYEE BENEFIT PLANS. Disclosure Schedule 2.01(o) contains a
----------------------
complete list of all employee or director pension, retirement, stock option,
stock purchase, stock ownership,
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savings, stock appreciation right, profit sharing, deferred compensation,
supplemental income, supplemental retirement, consulting, bonus, group
insurance, key executive officer insurance, vacation and sick leave policies,
severance and other benefit plans, contracts, agreements, and arrangements,
including, but not limited to, employee benefit plans, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), incentive and welfare policies, contracts, plans and arrangements and
all trust agreements related thereto with respect to any present or former
directors, officers, or other employees of the Seller or its Subsidiary
(hereinafter referred to collectively as the "Employee Plans"). All of the
Employee Plans comply in all material respects with all applicable requirements
of ERISA, the Code and other applicable laws, including the qualification
requirements of Section 401; neither the Seller nor its Subsidiary has engaged
in a prohibited transaction (as defined in Section 406 of ERISA or Section 4975
of the Code) with respect to any Employee Plan which is likely to result in any
penalties or taxes to the Seller or its Subsidiary under Section 502(i) of ERISA
or Section 4975 of the Code. There is no pending or, to the Seller's knowledge,
threatened litigation, administrative action or proceeding relating to any
Employee Plan. There has been no announcement or commitment by the Seller or the
Subsidiary to create any additional Employee Plan, or to amend any Employee
Plan, except for amendments required by applicable law which do not materially
increase the cost of such Employee Plan and except for amendments expressly
described herein; and, except as set forth in Disclosure Schedule 2.01(o), the
Seller and its Subsidiary do not have any obligations for post-retirement or
post-employment benefits under any Employee Plan that cannot be amended or
terminated upon no more than sixty (60) days' notice without incurring any
liability thereunder. With respect to the Seller or its Subsidiary, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by the Seller or its Subsidiary to any person which is a "parachute
payment" (as defined in Section 280G of the Code), increase or secure (by way of
a trust or other vehicle) any benefits payable under any Employee Plan other
than a Pension Plan, or accelerate the time of payment or vesting of any such
benefit under any plan, agreement or arrangement that specifically refers to
changes in control of the Seller or under any written agreement entered into
within one year prior to the Effective Time. With respect to each Employee Plan,
the Seller has supplied to the Purchaser a true and complete copy of (A) the
most recent annual report on the applicable form of the Form 5500 series filed
with the IRS with all the attachments filed, (B) such Employee Plan, including
amendments thereto, (C) each trust agreement and insurance contract relating to
such Employee Plan, including amendments thereto, (D) the most recent summary
plan description for such Employee Plan, including amendments thereto, and (E)
the most recent determination letter, if any, issued by the IRS if such Employee
Plan is a Qualified Plan. To the extent that any individual plan or arrangement
described under this Section 2.01 is not fully funded as described herein or
otherwise does not completely meet representations made herein, such plan and
its variance from the representation is set out on Disclosure Schedule 2.01(o).
(P) TITLE TO ASSETS. Except for the OREO, the Seller and its Subsidiary
---------------
has insurable title (subject only to standard title insurance policy exceptions
as determined by customary practices in the area in which such properties are
located) to its owned real properties, except for liens, as defined below, or
such other defects arising by operation of
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law. Seller, as lessee, has the right under valid and existing leases of
properties used by Seller in the conduct of its business to occupy and use all
such properties that are leased by it as are now occupied and used by it. Liens
shall mean any claim, encumbrance, or charge on property for payment of a debt,
obligation or duty.
(Q) COMPLIANCE WITH LAWS.
--------------------
(i) The Seller and its Subsidiary have and has maintained in full
force and effect 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 (each, a
"Governmental Entity") that are in each case required in order to permit it to
carry on its business as it is presently conducted; to the knowledge of the
Seller or Seller Bank, no suspension or cancellation of any of such permits,
licenses, certificates of authority, orders or approvals is threatened. To the
knowledge of the Seller, the business of the Seller and its Subsidiary are not
being conducted in violation of any law, ordinance, regulation, order, writ,
rule, decree or approval of any Governmental Entity.
(R) FEES. Neither the Seller nor its Subsidiary, nor to Seller's knowledge
----
any of their respective officers, directors, employees or agents, has employed
any broker or finder or incurred any liability for any financial advisory fees
other than for the fairness opinion rendered by HAS Associates, Inc., brokerage
fees commissions, or finder's fees, and no broker or finder has acted directly
or indirectly for the Seller or its Subsidiary, in connection with this
Agreement or the transactions contemplated hereby, and Purchaser and Seller
shall enter into the agreement set forth in Schedule 2.01(r).
(S) ENVIRONMENTAL MATTERS.
---------------------
(i) Except as set forth in Disclosure Schedule 2.01(s) with respect
to the Seller and its Subsidiary:
(A) Each of the Seller and its Subsidiary, and to the
knowledge of the Seller, the Properties (as defined below) are, and have been,
in substantial compliance with all applicable Environmental Laws (as defined
below);
(B) There is no judicial or administrative proceeding pending
or, to the knowledge of the Seller, threatened against it or its Subsidiary (x)
for alleged noncompliance (including by any predecessor) with, or liability
under, any applicable Environmental Law or (y) relating to the Release (defined
below) into the environment of any Hazardous Material (as defined below),
whether or not occurring at or on a site owned, leased or operated by it or its
Subsidiary;
(C) There is no judicial or administrative proceeding pending
or to the knowledge of the Seller threatened against the Seller or its
Subsidiary in respect of any Property (x) relating to alleged noncompliance
(including by any predecessor) with, or
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liability under, any Environmental Law or (y) relating to the Release into the
environment of any Hazardous Material whether or not occurring at or on such
Property;
(D) To the knowledge of the Seller, the properties currently
or, formerly owned or operated by the Seller or its Subsidiary (including,
without limitation, soil, groundwater or surface water on or under such
properties, and buildings thereon or, to the knowledge of the Seller, (without
having done any independent investigation) adjacent to such properties) do not
contain any Hazardous Material other than as permitted under applicable
Environmental Law;
(E) Neither the Seller nor its Subsidiary has received any
notice, demand letter, executive or administrative order, directive or request
for information from any federal, state or local governmental entity or any
third party relating to a Release or a threatened Release of Hazardous Materials
or Remediation (defined below) thereof or indicating that it may be in violation
of, or liable under, any applicable Environment Law;
(F) To the knowledge of the Seller, during the period of
Seller's or its Subsidiary's ownership or operation of any of its current
properties, or its holding of a security interest in a Property, there has been
no Release of Hazardous Material in, on, under, or to the knowledge of the
Seller, affecting or migrating to such properties. To the knowledge of the
Seller prior to the period of (A) the Seller's or its Subsidiary's ownership or
operation of its respective current properties, or (B) the Seller's or its
Subsidiary' holding of a security interest in a Property, there was no Release
of Hazardous Material in, on, under, affecting or migrating to any such
property; and
(G) To the knowledge of the Seller, neither the Seller or its
Subsidiary participate in the management of a Loan Property within the meaning
of 40 C.F.R. ss.300.1100(c) (1993).
(ii) The following definitions apply for purposes of this Section
2.01(r): (a) "Property" means any property owned by the Seller (or its
Subsidiary) or any property in which the Seller (or its Subsidiary) has an
interest or with respect to which it holds a security interest, including OREO
by the Seller, the branches or offices of the Seller or its Subsidiary, OREO
owned by the Subsidiary and, where required by the context, includes the owner
or operator of such property, but only with respect to such property; (b)
"Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order, judgment, decree
or injunction, (A) relating to the protection, preservation or restoration of
the environment (which includes, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, structures, soil, surface land,
subsurface land, plant and animal life or any other natural resource), or to
employee health or safety, or (B) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of, Hazardous Materials, in each case
as amended and as now in effect, including all judicial or legally binding
administrative interpretations of Environmental Laws or applicable regulations.
The term "Environmental Law" includes,
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without limitation, (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Superfund Amendments and Authorization Act, the
Federal Water Pollution Control Act of 1972, the Clean Air Act, the Clean Water
Act, the Resource Conservation and Recovery Act of 1976 (including, but not
limited to, the Hazardous and Solid Waste Amendments thereto and Subtitle I
relating to underground storage tanks), the Solid Waste Disposal Act, the Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Occupational Safety and Health Act of 1970, the Hazardous Substances
Transportation Act, the Emergency Planning and Community Right-To-Know Act, the
Safe Drinking Water Act, the National Environmental Policy Act, or any so-called
"Superfund" or "Superlien" law, each as amended and as now in effect, and (ii)
any present federal, state and local laws, statutes, ordinances, rules or
regulations conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of the
property or requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Loan Property to any
governmental authority or other person or entity, in connection with transfer of
title to or interest in property; (c) "Hazardous Material" means any substance
(whether solid, liquid or gas) which is listed, defined, designated or
classified as hazardous, toxic or radioactive or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Material includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance, extremely hazardous wastes, or words of similar meanings or
regulatory effect under any applicable Environmental Laws, including, but not
limited to, oil or petroleum or any fraction thereof, radon, radioactive
material, asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl; (d) "Release of any Hazardous
Material" means any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, dumping or disposing
of Hazardous Materials; and (e) "Remediation" means but is not limited to, any
response, remedial, removal, or corrective action, any activity to cleanup,
detoxify, decontaminate, contain or otherwise remediate any Hazardous Material,
any actions to prevent, cure or mitigate any Release of Hazardous Materials, any
inspection, investigation, study, monitoring, assessment, audit, sampling and
testing, laboratory or other analysis, or evaluation in each case relating to a
Release or threatened Release of any Hazardous Materials.
(T) ALLOWANCE FOR LOAN LOSSES. In the Seller's reasonable judgment, the
-------------------------
allowance for loan losses reflected in the Seller's audited statement of
condition at December 31, 1995, was, and the allowance for loan losses shown on
the balance sheets in its Reports for periods ending after December 31, 1995,
have been and will be, adequate in all material respects, as of the dates
thereof, under generally accepted accounting principles applicable to commercial
banks and no Regulatory Agency has required or requested Seller to increase the
allowance for loan losses for such periods. The Seller has disclosed to the
Purchaser in writing prior to the date hereof the amounts of all loans, leases,
advances, credit enhancements, other extensions of credit, commitments and
interest-bearing assets of the Seller and its Subsidiary that have been
classified as of August 31, 1996, as "Other Loans Specially Mentioned," "Special
Mention," "Substandard," "Doubtful," "Loss," or words of
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similar import. From and after the date hereof, the Seller promptly will provide
the Purchaser with a copy of each monthly or quarterly classified asset report
it provides to its Board of Directors. The OREO included in any non-performing
assets of the Seller or its Subsidiary is carried net of reserves at the lower
of cost or fair value. The Seller has received and maintains in its records
current independent appraisals or current internal appraisals, in either case
performed and prepared by a certified appraiser, with respect to OREO with book
values (net of reserves) in excess of $100,000; provided, however, that
"current" shall mean within the past 12 months.
(U) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
-------------------------------------
Disclosure Schedule 2.01(u), to Seller's knowledge, no officer or director of
the Seller, or any associate (as such term is defined in Rule 14a-1(a) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") of any such
officer or director, has any interest in any material contract or property (real
or personal), tangible or intangible, used in or pertaining to the business of
the Seller or its Subsidiary that would be required to be disclosed under
Regulation S-K of the Securities and Exchange Commission if the Seller or Seller
Bank were a reporting company under the Exchange Act.
(V) INSURANCE. The Seller and its Subsidiary are presently insured, and
---------
since December 31, 1991 have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business located in the Commonwealth of
Massachusetts would, in accordance with good business practice, customarily be
insured. Each policy of insurance maintained by Seller as of the date hereof is
set forth in Disclosure Schedule 2.01(v). Seller has not received notice from
any insurance carrier that (i) such insurance will be cancelled or that coverage
thereunder will be reduced or eliminated or (ii) premium costs with respect to
such insurance will be increased.
(W) INVESTMENT SECURITIES. Except for ownership of subsidiary shares and
---------------------
except as set forth in Disclosure Schedule 2.01 (a)(iv), neither the Seller nor
its Subsidiary owns or holds any equity securities or any security of or
interest in any mutual fund or other similar investment vehicle which invests in
equity securities. None of the investments reflected in the consolidated balance
sheet of the Seller as of December 31, 1995, and none of such investments made
by it or its Subsidiary since December 31, 1995, is subject to any restriction
(contractual or statutory), except to the extent such securities may be pledged
to secure public deposits, other than applicable securities laws, that would
materially impair the ability of the entity holding such investment freely to
dispose of such investment at any time.
(X) REGISTRATION OBLIGATIONS. Neither the Seller nor its Subsidiary is
------------------------
under any obligation, contingent or otherwise, to register any of its securities
under the Securities Act of 1933, as amended or the Exchange Act.
(Y) BOOKS AND RECORDS. The books and records of the Seller and its
-----------------
Subsidiary have been, and are being, maintained in accordance with applicable
legal and accounting requirements and reflect in all material respects the
substance of material events and transactions that should be included therein.
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(Z) CORPORATE DOCUMENTS. The Seller has delivered to the Purchaser true
-------------------
and complete copies of its Articles of Organization and bylaws, as amended to
date, which are currently in full force and effect, and the charter and bylaws
of its Subsidiary.
(AA) COMMUNITY REINVESTMENT ACT AND OTHER COMMON LAW COMPLIANCE. Seller
----------------------------------------------------------
and Seller Bank are in substantial compliance with the applicable provisions of
the Community Reinvestment Act of 1977 and the regulations promulgated
thereunder, and received a CRA rating of at least satisfactory as of its last
examination. The Seller and Seller Bank are in substantial compliance with all
fair lending laws or other laws relating to discrimination, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the Home
Mortgage Disclosure Act, the Real Estate Settlement Procedures Act of 1974 and
the Truth in Lending Act. As of the date of this Agreement, Seller has not been
advised of the existence of any fact or circumstance or set of facts or
circumstances which, if true, would cause Seller to fail to be in substantial
compliance with any such provisions.
(BB) SHAREHOLDERS' AGREEMENT. Each Shareholder of the Seller who is a
-----------------------
Director or executive officer of Seller or who has or shares the right to vote
or dispose of an aggregate of 10% or more of the outstanding shares of Seller
Common Stock has executed a written Shareholders' Agreement in the form attached
hereto as Exhibit B and the aggregate number of shares of Seller Common Stock
represents at least 90% of the outstanding shares of Seller Common Stock.
(CC) INTELLECTUAL PROPERTY. Except where there would be no Material
---------------------
Adverse Effect on Seller, Seller and its Subsidiary owns or possesses valid and
binding licenses and other rights to use without payment all material patents,
copyrights, trade secrets, trade names, servicemarks and trademarks used in its
businesses and neither Seller nor its Subsidiary has received any notice of
conflict with respect thereto that asserts to right of others. Seller and its
Subsidiary have in all material respects performed all the obligations required
to be performed by them and are not in default in any material respect under any
contract, agreement, arrangement or commitment relating to the foregoing, except
where such nonperformance or default would not, individually or in the
aggregate, have a Material Adverse Effect on Seller and Seller Bank taken as a
whole.
(DD) ADMINISTRATION OF FIDUCIARY ACCOUNTS. Each of Seller and Seller Bank
------------------------------------
has properly administered in all material respects all accounts for which it
acts as a fiduciary, including but not limited to accounts for which it serves
as a trustee, agent, custodian, personal representative, guardian, conservator
or investment advisor, in accordance with the terms of the governing documents
and applicable state and federal law and regulation and common law. Neither
Seller nor Seller Bank nor any of their respective directors, officers or
employees has committed any breach of trust with respect to any such fiduciary
account which has had or could reasonably be expected to have a Material Adverse
Effect on Seller and Seller Bank taken as a whole, and the accountings for each
such fiduciary account are true and correct in al material respects and
accurately reflect the assets of such fiduciary account.
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(EE) DERIVATIVE TRANSACTIONS. Disclosure Schedule 2.01(ee) sets forth the
-----------------------
market value, as of Decembere 31, 1995 of all holdings by Seller or its
Subsidiary of positions in forwards, futures, options on futures, swaps and any
other instrument within the scope of Seller's Board-approved investment policy
("Derivative Instruments"). Except as set forth in Disclosure Schedule 2.01(ee),
as of December 31, 1995, and subsequently thereto neither Seller nor its
Subsidiary has engaged in any transactions in or involving Derivative
Instruments. None of the counterparties to any contract or agreement with
respect to any such instrument is in default with respect to such contract or
agreement and no such contract or agreement, were it to be a loan held by Seller
or its Subsidiary, would be classified as "Other Loans Especially Mentioned,"
"Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans" or words of similar
import. The financial position of Seller and its Subsidiary on a consolidated
basis under or with respect to each such instrument has been reflected in the
books and records of Seller and Subsidiary in accordance with GAAP consistently
applied, and no open exposure of Seller or its Subsidiary with respect to any
such instrument (or with respect to multiple instruments with respect to any
single counterparty) exceeds $100,000.
(FF) KNOWLEDGE AS TO CONDITIONS. Seller knows of no reason why the
--------------------------
requisite regulatory approvals for the transaction contemplated by the Agreement
should not be obtained.
(GG) ACCURACY OF INFORMATION. The statements contained in this Agreement,
-----------------------
the Seller Disclosure Schedules or in any other written document delivered by or
on behalf of Seller pursuant to the terms of this Agreement are true and
correct, and to the knowledge of the Seller such statements and documents do not
omit any fact necessary to make the statements contained therein not misleading.
SECTION 2.02 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND
ACQUISITION CORP. The Purchaser represents and warrants to the Seller that:
(A) CORPORATE ORGANIZATION AND QUALIFICATION.
----------------------------------------
(I) PURCHASER. The Purchaser is a corporation duly incorporated,
---------
validly existing and in good standing under the laws of the State of Delaware
and is a savings and loan holding company duly registered under HOLA.
(II) ACQUISITION CORP. Acquisition Corp. will at the Effective
----------------
Time be a corporation duly incorporated, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts or the State of Delaware.
Acquisition Corp. will not, prior to the Effective Time, engage in any business
other than the transactions contemplated by this Agreement or have any
obligations or liabilities other than its obligations hereunder.
(B) CAPITAL STRUCTURE. The authorized capital stock of the Purchaser
-----------------
consists of 17 million (17,000,000) shares of common stock, par value $.01 per
share ("Purchaser Common Stock"), and 1 million (1,000,000) shares of preferred
stock, par value $.01 per
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share (the "Purchaser Preferred Stock"). As of June 30, 1996, 6,589,617 shares
of Purchaser Common Stock and no shares of Purchaser Preferred Stock were
outstanding. At the Effective Time, all the issued and outstanding capital stock
of Acquisition Corp. will be owned by the Purchaser. All outstanding shares of
capital stock of the Purchaser is, and at the Effective Time will be, and all
outstanding shares of capital stock of Acquisition Corp. at the Effective Time
will be, validly issued, fully paid and nonassessable and not subject to any
preemptive rights.
(C) AUTHORITY. The Purchaser has all requisite corporate power and
---------
authority to enter into this Agreement, subject to the required approval of
regulators as set forth in Schedule 2.01(f), and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Purchaser. This Agreement
has been duly executed and delivered by the Purchaser, and assuming due
execution and delivery by the Seller, constitutes a valid and binding obligation
of the Purchaser, enforceable in accordance with its terms subject to applicable
conservatorship, receivership, bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (including without limitation specific
performance), whether applied in a court of law or a court of equity.
(D) NO VIOLATIONS. The execution, delivery and performance of this
-------------
Agreement by the Purchaser do not, and the consummation of the transactions
contemplated hereby will not, constitute (i) a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of the
Purchaser or to which the Purchaser (or any of its respective properties) is
subject, (ii) a breach or violation of, or a default under, the certificate of
incorporation, charter or bylaws of the Purchaser, or any Subsidiary of the
Purchaser or (iii) a breach or violation of, or a default under (or an event
which with due notice or lapse of time or both would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the properties or assets of the Purchaser under
any of the terms, conditions or provisions of any note, bond, indenture, deed of
trust, loan agreement or other agreement, instrument or obligation to which the
Purchaser is a party, or to which any of its properties or assets may be bound
or affected.
(E) CONSENTS. Except as referred to herein or in connection, or in
--------
compliance, with the provisions of the Exchange Act, the BHCA, the HOLA, the
MGLA, the rules and regulations of the Regulatory Agencies, and the corporation,
securities or blue sky laws or regulations of the various states, no filing or
registration with, or authorization, consent or approval of, any public body or
authority is necessary for the consummation by the Purchaser, of the Merger or
the other transactions contemplated by this Agreement.
(F) ACCESS TO FUNDS. The Purchaser on the date hereof have, and at the
---------------
Effective Time will have, all funds necessary to consummate the Merger and
fulfill its obligations under the terms of this Agreement, including without
limitation, its obligation to pay the Purchase Price.
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(G) ABSENCE OF CLAIMS. No litigation, proceeding or controversy before any
-----------------
court or governmental agency is pending, and there is no pending claim, action
or proceeding against the Purchaser, or any of its subsidiaries, which is
reasonably likely, individually or in the aggregate, to materially hinder or
delay consummation of the transactions contemplated hereby, and, to the best of
the Purchaser's knowledge, no such litigation, proceeding, controversy, claim or
action has been threatened.
(H) ABSENCE OF REGULATORY ACTIONS. Neither the Purchaser nor its
-----------------------------
Subsidiary is a party to any cease and desist order, written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
written undertaking to, or is subject to any condition, order or directive by,
or is a recipient of any extraordinary supervisory letter from any Regulatory
Agency, nor has it been advised by any Regulatory Agency that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter or similar
written undertaking or condition which if issued would materially hinder or
delay consummation of the transactions contemplated hereby.
(I) CORPORATE DOCUMENTS. The Purchaser has delivered to the Seller true
-------------------
and complete copies of the Purchaser's certificate of incorporation, and bylaws
as amended to date and currently in full force and effect and, prior to the
Effective Time, will have delivered to the Seller true and complete copies of
the certificate of incorporation, or articles of organization and bylaws of
Acquisition Corp.
(J) FINANCIAL STATEMENTS. Purchaser has previously delivered, to Seller
--------------------
the Purchaser's audited Financial Statements for the year ended December 31,
1995, and the Purchaser's unaudited Financial Statements for the quarters ended
March 31, 1996 and, June 30, 1996. Such Financial Statements of Purchaser have
been prepared in conformity in all material respects with GAAP applied on a
consistent basis (except for changes, if any, required by GAAP and disclosed
therein) throughout the periods covered by such statements, and fairly present
in all materials respects the consolidated financial condition, results of
operations, stockholders' equity, and cash flows of Purchaser as of and for the
periods ending on the dates thereof, except for Purchaser's interim financial
statements which are subject to normal year-end adjustments.
(K) ABSENCE OF KNOWLEDGE. As of the date hereof, the Purchaser knows of no
--------------------
reason why it would be unable to obtain all of the necessary approvals required
in order to consummate the transactions contemplated by this Agreement. As of
the date of this Agreement, the Purchaser believes that, in light of its
financial condition, it will be able to obtain all such approvals, without the
imposition of any burdensome term or condition.
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ARTICLE III
CONDUCT PENDING THE MERGER
SECTION 3.01 CONDUCT OF THE SELLER'S BUSINESS PRIOR TO THE EFFECTIVE TIME.
Except with the written consent of Purchaser, which consent shall not be
unreasonably withheld, from and after the execution and delivery of this
Agreement and until the Effective Time, the Seller and its Subsidiary covenant
and agree that they shall:
(a) conduct their business, maintain their properties and operate only in
the ordinary course of business consistent with past practices and maintain
Seller's financial statements and reports in accordance with GAAP and maintain
Seller Bank's regulatory reports in accordance with applicable requirements;
(b) conduct their business and operate only in accordance with sound
banking practices, including charging off all loans required to be charged off
by bank regulators and regulations, statutes and sound banking practices;
(c) maintain an allowance for loan losses deemed by management of the
Seller to be adequate based on past loan loss experience and evaluation of
potential losses in current portfolios;
(d) remain in good standing with all applicable bank regulatory
authorities and preserve each of their existing banking locations;
(e) use their commercially reasonable efforts to maintain and preserve
intact their business organization, properties, leases and advantageous business
relationships and maintain good relationships with employees, and the goodwill
and business relationships with customers and others;
(f) maintain in full force and effect all of the insurance policies and
bonds covering the directors, officers, employees, properties, businesses and
Employee Plans of the Seller and its Subsidiary;
(g) consult with the Purchaser prior to acquiring any direct interest in
real property;
(h) not knowingly take any action which would materially adversely affect
or delay the ability of the Seller, Seller Bank, Purchaser or the Acquisition
Corp. to obtain any necessary approvals, consents or waivers of any governmental
authority or any other entity required for the transactions contemplated hereby;
and
(i) take such actions in the ordinary course of business consistent with
past practices to protect the Seller Bank's deposit base and prevent any
excessive withdrawals of deposits, provided, however, Seller Bank shall not pay
any interest on deposits which would
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exceed the maximum amount paid on like accounts with comparable institutions in
the Seller Bank's marketplace.
SECTION 3.02 FORBEARANCE BY THE SELLER. Without limiting the covenants set
forth in Section 3.01 hereof, except as otherwise specifically provided in this
Agreement and except to the extent required by law or regulation or by
regulatory authorities, from and after the execution and delivery of this
Agreement and until the Effective Time, the Seller and its Subsidiary will not,
without the prior written consent of the Purchaser, which written consent will
not be unreasonably withheld:
(a) amend their Articles of Organization, Charter, or Bylaws or other
corporate governance documents;
(b) except for the issuance of up to a maximum of 14,760 shares of Seller
Common Stock upon exercise of Seller Options, issue or sell any shares of their
capital stock, issue or grant any stock options, warrants, rights, calls or
commitments of any character calling for or permitting the issuance or sale of
their capital stock (or securities convertible into or exchangeable, with or
without additional consideration, for shares of such capital stock or amend any
of the terms of the outstanding stock options and SARs);
(c) increase or reduce the number of shares of their capital stock by
split-up, reverse split, reclassification, distribution of stock dividends,
change of par or stated value or otherwise modify, change or amend the voting
rights or preferences attributable to any such capital stock, except that the
reduction of outstanding shares of capital stock attributable to a stockholder
perfecting dissenters' rights shall not be violative of this section;
(d) purchase, permit the conversion of or otherwise acquire or transfer
for any consideration any outstanding shares of their capital stock or
securities carrying the right to acquire, or convert into or exchange for such
stock, with or without additional consideration;
(e) (i) adopt, amend or otherwise modify any of Seller's Employee Plans,
any bonus, pension, profit sharing, retirement or other compensation plan
qualified or non-qualified; (ii) enter into or (except as required pursuant to
Section 4.04 hereof) amend any contract of employment with any officer which is
not terminable at will without cost or other liability; (iii) make or grant any
general or individual wage or salary increase or increase in any manner the
compensation or fringe benefits of any of their employees, officers or
directors; (iv) become a party to or commit itself to fund or otherwise
establish any trust or account related to any Employee Plan with or for the
benefit of any employee, officer or director; (v) hire any new employee, except
that Seller may hire individuals of comparable skills and qualifications and at
comparable levels of compensation to fill existing vacancies identified in
Disclosure Schedule 3.02(e) and replace any employees who terminate their
employment with Seller after the date of this Agreement; (vi) pay any bonus
under any bonus or compensation plan (except as set forth in Disclosure Schedule
3.02(e)) ; or (vii) make any discretionary contribution to any Employee Plan;
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(f) incur any obligations, capital expenditures, liabilities or expenses
or make any charitable contributions, except in the ordinary course of business
consistent with past practice;
(g) merge or consolidate Seller or Seller Bank with any other corporation;
sell, transfer or lease any of their assets or property except in the ordinary
course of business, or close any banking office; make any acquisition of all or
any substantial portion of the business or assets of any other person, firm,
association, corporation or business organization other than in connection with
the collection of any loan or credit arrangement between Seller or Seller Bank
and any other person; enter into a purchase and assumption transaction with
respect to deposits and liabilities; permit the revocation or surrender by
Seller or Seller Bank of its certificate of authority to do business or its
certificate of authority to maintain, or file an application for the relocation
of any existing branch officer, or file an application for a certificate of
authority to establish a new branch office;
(h) waive, release, transfer or grant any rights, or modify or change in
any material respect, any material leases, licenses or agreements, other than in
the ordinary course of business;
(i) subject any asset or property of Seller to a lien, mortgage, pledge,
security interest or other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, and accounts established in the
ordinary course of business, transactions in "federal funds" and any lien,
pledge, security interest or other encumbrance incurred in the ordinary course
of business consistent with past practice which does not have or could not
reasonably be expected to have a Material Adverse Effect on Seller and Seller
Bank taken as a whole); modify in any material respect the manner in which
Seller and Seller Bank have heretofore conducted their business or enter into
any new line of business;
(j) make any loan or commitment secured by 1-4-family residential
properties to any borrower or group of affiliated borrowers except in the
ordinary course of business consistent with past practices and policies;
(k) except as set forth in Disclosure Schedule 3.02(k), compromise, extend
or restructure any real estate loan, construction loan or commercial loan with
an unpaid principal balance except in the ordinary course of business consistent
with past practices and policies;
(l) offer, issue any commitment for, or approve any first lien variable
rate residential mortgage loan, or home equity line of credit loan other than on
terms and conditions, exclusive of interest rates substantially similar to those
for such loans then currently offered by Seller or Seller Bank;
(m) make or commit to make any commercial business loan in excess of
$400,000 (including, without limitation, lines of credit and letters of credit)
or any commercial real estate or construction loan (including, without
limitation, lines of credit and letters of credit) except in the ordinary course
of business consistent with past practices and policies;
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(n) purchase or commit to purchase any bulk loan servicing portfolio;
(o) make any fixed rate loan with a term exceeding 30 years and which
cannot be sold in the secondary market;
(p) other than with respect to loan transactions entered into in the
ordinary course of business consistent with past practices and policies or other
than with respect to loans which are readily saleable in the secondary market
without recourse to the Federal Home Loan Mortgage Corporate or Federal National
Mortgage Association, make or enter into any material transaction, contract or
agreement or incur any other material commitment;
(q) incur any indebtedness for borrowed money, assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of
another person, except for deposit liabilities and except for indebtedness
incurred in the ordinary course of business the repayment term of which does not
exceed 90 days;
(r) cancel or compromise any debt or claim, which has not previously been
charged off, other than in the ordinary course of business;
(s) enter into any transaction other than in the ordinary course of
business;
(t) invite or initiate or enter into discussions or negotiations or
agreements for the acquisition or merger by the Seller or its Subsidiary of any
other entity;
(u) take any action which constitutes a breach or default of its
obligations under this Agreement, or would result in any of its representations
or warranties set forth in this Agreement becoming untrue, or which is
reasonably likely to delay or jeopardize the receipt of any of the regulatory
approvals required hereby;
(v) change its method of accounting as in effect as of December 31, 1995,
except as required by changes in GAAP or Regulatory Agencies;
(w) engage in or enter into any transactions with respect to Seller Bank's
portfolio of securities or make any investment in any security other than U.S.
Treasury obligations and obligations of GNMA, FNMA and FHLMC with a maturity of
one year or less, except that Seller may not under any circumstances engage in
or enter into any structured transactions, derivative securities, arbitrage or
hedging activity;
(x) settle any claim, action or proceeding involving any liability of the
Seller or Seller Bank for money, damages or other payment in excess of $25,000
or material restrictions upon the operations of the Seller or the Seller Bank;
(aa) sell or otherwise dispose of or encumber any shares of capital stock
of Seller Bank;
(bb) change its methodology or monthly accrual for the allowance for loan
losses;
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(cc) fail to notify Purchaser promptly of its receipt of any letter,
notice or other communication, whether written or oral, from any Regulatory
Agency advising that it is contemplating issuing, requiring, or requesting any
agreement, memoranda, understanding or similar undertaking, or order, directive,
or extraordinary supervisory letter;
(dd) fail to remain in compliance with any capital requirement of any
Regulatory Agency to which it is subject;
(ee) fail to promptly notify Purchaser of (A) the commencement or, to the
knowledge of Seller, threat of any audit, action, or proceeding involving any
material amount of taxes of Seller or Seller Bank; or (B) the receipt by Seller
or Seller Bank of any deficiency or audit notices or reports in respect of any
material deficiencies asserted by any Federal, state, local, or other tax
authority;
(ff) agree to the extension of any statute of limitations for making any
assessments with respect to taxes;
(gg) fail to maintain and keep their properties in as good repair and
condition as at present, except for ordinary wear and tear;
(hh) except in the ordinary course of business and consistent with
applicable laws and regulations, make any loan or loan commitment to any of its
officers, directors or 5% or more stockholders (or any person or entity
controlled by or affiliated with such officer, director or 5% or more
stockholder);
(ii) take or cause to be taken any action which would disqualify the
Merger as a tax free reorganization under Section 368 of the Code;
(jj) other than activities in the ordinary course of business consistent
with prudent banking practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of,
any of its material assets, properties or other rights or agreements;
(kk) file any application to relocate or terminate the operations of any
office of Seller Bank;
(ll) commit any act or omission which constitutes a breach or default by
Seller or its Subsidiary under any Regulatory Agreement or a material breach or
default by Seller or its Subsidiary under any material contract or material
license to which Seller or its Subsidiary is a party or by which them or their
respective properties is bound;
(mm) 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 foreclosure, settlements in lieu of foreclosure or troubled loan
or debt restructurings in the ordinary course of business consistent with
prudent banking practices;
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(nn) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or lease
for goods, services or office space to which Seller or its Subsidiary is a party
or by which Seller or its Subsidiary or their respective properties is bound
except that Seller may renew contracts, agreements or leases in the ordinary
course of business after consultation with Purchaser; or
(oo) pay any dividend or make any other distribution to stockholders of
Seller during any quarter in excess of the amount of dividends permissible under
Section 1.02(b)(ii) of this Agreement without causing an adjustment of the
Purchase Price.
(pp) agree or make any commitment to take any action to do any of the
foregoing.
SECTION 3.03 CONDUCT OF THE PURCHASER'S BUSINESS PRIOR TO THE EFFECTIVE
TIME.
(a) Except as expressly provided in this Agreement, during the
period from the date of this Agreement to the Effective Time, the Purchaser
shall not (i) take any action that would cause the representations in Section
2.02 to fail to be true and accurate or that would materially affect the ability
of the Purchaser and its Subsidiary to perform its covenants and agreements
under this Agreement or to consummate the transactions contemplated hereby, (ii)
take any action, which would materially adversely affect or delay the ability of
the Seller or the Purchaser to obtain any necessary approvals, consents or
waivers of any governmental authority required for the transactions contemplated
hereby, or (iii) without the prior written consent of the Seller, take action to
reduce the amount or its equity capital by more than 12% from the amount of
Purchaser's equity capital as of June 30, 1996. Except as expressly provided in
this Agreement, Acquisition Corp. shall not conduct any business prior to the
Effective Time.
(b) If prior to the Effective Time, the Purchaser makes any public
announcement of or files any application with a banking regulatory authority
with respect to a merger or acquisition of another company or entity, to the
extent that such acquisition or proposed transaction causes a delay in obtaining
the regulatory approvals set forth in Schedule 2.01(f) beyond March 31, 1997,
then the Purchase Price shall be increased by an aggregate amount equal to the
Seller's net earnings for each full month of such delay subsequent to March 31,
1996 (the "Delay Months"). Notwithstanding the above, the amount of such
increase shall be reduced by the "allocable amount of dividends," as defined
below, paid with respect to any quarter in which such Delay Months fall. The
allocable amount of dividends shall mean that percentage of the dividends paid
with respect to a quarter represented by the number of Delay Months in such
quarter divided by three.
ARTICLE IV
COVENANTS
SECTION 4.01 NO SOLICITATION. From and after the date hereof until the
termination of this Agreement, neither the Seller or Seller Bank, nor any of
their respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any attorney or accountant retained
by the Seller or its subsidiary), will, directly or indirectly, initiate,
solicit or
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knowingly encourage (including by way of furnishing non-public information or
assistance), or facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of their officers, directors or
employees or any attorney, accountant or other representative retained by it or
its subsidiary to take any such action, and the Seller shall notify Purchaser
orally (within one business day) and in writing (as promptly as practicable) of
all of the relevant details relating to all inquiries and proposals which it or
its subsidiary or any such officer, director, employee, attorney, accountant or
other representative may receive relating to any of such matters and if such
inquiry or proposal is in writing, the Seller shall deliver to Purchaser a copy
of such inquiry or proposal promptly; provided, however, that nothing contained
in this Section 4.01 shall prohibit the Board of Directors of the Seller from
(i) furnishing information to, or entering into discussions or negotiations with
any person or entity that makes an unsolicited written, bona fide proposal, to
acquire the Seller pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that (A) the Board of Directors of the Seller, after consultation
with and based upon the written advice of independent legal counsel (who may be
the Seller's regularly engaged independent legal counsel), determines in good
faith that such action is necessary for the Board of Directors of the Seller to
comply with its fiduciary duties to stockholders under applicable law (such
proposal being referred to herein as a "Superior Proposal") and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, the Seller (x) provides reasonable notice to
Purchaser to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person or entity and (y) receives from
such person or entity an executed confidentiality agreement in reasonably
customary form. For purposes of this Agreement, "Acquisition Proposal" shall
mean any of the following (other than the transactions contemplated hereunder)
involving the Seller or its Subsidiary: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more
of the assets of the Seller or Seller Bank, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 10% or more of the outstanding shares of capital stock of the Seller or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
SECTION 4.02 CERTAIN POLICIES OF THE SELLER; BALANCE SHEET.
(a) At the request of the Purchaser, the Seller shall modify and change
its loan, litigation and real estate valuation policies and practices (including
loan classifications and levels of reserves) after the date on which all
required shareholder, Regulatory Agency (other than the applicable waiting
period) and other approvals are received and prior to the Effective Time so as
to be consistent on a mutually satisfactory basis with those of the Purchaser;
provided, that such policies and practices (x) are consistent with generally
accepted accounting principles and all applicable laws and regulations, (y) do
not violate any law or regulation or cause the Seller
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or Seller Bank to be other than well-capitalized as defined by the Federal
Reserve Board or the FDIC, and (z) are consistent with prudent banking
practices.
(b) The Seller's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken to
conform to Purchaser's policies solely on account of this Section 4.02.
SECTION 4.03 ACCESS AND INFORMATION.
(a) From the date of this Agreement through the Effective Time, Seller and
Seller Bank shall afford to each of Purchaser and its authorized agents and
representatives, reasonable access to their respective properties, assets, books
and records and personnel, at reasonable business hours and after reasonable
notice; and Purchaser shall be provided with such financial and operating data
and other information with respect to the businesses, properties, assets, books
and records and personnel of Seller and Seller Bank as they shall from time to
time reasonably request. Purchaser agrees to conduct any such requests and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and consumer and employee relationships of Seller. In the
event the Purchaser learns of any information or matters during such
investigation that the Purchaser believes may constitute or reveal a material
breach of the Seller's representations, warranties, covenants or agreements
contained herein, the Purchaser shall provide the Seller with a written notice
specifying the information or matters learned and the basis upon which they may
constitute or reveal a material breach of the Seller's representations,
warranties, covenants or agreements and the Seller has the right to cure such
material breach within 30 calendar days from the date of such notice. No breach
of a representation, warranty, covenant or agreement that is learned pursuant to
Purchaser's investigation contemplated by this Section 4.03 shall constitute a
material breach of a representation, warranty, covenant or agreement by Seller
under any provision of or for any purpose under this Agreement unless Purchaser
provides Seller with a written notice relating thereto and the Seller has not
cured such breach within the time period provided in the immediately preceding
sentence or such case is not possible.
(b) The Purchaser agrees to treat as strictly confidential all information
received from the Seller or its Subsidiary and agrees not to divulge to any
other person, natural or corporate (other than essential employees and agents of
such party) any financial statements, schedules, contracts, agreements,
instruments, papers, documents and other information relating to the Seller and
its Subsidiary which it may come to know or which may come into its possession
and, if the transactions contemplated hereby are not consummated for any reason,
agrees promptly to return to the Seller all written material furnished by Seller
or its Subsidiary.
(c) Each party hereto will not, and will cause its respective
representatives not to, use any information obtained from any other such party
as a result of this Agreement (including this Section 4.03) or in connection
with the transactions contemplated hereby (whether so obtained before or after
the execution hereof, including work papers and other materials derived
therefrom (collectively, the "Confidential Information")) for any purpose
unrelated to the consummation of
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the transactions contemplated by this Agreement. Subject to the requirements of
law, regulation and applicable Regulatory Agencies, each party hereto will keep
confidential, and will cause its respective representatives to keep
confidential, all Confidential Information relating to or furnished by any other
such party unless such information (i) was already or becomes known to the
general public, other than from a prohibited disclosure by a party to this
Agreement or its representatives, (ii) becomes available to such party or an
affiliate of such party from sources (other than another party to this Agreement
or its representatives) not bound by a confidentiality obligation or agreement,
(iii) is disclosed with the prior written approval of the party which furnished
such Confidential Information or (iv) is or becomes readily ascertainable from
published information. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party hereto and its respective representatives shall promptly
cause all Confidential Information in the possession of itself and its
representatives, including all copies or extracts thereof, to be returned to the
party which furnished the same.
SECTION 4.04 EMPLOYEES AND DIRECTORS.
(a) At the Effective Time, all of the Directors of Seller Bank shall
resign and shall be replaced by the directors of the Acquisition Corp.
Additionally, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. and ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall resign as
officers and employees of Seller and Seller Bank.
All of Seller Bank's employees, other than as set forth in Section
4.04(a), would remain as employees of Seller Bank; however the Purchaser shall
have no duty or obligation to continue the employment of any such employees. No
contractual right to employment shall inure to such employees because of this
Agreement. No employee of Seller will have any contractual right to employment
unless such contract is in writing and executed by the President and Chief
Executive Officer of the Purchaser. The Purchaser shall not be liable or have
any obligation whatsoever to pay any severance benefits to any of Seller's
Employees other than as required by the Broadway National Bank Employee
Severance Compensation Plan attached as part of Disclosure Schedule 4.04.
(b) Prior to the Effective Time, Seller and Seller Bank shall cause any
and all employment, consulting, reimbursement or other agreement (the
"Employment Agreements") between Seller and Seller Bank and any individuals as
identified on Disclosure Schedule 4.04(c), to be terminated without further
liability for payments under such Employment Agreements on the part of Purchaser
or Seller, except as set forth in paragraph (d) below.
(c) Prior to the Effective Time or such earlier date on or prior to
December 31, 1996 as such person shall exercise any options to purchase Seller
Common Stock presently held by him, the Employment Agreement among the Seller,
Seller Bank and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Cashier") shall be terminated and the
Cashier shall receive a payment of $450,000 as full and final consideration for
the termination of such agreement and in satisfaction of any and all rights the
Cashier may have upon termination of employment, including subsequent to any
change in control, with the Seller and/or Seller Bank, whether before or after
consummation of the
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transactions herein contemplated (other than pursuant to vested rights in
employee benefit plans available generally for all employees which do not
discriminate in favor of officers).
(d) Prior to the Effective Time, Purchaser shall execute the form of
employment agreement for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ attached as Exhibit C hereto.
SECTION 4.05 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. The Purchaser and
the Seller shall (a) make as soon as practicable from the date of the Agreement,
any filings and applications required to be filed in order to obtain all
approvals, consents and waivers of governmental authorities necessary or
appropriate for the consummation of the transactions contemplated hereby (b)
cooperate with one another (i) in promptly determining what filings are required
to be made or approvals, consents or waivers are required to be obtained under
any relevant federal, state or foreign law or regulation and (ii) in promptly
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such approvals, consents or waivers, (c) use
reasonable efforts to obtain all such approvals, consents or waivers, to respond
to all inquiries and requests for information from regulatory authorities, (d)
and apprise each other of the content of all communications with regulatory
authorities with respect to all filings and applications.
SECTION 4.06 ANTI-TAKEOVER PROVISIONS. The Seller and its Subsidiary shall
use reasonable best efforts (i) to exempt or continue to exempt the Purchaser,
the Agreement and the Merger from any provisions of an anti-takeover provision
in the Seller's or its Subsidiary' articles of organization, charters and bylaws
and the provisions of any federal or state anti-takeover laws, and (ii) upon the
reasonable request of the Purchaser, to assist in any challenge by the Purchaser
to the applicability to the Agreement or the Merger of any federal or state
anti-takeover law.
SECTION 4.07 ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including using reasonable efforts to obtain all necessary actions or
non-actions, extensions, waivers, consents and approvals from all applicable
governmental entities, effecting all necessary registrations, applications and
filings (including, without limitation, filings under any applicable state
securities laws) and obtaining any required contractual consents and regulatory
approvals. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
proper officers and directors of each party to this Agreement and their
respective Subsidiary shall take all such necessary action as may be reasonably
requested by, and at the sole expense of, Purchaser. Seller and Seller Bank
agree to confer with Purchaser regarding notification of the Merger to both
customers and employees of the Seller Bank and further agree to invite a
representative of Purchaser to be present at meetings with Seller Bank's
employees to discuss the Merger.
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SECTION 4.08 PUBLICITY. The initial press release announcing this
Agreement shall be a joint press release and thereafter the Seller and the
Purchaser shall consult with each other in issuing any press releases or similar
public disclosure with respect to the other or the transactions contemplated
hereby and in making any filings with any governmental entity or with any
national securities exchange with respect thereto; provided, however, that
nothing contained in this Section 4.08 shall prohibit any party from responding
to questions from the business press or, following notification to the other
parties to this Agreement, from making any disclosure which, after consultation
with its counsel, it deems necessary to comply with the requirements of
applicable law or regulation.
SECTION 4.09 NOTIFICATION OF CERTAIN MATTERS. The Purchaser and the
Acquisition Corp., on the one hand, and the Seller and the Seller Bank, on the
other hand, shall give prompt notice to the other of (a) the occurrence or its
knowledge of any event or condition that would cause any of its representations
or warranties set forth in this Agreement not to be true and correct in all
material respects as of the date of this Agreement or as of the Effective Time
(except as to any representation or warranty which specifically relates to an
earlier date), or any of its obligations set forth in this Agreement required to
be performed at or prior to the Effective Time not to be performed in all
material respects at or prior to the Effective Time, including without
limitation, any event, condition, change or occurrence which individually or in
the aggregate has, or which, so far as reasonably can be foreseen at the time of
its occurrence, is reasonably likely to result in a Material Adverse Effect on
it; and (b) any action of a third party of which it receives notice that might
reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated hereby, including, without limitation, any notice or
other communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
SECTION 4.10 DIRECTORS' INSURANCE. The Purchaser will acquire and maintain
for a period of at least three years following the Effective Date, directors'
and officers' liability insurance, providing substantially the same coverage as
the existing directors' and officers' liability insurance of the Seller, as long
as the cost does not exceed a total of $35,000, for all persons who are
directors and officers of the Seller and Seller Bank on the Date hereof.
SECTION 4.11 SHAREHOLDERS' MEETING. The Seller shall take all action
necessary, in accordance with applicable law and its certificate of
incorporation and bylaws, to obtain the approval by the holders of Seller Common
Stock of the Agreement and Merger as promptly as practicable. The Seller's Board
of Directors (i) shall recommend to the Shareholders that the holders of the
Seller Common Stock vote in favor of or consent to and approve and adopt this
Agreement, unless the Board of Directors of the Seller, after consultation with
and based upon the written advice of independent legal cousel (who may be the
Seller's regularly engaged independent legal cousel), determines in good faith
that not making such recommendation is necessary for the Board of Directors of
the Seller to comply with its fiduciary duties to stockholders under applicable
laws and (ii) shall use its reasonable best efforts to solicit such approvals.
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SECTION 4.12 DISSENTERS' RIGHTS. Any holder of Seller Common Stock
otherwise entitled to receive Merger Consideration for each of his or her shares
shall be entitled to demand payment of the fair cash value of such shares as
specified in the MGLA if the holder follows the procedures specified in the
statutes. Those shares shall hereafter be specified as "Dissenting Shares." Any
Dissenting Shares shall not, after the Effective Time, be entitled to vote for
any purpose or receive any dividends or other distributions and shall not be
converted into cash as provided in Section 1.03 hereof; provided, however, that
shares of Seller Common Stock held by a dissenting shareholder who subsequently
withdraws a demand for payment, fails to comply fully with the requirements of
the MGLA, or otherwise fails to establish the right of such shareholder to be
paid the fair cash value of such shareholder's shares under the MGLA shall be
deemed to be converted into cash pursuant to the terms and conditions specified
herein. Seller shall give Purchaser prompt notice of any written demands for
appraisal of any shares of Seller Common Stock, attempted withdrawals of any
such demands, and any other instruments served pursuant to the MGLA and received
by Seller relating to shareholders' rights of appraisal. Seller shall not,
except with the prior written consent of Purchaser, voluntarily make any payment
with respect to any demands for appraisals of any shares of Seller Common Stock,
offer to settle or settle any such demands or approve any withdrawal of any such
demands.
SECTION 4.13 CONTINUATION OF LEASES. Seller shall use best efforts to
ensure that all action is taken to enable Purchaser to assume the leases
currently held by the Seller on its branch facilities. Seller shall cooperate
with Purchaser to secure any approvals from the lessors that may be required.
SECTION 4.14 SUBSEQUENT FINANCIAL STATEMENTS. As soon as reasonably
available, but in no event more than 20 days after the end of each month ending
after the date of this Agreement, Purchaser will deliver to Seller and Seller
will deliver to Purchaser their respective monthly financial statements.
SECTION 4.15 CURRENT INFORMATION. During the period from the date of this
Agreement to the Effective Time, Seller will cause one or more of Seller Bank's
designated representatives to confer on a regular and frequent basis (not less
than monthly) with representatives of Purchaser and to report (i) the general
status of the ongoing operations of Seller and its Subsidiary and (ii) the
status of, and the action proposed to be taken with respect to, loans held by
Seller or Seller Bank which, individually or in combination with one or more
other Loans to the same borrower thereunder, have an unpaid principal amount of
$250,000 or more and are non-performing assets. Seller will promptly notify
Purchaser of any material change in the normal course of business or in the
operation of the properties of Seller or its Subsidiary and of any governmental
complaints, investigations or hearings (or communication indicating that the
same may be contemplated), or the institution or the threat of significant
litigation involving Seller or its Subsidiary, and will keep Purchaser fully
informed of such events.
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ARTICLE V
CONDITIONS TO CONSUMMATION
SECTION 5.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions, none
of which may be waived:
(a) this Agreement shall have been approved by the requisite vote or
consent of the holders of Seller Common Stock in accordance with applicable law;
(b) all necessary regulatory or governmental approvals, consents or
waivers required to consummate the transactions contemplated hereby shall have
been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired; and
(c) no party 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 Merger.
SECTION 5.02 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER UNDER THIS
AGREEMENT. The obligations of the Purchaser to effect the Merger shall be
further subject to the satisfaction at or prior to the Effective Time of the
following conditions, any one or more of which may be waived by the Purchaser:
(a) each of the obligations, covenants and agreements of the Seller
required to be performed by it at or prior to the Effective Time pursuant to the
terms of this Agreement shall have been duly performed and complied with in all
material respects, and the Purchaser shall have received a certificate to the
foregoing effect dated the Effective Date and signed by the Chairman and
President of the Seller;
(b) the representations and warranties of the Seller contained in this
Agreement (subject to Section 4.09) shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time (as
though made at and as of the Effective Time except as to (i) any representation
or warranty which specifically relates to an earlier date; and (ii) where the
facts which cause the failure of any representation or warranty to be so true
and correct would not, either individually or in the aggregate, constitute a
Material Adverse Effect on Purchaser and its Subsidiary taken as a whole) and
the Purchaser shall have received a certificate to the foregoing effect dated
the Closing Date signed by the Chairman and President of the Seller.
(c) the Purchaser shall have received certified copies of the resolutions
(or documents of like import) evidencing the authorization of this Agreement and
the consummation of the transactions contemplated hereby by the Seller's Board
of Directors and the Seller's shareholders;
(d) the Purchaser shall have received a certificate of corporate existence
and good standing for the Seller from the Secretary of State of the Commonwealth
of Massachusetts (such
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certificate to be dated as of a day as close as practicable to the date of the
Closing) and a similar certificate for the Seller Bank from the OCC;
(e) Subject to the Purchaser's compliance with Sections 4.05 and 4.07,
none of the approvals or consents referred to in Section 5.01(b) hereof shall
contain any condition which would, or would be reasonably likely to, have a
Material Adverse Effect on the Purchaser and its Subsidiary taken as a whole
giving effect to the completion of the transactions contemplated hereby;
(f) the Purchaser shall have received an opinion or opinions, dated the
date of the Closing, from Cranmore, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Seller,
to the effect that:
(i) Seller is a corporation duly authorized, validly existing and in
good standing corporation under the laws of the Commonwealth of Massachusetts
and Seller Bank is a national bank duly organized and in existence under the
laws of the United States of America;
(ii) the Seller has the power and authority to carry on its
business currently conducted, to own, lease and operate its properties and to
consummate the transactions contemplated by this Agreement and the Plan of
Merger and the Seller and its Subsidiary have the corporate power and authority
to carry on their business currently conducted and to own, lease and operate
their properties;
(iii) this Agreement and the Plan of Merger have been duly
authorized and approved by the Seller and this Agreement and the Plan of Merger
and the transactions contemplated thereby have been approved by the requisite
vote or consent of the Seller's shareholders and duly authorized, executed and
delivered by the Seller and this Agreement and Plan of Merger constitute the
valid and binding obligation of the Seller;
(iv) the authorized capitalization of the Seller is as set forth
in Section 2.01(b) hereof;
(v) all acts, other proceedings required to be taken by or on the
part of the Seller, including the adoption of this Agreement and the Plan of
Merger by the shareholders of the Seller, and the necessary approvals, consents,
authorizations or notifications required to be taken to consummate the
transactions contemplated by this Agreement and the Plan of Merger, have been
properly taken or obtained; neither the execution and delivery of this Agreement
and the Plan of Merger nor the consummation of the transactions contemplated
hereby and thereby, with or without the giving of notice or the lapse of time,
or both, will (i) violate any provision of the Articles of Organization, Charter
or Bylaws of the Seller or the Subsidiary; or (ii) to the knowledge of such
counsel, violate, conflict with, result in the material breach or termination
of, constitute a material default under, accelerate the performance required by,
or result in the creation of any material lien, charge or encumbrance upon any
of the properties or assets of the Seller or the Subsidiary pursuant to any
indenture, mortgage, deed of trust, or other agreement or instrument to which
the Seller or the Subsidiary are a party or by which it or any of their
properties or assets may be bound, or violate any statute, rule or regulation
applicable to the
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Seller or the Subsidiary, which would have a Material Adverse Effect on the
financial condition, assets, liabilities, or business of the Seller or the
Subsidiary; to the knowledge of such counsel, no consent, approval,
authorization, order, registration or qualification of or with any court,
regulatory authority or other governmental body, other than as specifically
contemplated by this Agreement is required for the consummation by the Seller or
the Subsidiary of the transactions contemplated by this Agreement and the Plan
of Merger;
(vi) to the knowledge of such counsel, since the date of this
Agreement, neither the Seller nor the Subsidiary have granted any options,
warrants, calls, agreements or commitments of any character relating to any of
the shares of the Seller or the Subsidiary, nor has the Seller or the Subsidiary
granted any rights to purchase or otherwise acquire from the Seller or the
Subsidiary any shares of the Seller's or the Subsidiary' capital stock, except
as provided in this Agreement as set forth in Disclosure Schedule 2.01(b);
(vii) except as disclosed pursuant to Disclosure Schedule 2.01(k),
there are no actions, suits, proceedings or investigations of any nature pending
or threatened that challenge the validity or legality of the transactions
contemplated by this Agreement or Plan of Merger which seek or threaten to
restrain, enjoin or prohibit (or obtain substantial damages in connection with)
the consummation of such transactions;
(viii) to the knowledge of such counsel, there is no litigation,
appraisal or other proceeding or governmental investigation pending or
threatened against or relating to the business or property of the Seller or the
Subsidiary which would have a Materially Adverse Effect on the consolidated
financial condition of the Seller, or of any legal impediment to the continued
operation of the properties and business of the Seller or the Subsidiary in the
ordinary course after the consummation of the transactions contemplated by this
Agreement and Plan of Merger.
(g) the Seller shall have furnished the Purchaser with such certificates
of its officers or others and such other documents to evidence fulfillment of
the conditions set forth in this Section 5.02 as the Purchaser may reasonably
request.
(h) the Seller will be responsible for making all filings and/or
submitting all returns with respect to any state and/or local real estate
transfer or gains taxes that are required to be filed before the Effective Time.
Seller also agrees to pay any expenses relating to the preparation or filing of
returns with respect thereto.
SECTION 5.03 CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The obligations
of the Seller to effect the Merger shall be further subject to the satisfaction
at or prior to the Effective Time of the following conditions, any one or more
of which may be waived by the Seller:
(a) each of the obligations of the Purchaser required to be performed by
it at or prior to the Effective Date pursuant to the terms of this Agreement
shall have been duly performed and complied with in all material respects, and
the Seller shall have received a certificate to the foregoing effect dated the
Closing Date and signed by the President and Chief Financial Officer of the
Purchaser;
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(b) the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Effective Time (as though made at and as of the
Effective Time except as to any representation or warranty which specifically
relates to an earlier date) and the Seller shall have received a certificate to
the foregoing effect dated the Effective Date signed by the President and the
Chief Financial Officer of the Purchaser;
(c) the Seller shall have received an opinion, dated as of the Effective
Date, from ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Purchaser to the effect
that:
(i) Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(ii) Purchaser has the corporate power and authority to carry on
its business as now conducted, to own, lease and operate its
properties and to consummate the transactions contemplated by
the Agreement;
(iii) the Agreement has been duly authorized, executed and delivered
by Purchaser and Acquisition Corp. and constitutes the valid
and binding obligation of Purchaser and Acquisition Corp;
(iv) all corporate acts and other proceedings required to be taken
by or on the part of Purchaser and Acquisition Corp. to
consummate the transactions contemplated by the Agreement have
been properly taken; neither the execution and delivery of the
Agreement, nor the consummation of the transactions
contemplated hereby and thereby, with and without the giving
of notice or the lapse of time, or both, will violate any
provision of the Articles of Incorporation or Bylaws of
Purchaser;
(v) except as disclosed in such opinion, to the knowledge of such
counsel there are no actions, suits, proceedings or
investigations (public or private) of any nature pending or
threatened that challenge the validity or propriety of the
transactions contemplated by the Agreement or which seek or
threaten to restrain, enjoin or prohibit or to obtain
substantial damages in connection with the consummation of
such transactions; and
(vi) all regulatory and governmental approvals and consents which
are necessary to be obtained by Purchaser and its subsidiaries
to permit the execution, delivery and performance of the
Agreement have been obtained.
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ARTICLE VI
TERMINATION
SECTION 6.01 TERMINATION. Notwithstanding any other provision of this
Agreement, this Agreement may be terminated, and the Merger abandoned, prior to
the Effective Time, either before or after its approval by the shareholders of
the Seller:
(a) by the mutual consent of the Purchaser and the Seller in a written
instrument if the board of directors of each so determines by vote of a majority
of the members of its entire board;
(b) by the Purchaser or the Seller (provided that the party seeking
termination is not then in material breach of any representation, warranty,
covenant or other agreement contained herein), in the event of (i) a failure to
perform or comply by the other party with any covenant or agreement of such
other party contained in this Agreement, which failure or non-compliance is
material in the context of the transactions contemplated by this Agreement, or
(ii) subject to Section 4.09, any inaccuracies, omissions or breach in the
representations, warranties, covenants or agreements of the other party
contained in this Agreement the circumstances as to which either individually or
in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or cannot
be cured within 30 calendar days after written notice thereof is given by the
party seeking to terminate to such other party;
(c) by the Purchaser or the Seller by written notice to the other party if
either (i) any approval, consent or waiver of a governmental authority required
to permit consummation of the transactions contemplated hereby shall have been
denied or (ii) any governmental authority of competent jurisdiction shall have
issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement;
(d) by the Purchaser or the Seller, in the event that the Merger is not
consummated by June 30, 1997, unless the failure of such occurrence is due to
the failure to perform or comply with any covenant or agreement contained in
this Agreement by the party seeking to terminate; provided, however, that the
terminating party provides thirty (30) days prior written notice to the other
party of such Party's intention to terminate; or
(e) subject to Section 4.09, by the Purchaser by written notice to the
Seller in the event that there has occurred since the date of this Agreement an
event, condition, change or occurrence which, individually or in the aggregate,
has had or could reasonably be expected to result in a Material Adverse Effect
on the Seller; provided that the Purchaser shall have given the Seller thirty
(30) calendar days prior written notice of such termination, and the Seller
shall not have remedied such event, condition, change or occurrence by the end
of such thirty-day period.
(f) by Purchaser, if in connection with any application to the State of
Massachusetts regarding the Merger, Purchaser is required to make available for
call by the Massachusetts
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Housing Partnership Fund an amount of dollars greater than ninety hundredths of
one percent of the consolidated assets of Seller and Seller Bank.
SECTION 6.02 EFFECT OF TERMINATION. In the event of the termination of
this Agreement by either the Purchaser or the Seller, as provided above, this
Agreement shall thereafter become void and, subject to the provisions of Section
8.02, there shall be no liability on the part of any party hereto or their
respective officers or directors, except as provided in Section 6.03 and except
that any such termination shall be without prejudice to the rights of any party
hereto arising out of the willful breach by any other party of any provision
contained in this Agreement.
SECTION 6.03 TERMINATION FEE. In the event the Merger is terminated
pursuant to 6.01(b) or (e) of this Agreement by Purchaser or Seller and the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained in this Agreement which breach
constitutes a Material Adverse Effect, Purchaser and Seller agree that the
terminating party shall be entitled to a termination fee of $2 million as
liquidated damages.
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.01 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the provisions
of Article V and VI, the closing of the transactions contemplated hereby shall
take place at the offices of the Purchaser on such date (the "Closing Date")
within five (5) business days after the expiration of all applicable waiting
periods in connection with approvals of Regulatory Agencies and all conditions
to the consummation of this Agreement are satisfied or waived at such time
within such period as the Purchaser and the Seller mutually agree, or on such
other date as may be agreed by the parties; provided, however, that unless both
parties otherwise agree the Closing Date shall not occur before January 2, 1997.
Subject to the provisions of this Agreement, on the Closing Date, the
Certificate of Merger shall be signed, verified and affirmed as required by
applicable law and duly filed with the Secretary of State of the Commonwealth of
Massachusetts. The date of such filing is herein called the "Effective Date."
The "Effective Time" of the Merger shall be the time on the Effective Date as
set forth in such articles of merger.
SECTION 7.02 DELIVERIES AT THE CLOSING. Subject to the provisions of
Articles V and VI, on the Closing Date there shall be delivered to the Purchaser
and the Seller the documents and instruments required to be delivered under
Article V.
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ARTICLE VIII
OTHER MATTERS
SECTION 8.01 CERTAIN DEFINITIONS; INTERPRETATION. As used in this
Agreement, the following terms shall have the meanings indicated, unless the
context otherwise requires:
"material" means material to the Purchaser or the Seller (as the
case may be) and its respective subsidiaries, taken as a whole.
"person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
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 headings contained in this Agreement are for ease of
reference only and shall not affect the meaning or interpretation of this
Agreement. Whenever the words "include, "includes, or "including" are used in
this Agreement, they shall be deemed followed by the words "without limitation."
Any singular term in this Agreement shall be deemed to include the plural, and
any plural term the singular. Any reference to gender in this Agreement shall be
deemed to include any other gender.
SECTION 8.02 SURVIVAL. Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective Time
shall survive the Effective Time. All other agreements and covenants and all
representations and warranties shall be deemed to be conditions of the Agreement
and shall not survive the Effective Time. If the Agreement shall be terminated,
the agreements of the parties in Section 4.03(b) and (c) Section 6.02 through
6.03 and Section 8.07 shall survive such termination.
SECTION 8.03 AMENDMENT. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective boards of directors,
at any time before or after approval hereof by the shareholders of the Seller
but, after such approval, no amendment shall be made which reduces the amount or
changes the form of the Merger Consideration as provided in Section 1.02 or
which in any way materially adversely affects the rights of such shareholders,
without the further approval of such shareholders. This Agreement may not be
amended except by an instrument in writing specifically referring to this
Section 8.03 and signed on behalf of each of the parties hereto.
SECTION 8.04 WAIVER. At any time prior to the Effective Date, the
Purchaser, on the one hand, and the Seller, on the other hand, may (i) extend
the time for the performance of any of the obligations or other acts of the
other, (ii) waive any inaccuracies in the representations and warranties of the
other contained herein or in any documents delivered pursuant hereto and (iii)
waive compliance by the other with any of the agreements or conditions contained
herein which may legally be waived. Any agreement on the part of a party hereto
to
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any such extension or waiver shall be valid only if set forth in an instrument
in writing specifically referring to this Section 8.04 and signed on behalf of
such party.
SECTION 8.05 COUNTERPARTS. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
SECTION 8.06 GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the Commonwealth of Massachusetts,
without regard to conflicts of laws principles.
SECTION 8.07 EXPENSES. Each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby, except that if the Termination Fee becomes payable, the party entitled
to receive such fee shall be paid the fee by the other party on demand.
SECTION 8.08 NOTICES. All notices, requests, acknowledgements and other
communications hereunder to a party shall be in writing and shall be delivered
by hand, overnight courier or by facsimile transmission (confirmed in writing)
to such party at its address or facsimile number set forth below or such other
address or facsimile number as such party may specify by notice hereunder, and
shall be deemed to have been delivered as of the date so delivered.
If to the Seller, to: BROADWAY CAPITAL CORP.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
and
With copies to: Cranmore, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇. ▇. ▇▇▇▇▇▇▇▇
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If to the Purchaser or Acquisition Corp., to:
BOSTONFED BANCORP, INC.
17 New England Executive Park
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SECTION 8.09 ENTIRE AGREEMENT; ETC. This Agreement, together with the
Disclosure Schedules, the Exhibits and the Plan of Merger, represent the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made. All terms and provisions of the Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except as to Section 4.10, nothing in this Agreement is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 8.10 ASSIGNMENT. This Agreement may not be assigned by any
party hereto without the written consent of the other parties.
SECTION 8.11 SCHEDULES NOT ADMISSIONS. Inclusion in any Exhibit hereto or
in the Disclosure Schedules of any statement or information by the Seller shall
not constitute an admission that such information is required (by reason of
materiality or otherwise) to be furnished as part of such Disclosure Schedules,
otherwise under this Agreement or an admission against interest with respect to
any person not a party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BOSTONFED BANCORP, INC.
Attest: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------- -----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, Chief Executive Officer and
President
BROADWAY CAPITAL CORP.
Attest: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------- -----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
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