EXHIBIT 2.1
AGREEMENT AND PLAN
OF MERGER
BY AND BETWEEN
BROOKLINE BANCORP, INC.
AND
MYSTIC FINANCIAL, INC.
JULY 7, 2004
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS 1
1.1. Certain Definitions. 1
ARTICLE II THE MERGER 8
2.1. Merger. 8
2.2. Closing; Effective Time. 8
2.3. Certificate of Incorporation and Bylaws. 8
2.4. Directors and Officers of Surviving Corporation. 8
2.5. Additional Director of Brookline Bancorp and Brookline Bank. 8
2.6. Effects of the Merger. 8
2.7. Tax Consequences. 9
2.8. Possible Alternative Structures. 9
2.9. Additional Actions. 9
ARTICLE III CONVERSION OF SHARES 10
3.1. Conversion of MFI Common Stock; Merger Consideration. 10
3.2. Election Procedures. 11
3.3. Procedures for Exchange of MFI Common Stock. 14
3.4. Treatment of MFI Options. 16
3.5. Bank Merger. 17
3.6. Reservation of Shares. 17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MFI 17
4.1. Standard. 17
4.2. Organization. 18
4.3. Capitalization. 18
4.4. Authority; No Violation. 19
4.5. Consents. 20
4.6. Financial Statements. 21
4.7. Taxes. 21
4.8. No Material Adverse Effect. 22
4.9. Material Contracts; Leases; Defaults. 22
4.10. Ownership of Property; Insurance Coverage. 23
4.11. Legal Proceedings. 24
4.12. Compliance With Applicable Law. 24
4.13. Employee Benefit Plans. 25
4.14. Brokers, Finders and Financial Advisors. 29
4.15. Environmental Matters. 29
4.16. Loan Portfolio. 31
4.17. Securities Documents. 32
4.18. Related Party Transactions. 32
4.19. Deposits. 33
4.20. Antitakeover Provisions Inapplicable; Required Vote. 33
4.21. Registration Obligations. 33
4.22. Risk Management Instruments. 33
4.23. Fairness Opinion. 33
4.24. Intellectual Property. 34
4.25. Trust Accounts. 34
< (i)
4.26. Labor Matters. 34
4.27. MFI Information Supplied 34
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BROOKLINE BANCORP 34
5.1. Standard. 35
5.2. Organization. 35
5.3. Capitalization. 36
5.4. Authority; No Violation. 36
5.5. Consents. 37
5.6. Financial Statements. 38
5.7. Taxes. 38
5.8. No Material Adverse Effect. 39
5.9. Ownership of Property; Insurance Coverage. 39
5.10. Legal Proceedings. 40
5.11. Compliance With Applicable Law. 40
5.12. Employee Benefit Plans. 41
5.13. Environmental Matters. 43
5.14. Loan Portfolio. 44
5.15. Securities Documents. 44
5.16. Deposits. 45
5.17. Antitakeover Provisions Inapplicable. 45
5.18. Brokers, Finders and Financial Advisors. 45
5.19. Brookline Bancorp Common Stock 45
5.20. Material Contracts; Leases, Defaults. 45
5.21. Brookline Bancorp Information Supplied. 45
ARTICLE VI COVENANTS OF MFI 46
6.1. Conduct of Business. 46
6.2. Current Information. 50
6.3. Access to Properties and Records. 51
6.4. Financial and Other Statements. 52
6.5. Maintenance of Insurance. 52
6.6. Disclosure Supplements. 53
6.7. Consents and Approvals of Third Parties. 53
6.8. All Reasonable Efforts. 53
6.9. Failure to Fulfill Conditions. 53
6.10. No Solicitation. 53
6.11. Reserves and Merger-Related Costs. 54
6.12. Board of Directors and Committee Meetings. 55
ARTICLE VII COVENANTS OF BROOKLINE BANCORP 55
7.1. Conduct of Business. 55
7.2. Current Information and Consultation. 55
7.3. Financial and Other Statements. 56
7.4. Disclosure Supplements. 56
7.5. Consents and Approvals of Third Parties. 56
7.6. All Reasonable Efforts. 57
7.7. Failure to Fulfill Conditions. 57
7.8. Employee Benefits. 57
(ii)
7.9. Directors and Officers Indemnification and Insurance. 60
7.10. Stock Listing. 61
7.11. Stock and Cash Reserve. 61
7.12. Section 16(b) Exemption. 61
7.13. Communications to MFI Employees; Training 62
ARTICLE VIII REGULATORY AND OTHER MATTERS 62
8.1. Meeting of Stockholders. 62
8.2. Proxy Statement-Prospectus; Merger Registration Statement. 63
8.3. Regulatory Approvals. 64
8.4. Affiliates. 64
ARTICLE IX CLOSING CONDITIONS 64
9.1. Conditions to Each Party's Obligations under this Agreement. 64
9.2. Conditions to the Obligations of Brookline Bancorp under
this Agreement. 66
9.3. Conditions to the Obligations of MFI under this Agreement. 67
ARTICLE X THE CLOSING 67
10.1. Time and Place. 67
10.2. Deliveries at the Pre-Closing and the Closing. 68
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER 68
11.1. Termination. 68
11.2. Effect of Termination. 72
11.3. Amendment, Extension and Waiver. 73
ARTICLE XII MISCELLANEOUS 73
12.1. Confidentiality. 73
12.2. Public Announcements. 74
12.3. Survival. 74
12.4. Notices. 74
12.5. Parties in Interest. 75
12.6. Complete Agreement. 75
12.7. Counterparts. 75
12.8. Severability. 75
12.9. Governing Law. 76
12.10. Interpretation. 76
12.11. Specific Performance. 76
12.12. Waiver of Trial by Jury. 76
EXHIBIT A FORM OF VOTING AGREEMENT
EXHIBIT B FORM OF AGREEMENT AND PLAN OF BANK MERGER
EXHIBIT C AFFILIATES AGREEMENT
(iii)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
July 7, 2004, by and between Brookline Bancorp, Inc., a Delaware
corporation ("Brookline Bancorp"), and Mystic Financial, Inc., a Delaware
corporation ("MFI").
WHEREAS, the Board of Directors of each of Brookline Bancorp and MFI
(i) has determined that this Agreement and the business combination and
related transactions contemplated hereby are in the best interests of their
respective companies and stockholders and (ii) has determined that this
Agreement and the transactions contemplated hereby are consistent with and
in furtherance of their respective business strategies, and (iii) has
approved this Agreement at meetings of each of such Boards of Directors;
and
WHEREAS, in accordance with the terms of this Agreement, MFI will
merge with and into Brookline Bancorp (the "Merger"), and immediately
thereafter Medford Co-operative Bank, which is a wholly owned subsidiary of
MFI, will be merged with and into Brookline Bank, a wholly owned subsidiary
of Brookline Bancorp; and
WHEREAS, as a condition to the willingness of Brookline Bancorp to
enter into this Agreement, each of the directors of MFI have entered into a
Voting Agreement, substantially in the form of Exhibit A hereto, dated as
of the date hereof, with Brookline Bancorp (the "Voting Agreement"),
pursuant to which each such director has agreed, among other things, to
vote all shares of common stock of MFI owned by such person in favor of the
approval of this Agreement and the transactions contemplated hereby, upon
the terms and subject to the conditions set forth in such Voting
Agreements; and
WHEREAS, the parties intend the Merger to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and that this Agreement be and is hereby adopted
as a "plan of reorganization" within the meaning of Sections 354 and 361 of
the Code; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the business transactions
described in this Agreement and to prescribe certain conditions thereto.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, and of other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. Certain Definitions.
As used in this Agreement, the following terms have the following
meanings (unless the context otherwise requires, references to Articles and
Sections refer to Articles and Sections of this Agreement).
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"Affiliate" means any Person who directly, or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person and, without limiting the generality of the
foregoing, includes any executive officer or director of such Person and
any Affiliate of such executive officer or director.
"Agreement" means this agreement, and any amendment hereto.
"Bank Merger" shall mean the merger of Medford Co-operative Bank with
and into Brookline Bank, with Brookline Bank as the surviving institution,
which mergers shall occur immediately following the Merger.
"Bank Regulator" shall mean any Federal or state banking regulator,
including but not limited to the OTS, FDIC, the Commissioner and the FRB,
which regulates Brookline Bank, Medford Co-operative Bank, and their
respective holding companies or subsidiaries, as the case may be.
"Brookline Bancorp" shall mean Brookline Bancorp, Inc., a Delaware
corporation, with its principal executive offices located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Brookline Bancorp Common Stock" shall mean the common stock, par
value $.01 per share, of Brookline Bancorp.
"BROOKLINE BANCORP DISCLOSURE SCHEDULE" shall mean a written
disclosure schedule delivered by Brookline Bancorp to MFI specifically
referring to the appropriate section of this Agreement.
"Brookline Bancorp Stock Benefit Plans" shall mean 1999 and 2003
Stock Option Plans and 1999 and 2003 Recognition and Retention Plans.
"Brookline Bancorp Financial Statements" shall mean the (i) the
audited consolidated statements of financial condition (including related
notes and schedules) of Brookline Bancorp as of December 31, 2003 and 2002
and the consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows (including related notes and schedules,
if any) of Brookline Bancorp for each of the three years ended December 31,
2003, 2002 and 2001, as set forth in Brookline Bancorp's annual report on
Form 10-K for the year ended December 31, 2003, and (ii) the unaudited
interim consolidated financial statements of Brookline Bancorp as of the
end of each calendar quarter following December 31, 2003, and for the
periods then ended, as filed by Brookline Bancorp in its Securities
Documents.
"Brookline Bancorp Subsidiary" means any corporation, 50% or more of
the capital stock of which is owned, either directly or indirectly, by
Brookline Bancorp or Brookline Bank, except any corporation the stock of
which is held in the ordinary course of the lending activities of Brookline
Bank.
"Brookline Bank" shall mean Brookline Bank, a federally chartered
stock savings association, with its principal offices located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, which is a wholly owned
subsidiary of Brookline Bancorp.
2
"Cash Consideration" shall have the meaning set forth in Section
3.1.3.
"Cash Election" shall have the meaning set forth in Section 3.2.2.
"Cash/Stock Consideration" shall have the meaning set forth in
Section 3.1.3.
"Cash Election Shares" shall have the meaning set forth in Section
3.2.1.
"Certificate" shall mean a certificate evidencing shares of MFI
Common Stock.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commissioner" shall mean the Commissioner of the Massachusetts
Division of Banks, and shall include the Massachusetts Board of Bank
Incorporation (as appropriate).
"Confidentiality Agreement" shall mean the confidentiality agreement
referred to in Section 12.1 of this Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in
Section 3.1.4.
"Dissenting Stockholder" shall have the meaning set forth in
Section 3.1.4.
"Effective Time" shall mean the date and time specified pursuant to
Section 2.2 as the effective time of the Merger.
"Election Deadline" shall have the meaning set forth in Section
3.2.3.
"Election Form" shall have the meaning set forth in Section 3.2.2.
"Election Form Record Date" shall have the meaning set forth in
Section 3.2.2.
"Environmental Laws" shall mean any applicable Federal, state or
local law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any governmental entity relating to (1) the protection,
preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Materials of Environmental Concern. The term
Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. [SECTION]9601, et seq; the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. [SECTION]6901, et seq; the Clean Air Act, as amended,
42 U.S.C. [SECTION]7401, et seq; the Federal Water Pollution Control Act,
as amended, 33 U.S.C. [SECTION]1251, et seq; the Toxic Substances Control
Act, as amended, 15 U.S.C. [SECTION]2601, et seq; the Emergency Planning
and Community Right to
3
Know Act, 42 U.S.C. [SECTION]11001, et seq; the Safe Drinking Water Act, 42
U.S.C. [SECTION]300f, et seq; and all comparable state and local laws, and
(b) any common law (including without limitation common law that may impose
strict liability) that may impose liability or obligations for injuries or
damages due to the presence of or exposure to any Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall mean American Stock Transfer & Trust Company,
or such other bank or trust company or other agent designated by Brookline
Bancorp, and reasonably acceptable to MFI, which shall act as agent for
Brookline Bancorp in connection with the exchange procedures for exchanging
Certificates for the Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.3.1.
"Exchange Ratio" shall have the meaning set forth in Section 3.1.3.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of Boston.
"FRB" shall mean the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" shall mean accounting principles generally accepted in the
United States of America.
"Governmental Entity" shall mean any Federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references to
such Person being aware of a particular matter) means those facts that are
known or should have been known by the executive officers and directors of
such Person, and includes any facts, matters or circumstances set forth in
any written notice from any Bank Regulator or any other material written
notice received by an executive officer or director of that Person.
"Material Adverse Effect" shall mean, with respect to Brookline
Bancorp or MFI, respectively, any effect that (i) is material and adverse
to the financial condition, results of operations or business of Brookline
Bancorp and its Subsidiaries taken as a whole, or MFI and its Subsidiaries
taken as a whole, respectively, or (ii) materially impairs the ability of
either MFI, on the one hand, or Brookline Bancorp, on the other hand, to
perform its obligations under this Agreement or otherwise materially
impedes the consummation of the transactions contemplated
4
by this Agreement; provided that "Material Adverse Effect" shall not be
deemed to include the impact of (a) changes in laws and regulations
affecting banks or thrift institutions and their holding companies
generally, or interpretations thereof by courts or governmental agencies,
(b) changes in GAAP or regulatory accounting principles generally
applicable to financial institutions and their holding companies, (c)
actions and omissions of a party hereto (or any of its Subsidiaries) taken
with the prior written consent of the other party, (d) compliance with this
Agreement on the business, financial condition or results of operations of
the parties and their respective Subsidiaries, including the expenses
incurred by the parties hereto in consummating the transactions
contemplated by this Agreement (consistent with the information included in
the Brookline Bancorp Disclosure Schedules and the MFI Disclosure
Schedules), and (e) any change in the value of the securities or loan
portfolio of Brookline Bancorp or MFI, respectively, whether held as
available for sale or held to maturity, resulting from a change in interest
rates generally.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws.
"Merger" shall mean the merger of MFI with and into Brookline Bancorp
pursuant to the terms hereof.
"Merger Consideration" shall mean the cash or Brookline Bancorp
Common Stock, or combination thereof, in an aggregate per share amount to
be paid by Brookline Bancorp for each share of MFI Common Stock, as set
forth in Section 3.1.
"Merger Registration Statement" shall mean the registration
statement, together with all amendments, filed with the SEC under the
Securities Act for the purpose of registering shares of Brookline Bancorp
Common Stock to be offered to holders of MFI Common Stock in connection
with the Merger.
"Medford Co-operative" shall mean The Medford Co-operative Bank, a
Massachusetts chartered co-operative bank, with its principal offices
located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, which is a wholly
owned subsidiary of MFI.
"MFI" shall mean Mystic Financial, Inc., a Delaware corporation, with
its principal offices located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
"MFI Common Stock" shall mean the common stock, par value $0.01 per
share, of MFI.
"MFI DISCLOSURE SCHEDULE" shall mean a written disclosure schedule
delivered by MFI to Brookline Bancorp specifically referring to the
appropriate section of this Agreement.
"MFI Financial Statements" shall mean (i) the audited consolidated
balance sheets (including related notes and schedules, if any) of MFI as of
June 30, 2003 and 2002 and the consolidated statements of income, changes
in stockholders' equity and cash flows (including related notes and
schedules, if any) of MFI for each of the three years ended June 30, 2003,
2002 and 2001, as set forth in MFI's annual report on Form 10-K for the
year ended June 30, 2003 and (ii) the unaudited interim consolidated
financial statements of MFI as of the end of each calendar
5
quarter following June 30, 2003 and for the periods then ended, as filed by
MFI in its Securities Documents.
"MFI Option" shall mean an option to purchase shares of MFI Common
Stock granted pursuant to the MFI 1999 Stock Option Plan and outstanding as
of the date hereof, as set forth in MFI DISCLOSURE SCHEDULE 4.3.1.
"MFI Regulatory Reports" means the Call Reports of Medford Co-
operative, and accompanying schedules (other than such schedules as are
required to be kept confidential pursuant to applicable law or regulatory
requirements), as filed with the FDIC with respect to each calendar quarter
beginning with the quarter ended September 30, 2003, through the Closing
Date, and all Annual Reports on Form FR Y-6, any Current Report on Form FR
Y-6A filed with the FRB by MFI from December 31, 2002 through the Closing
Date.
"MFI Stockholders Meeting" shall have the meaning set forth in
Section 8.1.1.
"MFI Stock Benefit Plans" shall mean the MFI 1999 Stock Option Plan
and the MFI 1999 Recognition and Retention Plan, and any and all amendments
thereto.
"MFI Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by MFI or Medford
Co-operative, except any corporation the stock of which is held in the
ordinary course of the lending activities of Medford Co-operative.
"Mixed Election" shall have the meaning set forth in Section 3.2.2.
"Mystic ESOP" shall mean Mystic Financial, Inc. Employee Stock
Ownership Plan.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Nasdaq" shall mean the Nasdaq National Market.
"Non-Election" shall have the meaning set forth in Section 3.2.2.
"Non-Election Shares" shall have the meaning set forth in Section
3.2.1.
"Option Payment" shall have the meaning set forth in Section 3.4.
"OTS" shall mean the Office of Thrift Supervision or any successor
thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Proxy Statement-Prospectus" shall have the meaning set forth in
Section 8.2.1.
"Regulatory Agreement" shall have the meaning set forth in Section
4.12.3.
6
"Regulatory Approvals" means the approval of any Bank Regulator that
is necessary in connection with the consummation of the Merger, the Bank
Merger and the related transactions contemplated by this Agreement.
"Representative" shall have the meaning set forth in Section 3.2.2.
"Rights" shall mean warrants, options, rights, convertible
securities, stock appreciation rights and other arrangements or commitments
which obligate an entity to issue or dispose of any of its capital stock or
other ownership interests or which provide for compensation based on the
equity appreciation of its capital stock.
"SBA" shall mean the Small Business Administration or any successor
thereto.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed
pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act
of 1940, as amended; the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Shortfall Number" shall have the meaning set forth in Section 3.2.5.
"Significant Subsidiary" shall have the meaning set forth in Rule 1-
02 of Regulation S-X of the SEC.
"Stock Consideration" shall have the meaning set forth in Section
3.1.3.
"Stock Conversion Number" shall have the meaning set forth in Section
3.2.1.
"Stock Election Shares" shall have the meaning set forth in Section
3.2.1.
"Stock Election Number" shall have the meaning set forth in Section
3.2.1.
"Stock Election" shall have the meaning set forth in Section 3.2.2.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.
"Termination Date" shall mean March 31, 2005.
"Treasury Stock" shall have the meaning set forth in Section 3.1.2.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
7
ARTICLE II
THE MERGER
2.1. Merger.
Subject to the terms and conditions of this Agreement, at the
Effective Time: (a) MFI shall merge with and into Brookline Bancorp, with
Brookline Bancorp as the resulting or surviving corporation (the "Surviving
Corporation"); and (b) the separate existence of MFI shall cease and all of
the rights, privileges, powers, franchises, properties, assets, liabilities
and obligations of MFI shall be vested in and assumed by Brookline Bancorp.
As part of the Merger, each share of MFI Common Stock will be converted
into the right to receive the Merger Consideration pursuant to the terms of
Article III.
2.2. Closing; Effective Time.
The Merger shall be effected by the filing of a certificate of merger
with the Delaware Office of the Secretary of State on the day of the
Closing (the "Closing Date"), in accordance with the DGCL. The "Effective
Time" means the date and time upon which the certificate of merger is filed
with the Delaware Office of the Secretary of State, or as otherwise stated
in the certificate of merger, in accordance with the DGCL.
2.3. Certificate of Incorporation and Bylaws.
The Certificate of Incorporation and Bylaws of Brookline Bancorp as
in effect immediately prior to the Effective Time shall be the Certificate
of Incorporation and Bylaws of the Surviving Corporation, until thereafter
amended as provided therein and by applicable law.
2.4. Directors and Officers of Surviving Corporation.
Except as provided in Section 2.5, the directors of Brookline Bancorp
immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation. Until
changed in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation, the officers of Brookline Bancorp immediately
prior to the Effective Time shall be the initial officers of Surviving
Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
2.5. Additional Director of Brookline Bancorp and Brookline Bank.
Effective as of the Effective Time, one person presently serving as
director of MFI, as designated by Brookline Bancorp in consultation with
the MFI board, shall be appointed to the Board of Directors of Brookline
Bancorp and Brookline Bank.
2.6. Effects of the Merger.
At and after the Effective Time, the Merger shall have the effects as
set forth in the DGCL.
8
2.7. Tax Consequences.
It is intended that the Merger shall constitute a reorganization
within the meaning of Section 368(a) of the Code, and that this Agreement
shall constitute a "plan of reorganization" as that term is used in
Sections 354 and 361 of the Code. From and after the date of this Agreement
and until the Closing, each party hereto shall use its reasonable best
efforts to cause the Merger to qualify, and will not knowingly take any
action, cause any action to be taken, fail to take any action or cause any
action to fail to be taken which action or failure to act would reasonably
be expected to prevent the Merger from qualifying as a reorganization under
Section 368(a) of the Code. Following the Closing, neither Brookline
Bancorp nor any of its affiliates shall knowingly take any action, cause
any action to be taken, fail to take any action or cause any action to fail
to be taken, which action or failure to act would reasonably be expected to
cause the Merger to fail to qualify as a reorganization under Section
368(a) of the Code. Brookline Bancorp and MFI each hereby agrees to deliver
certificates substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto, to enable
counsel to deliver the legal opinions contemplated by Section 9.1.6, which
certificates shall be dated as of the date of such opinions.
2.8. Possible Alternative Structures.
Notwithstanding anything to the contrary contained in this Agreement
and subject to the satisfaction of the conditions set forth in Article IX,
prior to the Effective Time Brookline Bancorp shall be entitled to revise
the structure for effecting the Merger described in Section 2.1 or the Bank
Merger including, without limitation, by substituting a wholly owned
subsidiary for Brookline Bancorp or Brookline Bank, as applicable, provided
that (i) any such subsidiary shall become a party to, and shall agree to be
bound by, the terms of this Agreement (ii) there are no adverse Federal or
state income tax consequences to MFI stockholders, and nothing would
prevent the rendering of the opinions in Section 9.1.6, as a result of the
modification; (iii) the consideration to be paid to the holders of MFI
Common Stock under this Agreement is not thereby changed in kind, value or
reduced in amount; and (iv) such modification will not delay materially or
jeopardize receipt of any required regulatory approvals or other consents
and approvals relating to the consummation of the Merger or otherwise cause
any condition to Closing set forth in Article IX not to be capable of being
fulfilled. The parties hereto agree to appropriately amend this Agreement
and any related documents in order to reflect any such revised structure.
2.9. Additional Actions.
If, at any time after the Effective Time, Brookline Bancorp shall
consider or be advised that any further deeds, assignments or assurances in
law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in Brookline Bancorp its right, title or
interest in, to or under any of the rights, properties or assets of MFI or
Medford Co-operative, or (ii) otherwise carry out the purposes of this
Agreement, MFI and its officers and directors shall be deemed to have
granted to Brookline Bancorp an irrevocable power of attorney to execute
and deliver, in such official corporate capacities, all such deeds,
assignments or assurances in law or any other acts as are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in
Brookline Bancorp its right, title or interest in, to or under any of the
9
rights, properties or assets of MFI or (b) otherwise carry out the purposes
of this Agreement, and the officers and directors of the Brookline Bancorp
are authorized in the name of MFI or otherwise to take any and all such
action.
ARTICLE III
CONVERSION OF SHARES
3.1. Conversion of MFI Common Stock; Merger Consideration.
At the Effective Time, by virtue of the Merger and without any action
on the part of Brookline Bancorp, MFI or the holders of any of the shares
of MFI Common Stock, the Merger shall be effected in accordance with the
following terms:
3.1.1. Each share of Brookline Bancorp Common Stock that is
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding following the Effective Time and shall be unchanged
by the Merger.
3.1.2. All shares of MFI Common Stock held in the treasury of
MFI (including any unawarded shares held in the MFI 1999 Recognition and
Retention Plan Trust) and each share of MFI Common Stock owned by Brookline
Bancorp prior to the Effective Time (other than shares held in a fiduciary
capacity or in connection with debts previously contracted) ("Treasury
Stock"), shall, at the Effective Time, cease to exist, and the certificates
for such shares shall be canceled as promptly as practicable thereafter,
and no payment or distribution shall be made in consideration therefor.
3.1.3. Each share of MFI Common Stock issued and outstanding
immediately prior to the Effective Time (other than Treasury Stock and
Dissenting Shares) shall become and be converted into, as provided in and
subject to the limitations set forth in this Agreement, the right to
receive at the election of the holder thereof as provided in Section 3.2
either (i) $39.00 in cash (the "Cash Consideration"); (ii) 2.6786 shares
(the "Exchange Ratio") of Brookline Bancorp Common Stock (the "Stock
Consideration"); or (iii) a combination of the Cash Consideration and the
Stock Consideration, as provided in Section 3.2 (the "Cash/Stock
Consideration"). The Cash Consideration, the Stock Consideration and the
Cash/Stock Consideration are sometimes referred to herein collectively as
the "Merger Consideration."
3.1.4. Each outstanding share of MFI Common Stock, the holder
of which has perfected his right to dissent under Section 262 of the DGCL
and has not effectively withdrawn or lost such right as of the Effective
Time (the "Dissenting Shares"), shall not be converted into or represent a
right to receive the Merger Consideration hereunder, and the holder thereof
shall be entitled only to such rights as are granted by Section 262 of the
DGCL. MFI shall give Brookline Bancorp prompt notice upon receipt by MFI of
any such demands for payment of the fair value of such shares of MFI Common
Stock and of withdrawals of such notice and any other instruments provided
pursuant to applicable law (any stockholder duly making such demand being
hereinafter called a "Dissenting Stockholder"), and Brookline Bancorp shall
have the right to participate in all negotiations and proceedings with
respect to any such demands. MFI shall not, except with the prior written
consent of Brookline Bancorp, voluntarily make any payment with respect to,
or settle or offer to settle, any such demand for payment, or waive any
failure to
10
timely deliver a written demand for appraisal or the taking of any other
action by such Dissenting Stockholder as may be necessary to perfect
appraisal rights under the DGCL. Any payments made in respect of Dissenting
Shares shall be made by the Surviving Company.
3.1.5. If any Dissenting Stockholder shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to
such payment at or prior to the Effective Time, such holder's shares of MFI
Common Stock shall be converted into a right to receive the Merger
Consideration in accordance with the applicable provisions of this
Agreement. If such holder shall effectively withdraw or lose (through
failure to perfect or otherwise) his right to such payment after the
Effective Time (or the Election Deadline, as defined below), each share of
MFI Common Stock of such holder shall be treated as a Non-Election Share.
3.1.6. After the Effective Time, shares of MFI Common Stock
shall no longer be outstanding and shall automatically be canceled and
shall cease to exist, and shall thereafter by operation of this Section 3.1
represent only the right to receive the Merger Consideration and any
dividends or distributions with respect thereto or any dividends or
distributions with a record date prior to the Effective Time that were
declared or made by MFI on such shares of MFI Common Stock in accordance
with the terms of this Agreement on or prior to the Effective Time and
which remain unpaid at the Effective Time.
3.1.7. In the event Brookline Bancorp changes (or establishes
a record date for changing) the number of, or provides for the exchange of,
shares of Brookline Bancorp Common Stock issued and outstanding prior to
the Effective Time as a result of a stock split, stock dividend,
recapitalization, reclassification, or similar transaction with respect to
the outstanding Brookline Bancorp Common Stock and the record date therefor
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately and appropriately adjusted; provided, that for the
avoidance of doubt the parties acknowledge that the foregoing is not
intended to result in any such adjustment as a result of share issuances of
Brookline Bancorp Common Stock by Brookline Bancorp under Brookline Bancorp
Compensation and Benefit Plans or where such issuance is pursuant to a
widely distributed stock offering for fair market value consideration.
3.2. Election Procedures.
3.2.1. Holders of MFI Common Stock may elect to receive shares
of Brookline Bancorp Common Stock or cash (in either case without interest)
in exchange for their shares of MFI Common Stock in accordance with the
following procedures, provided that, in the aggregate, and subject to the
provisions of Section 3.2.6, 60% of the total number of shares of MFI
Common Stock issued and outstanding at the Effective Time, including any
Dissenting Shares but excluding any Treasury Stock and any shares of MFI
Common Stock issued after the date hereof pursuant to the exercise of an
MFI Option (the "Stock Conversion Number"), shall be converted into the
Stock Consideration and the remaining outstanding shares of MFI Common
Stock shall be converted into the Cash Consideration. Shares of MFI Common
Stock as to which a Cash Election (including, pursuant to a Mixed Election)
has been made are referred to herein as "Cash Election Shares." Shares of
MFI Common Stock as to which a Stock Election has been made (including,
pursuant to a Mixed Election) are referred to as "Stock Election Shares."
Shares of MFI Common Stock as to which no election has been made (or as to
which an Election Form is not returned properly completed) are referred to
herein as "Non-Election
11
Shares." The aggregate number of shares of MFI Common Stock with respect to
which a Stock Election has been made is referred to herein as the "Stock
Election Number."
3.2.2. An election form and other appropriate and customary
transmittal materials (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of such Certificates to the Exchange Agent), in such form as MFI
and Brookline Bancorp shall mutually agree ("Election Form"), shall be
mailed no more than 40 business days and no less than 20 business days
prior to the anticipated Effective Time or on such earlier date as
Brookline Bancorp and MFI shall mutually agree (the "Mailing Date") to each
holder of record of MFI Common Stock as of five business days prior to the
Mailing Date (the "Election Form Record Date"). Each Election Form shall
permit such holder, subject to the allocation and election procedures set
forth in this Section 3.2, (i) to elect to receive the Cash Consideration
for all of the shares of MFI Common Stock held by such holder (a "Cash
Election"), in accordance with Section 3.1.3, (ii) to elect to receive the
Stock Consideration for all of such shares (a "Stock Election"), in
accordance with Section 3.1.3, (iii) to elect to receive the Stock
Consideration for a part of such holder's MFI Common Stock and the Cash
Consideration for the remaining part of such holder's MFI Common Stock (a
"Mixed Election"), or (iv) to indicate that such record holder has no
preference as to the receipt of cash or Brookline Bancorp Common Stock for
such shares (a "Non-Election"). A holder of record of shares of MFI Common
Stock who holds such shares as nominee, trustee or in another
representative capacity (a "Representative") may submit multiple Election
Forms, provided that each such Election Form covers all the shares of MFI
Common Stock held by such Representative for a particular beneficial owner.
Any shares of MFI Common Stock with respect to which the holder thereof
shall not, as of the Election Deadline, have made an election by submission
to the Exchange Agent of an effective, properly completed Election Form
shall be deemed Non-Election Shares. All Dissenting Shares shall be deemed
Cash Election shares, and with respect to such shares the holders thereof
shall in no event receive consideration comprised of Brookline Bancorp
Common Stock, subject to Section 3.1.5; provided, however, that for
purposes of making the proration calculations provided for in this Section
3.2, only Dissenting Shares as existing at the Effective Time shall be
deemed Cash Election Shares.
3.2.3. To be effective, a properly completed Election Form
shall be submitted to the Exchange Agent on or before 5:00 p.m.,
Massachusetts time, on the 25th day following the Mailing Date (or such
other time and date as Brookline Bancorp and MFI may mutually agree) (the
"Election Deadline"); provided, however, that the Election Deadline may not
occur on or after the Closing Date. MFI shall make available up to two
separate Election Forms, or such additional Election Forms as Brookline
Bancorp may permit, to all persons who become holders (or beneficial
owners) of MFI Common Stock between the Election Form Record Date and the
close of business on the business day prior to the Election Deadline. MFI
shall provide to the Exchange Agent all information reasonably necessary
for it to perform as specified herein. An election shall have been properly
made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more Certificates
(or customary affidavits and indemnification regarding the loss or
destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of MFI Common Stock covered by such
Election Form, together with duly executed transmittal materials included
with the Election Form. If an MFI stockholder either (i) does not submit a
properly completed Election Form in a timely
12
fashion or (ii) revokes its Election Form prior to the Election Deadline
(without later submitting a properly completed Election Form prior to the
Election Deadline), the shares of MFI Common Stock held by such stockholder
shall be designated as Non-Election Shares. Any Election Form may be
revoked or changed by the person submitting such Election Form to the
Exchange Agent by written notice to the Exchange Agent only if such notice
of revocation or change is actually received by the Exchange Agent at or
prior to the Election Deadline. Brookline Bancorp shall cause the
Certificate or Certificates relating to any revoked Election Form to be
promptly returned without charge to the person submitting the Election Form
to the Exchange Agent. Subject to the terms of this Agreement and of the
Election Form, the Exchange Agent shall have discretion to determine when
any election, modification or revocation is received and whether any such
election, modification or revocation has been properly made.
3.2.4. If the Stock Election Number exceeds the Stock
Conversion Number, then all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive the Cash Consideration,
and, subject to Section 3.2.7, each holder of Stock Election Shares will be
entitled to receive the Stock Consideration only with respect to that
number of Stock Election Shares held by such holder (rounded to the nearest
whole share) equal to the product obtained by multiplying (x) the number of
Stock Election Shares held by such holder by (y) a fraction, the numerator
of which is the Stock Conversion Number and the denominator of which is the
Stock Election Number, with the remaining number of such holder's Stock
Election Shares being converted into the right to receive the Cash
Consideration.
3.2.5. If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number exceeds
the Stock Election Number being referred to herein as the "Shortfall
Number"), then all Stock Election Shares shall be converted into the right
to receive the Stock Consideration and the Non-Election Shares and Cash
Election Shares shall be treated in the following manner:
(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares shall be
converted into the right to receive the Cash Consideration and,
subject to Section 3.2.7 hereof, each holder of Non-Election Shares
shall receive the Stock Consideration in respect of that number of
Non-Election Shares held by such holder (rounded to the nearest whole
share) equal to the product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) a fraction, the
numerator of which is the Shortfall Number and the denominator of
which is the total number of Non-Election Shares, with the remaining
number of such holder's Non-Election Shares being converted into the
right to receive the Cash Consideration; or
(B) if the Shortfall Number exceeds the number of Non-
Election Shares, then all Non-Election Shares shall be converted into
the right to receive the Stock Consideration, and, subject to Section
3.2.7, each holder of Cash Election Shares shall receive the Stock
Consideration in respect of that number of Cash Election Shares held
by such holder (rounded to the nearest whole share) equal to the
product obtained by multiplying (x) the number of Cash Election
Shares held by such holder by (y) a fraction, the numerator of which
is the amount by which (1) the Shortfall Number exceeds (2) the total
number of Non-Election Shares and the denominator of which is the
total number of
13
Cash Election Shares, with the remaining number of such holder's Cash
Election Shares being converted into the right to receive the Cash
Consideration.
3.2.6. Notwithstanding anything in this Article III to the
contrary, the number of shares of MFI Common Stock to be converted into the
right to receive the Stock Consideration in the Merger shall not be less
than that number which would cause the ratio of (i) the average of the high
and low prices of Brookline Bancorp Common Stock on the Closing Date times
the aggregate number of shares of Brookline Bancorp Common Stock to be
issued as Stock Consideration pursuant to Section 3.1.3, to (ii) the sum of
(A) the amount set forth in the preceding clause (i), (B) the Aggregate
Cash Consideration to be issued pursuant to Section 3.1.3, (C) the number
of Dissenting Shares times the per share Cash Consideration and (D) any
other amounts received by a holder of MFI stock prior to the Merger, either
in a redemption of MFI stock or in a distribution with respect to MFI stock
(but only to the extent such amount is treated as other property or money
received in the exchange for purposes of Code Section 356, or would be so
treated if the MFI shareholder also had received stock of Brookline Bancorp
in exchange for stock owned by the shareholder in MFI) to be 42.5% (if the
number of Dissenting Shares is less than 5% of the outstanding shares of
MFI), 43.5% (if the number of Dissenting Shares is 5% or greater, but less
than 10% of the outstanding shares of MFI), or 45% (if the number of
Dissenting Shares is 10% or more of the outstanding shares of MFI). To the
extent the application of this Section 3.2.6 results in the number of
shares of MFI Common Stock to be converted into the right to receive the
Stock Consideration in the Merger being increased, the number of such
shares to be converted into the right to receive the Cash Consideration
will be decreased by an equal number of shares.
3.2.7. No Fractional Shares. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing fractional
shares of Brookline Bancorp Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution with respect to
Brookline Bancorp Common Stock shall be payable on or with respect to any
fractional share interest, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder
of Brookline Bancorp. In lieu of the issuance of any such fractional share,
Brookline Bancorp shall pay to each former holder of MFI Common Stock who
otherwise would be entitled to receive a fractional share of Brookline
Bancorp Common Stock, an amount in cash, rounded to the nearest cent and
without interest, equal to the product of (i) the fraction of a share to
which such holder would otherwise have been entitled and (ii) the average
of the daily closing sales prices of a share of Brookline Bancorp Common
Stock as reported on the Nasdaq for the five consecutive trading days
immediately preceding the Closing Date. For purposes of determining any
fractional share interest, all shares of MFI Common Stock owned by a MFI
stockholder shall be combined so as to calculate the maximum number of
whole shares of Brookline Bancorp Common Stock issuable to such MFI
stockholder.
3.3. Procedures for Exchange of MFI Common Stock.
3.3.1. Brookline Bancorp to Make Merger Consideration
Available. After the Election Deadline and no later than the Closing Date,
Brookline Bancorp shall deposit, or shall cause to be deposited, with the
Exchange Agent for the benefit of the holders of MFI Common Stock, for
exchange in accordance with this Section 3.3, certificates representing the
shares of
14
Brookline Bancorp Common Stock and an aggregate amount of cash sufficient
to pay the aggregate amount of cash payable pursuant to this Article III
(including the estimated amount of cash to be paid in lieu of fractional
shares of MFI Common Stock) (such cash and certificates for shares of
Brookline Bancorp Common Stock, together with any dividends or
distributions with respect thereto (without any interest thereon) being
hereinafter referred to as the "Exchange Fund").
3.3.2. Exchange of Certificates. Brookline Bancorp shall take
all steps necessary to cause the Exchange Agent, within five (5) business
days after the Effective Time, to mail to each holder of a Certificate or
Certificates who has not previously surrendered such certificates with an
Election Form, a form letter of transmittal for return to the Exchange
Agent and instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration and cash in lieu of
fractional shares into which the MFI Common Stock represented by such
Certificates shall have been converted as a result of the Merger, if any.
The letter of transmittal (which shall be subject to the reasonable
approval of MFI) shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent. Upon proper surrender of a Certificate
for exchange and cancellation to the Exchange Agent, together with a
properly completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration to which such holder of MFI common stock shall have become
entitled pursuant to Section 3.1.3, and the Certificate so surrendered
shall forthwith be cancelled. No interest will be paid or accrued on any
Cash Consideration or any cash payable in lieu of fractional shares or any
unpaid dividends and distributions, if any, payable to holders of
Certificates.
3.3.3. Rights of Certificate Holders after the Effective Time.
The holder of a Certificate that prior to the Merger represented issued and
outstanding MFI Common Stock shall have no rights, after the Effective
Time, with respect to such MFI Common Stock except to surrender the
Certificate in exchange for the Merger Consideration as provided in this
Agreement. No dividends or other distributions declared after the Effective
Time with respect to Brookline Bancorp Common Stock shall be paid to the
holder of any unsurrendered Certificate until the holder thereof shall
surrender such Certificate in accordance with this Section 3.3. After the
surrender of a Certificate in accordance with this Section 3.3, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Brookline Bancorp Common Stock
represented by such Certificate.
3.3.4. Surrender by Persons Other than Record Holders. If the
Person surrendering a Certificate and signing the accompanying letter of
transmittal is not the record holder thereof, then it shall be a condition
of the payment of the Merger Consideration that: (i) such Certificate is
properly endorsed to such Person or is accompanied by appropriate stock
powers, in either case signed exactly as the name of the record holder
appears on such Certificate, and is otherwise in proper form for transfer,
or is accompanied by appropriate evidence of the authority of the Person
surrendering such Certificate and signing the letter of transmittal to do
so on behalf of the record holder; and (ii) the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
similar taxes required by reason of the payment to a Person other than the
registered holder of the Certificate surrendered, or
15
required for any other reason, or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not payable.
3.3.5. Closing of Transfer Books. From and after the Effective
Time, there shall be no transfers on the stock transfer books of MFI of the
MFI Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be exchanged
for the Merger Consideration and canceled as provided in this Section 3.3.
3.3.6. Return of Exchange Fund. At any time following the six
(6) month period after the Effective Time, Brookline Bancorp shall be
entitled to require the Exchange Agent to deliver to it any portions of the
Exchange Fund which had been made available to the Exchange Agent and not
disbursed to holders of Certificates (including, without limitation, all
interest and other income received by the Exchange Agent in respect of all
funds made available to it), and thereafter such holders shall be entitled
to look to Brookline Bancorp (subject to abandoned property, escheat and
other similar laws) with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither Brookline Bancorp nor the Exchange
Agent shall be liable to any holder of a Certificate for any Merger
Consideration delivered in respect of such Certificate to a public official
pursuant to any abandoned property, escheat or other similar law.
3.3.7. Lost, Stolen or Destroyed Certificates. In the event
any Certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such Certificate to be
lost, stolen or destroyed and the posting by such person of a bond in such
amount as Brookline Bancorp may reasonably direct as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof.
3.3.8. Withholding. Brookline Bancorp or the Exchange Agent
will be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement or the transactions contemplated hereby
to any holder of MFI Common Stock such amounts as Brookline Bancorp (or any
Affiliate thereof) or the Exchange Agent are required to deduct and
withhold with respect to the making of such payment under the Code, or any
applicable provision of U.S. federal, state, local or non-U.S. tax law. To
the extent that such amounts are properly withheld by Brookline Bancorp or
the Exchange Agent, such withheld amounts will be treated for all purposes
of this Agreement as having been paid to the holder of the MFI Common Stock
in respect of whom such deduction and withholding were made by Brookline
Bancorp or the Exchange Agent.
3.4. Treatment of MFI Options.
MFI DISCLOSURE SCHEDULE 3.4 sets forth all of the outstanding MFI
Options as of the date hereof. At the Effective Time, and pursuant to the
terms of the MFI Option Plan, each MFI Option that is unexercised and
outstanding, whether or not then exercisable, immediately prior thereto
shall, by reason of the Merger, be cancelled and converted into the right
to receive in cash an amount (subject to required tax withholdings) equal
to (i) the excess of (A) the Cash
16
Consideration per share over (B) the exercise price per share of each such
MFI Option multiplied by (ii) the number of shares of MFI Common Stock
subject to the MFI Option (the "Option Payment"). MFI shall make the Option
Payment immediately prior to the Effective Time and MFI shall, in
accordance with Section5.3 of the MFI Option Plan, give written notice to
the each holder of a then outstanding MFI Option that such holder will
receive the payment described herein in exchange for such holder's
outstanding MFI Options and MFI shall use its reasonable best efforts to
obtain the written acknowledgment of each such holder of the receipt of
such notice. Prior to receipt of the Option Payment, each holder of an MFI
Option shall execute a cancellation agreement, substantially in the form
attached to BROOKLINE BANCORP DISCLOSURE SCHEDULE 3.4.
3.5. Bank Merger.
MFI and Brookline Bancorp shall use their reasonable best efforts to
cause the merger of Medford Co-operative with and into Brookline Bank, with
Brookline Bank as the surviving institution. In addition, following the
execution and delivery of this Agreement, Brookline Bancorp will cause
Brookline Bank, and MFI will cause Medford Co-operative, to execute and
deliver a Plan of Bank Merger substantially in the form attached to this
Agreement as Exhibit B.
3.6. Reservation of Shares.
Brookline Bancorp shall reserve for issuance a sufficient number of
shares of the Brookline Bancorp Common Stock for the purpose of issuing
shares of Brookline Bancorp Common Stock to the MFI stockholders in
accordance with this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MFI
MFI represents and warrants to Brookline Bancorp that the statements
contained in this Article IV are correct as of the date of this Agreement
and will be correct as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV), subject to the standard set forth in
Section 4.1 and except as set forth in the MFI DISCLOSURE SCHEDULE
delivered by MFI to Brookline Bancorp on the date hereof, and except as to
any representation or warranty which specifically relates to an earlier
date, which only need be so correct as of such earlier date. MFI has made a
good faith effort to ensure that the disclosure on each schedule of the MFI
DISCLOSURE SCHEDULE corresponds to the section referenced herein. However,
for purposes of the MFI DISCLOSURE SCHEDULE, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant as and to the extent that
it is reasonably clear on the face of such schedule that such item applies
to such other schedule. References to the Knowledge of MFI shall include
the Knowledge of Medford Co-operative.
4.1. Standard.
No representation or warranty of MFI contained in this Article IV
shall be deemed untrue or incorrect, and MFI shall not be deemed to have
breached a representation or warranty, as a consequence of the existence of
any fact, circumstance or event unless such fact, circumstance or event,
individually or taken together with all other facts, circumstances or
events inconsistent
17
with any paragraph of this Article IV, has had or is reasonably expected to
have a Material Adverse Effect, disregarding for these purposes (x) any
qualification or exception for, or reference to, materiality in any such
representation or warranty and (y) any use of the terms "material",
"materially", "in all material respects", "Material Adverse Effect" or
similar terms or phrases in any such representation or warranty. The
foregoing standard shall not apply to representations and warranties
contained in Sections 4.2 (other than the last sentence of Sections 4.2.1
and 4.2.2), 4.4, 4.13.4, 4.13.6, and 4.13.9, which shall be deemed untrue,
incorrect and breached if they are not true and correct in all material
respects.
4.2. Organization.
4.2.1. MFI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is duly
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the "BHCA"). MFI has full corporate power and authority
to carry on its business as now conducted. MFI is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of
its business requires such qualification.
4.2.2. Medford Co-operative is a Massachusetts chartered co-
operative bank duly organized, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts. The deposits of Medford Co-
operative are insured by the FDIC to the fullest extent permitted by law,
and all premiums and assessments required to be paid in connection
therewith have been paid by Medford Co-operative when due. Medford Co-
operative is a member in good standing of the FHLB and owns the requisite
amount of stock therein.
4.2.3. MFI DISCLOSURE SCHEDULE 4.2.3 sets forth each MFI
Subsidiary. Each MFI Subsidiary is a corporation, limited liability company
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization.
4.2.4. The respective minute books of MFI, Medford Co-
operative and each other MFI Subsidiary accurately records, in all material
respects, all material corporate actions of their respective stockholders
and boards of directors (including committees).
4.2.5. Prior to the date of this Agreement, MFI has made
available to Brookline Bancorp true and correct copies of the certificate
of incorporation or charter and bylaws of MFI, Medford Co-operative and
each other MFI Subsidiary.
4.3. Capitalization.
4.3.1. The authorized capital stock of MFI consists of
5,000,000 shares of MFI Common Stock, of which 1,565,945 shares are
outstanding, validly issued, fully paid and nonassessable and free of
preemptive rights, and 1,000,000 shares of preferred stock, $0.01 par value
("MFI Preferred Stock"), none of which are outstanding. There are 1,180,556
shares of MFI Common Stock held by MFI as treasury stock as of the date
hereof. Neither MFI nor any MFI Subsidiary has or is bound by any Rights of
any character relating to the purchase, sale or issuance or voting of, or
right to receive dividends or other distributions on any shares of MFI
Common Stock, or any other security of MFI or a MFI Subsidiary or any
securities representing the right to vote, purchase or otherwise receive
any shares of MFI
18
Common Stock or any other security of MFI or any MFI Subsidiary, other than
(i) shares issuable under the MFI Stock Benefit Plans, (ii) capital
securities issued by the Mystic Financial Capital Trust I and the Mystic
Financial Capital Trust II, (iii) debentures issued by MFI to Mystic
Financial Capital Trust I and Mystic Financial Capital Trust II, and (iv)
the guarantee issued by MFI to the holders of the capital securities issued
by Mystic Financial Capital Trust and Mystic Financial Capital Trust II.
MFI DISCLOSURE SCHEDULE 4.3.1 sets forth: the name of each holder of an
award granted under any MFI Stock Benefit Plan, identifying the nature of
the award; as to options to purchase MFI Common Stock, the number of shares
each such individual may acquire pursuant to the exercise of such options,
the grant, vesting and expiration dates, and the exercise price relating to
the options held; and the names of each holder of an outstanding restricted
stock award, the number of shares subject to each award, and the grant and
vesting dates.
4.3.2. MFI owns all of the capital stock of Medford Co-
operative, free and clear of any lien or encumbrance. Except for the MFI
Subsidiaries and as set forth in MFI DISCLOSURE SCHEDULE 4.3.2, MFI does
not possess, directly or indirectly, any material equity interest in any
corporate entity, except for equity interests held in the investment
portfolios of MFI or any MFI Subsidiary (which as to any one issuer, do not
exceed 5% of such issuer's outstanding equity securities), equity interests
held by MFI Subsidiaries in a fiduciary capacity, and equity interests held
in connection with the lending activities of MFI Subsidiaries, including
stock in the FHLB. Either MFI or Medford Co-operative owns all of the
outstanding shares of capital stock of each MFI Subsidiary free and clear
of all liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature, except that, in the case
of the Mystic Financial Capital Trust I and the Mystic Financial Capital
Trust II, MFI owns 100% of the common securities and less than 100% of the
capital securities.
4.3.3. To MFI's Knowledge, other than the Mystic ESOP and
except as set forth on MFI DISCLOSURE SCHEDULE 4.3.3, as of the date hereof
no Person is the beneficial owner (as defined in Section 13(d) of the
Exchange Act) of 5% or more of the outstanding shares of MFI Common Stock.
4.3.4. No bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which MFI's stockholders may
vote have been issued by MFI and are outstanding.
4.4. Authority; No Violation.
4.4.1. MFI has full corporate power and authority to execute
and deliver this Agreement and, subject to the receipt of the Regulatory
Approvals described in Section 8.3 and the approval of this Agreement by
MFI's stockholders, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by MFI and the completion by MFI
of the transactions contemplated hereby, up to and including the Merger,
have been duly and validly approved by the Board of Directors of MFI. This
Agreement has been duly and validly executed and delivered by MFI, and
subject to approval by the stockholders of MFI and receipt of the
Regulatory Approvals and due and valid execution and delivery of this
Agreement by Brookline Bancorp, constitutes the valid and binding
obligation of MFI, enforceable against
19
MFI in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and
subject, as to enforceability, to general principles of equity.
4.4.2. Subject to compliance by Brookline Bancorp with the
terms and conditions of this Agreement, (A) the execution and delivery of
this Agreement by MFI, (B) subject to receipt of Regulatory Approvals, and
MFI's and Brookline Bancorp's compliance with any conditions contained
therein, and subject to the receipt of the approval of the stockholders of
MFI, the consummation of the transactions contemplated hereby, and (C)
compliance by MFI with any of the terms or provisions hereof will not (i)
conflict with or result in a breach of any provision of the Certificate of
Incorporation or Bylaws of MFI or any MFI Subsidiary or the Certificate of
Incorporation and Bylaws of Medford Co-operative; (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to MFI or any MFI Subsidiary or any of their
respective properties or assets; or (iii) violate, conflict with, result in
a breach of any provisions of, constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default), under,
result in the termination of, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any
lien, security interest, charge or other encumbrance upon any of the
properties or assets of MFI or Medford Co-operative under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which
MFI or Medford Co-operative is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults under clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a
Material Adverse Effect on MFI and the MFI Subsidiaries taken as a whole.
4.5. Consents.
Except for (a) the receipt of the Regulatory Approvals and compliance
with any conditions contained therein, (b) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, and (c) the
approval of this Agreement by the requisite vote of the stockholders of
MFI, no consents, waivers or approvals of, or filings or registrations
with, any Governmental Entity or Bank Regulator are necessary, and, to
MFI's Knowledge, no consents, waivers or approvals of, or filings or
registrations with, any other third parties are necessary, in connection
with (x) the execution and delivery of this Agreement by MFI, and the
completion by MFI of the Merger or (y) the execution and delivery of the
Plan of Bank Merger and the completion of the Bank Merger. MFI has no
reason to believe that (i) any required Regulatory Approvals or other
required consents or approvals will not be received or will include the
imposition of any condition or requirement that could reasonably be
expected to result in a Material Adverse Effect on Brookline Bancorp and
its Subsidiaries, taken as a whole, or that (ii) any public body or
authority having jurisdiction over the affairs of MFI or its subsidiaries,
the consent or approval of which is not required or to which a filing is
not required, will object to the completion of the transactions
contemplated by this Agreement.
20
4.6. Financial Statements.
4.6.1. The MFI Regulatory Reports have been prepared in all
material respects in accordance with applicable regulatory accounting
principles and practices throughout the periods covered by such statements,
and fairly present in all material respects, the consolidated financial
position, results of operations and changes in shareholders' equity of MFI
as of and for the periods ended on the dates thereof, in accordance with
applicable regulatory accounting principles applied on a consistent basis.
4.6.2. MFI has previously made available to Brookline Bancorp
the MFI Financial Statements covering periods ended prior to the date
hereof. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.6, the MFI
Financial Statements have been prepared in accordance with GAAP, and
(including the related notes where applicable) fairly present in each case
in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments) the consolidated financial
position, results of operations and cash flows of MFI and the MFI
Subsidiaries on a consolidated basis as of and for the respective periods
ended on the dates thereof, in accordance with GAAP during the periods
involved, except as indicated in the notes thereto, or in the case of
unaudited statements, as permitted by Form 10-Q.
4.6.3. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.6, at
the date of each balance sheet included in the MFI Financial Statements or
in the MFI Regulatory Reports, MFI did not have any liabilities,
obligations or loss contingencies of any nature (whether absolute, accrued,
contingent or otherwise) of a type required to be reflected in such MFI
Financial Statements or in the MFI Regulatory Reports or in the footnotes
thereto which are not fully reflected or reserved against therein or fully
disclosed in a footnote thereto, except for liabilities, obligations and
loss contingencies which are not material individually or in the aggregate,
and except for liabilities, obligations and loss contingencies which are
within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring
audit adjustments and the absence of footnotes.
4.7. Taxes.
Except as set forth in MFI DISCLOSURE SCHEDULE 4.7, MFI and the MFI
Subsidiaries that are at least 80 percent owned by MFI are members of the
same affiliated group within the meaning of Code Section 1504(a). MFI has
duly filed all federal, state and material local tax returns required to be
filed by or with respect to MFI and each Subsidiary of MFI, taking into
account any extensions (all such returns, to MFI's Knowledge, being
accurate and correct in all material respects) and has duly paid or made
provisions for the payment of all material federal, state and local taxes
which have been incurred by or are due or claimed to be due from MFI and
any Subsidiary of MFI by any taxing authority or pursuant to any written
tax sharing agreement, other than taxes or other charges which (i) are not
delinquent, (ii) are being contested in good faith, or (iii) have not yet
been fully determined. Except as set forth in MFI DISCLOSURE SCHEDULE 4.7,
as of the date of this Agreement, MFI has received no written notice of,
and to MFI's Knowledge there is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any
taxes of MFI or any of its Subsidiaries, and no claim has been made by any
taxing authority in a jurisdiction where MFI or any of its Subsidiaries do
not file tax returns that MFI or any such Subsidiary is subject to taxation
in that
21
jurisdiction. Except as set forth in MFI DISCLOSURE SCHEDULE 4.7, MFI and
its Subsidiaries 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. MFI and each of its Subsidiaries has timely 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, stockholder or other third party, and MFI and each of its
Subsidiaries, to MFI's Knowledge, has 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.
4.8. No Material Adverse Effect.
MFI and the MFI Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since June 30, 2003 and no event has occurred or
circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on MFI and the MFI
Subsidiaries, taken as a whole.
4.9. Material Contracts; Leases; Defaults.
4.9.1. Except as set forth in MFI DISCLOSURE SCHEDULE 4.9.1,
neither MFI nor any MFI Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract with any past or present
officer, director or employee of MFI or any MFI Subsidiary, except for "at
will" arrangements; (ii) any plan or contract providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit
sharing or similar material arrangements for or with any past or present
officers, directors or employees of MFI or any MFI Subsidiary; (iii) any
collective bargaining agreement with any labor union relating to employees
of MFI or any MFI Subsidiary; (iv) any agreement which by its terms limits
or affects the payment of dividends by MFI or any MFI Subsidiary; (v) any
instrument evidencing or related to indebtedness for borrowed money in
excess of $100,000, whether directly or indirectly, by way of purchase
money obligation, conditional sale, lease purchase, guaranty or otherwise,
in respect of which MFI or any MFI Subsidiary is an obligor to any person,
which instrument evidences or relates to indebtedness other than deposits,
FHLB advances with a term to maturity not in excess of one year, repurchase
agreements, 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 material non-
customary restrictions (other than those relating to the payment of
principal and interest when due) which would be applicable on or after the
Closing Date to Brookline Bancorp or any Brookline Bancorp Subsidiary; (vi)
any other agreement, written or oral, which is not terminable without cause
on 60 days' notice or less without material penalty or payment, or that
obligates MFI or any MFI Subsidiary for the payment of more than $25,000
annually or for the payment of more than $50,000 over its remaining term;
or (vii) any agreement (other than this Agreement), contract, arrangement,
commitment or understanding (whether written or oral) that restricts or
limits in any material way the conduct of business by MFI or any MFI
Subsidiary (it being understood that any non-compete or similar provision
shall be deemed material).
4.9.2. Each real estate lease that will require the consent of
the lessor or its agent as a result of the Merger or the Bank Merger by
virtue of the terms of any such lease, is
22
listed in MFI DISCLOSURE SCHEDULE 4.9.2 identifying the section of the
lease that contains such prohibition or restriction. Subject to any
consents that may be required as a result of the transactions contemplated
by this Agreement, to its Knowledge, neither MFI nor any MFI Subsidiary is
in default in any material respect under any material contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to
which it is a party, by which its assets, business, or operations may be
bound or affected, or under which it or its assets, business, or operations
receive benefits, and there has not occurred any event that, with the lapse
of time or the giving of notice or both, would constitute such a default.
4.9.3. True and correct copies of agreements, contracts,
arrangements and instruments referred to in Section 4.9.1 and 4.9.2 have
been made available to Brookline Bancorp on or before the date hereof, are
listed on MFI DISCLOSURE SCHEDULE 4.9.1 and are in full force and effect on
the date hereof. Except as set forth in MFI DISCLOSURE SCHEDULE 4.9.3, no
plan, contract, employment agreement, termination agreement, or similar
agreement or arrangement to which MFI or any MFI Subsidiary is a party or
under which MFI or any MFI Subsidiary may be liable contains provisions
which permit an employee or independent contractor to terminate it without
cause and continue to accrue future benefits thereunder. Except as set
forth in MFI DISCLOSURE SCHEDULE 4.9.3, no such agreement, plan, contract,
or arrangement (x) provides for acceleration in the vesting of benefits or
payments due thereunder upon the occurrence of a change in ownership or
control of MFI or any MFI Subsidiary or upon the occurrence of a subsequent
event; or (y) requires MFI or any MFI Subsidiary to provide a benefit in
the form of MFI Common Stock or determined by reference to the value of MFI
Common Stock.
4.10. Ownership of Property; Insurance Coverage.
4.10.1. Except as set forth in MFI DISCLOSURE SCHEDULE 4.10.1,
MFI and each MFI Subsidiary has good and, as to real property, marketable
title to all material assets and properties owned by MFI or each MFI
Subsidiary in the conduct of its businesses, whether such assets and
properties are real or personal, tangible or intangible, including assets
and property reflected in the balance sheet contained in the most recent
MFI Financial Statements or acquired subsequent thereto (except to the
extent that such assets and properties have been disposed of in the
ordinary course of business, since the date of such balance sheet), subject
to no material encumbrances, liens, mortgages, security interests or
pledges, except (i) those items which secure liabilities for public or
statutory obligations or any discount with, borrowing from or other
obligations to FHLB, inter-bank credit facilities, reverse repurchase
agreements or any transaction by a MFI Subsidiary acting in a fiduciary
capacity, and (ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith. MFI and the MFI Subsidiaries, as lessee,
have the right under valid and existing leases of real and personal
properties used by MFI and the MFI Subsidiaries in the conduct of their
businesses to occupy or use all such properties as presently occupied and
used by each of them. Such existing leases and commitments to lease
constitute or will constitute operating leases for both tax and financial
accounting purposes and the lease expense and minimum rental commitments
with respect to such leases and lease commitments are as disclosed in all
material respects in the notes to the MFI Financial Statements.
23
4.10.2. With respect to all material agreements pursuant to
which MFI or any MFI Subsidiary has purchased securities subject to an
agreement to resell, if any, MFI or such MFI Subsidiary, as the case may
be, has a lien or security interest (which to MFI's Knowledge is a valid,
perfected first lien) in the securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds
the amount of the debt secured thereby.
4.10.3. MFI, Medford Co-operative, and each other Subsidiary
of MFI currently maintain insurance considered by each of them to be
reasonable for their respective operations. Neither MFI, Medford Co-
operative, nor any other Subsidiary of MFI, has received notice from any
insurance carrier on or before the date hereof that (i) such insurance will
be canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance will be
substantially increased. There are presently no material claims pending
under such policies of insurance and no notices have been given by MFI,
Medford Co-operative, or any other Subsidiary of MFI under such policies.
All such insurance is valid and enforceable and in full force and effect
(other than insurance that expires in accordance with its terms), and
within the last three years MFI, Medford Co-operative, and each other
Subsidiary of MFI has received each type of insurance coverage for which it
has applied and during such periods has not been denied indemnification for
any material claims submitted under any of its insurance policies. MFI
DISCLOSURE SCHEDULE 4.10.3 identifies all policies of insurance maintained
by MFI, Medford Co-operative, and each Subsidiary of MFI as well as the
other matters required to be disclosed under this Section 4.10.3.
4.11. Legal Proceedings.
Except as set forth in MFI DISCLOSURE SCHEDULE 4.11, neither MFI nor
any MFI Subsidiary is a party to any, and there are no pending or, to MFI's
Knowledge, threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any nature, (i) against MFI or
any MFI Subsidiary, (ii) to which MFI or any MFI Subsidiary's assets are or
may be subject, (iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which would reasonably
be expected to adversely affect the ability of MFI to perform under this
Agreement, except for any proceeding, claim, action, investigation or
inquiry which, if adversely determined, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect.
4.12. Compliance With Applicable Law.
4.12.1. To MFI's Knowledge, each of MFI and each MFI
Subsidiary is in compliance in all material respects with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to it, its properties,
assets and deposits, its business, and its conduct of business and its
relationship with its employees, including, without limitation, the Uniting
and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (the "USA PATRIOT Act") of 2001, the Equal
Credit Opportunity Act, the Truth in Lending Act, the Real Estate
Settlement Procedures Act, the Consumer Credit Protection Act, the Fair
Credit Reporting Act, the Fair Debt Collections Act, the Fair Housing Act,
the Community Reinvestment Act of 1977 ("CRA"),
24
the Home Mortgage Disclosure Act, and all other applicable fair lending
laws and other laws relating to discriminatory business practices, and
neither MFI nor any MFI Subsidiary has received any written notice to the
contrary.
4.12.2. Each of MFI and each MFI Subsidiary has all material
permits, licenses, authorizations, orders and approvals of, and has made
all filings, applications and registrations with, all Governmental Entities
and Bank Regulators that are required in order to permit it to own or lease
its properties and to conduct its business as presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in
full force and effect and, to the Knowledge of MFI, no suspension or
cancellation of any such permit, license, certificate, order or approval is
threatened or will result from the consummation of the transactions
contemplated by this Agreement, subject to obtaining the approvals set
forth in Section 8.3.
4.12.3. For the period beginning July 1, 2001, neither MFI nor
any MFI Subsidiary has received any written notification or, to MFI's
Knowledge, any other communication from any Bank Regulator (i) asserting
that MFI or any MFI Subsidiary is not in material compliance with any of
the statutes, regulations or ordinances which such Bank Regulator enforces;
(ii) threatening to revoke any license, franchise, permit or governmental
authorization which is material to MFI or any MFI Subsidiary;
(iii) requiring or threatening to require MFI or any MFI Subsidiary, or
indicating that MFI or any MFI Subsidiary may be required, to enter into a
cease and desist order, agreement or memorandum of understanding or any
other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in
the insurance of bank deposits restricting or limiting, or purporting to
restrict or limit, in any material respect the operations of MFI or any MFI
Subsidiary, including without limitation any restriction on the payment of
dividends; or (iv) directing, restricting or limiting, or purporting to
direct, restrict or limit, in any material manner the operations of MFI or
any MFI Subsidiary (any such notice, communication, memorandum, agreement
or order described in this sentence is hereinafter referred to as a
"Regulatory Agreement"). Neither MFI nor any MFI Subsidiary has consented
to or entered into any Regulatory Agreement that is currently in effect.
The most recent regulatory rating given to Medford Co-operative as to
compliance with the CRA is satisfactory or better.
4.13. Employee Benefit Plans.
4.13.1. MFI DISCLOSURE SCHEDULE 4.13.1 contains a descriptive
list of each compensation, consulting, employment, termination or
collective bargaining agreement, and each stock option, stock purchase,
stock appreciation right, recognition and retention, life, health, accident
or other insurance, bonus, deferred or incentive compensation, severance or
separation agreement or any agreement providing any payment or benefit
resulting from a change in control, profit sharing, retirement, or other
employee benefit plan, practice, policy or arrangement of any kind, oral or
written, covering employees, former employees, directors or former
directors of MFI or each MFI Subsidiary or their respective beneficiaries,
including, but not limited to, any employee benefit plans within the
meaning of Section 3(3) of ERISA, which MFI or any MFI Subsidiary
maintains, to which MFI or any MFI Subsidiary contributes, or under which
any employee, former employee, director or former director of MFI or any
MFI Subsidiary is covered or has benefit rights and pursuant to which any
liability of MFI or any MFI Subsidiary exists or is reasonably likely to
occur (the "Compensation and Benefit Plans"). MFI
25
has made available for inspection true and correct copies of the
Compensation and Benefit Plans, as well as current summary plan
descriptions, trust agreements, and insurance contracts, Internal Revenue
Service Form 5500 (for the three most recently completed plan years) and
the most recent IRS determination letters with respect thereto, and the
loan agreement and related documents, including any amendments thereto,
evidencing any outstanding loan to an employee stock ownership plan
maintained by MFI or any MFI Subsidiary. Except as set forth on MFI
DISCLOSURE SCHEDULE 4.13.1, MFI neither maintains nor has entered into any
Compensation and Benefit Plan or other document, plan or agreement which
contains any change in control provisions which would cause an increase or
acceleration of benefits or benefit entitlements to employees or former
employees of MFI or any MFI Subsidiary or their respective beneficiaries,
or other provisions, which would cause an increase in the liability of MFI
or any MFI Subsidiary or to Brookline Bancorp as a result of the
transactions contemplated by this Agreement or any related action
thereafter (a "Change in Control Benefit"). The term "Compensation and
Benefit Plans" as used herein refers to all plans contemplated under the
preceding sentences of this Section 4.13.1, provided that the term "Plan"
or "Plans" is used in this Agreement for convenience only and does not
constitute an acknowledgment that a particular arrangement is an employee
benefit plan within the meaning of Section 3(3) of ERISA. Neither MFI nor
any MFI Subsidiary has been notified by any Governmental Entity to modify
or limit any payments or other compensation paid or payable by MFI or any
MFI Subsidiary under this Agreement, any Compensation and Benefit Plan or
otherwise, to or for the benefit of any employee or director of MFI or any
MFI Subsidiary and to the best knowledge of MFI, all such payments are in
compliance with all applicable rules, regulations and bulletins promulgated
by the Governmental Entities. Neither MFI nor any of its Subsidiaries has
any commitment to create any additional Compensation and Benefit Plan or to
materially modify, change or renew any existing Compensation and Benefit
Plan (any modification or change that increases the cost of such plans
would be deemed material), except as required to maintain the qualified
status thereof.
4.13.2. Each of the Compensation and Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift, savings or
employee stock ownership plan that is qualified under Section 401(a) of the
Code ("MFI Qualified Plans") has been determined by the Internal Revenue
Service to qualify under Section 401(a) of the Code (a copy of each such
determination letter is included on MFI DISCLOSURE SCHEDULE 4.13.2), and,
to the best knowledge of MFI, there exist no circumstances likely to
materially adversely affect the qualified status of any such MFI Qualified
Plan. All such MFI Qualified Plans established or maintained by MFI or each
MFI Subsidiary or to which MFI or any MFI Subsidiary contribute are in
compliance in all material respects with all applicable requirements of
ERISA, and are in compliance in all material respects with all applicable
requirements (including qualification and non-discrimination requirements
in effect as of the Effective Time) of the Code for obtaining the tax
benefits the Code permits with respect to such MFI Qualified Plans. Except
as set forth on MFI DISCLOSURE SCHEDULE 4.13.2, no MFI Qualified Plan is a
defined benefit pension plan which is subject to Title IV of ERISA. All
accrued contributions and other payments required to be made by MFI or each
MFI Subsidiary to any Compensation and Benefit Plan through the date
hereof, have been made or reserves adequate for such purposes as of the
date hereof, have been set aside therefor and reflected in MFI consolidated
financial statements to the extent required by GAAP and MFI and its
Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Compensation and Benefit Plan for
26
financial reporting purposes to the extent required by GAAP. Neither MFI
nor any MFI Subsidiary is in material default in performing any of its
respective contractual obligations under any of Compensation and Benefit
Plans or any related trust agreement or insurance contract, and there are
no material outstanding liabilities of any such Plan other than liabilities
for benefits to be paid to participants in such Plan and their
beneficiaries in accordance with the terms of such Plan. Neither MFI nor
any MFI Subsidiary has engaged in a transaction, or omitted to take any
action, with respect to any Compensation and Benefit Plan that would
reasonably be expected to subject MFI or any MFI Subsidiary to an unpaid
tax or penalty imposed by either Section 4975 of the Code or Section 502 of
ERISA.
4.13.3. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3,
no liability, other than PBGC premiums arising in the ordinary course of
business, has been or is expected by MFI or any of its Subsidiaries to be
incurred with respect to any MFI Compensation and Benefit Plan which is a
defined benefit plan subject to Title IV of ERISA ("MFI Defined Benefit
Plan"), or with respect to any "single-employer plan" (as defined in
Section 4001(a) of ERISA) currently or formerly maintained by MFI or any
entity which is considered one employer with MFI under Section 4001(b)(1)
of ERISA or Section 414 of the Code (an "ERISA Affiliate") (such plan
hereinafter referred to as an "ERISA Affiliate Plan"). Except as set forth
in MFI DISCLOSURE SCHEDULE 4.13.3, based upon the report of MFI's third-
party actuary and plan administrator, no MFI Defined Benefit Plan had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, as of the last day of the end of the most recent
plan year ending prior to the date hereof. Except as set forth in MFI
DISCLOSURE SCHEDULE 4.13.3, the net fair market value of the assets of each
MFI Defined Benefit Plan exceeds the actuarial present value of the
accumulated plan benefits guaranteed under Section 4022 of ERISA as of the
end of the most recent plan year ending prior to the date hereof for which
MFI has completed actuarial reports that have been filed with the Internal
Revenue Service. There is not currently pending with the PBGC any filings
with respect to any reportable event under Section 4043 of ERISA nor has
any reportable event occurred as to which a filing is required and has not
been made (other than as might be required with respect to this Agreement
and transactions contemplated thereby). Except as set forth in MFI
DISCLOSURE SCHEDULE 4.13.3, neither MFI nor any ERISA Affiliate has
contributed to any "multi-employer plan," as defined in Section 3(37) of
ERISA, on or after September 26, 1980. Except as set forth in MFI
DISCLOSURE SCHEDULE 4.13.3, neither MFI nor any of its Subsidiaries has
provided, or is required to provide, security to any MFI Defined Benefit
Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code or has taken any action, or omitted to take
any action, that has resulted, or would reasonably be expected to result in
the imposition of a lien under Section 412(n) of the Code or pursuant to
ERISA. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3. neither MFI
nor any ERISA Affiliate nor any MFI Compensation and Benefit Plan, nor any
trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which any of the aforesaid
persons or entities would reasonably be expected to be subject to either a
civil liability or penalty pursuant to Section 409, 502(i) or 502(l) of
ERISA or a tax imposed pursuant to Chapter 43 of the Code. To the Knowledge
of MFI, and except as set forth in MFI DISCLOSURE SCHEDULE 4.13.3, there is
no pending investigation or enforcement action by any Bank Regulator with
respect to any Compensation and Benefit Plan or any ERISA Affiliate Plan.
There is no pending or, to the best knowledge of MFI, threatened litigation
or pending claim (other than individual benefit claims made in the ordinary
course) by or on behalf of or against
27
any of Compensation and Benefit Plans (or with respect to the
administration of any of such Plans) now or heretofore maintained by MFI or
any MFI Subsidiary which allege violations of applicable state or federal
law or the terms of the Plan which are reasonably likely to result in a
liability on the part of MFI or any MFI Subsidiary or any such Plan.
4.13.4. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.4,
neither MFI nor any MFI Subsidiary has any obligations to provide retiree
health, life insurance, disability insurance, or other retiree death
benefits under any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code. Except as set forth in MFI
DISCLOSURE SCHEDULE 4.13.4, there has been no communication to employees by
MFI or any MFI Subsidiary that would reasonably be expected to preclude MFI
(or Brookline Bancorp as successor to MFI) from amending or terminating any
obligations to its employees or former employees with respect to retiree
health, life insurance, disability insurance, or other retiree death
benefits.
4.13.5. All Compensation and Benefit Plans that are group
health plans have been operated in compliance with the group health plan
continuation requirements of Section 4980B of the Code and Sections 601-609
of ERISA and with the certification of prior coverage and other
requirements of Sections 701-702 and 711-713 of ERISA.
4.13.6. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.6,
MFI and its Subsidiaries do not maintain any Compensation and Benefit Plans
covering employees who are not United States residents.
4.13.7. MFI DISCLOSURE SCHEDULE 4.13.7, lists and describes:
(i) each employee, officer and director of MFI and each MFI Subsidiary who
is eligible to receive a Change in Control Benefit, showing the amount of
such Change in Control Benefit for the individuals listed on MFI DISCLOSURE
SCHEDULE 7.8.3; (ii) each other employee of MFI or any MFI Subsidiary who
may be eligible for a Change in Control Benefit, showing the date of hire
of each such employee, and his or her estimated salary for 2004 and bonus
amount for 2003; as well as his or her exempt status, (iii) the unpaid
balance of any loans owing by the Mystic ESOP to MFI or any party as of the
date hereof (the "ESOP Loan") and the number of unallocated shares of MFI
Common Stock held by such trust; and (iv) each employee, officer or
director for whom a supplemental executive retirement, salary continuation
or deferred compensation plan or agreement is maintained, showing the
amounts due under each such plan or agreement and the payment schedule
thereof, and the amounts accrued in MFI Financial Statements with respect
thereto. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.13.7, the
consummation of the Merger will not, directly or indirectly (including,
without limitation, as a result of any termination of employment or service
at any time prior to or following the Effective Time) (A) entitle any
employee, consultant or director to any payment or benefit (including
severance pay, change in control benefit, or similar compensation) or any
increase in compensation, (B) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan or (C) result in any
material increase in benefits payable under any Compensation and Benefit
Plan.
4.13.8. Except as disclosed in MFI DISCLOSURE SCHEDULE 4.13.8,
neither MFI nor any MFI Subsidiary maintains any compensation plans,
programs or arrangements
28
under which any payment is reasonably likely to become non-deductible, in
whole or in part, for tax reporting purposes as a result of the limitations
under Section 162(m) of the Code and the regulations issued thereunder.
4.13.9. Except as set forth in MFI DISCLOSURE SCHEDULE 4.13.9,
the consummation of the Merger and/or the Bank Merger will not, directly or
indirectly (including without limitation, as a result of any termination of
employment or service at any time prior to or following the Effective
Time), entitle any current or former employee, director or independent
contractor of MFI or any MFI Subsidiary to any actual or deemed payment (or
benefit) which would reasonably be expected to constitute a "parachute
payment" (as such term is defined in Section 280G of the Code).
4.14. Brokers, Finders and Financial Advisors.
Neither MFI nor any MFI Subsidiary, nor any of their respective
officers, directors, employees or agents, has employed any broker, finder
or financial advisor in connection with the transactions contemplated by
this Agreement, or incurred any liability or commitment for any fees or
commissions to any such person in connection with the transactions
contemplated by this Agreement except for the retention of RBC Capital
Markets ("RBC") by MFI and the fee payable pursuant thereto. A true and
correct copy of the engagement agreement with RBC, setting forth the fee
payable to RBC for its services rendered to MFI in connection with the
Merger and transactions contemplated by this Agreement, is attached to MFI
DISCLOSURE SCHEDULE 4.14.
4.15. Environmental Matters.
4.15.1. Except as may be set forth in MFI DISCLOSURE SCHEDULE
4.15, with respect to MFI and each MFI Subsidiary:
(A) Each of MFI and the MFI Subsidiaries and, to MFI's
Knowledge, the Participation Facilities and the Loan Properties are, and
have been, in substantial compliance with, and are not liable under, any
Environmental Laws;
(B) MFI has received no written notice that there is
any suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to MFI's Knowledge, no
such action is threatened, before any court, governmental agency or other
forum against it or any of the MFI Subsidiaries or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law or (y) relating to the presence
of or release into the environment of any Materials of Environmental
Concern (as defined herein), whether or not occurring at or on a site
owned, leased or operated by it or any of the MFI Subsidiaries or any
Participation Facility;
(C) MFI has received no written notice that there is
any suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending and, to MFI's Knowledge no
such action is threatened, before any court, governmental agency or other
forum relating to or against any Loan Property (or MFI or any of the MFI
Subsidiaries in respect of such Loan Property) (x) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or
29
release into the environment of any Materials of Environmental Concern,
whether or not occurring at or on a site owned, leased or operated by a
Loan Property;
(D) To MFI's Knowledge, the properties currently owned
or operated by MFI or any MFI Subsidiary (including, without limitation,
soil, groundwater or surface water on, or under the properties, and
buildings thereon) are not contaminated with and do not otherwise contain
any Materials of Environmental Concern other than as permitted under
applicable Environmental Law;
(E) Neither MFI nor any MFI Subsidiary has received any
written notice, demand letter, executive or administrative order, directive
or request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(F) To MFI's Knowledge, there are no underground
storage tanks on, in or under any properties owned or operated by MFI or
any of the MFI Subsidiaries or any Participation Facility, and to MFI's
Knowledge, no underground storage tanks have been closed or removed from
any properties owned or operated by MFI or any of the MFI Subsidiaries or
any Participation Facility; and
(G) To MFI's Knowledge, during the period of (s) MFI's
or any of the MFI Subsidiaries' ownership or operation of any of their
respective current properties or (t) MFI's or any of the MFI Subsidiaries'
participation in the management of any Participation Facility, there has
been no contamination by or release of Materials of Environmental Concerns
in, on, under or affecting such properties that could reasonably be
expected to result in material liability under the Environmental Laws. To
MFI's Knowledge, prior to the period of (x) MFI's or any of the MFI
Subsidiaries' ownership or operation of any of their respective current
properties or (y) MFI's or any of the MFI Subsidiaries' participation in
the management of any Participation Facility, there was no contamination by
or release of Materials of Environmental Concern in, on, under or affecting
such properties that could reasonably be expected to result in material
liability under the Environmental Laws.
(H) Neither MFI nor any other MFI Subsidiary has
conducted any environmental studies during the past ten years (other than
Phase I studies which did not indicate any contamination of the environment
by Materials of Environmental Concern) with respect to any properties owned
or leased by it or any of its Subsidiaries, or with respect to any Loan
Property or any Participation Facility.
4.15.2. "Loan Property" means any property in which the
applicable party (or a Subsidiary of it) holds a security interest, and,
where required by the context, includes the owner or operator of such
property, but only with respect to such property. "Participation Facility"
means any facility in which the applicable party (or a Subsidiary of it)
participates in the management (including all property held as trustee or
in any other fiduciary capacity) and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
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4.16. Loan Portfolio.
4.16.1. The allowance for loan losses reflected in the notes
to MFI's audited consolidated statement of financial condition at June 30,
2003 was, and the allowance for loan losses shown in the notes to the
unaudited consolidated financial statements in MFI's Securities Documents
for periods ending after June 30, 2003 were, or will be, adequate, as of
the dates thereof, under GAAP.
4.16.2. MFI DISCLOSURE SCHEDULE 4.16.2 sets forth a listing,
as of May 31, 2004, by account, of: (A) all loans (including loan
participations) of MFI or any other MFI Subsidiary that have been
accelerated during the past twelve months; (B) all loan commitments or
lines of credit of MFI or any other MFI Subsidiary which have been
terminated by MFI or any other MFI Subsidiary during the past twelve months
by reason of a default or adverse developments in the condition of the
borrower or other events or circumstances affecting the credit of the
borrower; (C) all loans, lines of credit and loan commitments as to which
MFI or any other MFI Subsidiary has given written notice of its intent to
terminate during the past twelve months; (D) with respect to all commercial
loans (including commercial real estate loans), all notification letters
and other written communications from MFI or any other MFI Subsidiary to
any of their respective borrowers, customers or other parties during the
past twelve months wherein MFI or any other MFI Subsidiary has requested or
demanded that actions be taken to correct existing defaults or facts or
circumstances which may become defaults; (E) each borrower, customer or
other party which has notified Medford Co-operative or any other MFI
Subsidiary during the past twelve months of, or has asserted against
Medford Co-operative, or any other MFI Subsidiary, in each case in writing,
any "lender liability" or similar claim, and, to the knowledge of MFI or
any MFI Subsidiary, each borrower, customer or other party which has given
Medford Co-operative, or any other MFI Subsidiary any oral notification of,
or orally asserted to or against Medford Co-operative, or any other MFI
Subsidiary, any such claim; and (F) all loans, (1) that are contractually
past due 90 days or more in the payment of principal and/or interest,
(2) that are on non-accrual status, (3) that as of May 31, 2004 are
classified as "Other Loans Specially Mentioned", "Special Mention",
"Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Watch list"
or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the
obligor thereunder, (4) where a reasonable doubt exists as to the timely
future collectability of principal and/or interest, whether or not interest
is still accruing or the loans are less than 90 days past due, (5) where
the interest rate terms have been reduced and/or the maturity dates have
been extended subsequent to the agreement under which the loan was
originally created due to concerns regarding the borrower's ability to pay
in accordance with such initial terms, or (6) where a specific reserve
allocation exists in connection therewith; and (G) all other assets
classified by Medford Co-operative, or any other MFI Subsidiary as real
estate acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure. DISCLOSURE SCHEDULE
4.16.2 may exclude any individual loan with a principal outstanding balance
of less than $50,000, provided that DISCLOSURE SCHEDULE 4.16.2 includes,
for each category described, the aggregate amount of individual loans with
a principal outstanding balance of less than $50,000 that has been
excluded.
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4.16.3. All loans receivable (including discounts) and accrued
interest entered on the books of MFI and the MFI Subsidiaries arose out of
bona fide arm's-length transactions, were made for good and valuable
consideration in the ordinary course of MFI's or the appropriate MFI
Subsidiary's respective business, and the notes or other evidences of
indebtedness with respect to such loans (including discounts) are true and
genuine and are what they purport to be, except as set forth in MFI
DISCLOSURE SCHEDULE 4.16.3. To the Knowledge of MFI, the loans, discounts
and the accrued interest reflected on the books of MFI and the MFI
Subsidiaries are subject to no defenses, set-offs or counterclaims
(including, without limitation, those afforded by usury or truth-in-lending
laws), except as may be provided by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general principles of equity.
Except as set forth in MFI DISCLOSURE SCHEDULE 4.16.3, all such loans are
owned by MFI or the appropriate MFI Subsidiary free and clear of any liens.
4.16.4. The notes and other evidences of indebtedness
evidencing the loans described above, and all pledges, mortgages, deeds of
trust and other collateral documents or security instruments relating
thereto are, in all material respects, valid, true and genuine, and what
they purport to be.
4.17. Securities Documents.
MFI has made available to Brookline Bancorp copies of its (i) annual
reports on Form 10-K for the years ended June 30, 2003, 2002 and 2001, (ii)
quarterly reports on Form 10-Q for the quarters ended September 30, 2003,
December 31, 2003 and March 31, 2004, and (iii) proxy materials used or for
use in connection with its meetings of stockholders held in 2003 and 2002.
Such reports, as amended, and proxy materials complied, at the time filed
with the SEC, in all material respects, with the Securities Laws.
4.18. Related Party Transactions.
Except as described in MFI's proxy statement dated September 12, 2003
(the "MFI Proxy Statement") distributed in connection with its annual
meeting of stockholders held on October 22, 2003 (which has previously been
made available to Brookline Bancorp), or as set forth in MFI DISCLOSURE
SCHEDULE 4.18, neither MFI nor any MFI Subsidiary is a party to any
transaction (including any loan or other credit accommodation) with any
Affiliate of MFI or any MFI Subsidiary. Except as described in the MFI
Proxy Statement, all such transactions (a) were made in the ordinary course
of business, (b) were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more
than the normal risk of collectability or present other unfavorable
features. No loan or credit accommodation to any Affiliate of MFI or any
MFI Subsidiary is presently in default or, during the three year period
prior to the date of this Agreement, has been in default or has been
restructured, modified or extended except for rate modifications pursuant
to Medford Co-operative's loan modification policy that is applicable to
all Persons. Neither MFI nor any MFI Subsidiary has been notified that
principal or interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by MFI is
inappropriate.
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4.19. Deposits.
None of the deposits of any MFI Subsidiary is a "brokered deposit" as
defined in 12 C.F.R. Section 337.6(a)(2).
4.20. Antitakeover Provisions Inapplicable; Required Vote.
The Board of Directors of MFI has, to the extent such statute is
applicable, taken all action (including appropriate approvals of the Board
of Directors of MFI) necessary to exempt Brookline Bancorp, the Merger,
this Agreement and the transactions contemplated hereby from Section 203 of
the DGCL. The affirmative vote of a majority of the issued and outstanding
shares of MFI Common Stock is required to approve this Agreement and the
Merger under MFI's certificate of incorporation (and no greater voting
requirement is applicable by reason of Article VIII of the Certificate of
Incorporation) and the DGCL.
4.21. Registration Obligations.
Neither MFI nor any MFI Subsidiary is under any obligation,
contingent or otherwise, which will survive the Effective Time by reason of
any agreement to register any transaction involving any of its securities
under the Securities Act.
4.22. Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements,
futures and forward contracts and other similar risk management
arrangements, whether entered into for MFI's own account, or for the
account of one or more of MFI's Subsidiaries or their customers (all of
which are set forth in MFI DISCLOSURE SCHEDULE 4.22), were in all material
respects entered into in compliance with all applicable laws, rules,
regulations and regulatory policies, and to the Knowledge of MFI and each
MFI Subsidiary, with counterparties believed to be financially responsible
at the time; and to MFI's and each MFI Subsidiary's Knowledge each of them
constitutes the valid and legally binding obligation of MFI or such MFI
Subsidiary, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither MFI nor any
MFI Subsidiary, nor, to the Knowledge of MFI, any other party thereto, is
in breach of any of its obligations under any such agreement or arrangement
in any material respect.
4.23. Fairness Opinion.
MFI has received an opinion from RBC to the effect that, subject to
the terms, conditions and qualifications set forth therein, as of the date
hereof, the Merger Consideration to be received by the stockholders of MFI
pursuant to this Agreement is fair to such stockholders from a financial
point of view. Such opinion has not been amended or rescinded as of the
date of this Agreement.
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4.24. Intellectual Property.
MFI and each MFI Subsidiary owns or, to MFI's Knowledge, possesses
valid and binding licenses and other rights (subject to expirations in
accordance with their terms) to use all patents, copyrights, trade secrets,
trade names, servicemarks and trademarks used in their business, each
without payment, and neither MFI nor any MFI Subsidiary has received any
notice of conflict with respect thereto that asserts the rights of others.
MFI and each Significant Subsidiary of MFI have performed all the
obligations required to be performed, and are not in default in any
respect, under any contract, agreement, arrangement or commitment relating
to any of the foregoing.
4.25. Trust Accounts.
Neither MFI, nor any MFI Subsidiary conducts any trust business.
4.26. Labor Matters.
There are no labor or collective bargaining agreements to which MFI
or any MFI Subsidiary is a party. To the Knowledge of MFI, there is no
union organizing effort pending or threatened against MFI or any MFI
Subsidiary. There is no labor strike, labor dispute (other than routine
employee grievances that are not related to union employees), work
slowdown, stoppage or lockout pending or, to the Knowledge of MFI,
threatened against MFI or any MFI Subsidiary. There is no unfair labor
practice or labor arbitration proceeding pending or, to the Knowledge of
MFI, threatened against MFI or any MFI Subsidiary (other than routine
employee grievances that are not related to union employees). MFI and each
MFI Subsidiary is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any
unfair labor practice.
4.27. MFI Information Supplied
The information relating to MFI and any MFI Subsidiary to be
contained in the Merger Registration Statement, or in any other document
filed with any Bank Regulator or other Governmental Entity in connection
herewith, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Merger
Registration Statement will comply with the provisions of the Exchange Act
and the rules and regulations thereunder and the provisions of the
Securities Act and the rules and regulations thereunder, except that no
representation or warranty is made by MFI with respect to statements made
or incorporated by reference therein based on information supplied by
Brookline Bancorp specifically for inclusion or incorporation by reference
in the Merger Registration Statement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BROOKLINE BANCORP
Brookline Bancorp represents and warrants to MFI that the statements
contained in this Article V are correct as of the date of this Agreement
and will be correct as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this
34
Agreement throughout this Article V), subject to the standard set forth in
Section 5.1 and except as set forth in the BROOKLINE BANCORP DISCLOSURE
SCHEDULE delivered by Brookline Bancorp to MFI on the date hereof, and
except to any representation of warranty which specifically relates to an
earlier date, which only need be so correct as of such earlier date.
Brookline Bancorp has made a good faith effort to ensure that the
disclosure on each schedule of the BROOKLINE BANCORP DISCLOSURE SCHEDULE
corresponds to the section referenced herein. However, for purposes of the
BROOKLINE BANCORP DISCLOSURE SCHEDULE, any item disclosed on any schedule
therein is deemed to be fully disclosed with respect to all schedules under
which such item may be relevant as and to the extent that it is reasonably
clear on the face of such schedule that such item applies to such other
schedule. References to the Knowledge of Brookline Bancorp shall include
the Knowledge of Brookline Bank.
5.1. Standard.
No representation or warranty of Brookline Bancorp contained in this
Article V shall be deemed untrue or incorrect, and Brookline Bancorp shall
not be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event unless such
fact, circumstance or event, individually or taken together with all other
facts, circumstances or events inconsistent with any paragraph of Article
V, has had or is reasonably expected to have a Material Adverse Effect,
disregarding for these purposes (x) any qualification or exception for, or
reference to, materiality in any such representation or warranty and (y)
any use of the terms "material", "materially", "in all material respects",
"Material Adverse Effect" or similar terms or phrases in any such
representation or warranty. The foregoing standard shall not apply to
representations and warranties contained in Sections 5.2 (other than the
last sentence of Sections 5.2.1 and 5.2.2), 5.3 and 5.4, which shall be
deemed untrue, incorrect and breached if they are not true and correct in
all material respects.
5.2. Organization.
5.2.1. Brookline Bancorp is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and is duly registered as a savings and loan holding company
under the HOLA. Brookline Bancorp has full corporate power and authority to
carry on its business as now conducted and is duly licensed or qualified to
do business in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or the conduct of its business
requires such qualification.
5.2.2. Brookline Bank is a savings association duly organized,
validly existing and in good standing under Federal law. The deposits of
Brookline Bank are insured by the FDIC to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due. Brookline Bank is a member in good
standing of the FHLB and owns the requisite amount of stock therein.
5.2.3. BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.2.3 sets forth
each Brookline Bancorp Subsidiary. Each Brookline Bancorp Subsidiary (other
than Brookline Bank) is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization.
35
5.2.4. The respective minute books of Brookline Bancorp and
each Brookline Bancorp Subsidiary accurately records, in all material
respects, all material corporate actions of their respective stockholders
and boards of directors (including committees).
5.2.5. Prior to the date of this Agreement, Brookline Bancorp
has made available to MFI true and correct copies of the certificate of
incorporation or charter and bylaws of Brookline Bancorp and Brookline Bank
and the Brookline Bancorp Subsidiaries.
5.3. Capitalization.
5.3.1. The authorized capital stock of Brookline Bancorp
consists of 200,000,000 shares of Brookline Bancorp Common Stock, of which
60,409,532 shares are outstanding, validly issued, fully paid and
nonassessable and free of preemptive rights, and 50,000,000 shares of
preferred stock, $0.01 par value ("Brookline Bancorp Preferred Stock"),
none of which are outstanding. There are 1,335,299_ shares of Brookline
Bancorp Common Stock held by Brookline Bancorp as treasury stock. Neither
Brookline Bancorp nor any Brookline Bancorp Subsidiary has or is bound by
any Rights of any character relating to the purchase, sale or issuance or
voting of, or right to receive dividends or other distributions on any
shares of Brookline Bancorp Common Stock, or any other security of
Brookline Bancorp or any securities representing the right to vote,
purchase or otherwise receive any shares of Brookline Bancorp Common Stock
or any other security of Brookline Bancorp, other than shares issuable
under the Brookline Bancorp Stock Benefit Plans.
5.3.2. Brookline Bancorp owns all of the capital stock of
Brookline Bank free and clear of any lien or encumbrance. Either Brookline
Bancorp or Brookline Bank owns all of the outstanding shares of capital
stock of each Brookline Bancorp Subsidiary free and clear of all liens,
security interests, pledges, charges, encumbrances, agreements and
restrictions of any kind or nature.
5.3.3. Except as set forth in BROOKLINE BANCORP DISCLOSURE
SCHEDULE 5.3.3, to the Knowledge of Brookline Bancorp, no Person is the
beneficial owner (as defined in Section 13(d) of the Exchange Act) of 5% or
more of the outstanding shares of Brookline Bancorp Common Stock.
5.3.4. No bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which Brookline Bancorp's
stockholders may vote has been issued by Brookline Bancorp and are
outstanding.
5.4. Authority; No Violation.
5.4.1. Brookline Bancorp has full corporate power and
authority to execute and deliver this Agreement and, subject to receipt of
the required Regulatory Approvals, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Brookline Bancorp and the completion by Brookline Bancorp of the
transactions contemplated hereby, up to and including the Merger, have been
duly and validly approved by the Board of Directors of Brookline Bancorp,
and no other corporate proceedings on the part of Brookline Bancorp are
necessary to complete the transactions contemplated hereby, up to and
including the Merger. This Agreement has been duly and validly executed and
delivered by
36
Brookline Bancorp, and subject to the receipt of the Regulatory Approvals
described in Section 8.3 and approval by the stockholders of MFI and due
and valid execution and delivery of this Agreement by MFI, constitutes the
valid and binding obligations of Brookline Bancorp, enforceable against
Brookline Bancorp in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of
equity.
5.4.2. (A) The execution and delivery of this Agreement by
Brookline Bancorp, (B) subject to receipt of the Regulatory Approvals, and
compliance by MFI and Brookline Bancorp with any conditions contained
therein, and subject to the receipt of the approval of the stockholders of
MFI, the consummation of the transactions contemplated hereby, and (C)
compliance by Brookline Bancorp with any of the terms or provisions hereof
will not (i) conflict with or result in a breach of any provision of the
certificate of incorporation or bylaws of Brookline Bancorp or any
Brookline Bancorp Subsidiary or the charter and bylaws of Brookline Bank;
(ii) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Brookline Bancorp or any
Brookline Bancorp Subsidiary or any of their respective properties or
assets; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default), under, result in the
termination of, accelerate the performance required by, or result in a
right of termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets
of Brookline Bancorp, Brookline Bank or any Brookline Bancorp Subsidiary
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which any of them is a party, or by which they
or any of their respective properties or assets may be bound or affected,
except for such violations, conflicts, breaches or defaults under clause
(ii) or (iii) hereof which, either individually or in the aggregate, will
not have a Material Adverse Effect on Brookline Bancorp and the Brookline
Bancorp Subsidiaries taken as a whole.
5.5. Consents.
Except for (a) the receipt of the Regulatory Approvals and compliance
with any conditions contained therein, (b) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (c) the filing
with the SEC of (i) the Merger Registration Statement and (ii) such reports
under Sections 13(a), 13(d), 13(g) and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated hereby and the obtaining from the SEC of such orders as may be
required in connection therewith, (d) approval of the listing of Brookline
Bancorp Common Stock to be issued in the Merger on the Nasdaq, (e) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Brookline Bancorp Common Stock pursuant to this
Agreement, and (f) the approval of this Agreement by the requisite vote of
the stockholders of MFI, no consents, waivers or approvals of, or filings
or registrations with, any Governmental Entity or Bank Regulator are
necessary, and, to the Knowledge of Brookline Bancorp, no consents, waivers
or approvals of, or filings or registrations with, any other third parties
are necessary, in connection with (x) the execution and delivery of this
Agreement by Brookline Bancorp and the completion by Brookline Bancorp of
the Merger or (y) the execution and delivery of the Plan of Bank Merger and
the completion of
37
the Bank Merger. Brookline Bancorp has no reason to believe that (i) any
Regulatory Approvals or other required consents or approvals will not be
received or will include the imposition of any condition or requirement
that could reasonably be expected by Brookline Bancorp to result in a
Material Adverse Effect on Brookline Bancorp and its Subsidiaries, taken as
a whole, or that (ii) any public body or authority having jurisdiction over
affairs of Brookline Bancorp, the consent or approval of which is not
required or to which a filing is not required, will object to the
completion of the transactions contemplated by this Agreement.
5.6. Financial Statements.
5.6.1. Brookline Bancorp has previously made available to MFI
the Brookline Bancorp Financial Statements covering periods ended prior to
the date hereof. The Brookline Bancorp Financial Statements have been
prepared in accordance with GAAP, and (including the related notes where
applicable) fairly present in each case in all material respects (subject
in the case of the unaudited interim statements to normal year-end
adjustments) the consolidated financial position, results of operations and
cash flows of Brookline Bancorp and the Brookline Bancorp Subsidiaries on a
consolidated basis as of and for the respective periods ending on the dates
thereof, in accordance with GAAP during the periods involved, except as
indicated in the notes thereto, or in the case of unaudited statements, as
permitted by Form 10-Q.
5.6.2. At the date of each balance sheet included in the
Brookline Bancorp Financial Statements, Brookline Bancorp did not have any
liabilities, obligations or loss contingencies of any nature (whether
absolute, accrued, contingent or otherwise) of a type required to be
reflected in such Brookline Bancorp Financial Statements or in the
footnotes thereto which are not fully reflected or reserved against therein
or fully disclosed in a footnote thereto, except for liabilities,
obligations and loss contingencies which are not material individually or
in the aggregate or which are incurred in the ordinary course of business,
consistent with past practice, and except for liabilities, obligations and
loss contingencies which are within the subject matter of a specific
representation and warranty herein and subject, in the case of any
unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
5.7. Taxes.
Brookline Bancorp and the Brookline Bancorp Subsidiaries that are at
least 80 percent owned by Brookline Bancorp are members of the same
affiliated group within the meaning of Code Section 1504(a). Brookline
Bancorp has duly filed all federal, state and material local tax returns
required to be filed by or with respect to Brookline Bancorp and each
Subsidiary of Brookline Bancorp, taking into account any extensions (all
such returns, to the Knowledge of Brookline Bancorp, being accurate and
correct in all material respects) and has duly paid or made provisions for
the payment of all federal, state and material local taxes which have been
incurred by or are due or claimed to be due from Brookline Bancorp and any
Subsidiary of Brookline Bancorp by any taxing authority or pursuant to any
written tax sharing agreement other than taxes or other charges which (i)
are not delinquent, (ii) are being contested in good faith, or (iii) have
not yet been fully determined. As of the date of this Agreement, Brookline
Bancorp has received no notice of, and to the Knowledge of Brookline
Bancorp, there is no audit examination, deficiency assessment, tax
investigation or refund litigation with respect to any
38
taxes of Brookline Bancorp or any of its Subsidiaries, and no claim has
been made by any taxing authority in a jurisdiction where Brookline Bancorp
or any of its Subsidiaries do not file tax returns that Brookline Bancorp
or any such Subsidiary is subject to taxation in that jurisdiction. Except
as set forth in BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.7, Brookline
Bancorp and its Subsidiaries 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. Brookline Bancorp and each of its
Subsidiaries has timely 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, stockholder or other third party, and
Brookline Bancorp and each of its Subsidiaries, to the Knowledge of
Brookline Bancorp, has 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.
5.8. No Material Adverse Effect.
Except as disclosed in Brookline Bancorp's Securities Documents filed
on or prior to the date hereof, Brookline Bancorp and the Brookline Bancorp
Subsidiaries, taken as a whole, have not suffered any Material Adverse
Effect since December 31, 2003 and no event has occurred or circumstance
arisen since that date which, in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on Brookline Bancorp and the
Brookline Bancorp Subsidiaries, taken as a whole.
5.9. Ownership of Property; Insurance Coverage.
5.9.1. Brookline Bancorp and each Significant Subsidiary of
Brookline Bancorp has good and, as to real property, marketable title to
all material assets and properties owned by Brookline Bancorp or each
Significant Subsidiary of Brookline Bancorp in the conduct of its
businesses, whether such assets and properties are real or personal,
tangible or intangible, including assets and property reflected in the
balance sheets contained in the Brookline Bancorp Financial Statements or
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of in the ordinary course of business, since
the date of such balance sheets), subject to no material encumbrances,
liens, mortgages, security interests or pledges, except (i) those items
which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to FHLB, inter-bank
credit facilities, or any transaction by a Significant Subsidiary of
Brookline Bancorp acting in a fiduciary capacity, and (ii) statutory liens
for amounts not yet delinquent or which are being contested in good faith.
Brookline Bancorp and the Significant Subsidiaries of Brookline Bancorp, as
lessee, have the right under valid and subsisting leases of real and
personal properties used by Brookline Bancorp and the Significant
Subsidiaries of Brookline Bancorp in the conduct of their businesses to
occupy or use all such properties as presently occupied and used by each of
them.
5.9.2. Brookline Bancorp and each Significant Subsidiary of
Brookline Bancorp currently maintain insurance considered by Brookline
Bancorp to be reasonable for their respective operations. Neither Brookline
Bancorp nor any Significant Subsidiary of Brookline Bancorp has received
notice from any insurance carrier on or before the date hereof that such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated.
39
All such insurance is valid and enforceable and in full force and effect
(other than insurance that expires in accordance with its terms), and
within the last three years Brookline Bancorp and each Significant
Subsidiary of Brookline Bancorp has received each type of insurance
coverage for which it has applied and during such periods has not been
denied indemnification for any material claims submitted under any of its
insurance policies.
5.10. Legal Proceedings.
Neither Brookline Bancorp nor any Brookline Bancorp Subsidiary is a
party to any, and there are no pending or, to the Knowledge of Brookline
Bancorp, threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any nature (i) against
Brookline Bancorp or any Brookline Bancorp Subsidiary, (ii) to which
Brookline Bancorp or any Brookline Bancorp Subsidiary's assets are or may
be subject, (iii) challenging the validity or propriety of any of the
transactions contemplated by this Agreement, or (iv) which would reasonably
be expected to adversely affect the ability of Brookline Bancorp to perform
under this Agreement, except for any proceeding, claim, action,
investigation or inquiry which, if adversely determined, individually or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
5.11. Compliance With Applicable Law.
5.11.1. To the Knowledge of Brookline Bancorp, each of
Brookline Bancorp and each Brookline Bancorp Subsidiary is in compliance in
all material respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to it, its properties, assets and deposits, its
business, and its conduct of business and its relationship with its
employees, including, without limitation, the USA PATRIOT Act, the Equal
Credit Opportunity Act, the Truth in Lending Act, the Real Estate
Settlement Procedures Act, the Consumer Credit Protection Act, the Fair
Credit Reporting Act, the Fair Debt Collections Act, the Fair Housing Act,
the CRA, the Home Mortgage Disclosure Act, and all other applicable fair
lending laws and other laws relating to discriminatory business practices,
and neither Brookline Bancorp nor any Brookline Bancorp Subsidiary has
received any written notice to the contrary.
5.11.2. Each of Brookline Bancorp and each Brookline Bancorp
Subsidiary has all material permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Entities and Bank Regulators that are required in
order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect and, to the
Knowledge of Brookline Bancorp, no suspension or cancellation of any such
permit, license, certificate, order or approval is threatened or will
result from the consummation of the transactions contemplated by this
Agreement, subject to obtaining the approvals set forth in Section 8.3.
5.11.3. For the period beginning January 1, 2001, neither
Brookline Bancorp nor any Brookline Bancorp Subsidiary has received any
written notification or, to the Knowledge of Brookline Bancorp, any other
communication from any Bank Regulator (i) asserting that
40
Brookline Bancorp or any Brookline Bancorp Subsidiary is not in material
compliance with any of the statutes, regulations or ordinances which such
Bank Regulator enforces; (ii) threatening to revoke any license, franchise,
permit or governmental authorization which is material to Brookline Bancorp
or any Brookline Bancorp Subsidiary; (iii) requiring or threatening to
require Brookline Bancorp or any Brookline Bancorp Subsidiary, or
indicating that Brookline Bancorp or any Brookline Bancorp Subsidiary may
be required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement with any federal or
state governmental agency or authority which is charged with the
supervision or regulation of banks or engages in the insurance of bank
deposits restricting or limiting, or purporting to restrict or limit, in
any material respect the operations of Brookline Bancorp or any Brookline
Bancorp Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit, in any manner the operations of
Brookline Bancorp or any Brookline Bancorp Subsidiary, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither Brookline
Bancorp nor any Brookline Bancorp Subsidiary has consented to or entered
into any currently effective Regulatory Agreement. The most recent
regulatory rating given to Brookline Bank as to compliance with the CRA is
satisfactory or better.
5.12. Employee Benefit Plans.
5.12.1. BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.12.1 includes
a list of all Compensation and Benefit Plans sponsored by Brookline Bancorp
or any of its Subsidiaries. "Compensation and Benefit Plans" as used herein
shall have the same meaning as set forth in Section 4.13.1, substituting
the name of Brookline Bancorp for MFI wherever used therein. Neither
Brookline Bancorp nor any of its Subsidiaries has been notified by any
Governmental Entity to modify or limit any payments or other compensation
paid or payable by Brookline Bancorp or any of its Subsidiaries under this
Agreement, any Compensation and Benefit Plan or otherwise, to or for the
benefit of any employee or director of Brookline Bancorp or any of its
Subsidiaries and to the best knowledge of Brookline Bancorp, all such
payments are in compliance with all applicable rules, regulations and
bulletins promulgated by the any Governmental Entities. Neither Brookline
Bancorp nor any of its Subsidiaries has any commitment to create any
additional Compensation and Benefit Plan or to materially modify, change or
renew any existing Compensation and Benefit Plan (any modification or
change that increases the cost of such plans would be deemed material),
except as required to maintain the qualified status thereof, Brookline
Bancorp has made available to MFI true and correct copies of the Brookline
Bancorp Compensation and Benefit Plans.
5.12.2. Each of the Compensation and Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift, savings or
employee stock ownership plan that is qualified under Section 401(a) of the
Code ("Brookline Bancorp Qualified Plans") has been determined by the
Internal Revenue Service to qualify under Section 401(a) of the Code (a
copy of each such determination letter is included on BROOKLINE BANCORP
DISCLOSURE SCHEDULE 5.12.2), and, to the best knowledge of Brookline
Bancorp, there exist no circumstances likely to materially adversely affect
the qualified status of any such Brookline Bancorp Qualified Plan. All such
Brookline Bancorp Qualified Plans established or maintained
41
by Brookline Bancorp or each Brookline Bancorp Subsidiary or to which
Brookline Bancorp or any Brookline Bancorp Subsidiary contribute are in
compliance in all material respects with all applicable requirements of
ERISA, and are in compliance in all material respects with all applicable
requirements (including qualification and non-discrimination requirements
in effect as of the Effective Time) of the Code for obtaining the tax
benefits the Code permits with respect to such Brookline Bancorp Qualified
Plans. Except as set forth on BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.12.2,
no Brookline Bancorp Qualified Plan is a defined benefit pension plan which
is subject to Title IV of ERISA. All accrued contributions and other
payments required to be made by Brookline Bancorp or each Brookline Bancorp
Subsidiary to any Compensation and Benefit Plan through the date hereof,
have been made or reserves adequate for such purposes as of the date
hereof, have been set aside therefor and reflected in Brookline Bancorp's
consolidated financial statements to the extent required by GAAP and
Brookline Bancorp and its Subsidiaries have expensed and accrued as a
liability the present value of future benefits under each applicable
Compensation and Benefit Plan for financial reporting purposes to the
extent required by GAAP. Neither Brookline Bancorp nor any Brookline
Bancorp Subsidiary is in material default in performing any of its
respective contractual obligations under any Compensation and Benefit Plans
or any related trust agreement or insurance contract, and there are no
material outstanding liabilities of any such Plan other than liabilities
for benefits to be paid to participants in such Plan and their
beneficiaries in accordance with the terms of such Plan. Neither Brookline
Bancorp nor any of its Subsidiaries has engaged in a transaction, or
omitted to take any action, with respect to any Compensation and Benefit
Plan that would reasonably be expected to subject Brookline Bancorp or any
of its Subsidiaries to an unpaid tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA.
5.12.3. No liability, other than PBGC premiums arising in the
ordinary course of business, has been or is expected by Brookline Bancorp
or any of its Subsidiaries to be incurred with respect to any Compensation
and Benefit Plan which is a defined benefit plan subject to Title IV of
ERISA ("Brookline Bancorp Defined Benefit Plan"), or with respect to any
"single-employer plan" (as defined in Section 4001(a) of ERISA) currently
or formerly maintained by Brookline Bancorp or any entity which is
considered one employer with Brookline Bancorp under Section 4001(b)(1) of
ERISA or Section 414 of the Code (an "ERISA Affiliate") (such plan
hereinafter referred to as an "ERISA Affiliate Plan"). No Brookline Bancorp
Defined Benefit Plan had an "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, as of the last day of the end
of the most recent plan year ending prior to the date hereof. The net fair
market value of the assets of each Brookline Bancorp Defined Benefit Plan
exceeds the actuarial present value of the accumulated plan benefits
guaranteed under Section 4022 of ERISA as of the end of the most recent
plan year ending prior to the date hereof for which Brookline Bancorp has
completed actuarial reports that have been filed with the Internal Revenue
Service. There is not currently pending with the PBGC any filings with
respect to any reportable event under Section 4043 of ERISA nor has any
reportable event occurred as to which a filing is required and has not been
made (other than as might be required with respect to this Agreement and
transactions contemplated thereby). Neither Brookline Bancorp nor any ERISA
Affiliate has contributed to any "multi-employer plan," as defined in
Section 3(37) of ERISA, on or after September 26, 1980. Neither Brookline
Bancorp nor any of its Subsidiaries has provided, or is required to
provide, security to any Brookline Bancorp Defined Benefit Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code
42
or has taken any action, or omitted to take any action, that has resulted,
or would reasonably be expected to result in the imposition of a lien under
Section 412(n) of the Code or pursuant to ERISA. Neither Brookline Bancorp
nor any ERISA Affiliate nor any Brookline Bancorp Compensation and Benefit
Plan, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in a transaction in connection with which any of the
aforesaid persons or entities would reasonably be expected to be subject to
either a civil liability or penalty pursuant to Section 409, 502(i) or
502(l) of ERISA or a tax imposed pursuant to Chapter 43 of the Code. To the
Knowledge of Brookline Bancorp, there is no pending investigation or
enforcement action by any Bank Regulator with respect to any Compensation
and Benefit Plan or any ERISA Affiliate Plan. There is no pending or, to
the best knowledge of Brookline Bancorp, threatened litigation or pending
claim (other than individual benefit claims made in the ordinary course) by
or on behalf of or against any of Compensation and Benefit Plans (or with
respect to the administration of any of such Plans) now or heretofore
maintained by Brookline Bancorp or any Brookline Bancorp Subsidiary which
allege violations of applicable state or federal law or the terms of the
Plan which are reasonably likely to result in a liability on the part of
Brookline Bancorp or any of its Subsidiaries or any such Plan.
5.12.4. All Compensation and Benefit Plans that are group
health plans have been operated in compliance with the group health plan
continuation requirements of Section 4980B of the Code and Sections 601-609
of ERISA and with the certification of prior coverage and other
requirements of Sections 701-702 and 711-713 of ERISA.
5.13. Environmental Matters.
5.13.1. To the Knowledge of Brookline Bancorp, neither the
conduct nor operation of their business nor any condition of any property
currently or previously owned or operated by any of them (including,
without limitation, in a fiduciary or agency capacity), or on which any of
them holds a lien, results or resulted in a violation of any Environmental
Laws that is reasonably likely to impose a material liability (including a
material remediation obligation) upon Brookline Bancorp or any of Brookline
Bancorp Subsidiary. To the Knowledge of Brookline Bancorp, no condition has
existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably
likely to result in any material liability to Brookline Bancorp or any
Brookline Bancorp Subsidiary by reason of any Environmental Laws. Neither
Brookline Bancorp nor any Brookline Bancorp Subsidiary has received any
written notice from any Person that Brookline Bancorp or any Brookline
Bancorp Subsidiary or the operation or condition of any property ever
owned, operated, or held as collateral or in a fiduciary capacity by any of
them are currently in violation of or otherwise are alleged to have
financial exposure under any Environmental Laws or relating to Materials of
Environmental Concern (including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
Materials of Environmental Concern at, on, beneath, or originating from any
such property) for which a material liability is reasonably likely to be
imposed upon Brookline Bancorp or any Brookline Bancorp Subsidiary.
5.13.2. There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
the Brookline Bancorp's Knowledge, threatened, before any court,
governmental agency or other forum against Brookline Bancorp or any
Brookline Bancorp Subsidiary (x) for alleged noncompliance (including by
any predecessor)
43
with, or liability under, any Environmental Law or (y) relating to the
presence of or release into the environment of any Materials of
Environmental Concern (as defined herein), whether or not occurring at or
on a site owned, leased or operated by any of the Brookline Bancorp.
5.14. Loan Portfolio.
5.14.1. The allowance for loan losses reflected in Brookline
Bancorp's audited consolidated statement of condition at December 31, 2003
was, and the allowance for loan losses shown on the balance sheets in
Brookline Bancorp's Securities Documents for periods ending after December
31, 2003 were or will be, adequate, as of the dates thereof, under GAAP.
5.14.2. BROOKLINE BANCORP DISCLOSURE SCHEDULE 5.14.2 sets
forth a listing, as of the most recently available date, all loans of
Brookline Bancorp and any Brookline Bancorp Subsidiary (1) that are
contractually past due 90 days or more in the payment of principal and/or
interest, (2) that are on non-accrual status, (3) that as of the date of
this Agreement are classified as "Other Loans Specially Mentioned",
"Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Watch list" or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan and
the identity of the obligor thereunder, (4) where a reasonable doubt exists
as to the timely future collectability of principal and/or interest,
whether or not interest is still accruing or the loans are less than 90
days past due, (5) where the interest rate terms have been reduced and/or
the maturity dates have been extended subsequent to the agreement under
which the loan was originally created due to concerns regarding the
borrower's ability to pay in accordance with such initial terms, or (6)
where a specific reserve allocation exists in connection therewith; and all
assets classified by Brookline Bancorp or any Brookline Bancorp Subsidiary
as real estate acquired through foreclosure or in lieu of foreclosure,
including in-substance foreclosures, and all other assets currently held
that were acquired through foreclosure or in lieu of foreclosure.
DISCLOSURE SCHEDULE 5.14.2 may exclude any individual loan with a principal
outstanding balance of less than $100,000.
5.14.3. All loans receivable (including discounts) and accrued
interest entered on the books of Brookline Bancorp and each Brookline
Bancorp Subsidiary arose out of bona fide arm's-length transactions, were
made for good and valuable consideration in the ordinary course of
business, and the notes or other evidences of indebtedness with respect to
such loans (including discounts) are true and genuine and are what they
purport to be.
5.14.4. The notes and other evidences of indebtedness
evidencing the loans described above, and all pledges, mortgages, deeds of
trust and other collateral documents or security instruments relating
thereto are, in all material respects, valid, true and genuine, and what
they purport to be.
5.15. Securities Documents.
Brookline Bancorp has made available to MFI copies of its (i) annual
report on Form 10-K for the year ended December 31, 2003, (ii) quarterly
report on Form 10-Q for the quarter ended March 31, 2004 and (iii) proxy
materials used or for use in connection with its meeting of
44
stockholders held in 2004. Such reports and such proxy materials complied,
at the time filed with the SEC, in all material respects, with the
Securities Laws.
5.16. Deposits.
None of the deposits of any Brookline Bancorp Subsidiary is a
"brokered deposit" as defined in 12 C.F.R. Section 337.6(a)(2).
5.17. Antitakeover Provisions Inapplicable.
The transactions contemplated by this Agreement are not subject to
the requirements of any "moratorium," "control share," "fair price,"
"affiliate transactions," "business combination" or other antitakeover laws
and regulations of any state, including the provisions of Section 203 of
the DGCL applicable to Brookline Bancorp or any Brookline Bancorp
Subsidiary.
5.18. Brokers, Finders and Financial Advisors.
Neither Brookline Bancorp nor any Brookline Bancorp Subsidiary, nor
any of their respective officers, directors, employees or agents, has
employed any broker, finder or financial advisor in connection with the
transactions contemplated by this Agreement, or incurred any liability or
commitment for any fees or commissions to any such person in connection
with the transactions contemplated by this Agreement, except for the
retention of ▇▇▇▇ ▇▇▇▇ & Co. by Brookline Bancorp and the fee payable
pursuant thereto.
5.19. Brookline Bancorp Common Stock
The shares of Brookline Bancorp Common Stock to be issued pursuant to
this Agreement, when issued in accordance with the terms of this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable and
subject to no preemptive rights.
5.20. Material Contracts; Leases, Defaults.
Neither Brookline Bancorp nor any Brookline Bancorp Subsidiary is a
party to or subject to: (i) any collective bargaining agreement with any
labor union relating to employees of Brookline Bancorp or any Brookline
Bancorp Subsidiary; nor (ii) any agreement which by its terms limits the
payment of dividends by Brookline Bancorp or any Brookline Bancorp
Subsidiary.
5.21. Brookline Bancorp Information Supplied.
The information relating to Brookline Bancorp and any Brookline
Bancorp Subsidiary to be contained in the Merger Registration Statement, or
in any other document filed with any Bank Regulator or other Governmental
Entity in connection herewith, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made,
not misleading. The Merger Registration Statement will comply with the
provisions of the Exchange Act and the rules and regulations thereunder and
the provisions of the Securities Act and the rules and regulations
thereunder, except that no representation or warranty is made by Brookline
Bancorp with respect
45
to statements made or incorporated by reference therein based on
information supplied by MFI specifically for inclusion or incorporation by
reference in the Merger Registration Statement.
ARTICLE VI
COVENANTS OF MFI
6.1. Conduct of Business.
6.1.1. Affirmative Covenants. During the period from the date
of this Agreement to the Effective Time, except with the written consent of
Brookline Bancorp, which consent will not be unreasonably withheld,
conditioned or delayed, MFI will, and it will cause each MFI Subsidiary to:
operate its business only in the usual, regular and ordinary course of
business; use reasonable efforts to preserve intact its business
organization and assets and maintain its rights and franchises; and
voluntarily take no action which would: (i) adversely affect the ability of
the parties to obtain the Regulatory Approvals or materially increase the
period of time necessary to obtain the Regulatory Approvals, or (ii)
adversely affect its ability to perform its covenants and agreements under
this Agreement.
6.1.2. Negative Covenants. MFI agrees that from the date of
this Agreement to the Effective Time, except as otherwise specifically
permitted or required by this Agreement, set forth in MFI DISCLOSURE
SCHEDULE 6.1.2, or consented to by Brookline Bancorp in writing (which
consent shall not be unreasonably withheld, conditioned or delayed), it
will not, and it will cause each of the MFI Subsidiaries not to:
(A) change or waive any provision of its Certificate of
Incorporation, Charter or Bylaws, except as required by law;
(B) change the number of authorized or issued shares of
its capital stock, issue any shares of MFI Common Stock that are held as
Treasury Shares as of the date of this Agreement, or issue or grant any
Right or agreement of any character relating to its authorized or issued
capital stock or any securities convertible into shares of such stock, make
any grant or award under the MFI Stock Benefit Plans, or split, combine or
reclassify any shares of capital stock, or declare, set aside or pay any
dividend or other distribution in respect of capital stock, or redeem or
otherwise acquire any shares of capital stock, except that (i) MFI may
issue shares of MFI Common Stock upon the valid exercise, in accordance
with the information set forth in MFI DISCLOSURE SCHEDULE 4.3.1, of
presently outstanding MFI Options issued under the MFI Stock Benefit Plans,
(ii) MFI may continue to pay its regular quarterly cash dividend of $0.115
per share with payment and record dates consistent with past practice
(provided the declaration of the last quarterly dividend by MFI prior to
the Effective Time and the payment thereof shall be coordinated with
Brookline Bancorp so that holders of MFI Common Stock do not receive
dividends on both MFI Common Stock and Brookline Bancorp Common Stock
received in the Merger in respect of such quarter or fail to receive a
dividend on at least one of the MFI Common Stock or Brookline Bancorp
Common Stock received in the Merger in respect of such quarter), (iii) any
MFI Subsidiary may pay dividends to its parent company (as permitted under
applicable law or regulations).
46
(C) enter into, amend in any material respect or
terminate any material contract or agreement (including without limitation
any settlement agreement with respect to litigation) except in the ordinary
course of business;
(D) other than as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(D), make application for the opening or closing of any, or open or
close any, branch or automated banking facility;
(E) grant or agree to pay any bonus, severance or
termination to, or enter into, renew or amend any employment agreement,
severance agreement and/or supplemental executive agreement with, or
increase in any manner the compensation or fringe benefits of, any of its
directors, officers or employees, except (i) as may be required pursuant to
commitments existing on the date hereof and set forth on MFI DISCLOSURE
SCHEDULES 4.9.1 and 4.13.1 or as required pursuant to Section 7.8 of this
Agreement, (ii) as to non-management employees, merit pay increases, of no
more than 5% individually, in the ordinary course of business consistent
with past practices, (iii) with respect to severance or termination pay or
benefits, pursuant to terminations of employment in the ordinary course of
business consistent with past practice, (iv) the payment by MFI or Medford
Co-operative immediately prior to the Effective Time of bonuses for
services rendered during calendar 2004, to the extent that these bonuses
are accrued in accordance with GAAP and provided that such bonuses are
consistent, as to amount (individually and in the aggregate) and persons
covered, with past practice, and (v) as otherwise contemplated by this
Agreement. Neither MFI nor any MFI Subsidiary shall hire or promote any
employee to a rank having a title of vice president or other more senior
rank or hire any new employee at an annual rate of compensation in excess
of $50,000, provided that a MFI Subsidiary may hire at-will, non-officer
employees to fill vacancies that may from time to time arise in the
ordinary course of business;
(F) enter into or, except as may be required by law,
materially modify any pension, retirement, stock option, stock purchase,
stock appreciation right, stock grant, savings, profit sharing, deferred
compensation, supplemental retirement, consulting, bonus, group insurance
or other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any of
its directors, officers or employees; or make any contributions to any
defined contribution or defined benefit plan not in the ordinary course of
business consistent with past practice, except (i) as may be required by
applicable law, or (ii) as otherwise contemplated by this Agreement;
(G) merge or consolidate MFI or any MFI Subsidiary with
any other corporation; sell or lease all or any substantial portion of the
assets or business of MFI or any MFI Subsidiary; make any acquisition of
all or any substantial portion of the business or assets of any other
Person other than in connection with foreclosures, settlements in lieu of
foreclosure, troubled loan or debt restructuring, or the collection of any
loan or credit arrangement between MFI, or any MFI Subsidiary, and any
other Person; enter into a purchase and assumption transaction with respect
to deposits and liabilities; incur deposit liabilities, other than
liabilities incurred in the ordinary course of business consistent with
past practice and in keeping with prevailing competitive rates; permit the
revocation or surrender by any MFI Subsidiary of its certificate of
authority to maintain, or file an application for the relocation of, any
existing branch office, or file an application for a certificate of
authority to establish a new branch office;
47
(H) except as permitted by Section 6.1.2(B) sell or
otherwise dispose of the capital stock of MFI or sell or otherwise dispose
of any asset of MFI or of any MFI Subsidiary other than in the ordinary
course of business consistent with past practice; except for transactions
with the FHLB, subject any asset of MFI or of any MFI Subsidiary to a lien,
pledge, security interest or other encumbrance (other than in connection
with deposits, repurchase agreements, bankers acceptances, "treasury tax
and loan" accounts established in the ordinary course of business,
including pledges in connection with acceptance of governmental deposits,
and transactions in "federal funds" and the satisfaction of legal
requirements in the exercise of trust powers) other than in the ordinary
course of business consistent with past practice; incur any indebtedness
for borrowed money (or guarantee any indebtedness for borrowed money),
except in the ordinary course of business consistent with past practice;
(I) take any action which would be reasonably expected
to result in any of the representations and warranties of MFI set forth in
this Agreement becoming untrue as of any date after the date hereof or in
any of the conditions set forth in Article IX hereof not being satisfied,
except in each case as may be required by applicable law;
(J) change its method, practice or principle of
accounting, except as may be required from time to time by GAAP (without
regard to any optional early adoption date) or any Bank Regulator
responsible for regulating MFI or Medford Co-operative or regulatory
accounting principles;
(K) waive, release, grant or transfer any material
rights of value or modify or change in any material respect any existing
material agreement or indebtedness to which MFI or any MFI Subsidiary is a
party;
(L) purchase any equity securities, or purchase any
other securities except securities (i) rated "A" or higher by either
Standard & Poor's Ratings Services or ▇▇▇▇▇'▇ Investors Service, (ii)
having a face amount of not more than $1,000,000, (iii) with a weighted
average life of not more than two years and (iv) otherwise in the ordinary
course of business consistent with past practice;
(M) except as specifically provided below, and except
for commitments issued prior to the date of this Agreement which have not
yet expired and which have been disclosed on the MFI DISCLOSURE SCHEDULE
6.1.2(M), and the renewal of existing lines of credit, make any new loan or
other credit facility commitment (including without limitation, loan
participations, lines of credit and letters of credit) to any borrower or
group of affiliated borrowers in excess of $200,000 in the aggregate for
unsecured loans and $500,000 in the aggregate for secured loans. In
addition, the following require the prior consent of Brookline Bancorp: a
residential loan of $500,000 or greater (except for residential loans sold
as to which there is an agreement to sell on a non-recourse basis); a
construction loan of $500,000 or greater; an unsecured loan of $25,000 or
greater; a secured commercial business loan of $250,000 or greater; and a
commercial real estate loan of $500,000 or greater; or purchase, invest in
or originate any finance lease or any loan secured by a lease of personal
property;
48
(N) except as set forth on the MFI DISCLOSURE SCHEDULE
6.1.2(N), enter into, renew, extend or modify any other transaction (other
than a deposit transaction) with any Affiliate;
(O) enter into any futures contract, option, interest
rate caps, interest rate floors, interest rate exchange agreement or other
agreement or take any other action for purposes of hedging the exposure of
its interest-earning assets and interest-bearing liabilities to changes in
market rates of interest;
(P) except for the execution of this Agreement, and
actions taken or which will be taken in accordance with this Agreement and
performance thereunder, take any action that would give rise to a right of
payment to any individual under any employment agreement;
(Q) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(Q), make any change in policies in existence on the date of this
Agreement with regard to: the extension of credit, or the establishment of
reserves with respect to the possible loss thereon or the charge off of
losses incurred thereon; investments; asset/liability management; or other
material banking policies in any material respect except as may be required
by changes in applicable law or regulations, GAAP or regulatory accounting
principles or by a Bank Regulator;
(R) except for the execution of this Agreement, and the
transactions contemplated therein, take any action that would give rise to
an acceleration of the right to payment to any individual under any MFI
Compensation and Benefit Plan;
(S) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(S), make any capital expenditures in excess of $25,000 individually
or $50,000 in the aggregate, other than pursuant to binding commitments
existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair;
(T) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(T), purchase or otherwise acquire, or sell or otherwise dispose of,
any assets or incur any liabilities other than in the ordinary course of
business consistent with past practices and policies;
(U) sell any participation interest in any loan (other
than sales of loans secured by one- to four-family real estate that are
consistent with past practice and other than as listed on MFI DISCLOSURE
SCHEDULE 6.1.2(v)) unless Brookline Bank has been given the first
opportunity and a reasonable time to purchase any loan participation being
sold, or purchase any participation interest in any loan other than
purchases of participation interests from Brookline Bancorp;
(V) except as set forth in MFI DISCLOSURE SCHEDULE
6.1.2(V), undertake or enter into any lease, contract or other commitment
for its account, other than in the normal course of providing credit to
customers as part of its banking business, involving a payment by MFI or
any MFI Subsidiary of more than $100,000 annually, or containing any
financial commitment extending beyond 12 months from the date hereof;
49
(W) pay, discharge, settle or compromise any claim,
action, litigation, arbitration or proceeding, other than any such payment,
discharge, settlement or compromise in the ordinary course of business
consistent with past practice that involves solely money damages in the
amount not in excess of $25,000 individually or $50,000 in the aggregate,
and that does not create negative precedent for other pending or potential
claims, actions, litigation, arbitration or proceedings;
(X) foreclose upon or take a deed or title to any
commercial real estate without first conducting a Phase I environmental
assessment of the property or foreclose upon any commercial real estate if
such environmental assessment indicates the presence of a Materials of
Environmental Concern;
(Y) purchase or sell any mortgage loan servicing rights
other than in the ordinary course of business consistent with past
practice;
(Z) issue any broadly distributed communication of a
general nature to employees (including general communications relating to
benefits and compensation) without prior consultation with Brookline
Bancorp and, to the extent relating to post-Closing employment, benefit or
compensation information without the prior consent of Brookline Bancorp
(which shall not be unreasonably withheld, conditioned or delayed) or issue
any broadly distributed communication of a general nature to customers
without the prior approval of Brookline Bancorp (which shall not be
unreasonably withheld), except as required by law or for communications in
the ordinary course of business consistent with past practice that do not
relate to the Merger or other transactions contemplated hereby; or
(AA) agree to do any of the foregoing.
6.2. Current Information.
6.2.1. During the period from the date of this Agreement to
the Effective Time, MFI will cause one or more of its representatives to
confer with representatives of Brookline Bancorp and report the general
status of its ongoing operations at such times as Brookline Bancorp may
reasonably request. MFI will promptly notify Brookline Bancorp of any
material change in the normal course of its business or in the operation of
its properties and, to the extent permitted by applicable law, of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the
threat of material litigation involving MFI or any MFI Subsidiary. Without
limiting the foregoing, senior officers of Brookline Bancorp and MFI shall
meet on a reasonably regular basis (expected to be at least monthly) to
review the financial and operational affairs of MFI and its Subsidiaries,
in accordance with applicable law, and MFI shall give due consideration to
Brookline Bancorp's input on such matters, with the understanding that,
notwithstanding any other provision contained in this Agreement, neither
Brookline Bancorp nor any Brookline Bancorp Subsidiary shall under any
circumstance be permitted to exercise control of MFI or any MFI Subsidiary
prior to the Effective Time.
6.2.2. Medford Co-operative and Brookline Bank shall meet on a
regular basis to discuss and plan for the conversion of data processing and
related electronic informational
50
systems of Medford Co-operative to those used by Brookline Bank, which
planning shall include, but not be limited to, discussion of the possible
termination by Medford Co-operative of third-party service provider
arrangements effective at the Effective Time or at a date thereafter, non-
renewal of personal property leases and software licenses used by Medford
Co-operative in connection with its systems operations, retention of
outside consultants and additional employees to assist with the conversion,
and outsourcing, as appropriate, of proprietary or self-provided system
services, it being understood that neither Medford Co-operative shall be
obligated to take any such action prior to the Effective Time and, unless
Medford Co-operative otherwise agrees and provided it is permitted by
applicable law, no conversion shall take place prior to the Effective Time.
In the event that Medford Co-operative takes, at the request of Brookline
Bank, any action relative to third parties to facilitate the conversion
that results in the imposition of any termination fees or charges,
Brookline Bank shall indemnify Medford Co-operative for any such fees and
charges, and the costs of reversing the conversion process, if for any
reason the Merger is not consummated for any reason other than a breach of
this Agreement by MFI, or a termination of this Agreement under Section
11.1.8 or 11.1.9.
6.2.3. MFI shall provide Brookline Bancorp, within fifteen
(15) business days of the end of each calendar month, a written list of
nonperforming assets (the term "nonperforming assets," for purposes of this
subsection, means (i) loans that are "troubled debt restructuring" as
defined in Statement of Financial Accounting Standards No. 15, "Accounting
by Debtors and Creditors for Troubled Debt Restructuring," (ii) loans on
nonaccrual, (iii) real estate owned, (iv) all loans ninety (90) days or
more past due) as of the end of such month and (iv) and impaired loans. On
a monthly basis, MFI shall provide Brookline Bancorp with a schedule of all
loan approvals, which schedule shall indicate the loan amount, loan type
and other material features of the loan.
6.2.4. MFI shall promptly inform Brookline Bancorp upon
receiving notice of any legal, administrative, arbitration or other
proceedings, demands, notices, audits or investigations (by any federal,
state or local commission, agency or board) relating to the alleged
liability of MFI or any MFI Subsidiary under any labor or employment law.
6.3. Access to Properties and Records.
Subject to Section 12.1, MFI shall permit Brookline Bancorp
reasonable access upon reasonable notice to its properties and those of the
MFI Subsidiaries, and shall disclose and make available to Brookline
Bancorp during normal business hours all of its books, papers and records
relating to the assets, properties, operations, obligations and
liabilities, including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' (other than
minutes that discuss any of the transactions contemplated by this Agreement
or any other subject matter MFI reasonably determines should be treated as
confidential) and stockholders' meetings, organizational documents, Bylaws,
material contracts and agreements, filings with any regulatory authority,
litigation files, plans affecting employees, and any other business
activities or prospects in which Brookline Bancorp may have a reasonable
interest; provided, however, that MFI shall not be required to take any
action that would provide access to or to disclose information where such
access or disclosure, in MFI's reasonable judgment, would interfere with
the normal conduct of MFI's business or would violate or prejudice the
rights or business interests or confidences of any customer or other person
or would result in the waiver
51
by it of the privilege protecting communications between it and any of its
counsel or contravene any applicable law. MFI shall provide and shall
request its auditors to provide Brookline Bancorp with such historical
financial information regarding it (and related audit reports and consents)
as Brookline Bancorp may reasonably request for Securities Law disclosure
purposes. Brookline Bancorp shall use commercially reasonable efforts to
minimize any interference with MFI's regular business operations during any
such access to MFI's property, books and records. MFI and each MFI
Subsidiary shall permit Brookline Bancorp, at Brookline Bancorp's expense,
to cause a "phase I environmental audit" and a "phase II environmental
audit" to be performed at any physical location owned or, to the extent
permitted under the applicable lease agreement, occupied by MFI or any MFI
Subsidiary.
6.4. Financial and Other Statements.
6.4.1. Promptly upon receipt thereof, MFI will furnish to
Brookline Bancorp copies of each annual, interim or special audit of the
books of MFI and the MFI Subsidiaries made by its independent accountants
and copies of all internal control reports submitted to MFI by such
accountants, or by any other accounting firm rendering internal audit
services, in connection with each annual, interim or special audit of the
books of MFI and the MFI Subsidiaries made by such accountants.
6.4.2. As soon as reasonably available, but in no event later
than five business days after such documents are filed with the SEC, MFI
will deliver to Brookline Bancorp the Securities Documents filed by it with
the SEC under the Securities Laws other than those Securities Documents
that are available publicly through the SEC's ▇▇▇▇▇ data base. Within 25
days after the end of each month, MFI will deliver to Brookline Bancorp a
consolidated balance sheet and a consolidated statement of operations,
without related notes, for such month prepared in accordance with current
financial reporting practices, as well as a month-end and year to date
comparison to budget.
6.4.3. With reasonable promptness, MFI will furnish to
Brookline Bancorp such additional financial data that MFI possesses and as
Brookline Bancorp may reasonably request, including without limitation,
detailed monthly financial statements and loan reports.
6.5. Maintenance of Insurance.
MFI shall use commercially reasonable efforts to maintain, and to
cause the MFI Subsidiaries to maintain, insurance in such amounts as are
reasonable to cover such risks as are customary in relation to the
character and location of its properties and the nature of its business,
with such coverage and in such amounts not less than that currently
maintained by MFI and the MFI Subsidiaries and set forth in MFI DISCLOSURE
SCHEDULE 4.10.3. MFI will promptly inform Brookline Bancorp if MFI or any
MFI Subsidiary receives notice from an insurance carrier that (i) an
insurance policy will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to any policy of
insurance will be substantially increased.
52
6.6. Disclosure Supplements.
From time to time prior to the Effective Time, MFI will promptly
supplement or amend the MFI DISCLOSURE SCHEDULE delivered in connection
herewith with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required
to be set forth or described in such MFI DISCLOSURE SCHEDULE or which is
necessary to correct any information in such MFI DISCLOSURE SCHEDULE which
has been rendered materially inaccurate thereby. No supplement or amendment
to such MFI DISCLOSURE SCHEDULE shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Article IX.
Notwithstanding anything to the contrary contained herein, no failure to
provide any such supplement or amendment to the MFI DISCLOSURE SCHEDULE
shall constitute the failure of any condition set forth in Article IX to be
satisfied unless the underlying breach or inaccuracy would individually or
collectively result in the failure of a condition set forth in Article IX
to be satisfied.
6.7. Consents and Approvals of Third Parties.
MFI and Medford Co-operative shall use all commercially reasonable
efforts, and shall cause each MFI Subsidiary to use all commercially
reasonable efforts to obtain as soon as practicable all consents and
approvals of any other persons necessary or desirable for the consummation
of the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, MFI shall utilize the services of a
professional proxy soliciting firm to provide assistance in obtaining the
stockholder vote required to be obtained by it hereunder.
6.8. All Reasonable Efforts.
Subject to the terms and conditions herein provided, MFI agrees to
use, and agrees to cause Medford Co-operative to use, all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
6.9. Failure to Fulfill Conditions.
In the event that MFI or Medford Co-operative determines that a
condition to its obligation to complete the Merger cannot be fulfilled and
that it will not waive that condition, it will promptly notify Brookline
Bancorp.
6.10. No Solicitation.
From and after the date hereof until the termination of this
Agreement, neither MFI, nor any MFI Subsidiary, nor any of their respective
officers, directors, employees, representatives, agents and affiliates
(including, without limitation, any investment banker, attorney or
accountant retained by MFI or any of the MFI Subsidiaries), will, directly
or indirectly, initiate, solicit or knowingly encourage (including by way
of furnishing non-public information or assistance) 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 in
furtherance of such inquiries or to obtain an
53
Acquisition Proposal or agree to or endorse any Acquisition Proposal, or
authorize or permit any of its officers, directors, or employees or any of
its Subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative retained by any of its Subsidiaries to
take any such action, and MFI shall notify Brookline Bancorp 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 MFI or any
of its Subsidiaries or any of its officers, directors or employees, or, to
MFI's Knowledge, investment bankers, financial advisors, attorneys,
accountants or other representatives of MFI may receive relating to any of
such matters, provided, however, that nothing contained in this Section
6.10 shall prohibit the Board of Directors of MFI from (i) complying with
its disclosure obligations under federal or state law; or (ii) furnishing
information to, or entering into discussions or negotiations with, any
person or entity that makes an unsolicited Acquisition Proposal, if, and
only to the extent that, (A) the Board of Directors of MFI determines in
good faith (after consultation with its financial and legal advisors),
taking into account all legal, financial and regulatory aspects of the
proposal and the Person making the proposal, that such proposal, if
consummated, is reasonably likely to result in a transaction more favorable
to MFI's stockholders from a financial point of view than the Merger; (B)
the Board of Directors of MFI determines in good faith (after consultation
with its financial and legal advisors) that the failure to furnish
information to or enter into discussions with such Person would likely
cause the Board of Directors to breach its fiduciary duties to stockholders
under applicable law; (C) such Acquisition Proposal was not solicited by
MFI and did not otherwise result from a breach of this Section 6.10 by MFI
(such proposal that satisfies clauses (A), (B) and (C) being referred to
herein as a "Superior Proposal"); (D) MFI promptly notifies Brookline
Bancorp of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought
to be initiated or continued with MFI or any of its representatives
indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any inquiries, proposals or offers, and
receives from such Person an executed confidentiality agreement in form and
substance identical in all material respects to the confidentiality
agreements that MFI and Brookline Bancorp entered into; and (E) the MFI
Stockholders Meeting has not occurred. For purposes of this Agreement,
"Acquisition Proposal" shall mean any proposal or offer as to any of the
following (other than the transactions contemplated hereunder) involving
MFI or any of its Subsidiaries: (i) any merger, consolidation, share
exchange, business combination, or other similar transactions; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of
25% or more of the assets of MFI and the MFI Subsidiaries, taken as a
whole, in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 25% or more of the outstanding shares of
capital stock of MFI 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.
6.11. Reserves and Merger-Related Costs.
On or before the Effective Date, to the extent consistent with GAAP,
the rules and regulations of the SEC and applicable banking laws and
regulations, MFI shall establish such additional accruals and reserves as
may be necessary to conform the accounting reserve practices and methods
(including credit loss practices and methods) of MFI to those of Brookline
Bancorp (as such practices and methods are to be applied to MFI from and
after the Closing Date) and Brookline Bancorp's plans with respect to the
conduct of the business of MFI following the
54
Merger and otherwise to reflect Merger-related expenses and costs incurred
by MFI, provided, however, that MFI shall not be required to take such
action unless Brookline Bancorp agrees in writing that all conditions to
closing set forth in Section 9.2 have been satisfied or waived (except for
the expiration of any applicable waiting periods). No accrual or reserve
made by MFI or any MFI Subsidiary pursuant to this subsection, or any
litigation or regulatory proceeding arising out of any such accrual or
reserve, shall constitute or be deemed to be a breach or violation of any
representation, warranty, covenant, condition or other provision of this
Agreement or to constitute a termination event within the meaning of
Section 11.1.2. No action shall be required to be taken by MFI pursuant to
this Section 6.11 if, in the opinion of MFI's independent auditors, such
action would contravene GAAP.
6.12. Board of Directors and Committee Meetings.
MFI and the MFI Subsidiaries shall permit a representative of
Brookline Bancorp to attend any meeting of their Board of Directors, and
shall permit no more than two (2) representatives of Brookline Bancorp to
attend any meeting of their loan (security) committee, as an observer (the
"Observer"), provided that neither MFI nor any MFI Subsidiary shall be
required to permit the Observer to remain present during any confidential
discussion of this Agreement and the transactions contemplated hereby or
any third party proposal to acquire control of MFI or during any other
matter that the respective Board of Directors has been advised of by
counsel that such attendance by the Observer may violate a confidentiality
obligation or fiduciary duty or any legal, regulatory or Nasdaq
requirements.
ARTICLE VII
COVENANTS OF BROOKLINE BANCORP
7.1. Conduct of Business.
During the period from the date of this Agreement to the Effective
Time, except with the written consent of MFI, which consent will not be
unreasonably withheld, Brookline Bancorp will, and it will cause each
Brookline Bancorp Subsidiary to: conduct its business only in the usual,
regular and ordinary course consistent with past practices; use reasonable
efforts to preserve intact its business organization and assets and
maintain its rights and franchises; and voluntarily take no action that
would: (i) adversely affect the ability of the parties to obtain the
Regulatory Approvals or materially increase the period of time necessary to
obtain such approvals; (ii) adversely affect its ability to perform its
covenants and agreements under this Agreement; or (iii) result in the
representations and warranties contained in Article V of this Agreement not
being true and correct on the date of this Agreement or at any future date
on or prior to the Closing Date or in any of the conditions set forth in
Article IX hereof not being satisfied.
7.2. Current Information and Consultation.
During the period from the date of this Agreement to the Effective
Time, Brookline Bancorp will cause one or more of its representatives to
confer with representatives of MFI and report the general status of its
financial condition, operations and business and matters relating to the
completion of the transactions contemplated hereby, at such times as MFI
may reasonably
55
request. Brookline Bancorp will promptly notify MFI, to the extent
permitted by applicable law, of any governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material litigation
involving Brookline Bancorp and any Brookline Bancorp Subsidiary. Brookline
Bancorp shall be reasonably responsive to requests by MFI for access to
such information and personnel regarding Brookline Bancorp and its
Subsidiaries as may be reasonably necessary for MFI to confirm that the
representations and warranties of Brookline Bancorp contained herein are
true and correct and that the covenants of Brookline Bancorp contained
herein have been performed in all material respects; provided, however,
that Brookline Bancorp shall not be required to take any action that would
provide access to or to disclose information where such access or
disclosure, in Brookline Bancorp's reasonable judgment, would interfere
with the normal conduct of Brookline Bancorp's business or would violate or
prejudice the rights or business interests or confidences of any customer
or other person or would result in the waiver by it of the privilege
protecting communications between it and any of its counsel.
7.3. Financial and Other Statements.
As soon as reasonably available, but in no event later than the date
such documents are filed with the SEC, Brookline Bancorp will deliver to
MFI the Securities Documents filed by it with the SEC under the Securities
Laws other than those Securities Documents that are available publicly
though the SEC's ▇▇▇▇▇ data base. Brookline Bancorp will advise MFI
promptly of the receipt of any examination report of any Bank Regulator
with respect to the condition or activities of Brookline Bancorp or any of
the Brookline Bancorp Subsidiaries.
7.4. Disclosure Supplements.
From time to time prior to the Effective Time, Brookline Bancorp will
promptly supplement or amend the BROOKLINE BANCORP DISCLOSURE SCHEDULE
delivered in connection herewith with respect to any matter hereafter
arising which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such
BROOKLINE BANCORP DISCLOSURE SCHEDULE or which is necessary to correct any
information in such BROOKLINE BANCORP DISCLOSURE SCHEDULE which has been
rendered inaccurate thereby. No supplement or amendment to such BROOKLINE
BANCORP DISCLOSURE SCHEDULE shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Article IX.
Notwithstanding anything to the contrary contained herein, no failure to
provide any such supplement or amendment to the BROOKLINE BANCORP
DISCLOSURE SCHEDULE shall constitute the failure of any condition set forth
in Article IX to be satisfied unless the underlying breach or inaccuracy
would individually or collectively result in the failure of a condition set
forth in Article IX to be satisfied.
7.5. Consents and Approvals of Third Parties.
Brookline Bancorp and Brookline Bank shall use all commercially
reasonable efforts to obtain as soon as practicable all consents and
approvals of any other Persons necessary or desirable for the consummation
of the transactions contemplated by this Agreement.
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7.6. All Reasonable Efforts.
Subject to the terms and conditions herein provided, Brookline
Bancorp agrees to use and agrees to cause Brookline Bank to use all
commercially reasonable efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Subject to the advice of its
counsel, Brookline Bancorp shall execute any supplemental indentures and
take such other actions as shall be required pursuant to the Indenture,
dated April 10, 2002 between MFI, as issuer, and Wilmington Trust Company,
as trustee, and the Indenture, dated February 14, 2003, between MFI, as
issuer, and The Bank of New York, as trustee, in order for the transactions
contemplated by this Agreement not to conflict with or result in a breach
of such Indentures.
7.7. Failure to Fulfill Conditions.
In the event that Brookline Bancorp determines that a condition to
its obligation to complete the Merger cannot be fulfilled and that it will
not waive that condition, it will promptly notify MFI.
7.8. Employee Benefits.
7.8.1. Brookline Bancorp agrees that it will honor all
Compensation and Benefit Plans in accordance with their terms as in effect
immediately before the Effective Time, subject to any amendment or
termination thereof that may be required or permitted by this Agreement.
Following the Effective Time, Brookline Bancorp shall provide Continuing
Employees (as defined below in Section 7.8.6) with compensation and
benefits that are, in the aggregate, substantially similar to the
compensation and benefits provided to similarly situated Brookline Bancorp
employees (as of the date any such compensation or benefit is provided).
All MFI Employees who become participants in a Brookline Bancorp
Compensation and Benefit Plan shall, for purposes of determining
eligibility for and for any applicable vesting periods of such employee
benefits only (and not for benefit accrual purposes) be given credit for
service as an employee of MFI or any MFI Subsidiary or any predecessor
thereto prior to the Effective Time, provided, however, that credit for
prior service shall not be given under the Brookline Bancorp ESOP, under
the Brookline Bancorp retiree health plan, or to the extent that providing
such credit would result in a duplication of benefits; and provided
further, that credit for prior service with MFI or a MFI Subsidiary shall
also be given for benefit accrual purposes under any vacation policy or
plan of Brookline Bancorp or under any severance compensation plan for
employees that Brookline Bancorp has or may adopt in the future. This
Agreement shall not be construed to limit the ability of Brookline Bancorp
or Brookline Bank to terminate the employment of any employee or to review
employee benefits programs from time to time, or to make such changes as
they deem appropriate, subject to the terms and conditions of such
programs, or to terminate any Compensation and Benefit Plan.
7.8.2. Subject to the occurrence of the Effective Time, the
Mystic ESOP shall be terminated immediately prior to and effective as of
the Effective Time (all shares held by the ESOP shall be converted into the
right to receive the Merger Consideration, as elected by the ESOP
participants), all outstanding Mystic ESOP indebtedness shall be repaid,
and the balance
57
of the shares and any other assets remaining in the Loan Suspense Account
(as such term is defined in the Mystic ESOP) shall be allocated and
distributed to Mystic ESOP participants (subject to the receipt of a
favorable determination letter from the IRS), as provided for in the Mystic
ESOP and unless otherwise required by applicable law. Prior to the
Effective Time, MFI, and following the Effective Time, Brookline Bancorp
shall use their respective best efforts in good faith to obtain such
favorable determination letter (including, but not limited to, making such
changes to the ESOP and the proposed allocations as may be requested by the
IRS as a condition to its issuance of a favorable determination letter).
MFI and following the Effective Time, Brookline Bancorp, will adopt such
amendments to the Mystic ESOP as may be reasonably required by the IRS as a
condition to granting such favorable determination letter on termination.
Neither MFI, nor following the Effective Time, Brookline Bancorp shall make
any distribution from the Mystic ESOP except as may be required by
applicable law until receipt of such favorable determination letter. In the
case of a conflict between the terms of this Section 7.8.2 and the terms of
the Mystic ESOP, the terms of the Mystic ESOP shall control however, in the
event of any such conflict, MFI before the Merger, and Brookline Bancorp
after the Merger, shall use their best efforts to cause the ESOP to be
amended to conform to the requirements of this Section.
7.8.3. The payments required to be made under the employment
agreements or change of control agreements between (i) MFI and/or Medford
Co-operative and (ii) the individuals listed on MFI DISCLOSURE SCHEDULE
7.8.3 shall be made by MFI or Medford Co-operative on the Closing Date
prior to the Effective Time (except as indicated below). MFI and/or Medford
Co-operative shall obtain from each individual listed in MFI DISCLOSURE
SCHEDULE 7.8.3 an agreement (a "Settlement Agreement"), substantially in
the form attached to BROOKLINE BANCORP DISCLOSURE SCHEDULE 7.8.3, to accept
in full settlement of his or her rights under the specified programs the
amounts and benefits determined under the individual's Settlement Agreement
and pay such amounts to such individuals who are employed as of the
Effective Time. Any officer or employee of MFI or Medford Co-operative who
is a party to a Settlement Agreement and who (i) is terminated other than
for cause, death or disability pursuant to the terms of the applicable
employment or change in control agreement, or (ii) resigns on or after the
Effective Date, shall be entitled to receive the benefits payable or to be
otherwise provided under such Settlement Agreement on the Closing Date (or
following the Closing Date if such termination (voluntary or involuntary)
is initially effective following the Closing Date), and Brookline Bancorp
agrees to provide the non-cash benefits provided in the Settlement
Agreement. If requested by Brookline Bancorp prior to December 1, 2004, all
or a portion of the cash payment to be made pursuant to one or more of the
Settlement Agreements referenced in this Section 7.8.3 shall be accelerated
and paid by MFI or Medford Co-operative prior to December 31, 2004,
provided, however, that the acceleration of such amounts shall not be
considered compensation, annual compensation or base cash compensation for
purposes of increasing any payment made under any such employment,
severance or change in control agreement to which such person is a party.
At the time of payment of the amounts set forth in the Settlement
Agreements set forth in BROOKLINE BANCORP DISCLOSURE SCHEDULE 7.8.3, each
executive shall enter into an acknowledgment and release, attached to said
Settlement Agreements as Appendix A, acknowledging that no further payments
are due under such sections (other than any continuation of insurance
benefits or corrective Section 280G indemnities to be provided under the
terms of the Settlement Agreements and applicable employment agreements)
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and releasing MFI, Medford Co-operative, Brookline Bancorp and Brookline
Bank from any and all claims arising thereunder.
7.8.4. Prior to the Effective Time, any shares reserved for
issuance pursuant to grants under the MFI RRP, which were not awarded to
eligible employees, eligible directors or eligible directors emeritus prior
to the execution of this Agreement, shall be cancelled and the MFI RRP
shall be terminated, effective as of the Effective Time.
7.8.5. If requested by Brookline Bancorp prior to December 1,
2004, MFI and/or Medford Co-operative agree to accelerate and pay in 2004,
the payments to be made to the non-employee directors under the Retirement
Plan for Non-Employee Directors in connection with their termination of
service at the Effective Time. If not so requested, MFI or Medford Co-
operative shall make all payments contemplated under the Retirement Plan
for Non-Employee Directors, as computed in accordance with the principles
described in the MFI DISCLOSURE SCHEDULE 4.13.7, to all non-employee
directors on the Closing Date. MFI shall obtain an acknowledgment from each
non-employee director that the amounts paid thereunder are in full
satisfaction of the amounts due and owing thereunder, in the form attached
to BROOKLINE BANCORP DISCLOSURE SCHEDULE 7.8.5.
7.8.6. In the event of any termination of any MFI or Medford
Co-operative health plan or consolidation of any such plan with any
Brookline Bancorp or Brookline Bank health plan or to the extent that an
employee of MFI or any MFI Subsidiary who continues employment with
Brookline Bancorp or a Brookline Bancorp Subsidiary ("Continuing Employee")
participates in a Brookline Bancorp health plan, Brookline Bancorp shall
make available to such Continuing Employees and their dependents employer-
provided health coverage (including medical, dental, pharmaceutical and/or
vision benefits) on the same basis as it provides such coverage to
Brookline Bancorp employees. Unless a Continuing Employee affirmatively
terminates coverage under a MFI health plan prior to the time that such
Continuing Employee becomes eligible to participate in the Brookline
Bancorp health plan, no coverage of any of the Continuing Employees or
their dependents shall terminate under any of the MFI health plans prior to
the time such Continuing Employees and their dependents become eligible to
participate in the health plans, programs and benefits common to all
employees of Brookline Bancorp and their dependents. In the event of a
termination or consolidation of any MFI health plan, terminated MFI
employees and qualified beneficiaries will have the right to continued
coverage under group health plans of Brookline Bancorp in accordance with
Code Section 4980B(f), consistent with the provisions below. In the event
of any termination of any MFI health plan, or consolidation of any MFI
health plan with any Brookline Bancorp health plan, any coverage limitation
under the Brookline Bancorp health plan due to any pre-existing condition
shall be waived by the Brookline Bancorp health plan to the degree that
such condition was covered by the MFI health plan and such condition would
otherwise have been covered by the Brookline Bancorp health plan in the
absence of such coverage limitation. All MFI Employees who cease
participating in an MFI health plan and become participants in a comparable
Brookline Bancorp health plan shall receive credit for any co-payment and
deductibles paid under MFI's health plan for purposes of satisfying any
applicable deductible or out-of-pocket requirements under the Brookline
Bancorp health plan, upon substantiation, in a form satisfactory to
Brookline Bancorp that such co-payment and/or deductible has been
59
satisfied. Brookline Bancorp shall assume the retiree health plan of MFI
and each MFI Subsidiary and shall have the same rights and obligations
thereunder.
7.9. Directors and Officers Indemnification and Insurance.
7.9.1. Brookline Bancorp shall maintain, or shall cause
Brookline Bank to maintain, in effect for six years following the Effective
Time, the current directors' and officers' liability insurance policies
maintained by MFI (provided, that Brookline Bancorp may substitute therefor
policies of at least the same coverage containing terms and conditions
which are not materially less favorable) with respect to matters occurring
prior to the Effective Time; provided, however, that in no event shall
Brookline Bancorp be required to expend pursuant to this Section 7.9.1 more
than 200% of the annual cost currently expended by MFI with respect to such
insurance, as set forth in MFI DISCLOSURE SCHEDULE 7.9.1 (the "Maximum
Amount"); provided, further, that if the amount of the aggregate premium
necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, Brookline Bancorp shall maintain the most advantageous
policies of directors' and officers' insurance obtainable for an annual
premium equal to the Maximum Amount. In connection with the foregoing, MFI
agrees in order for Brookline Bancorp to fulfill its agreement to provide
directors and officers liability insurance policies for six years to
provide such insurer or substitute insurer with such reasonable and
customary representations as such insurer may request with respect to the
reporting of any prior claims.
7.9.2. In addition to Section 7.9.1, Brookline Bancorp shall
indemnify, defend and hold harmless each person who is now, or who has been
at any time before the date hereof or who becomes before the Effective
Time, an officer or director of MFI or an MFI Subsidiary (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement of or in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, or administrative (each a "Claim"),
in which an Indemnified Party is, or is threatened to be made, a party or
witness in whole or in part on or arising in whole or in part out of the
fact that such person is or was a director, officer or employee of MFI or a
MFI Subsidiary if such Claim pertains to any matter of fact arising,
existing or occurring before the Effective Time (including, without
limitation, the Merger and the other transactions contemplated hereby),
regardless of whether such Claim is asserted or claimed before, or after,
the Effective Time (the "Indemnified Liabilities"), to the fullest extent
permitted under Delaware law (to the extent not prohibited by Federal law),
and MFI's Certificate of Incorporation and Bylaws. Brookline Bancorp shall
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the fullest extent permitted by
Delaware law (to the extent not prohibited by Federal law) upon receipt of
an undertaking to repay such advance payments if the Indemnified Party
shall be adjudicated or determined to be not entitled to indemnification in
the manner set forth below. Any Indemnified Party wishing to claim
indemnification under this Section 7.9.2 upon learning of any Claim, shall
notify Brookline Bancorp (but the failure so to notify Brookline Bancorp
shall not relieve it from any liability which it may have under this
Section 7.9.2, except to the extent such failure materially prejudices
Brookline Bancorp) and shall, if required by applicable law, deliver to
Brookline Bancorp the undertaking referred to in the previous sentence.
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7.9.3. In the event that either Brookline Bancorp or any of
its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving bank or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Brookline
Bancorp shall assume the obligations set forth in this Section 7.9.
7.9.4. The obligations of Brookline Bancorp provided under
this Section 7.9 are intended to be enforceable against Brookline Bancorp
directly by the Indemnified Parties and their heirs and representatives and
shall be binding on all respective successors and permitted assigns of
Brookline Bancorp. Brookline Bancorp shall pay all reasonable costs,
including attorneys' fees, that may be incurred by any Indemnified Party in
successfully enforcing the indemnity and other obligations provided for in
this Section 7.9 to the fullest extent permitted under applicable law. The
rights of each Indemnified Party hereunder shall be in addition to any
other rights such Indemnified Party may have under applicable law.
7.10. Stock Listing.
Brookline Bancorp agrees to list on the Nasdaq (or such other
national securities exchange on which the shares of the Brookline Bancorp
Common Stock shall be listed as of the Closing Date), subject to official
notice of issuance, the shares of Brookline Bancorp Common Stock to be
issued in the Merger.
7.11. Stock and Cash Reserve.
Brookline Bancorp agrees at all times from the date of this Agreement
until the Merger Consideration has been paid in full to reserve a
sufficient number of shares of Brookline Bancorp Common Stock and to
maintain sufficient liquid accounts or borrowing capacity to fulfill its
obligations under this Agreement.
7.12. Section 16(b) Exemption.
Brookline Bancorp and MFI agree that, in order to most effectively
compensate and retain MFI Insiders (as defined below) in connection with
the Merger, both prior to and after the Effective Time, it is desirable
that MFI Insiders not be subject to a risk of liability under Section 16(b)
of the Exchange Act to the fullest extent permitted by applicable law in
connection with the conversion of shares of MFI Common Stock into shares of
Brookline Bancorp in the Merger, and for that compensatory and retentive
purpose agree to the provisions of this Section 7.12. Assuming that MFI
delivers to Brookline Bancorp the MFI Section 16 Information (as defined
below) in a timely fashion prior to the Effective Time, the Board of
Directors of Brookline Bancorp, or a committee of non-employee directors
thereof (as such term is defined for purposes of Rule 16b-3(d) under the
Exchange Act), shall reasonably promptly thereafter and in any event prior
to the Effective Time adopt a resolution providing in substance that the
receipt by the MFI Insiders (as defined below) of Brookline Bancorp Common
Stock in exchange for shares of MFI Common Stock, pursuant to the
transactions contemplated hereby and to the extent such securities are
listed in the MFI Section 16 Information, are intended to be exempt from
liability pursuant to Section 16(b) under the Exchange Act to the fullest
extent permitted by
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applicable law. "MFI Section 16 Information" shall mean information
accurate in all material respects regarding the MFI Insiders, the number of
shares of MFI Common Stock held by each such MFI Insider and expected to be
exchanged for Brookline Bancorp Common Stock in the Merger. "MFI Insiders"
shall mean those officers and directors of MFI who are subject to the
reporting requirements of Section 16(a) of the Exchange Act and who are
expected to be subject to Section 16(a) of the Exchange Act with respect to
Brookline Bancorp Common Stock subsequent to the Effective Time.
7.13. Communications to MFI Employees; Training
Brookline Bancorp and MFI agree that as promptly as practicable
following the execution of this Agreement, meetings with employees of MFI
and Medford Co-operative shall be held at such location as Brookline
Bancorp and MFI shall mutually agree, provided that representatives of MFI
shall be permitted to attend such meetings, to announce the proposed
Merger. Brookline Bancorp and MFI shall mutually agree as to the scope and
content of all communications to the employees of MFI and Medford Co-
operative. At mutually agreed upon times following execution of this
Agreement, representatives of Brookline Bancorp shall be permitted to meet
with the employees of MFI and Medford Co-operative to discuss employment
opportunities with Brookline Bancorp, provided that representatives of MFI
shall be permitted to attend any such meeting. From and after the
Determination Date, Brookline Bancorp shall also be permitted to conduct
training sessions outside of normal business hours or at other times as MFI
may agree, with the employees of MFI and Medford Co-operative and may
conduct such training seminars at any branch location of Medford Co-
operative; provided that Brookline Bancorp will in good faith attempt to
schedule such training sessions in a manner which does not unreasonably
interfere with Medford Co-operative's normal business operations. Brookline
Bancorp shall reimburse the employees of MFI and Medford Co-operative for
transportation costs to and from the locations where Brookline Bancorp
shall train such employees and compensate the employees of MFI and Medford
Co-operative or reimburse the employees of MFI and Medford Co-operative
respective applicable standard or overtime rates for the time spent in such
training.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1. Meeting of Stockholders.
8.1.1. MFI will (i) take all steps necessary to duly call,
give notice of, convene and hold a special meeting of its stockholders as
promptly as practicable after the Merger Registration Statement is declared
effective by the SEC, for the purpose of considering this Agreement and the
Merger (the "MFI Stockholders Meeting"), (ii) in connection with the
solicitation of proxies with respect to the MFI Stockholders Meeting, have
its Board of Directors recommend approval of this Agreement to the MFI
stockholders; and (iii) cooperate and consult with Brookline Bancorp with
respect to each of the foregoing matters. The Board of Directors of MFI may
fail to make such a recommendation referred to in clause (ii) above, or
withdraw, modify or change any such recommendation only if such Board of
Directors, after having consulted with and considered the advice of its
outside financial and legal advisors, has
62
determined that the making of such recommendation, or the failure so to
withdraw, modify or change its recommendation, would constitute a breach of
the fiduciary duties of such directors under applicable law.
8.2. Proxy Statement-Prospectus; Merger Registration Statement.
8.2.1. For the purposes (x) of registering Brookline Bancorp
Common Stock to be offered to holders of MFI Common Stock in connection
with the Merger with the SEC under the Securities Act and (y) of holding
the MFI Stockholders Meeting, Brookline Bancorp shall draft and prepare,
and MFI shall cooperate in the preparation of, the Merger Registration
Statement, including a proxy statement and prospectus satisfying all
applicable requirements of applicable state securities and banking laws,
and of the Securities Act and the Exchange Act, and the rules and
regulations thereunder (such proxy statement/prospectus in the form mailed
by MFI to the MFI stockholders, together with any and all amendments or
supplements thereto, being herein referred to as the "Proxy Statement-
Prospectus"). Brookline Bancorp shall provide MFI and its counsel with
appropriate opportunity to review and comment on the Proxy Statement-
Prospectus, and shall incorporate all appropriate comments thereto, prior
to the time it is initially filed with the SEC or any amendments are filed
with the SEC. Brookline Bancorp shall file the Merger Registration
Statement, including the Proxy Statement-Prospectus, with the SEC. Each of
Brookline Bancorp and MFI shall use its best efforts to have the Merger
Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and MFI shall thereafter
promptly mail the Proxy Statement-Prospectus to its stockholders. Brookline
Bancorp shall also use its best efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement, and MFI shall furnish all
information concerning MFI and the holders of MFI Common Stock as may be
reasonably requested in connection with any such action.
8.2.2. Brookline Bancorp shall, as soon as practicable, file
the Merger Registration Statement with the SEC under the Securities Act in
connection with the transactions contemplated by this Agreement. Brookline
Bancorp will advise MFI promptly after Brookline Bancorp receives notice of
the time when the Merger Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualifications of the shares of Brookline Bancorp
Common Stock issuable pursuant to the Merger Registration Statement, or the
initiation or threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Merger
Registration Statement, or for additional information, and Brookline
Bancorp will provide MFI with as many copies of such Merger Registration
Statement and all amendments thereto promptly upon the filing thereof as
MFI may reasonably request.
8.2.3. MFI and Brookline Bancorp shall promptly notify the
other party if at any time it becomes aware that the Proxy Statement-
Prospectus or the Merger Registration Statement contains any untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. In
such event, MFI shall cooperate with Brookline Bancorp in the preparation
of a supplement or amendment to such Proxy Statement-Prospectus that
corrects such misstatement or omission, and Brookline Bancorp shall
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file an amended Merger Registration Statement with the SEC, and each of MFI
and Brookline Bancorp shall mail an amended Proxy Statement-Prospectus to
MFI's stockholders.
8.3. Regulatory Approvals.
Each of MFI and Brookline Bancorp will cooperate with the other and
use all reasonable efforts to promptly prepare and as soon as practicable
following the date hereof, file all necessary documentation to obtain all
necessary permits, consents, waivers, approvals and authorizations of the
OTS, the FRB, and the Commissioner and any other third parties and
governmental bodies necessary to consummate the transactions contemplated
by this Agreement. MFI and Brookline Bancorp will furnish each other and
each other's counsel with all information concerning themselves, their
Subsidiaries, directors, officers and stockholders and such other matters
as may be necessary or advisable in connection with any application,
petition or other statement made by or on behalf of MFI or Brookline
Bancorp to any Bank Regulator or governmental body in connection with the
Merger, Bank Merger and the other transactions contemplated by this
Agreement. MFI shall have the right to review and approve in advance all
characterizations of the information relating to MFI and any of its
Subsidiaries which appear in any filing made in connection with the
transactions contemplated by this Agreement with any governmental body. In
addition, MFI and Brookline Bancorp shall each furnish to the other for
review a copy of each such filing made in connection with the transactions
contemplated by this Agreement with any governmental body prior to its
filing.
8.4. Affiliates.
8.4.1. MFI shall use all reasonable efforts to cause each
director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act) of MFI to deliver to
Brookline Bancorp, as soon as practicable after the date of this Agreement,
and at least thirty (30) days prior to the date of the MFI Stockholders
Meeting, a written agreement, in the form of Exhibit C hereto, providing
that such person will not sell, pledge, transfer or otherwise dispose of
any shares of Brookline Bancorp Common Stock to be received by such
"affiliate" as a result of the Merger otherwise than in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder.
ARTICLE IX
CLOSING CONDITIONS
9.1. Conditions to Each Party's Obligations under this Agreement.
The respective obligations of each party under this Agreement shall
be subject to the fulfillment at or prior to the Closing Date of the
following conditions, none of which may be waived:
9.1.1. Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by
the requisite vote of the stockholders of MFI.
9.1.2. Injunctions. None of the parties hereto shall be
subject to any order, decree or injunction of a court or agency of
competent jurisdiction, and no statute, rule or
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regulation shall have been enacted, entered, promulgated, interpreted,
applied or enforced by any Governmental Entity or Bank Regulator, that
enjoins or prohibits the consummation of the transactions contemplated by
this Agreement.
9.1.3. Regulatory Approvals. All Regulatory Approvals required
to complete the Merger and the Bank Merger shall have been obtained and
shall remain in full force and effect and all waiting periods relating
thereto shall have expired.
9.1.4. Effectiveness of Merger Registration Statement. The
Merger Registration Statement shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the Merger
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or threatened by the SEC and, if the
offer and sale of Brookline Bancorp Common Stock in the Merger is subject
to the blue sky laws of any state, shall not be subject to a stop order of
any state securities commissioner.
9.1.5. Nasdaq Listing. The shares of Brookline Bancorp Common
Stock to be issued in the Merger shall have been authorized for listing on
the Nasdaq, subject to official notice of issuance.
9.1.6. Tax Opinions. On the basis of facts, representation and
assumptions which shall be consistent with the state of facts existing at
the Closing Date, Brookline Bancorp shall have received an opinion of ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., reasonably acceptable in form and substance
to Brookline Bancorp, and MFI shall have received an opinion of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Wood LLP, reasonably acceptable in form and substance to MFI,
each dated as of the Closing Date, substantially to the effect that, for
Federal income tax purposes:
(A) The Merger, when consummated in accordance with the terms
hereof, either will constitute a reorganization within the meaning of
Section 368(a) of the Code or will be treated as part of a
reorganization within the meaning of Section 368(a) of the Code;
(B) The Bank Merger will not adversely affect the Merger
qualifying as a reorganization within the meaning of Section 368(a)
of the Code;
(C) No gain or loss will be recognized by Brookline Bancorp,
Brookline Bank, MFI or Medford Co-Operative by reason of the Merger;
(D) The exchange of Brookline Bancorp Common Stock, to the
extent exchanged for MFI Common Stock, will not give rise to the
recognition of gain or loss for Federal income tax purposes to the
stockholders of MFI;
(E) The basis of the Brookline Bancorp Common Stock to be
received (including any fractional shares deemed received for tax
purposes) by an MFI stockholder will be the same as the basis of the
MFI Common Stock surrendered pursuant to the Merger in exchange
therefor, increased by any gain recognized by such MFI stockholder as
a result of the Merger and decreased by any cash received by such MFI
stockholder in the Merger; and
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(F) The holding period of the shares of Brookline Bancorp
Common Stock to be received by a stockholder of MFI will include the
period during which the stockholder held the shares of MFI Common
Stock surrendered in exchange therefore, provided the MFI Common
Stock surrendered is held as a capital asset at the Effective Time.
9.2. Conditions to the Obligations of Brookline Bancorp under this
Agreement.
The obligations of Brookline Bancorp under this Agreement shall be
further subject to the satisfaction of the conditions set forth in Sections
9.2.1 through 9.2.5 at or prior to the Closing Date:
9.2.1. Representations and Warranties. Each of the
representations and warranties of MFI set forth in this Agreement shall be
true and correct as of the date of this Agreement and upon the Effective
Time with the same effect as though all such representations and warranties
had been made at the Effective Time (except to the extent such
representations and warranties speak as of an earlier date, which only need
be true and correct as of such earlier date), in any case subject to the
standard set forth in Section 4.1; and MFI shall have delivered to
Brookline Bancorp a certificate to such effect signed by the Chief
Executive Officer and the Chief Financial Officer of MFI as of the
Effective Time.
9.2.2. Agreements and Covenants. MFI shall have performed in
all material respects all obligations and complied in all material respects
with all agreements or covenants to be performed or complied with by each
of them at or prior to the Effective Time, and Brookline Bancorp shall have
received a certificate signed on behalf of MFI by the Chief Executive
Officer and Chief Financial Officer of MFI to such effect dated as of the
Effective Time.
9.2.3. Regulatory Conditions. No Regulatory Approval required
for consummation the Merger and Bank Merger includes any condition or
requirement, excluding standard conditions that are normally imposed by the
regulatory authorities in bank merger transactions, that could reasonably
be expected by Brookline Bancorp to result in a Material Adverse Effect on
Brookline Bancorp and its Subsidiaries, taken as a whole
9.2.4. Dissenting Shares. As of immediately prior to the
Effective Time, not more than 10% of the issued and outstanding shares of
MFI Common Stock shall have dissented to the Merger under the DGCL, and
preserved, as of immediately prior to the Effective Time, the right to
pursue their right of appraisal for the fair value of their shares of MFI
Common Stock under the DGCL.
9.2.5. Permits, Authorizations, Etc. MFI and the MFI
Subsidiaries shall have obtained any and all material permits,
authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Merger and the Bank Merger, the failure of which
to obtain would have a Material Adverse Effect on Brookline Bancorp and its
Subsidiaries, taken as a whole.
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9.3. Conditions to the Obligations of MFI under this Agreement.
The obligations of MFI under this Agreement shall be further subject
to the satisfaction of the conditions set forth in Sections 9.3.1 through
9.3.4 at or prior to the Closing Date:
9.3.1. Representations and Warranties. Each of the
representations and warranties of Brookline Bancorp set forth in this
Agreement shall be true and correct as of the date of this Agreement and
upon the Effective Time with the same effect as though all such
representations and warranties had been made at the Effective Time (except
to the extent such representations and warranties speak as of an earlier
date, which only need be true and correct as of such earlier date), in any
case subject to the standard set forth in Section 5.1; and Brookline
Bancorp shall have delivered to MFI a certificate to such effect signed by
the Chief Executive Officer or Chief Operating Officer and the Chief
Financial Officer of Brookline Bancorp as of the Effective Time.
9.3.2. Agreements and Covenants. Brookline Bancorp shall have
performed in all material respects all obligations and complied in all
material respects with all agreements or covenants to be performed or
complied with by each of them at or prior to the Effective Time, and MFI
shall have received a certificate signed on behalf of Brookline Bancorp by
the Chief Executive Officer or Chief Operating Officer and Chief Financial
Officer of Brookline Bancorp to such effect dated as of the Effective Time.
9.3.3. Permits, Authorizations, Etc. Brookline Bancorp and its
Subsidiaries shall have obtained any and all material permits,
authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Merger and the Bank Merger, the failure of which
to obtain would have a Material Adverse Effect on Brookline Bancorp and its
Subsidiaries, taken as a whole.
9.3.4. Payment of Merger Consideration. Brookline Bancorp
shall have delivered the Exchange Fund to the Exchange Agent on or before
the Closing Date and the Exchange Agent shall provide MFI with a
certificate evidencing such delivery.
ARTICLE X
THE CLOSING
10.1. Time and Place.
Subject to the provisions of Articles IX and XI hereof, the Closing
of the transactions contemplated hereby shall take place at the offices of
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. at 10:00 a.m. on the date determined by Brookline Bancorp,
in its sole discretion, upon five (5) days prior written notice to MFI, but
in no event later than thirty days (30) after the last condition precedent
(other than those conditions that relate to actions to be taken at the
Closing, but subject to the fulfillment or waiver of those conditions)
pursuant to this agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or at such other place, date
or time upon which Brookline Bancorp and MFI mutually agree.
Notwithstanding the foregoing, and at Brookline Bancorp's sole discretion,
such Closing may occur on the close of business on January 7, 2005
(provided that all conditions precedent have been fulfilled or waived,
including the expiration of any
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applicable waiting period). A pre-closing of the transactions contemplated
hereby (the "Pre-Closing") shall take place at the offices of ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. at
10:00 a.m. on the day prior to the Closing Date (the "Pre-Closing Date").
10.2. Deliveries at the Pre-Closing and the Closing.
At the Pre-Closing there shall be delivered to Brookline Bancorp and
MFI the opinions, certificates, and other documents and instruments
required to be delivered at the Closing under Article IX hereof. At or
prior to the Closing, Brookline Bancorp shall deliver the Merger
Consideration as set forth under Section 9.3.4 hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1. Termination.
This Agreement may be terminated at any time prior to the Closing
Date, whether before or after approval of the Merger by the stockholders of
MFI:
11.1.1. At any time by the mutual written agreement of
Brookline Bancorp and MFI;
11.1.2. By either party (provided, that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material
breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach by its nature cannot
be cured prior to the Termination Date or shall not have been cured within
30 days after written notice of such breach by the terminating party to the
other party provided, however, that neither party shall have the right to
terminate this Agreement pursuant to this Section 11.1.2 unless the breach
of representation or warranty, together with all other such breaches, would
entitle the terminating party not to consummate the transactions
contemplated hereby under Section 9.2.1 (in the case of a breach of a
representation or warranty by MFI) or Section 9.3.1 (in the case of a
breach of a representation or warranty by Brookline Bancorp);
11.1.3. By either party (provided, that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material
failure to perform or comply with any of the covenants or agreements set
forth in this Agreement on the part of the other party, which failure by
its nature cannot be cured prior to the Termination Date or shall not have
been cured within 30 days after written notice of such failure by the
terminating party to the other party; provided, however, that neither party
shall have the right to terminate this Agreement pursuant to this Section
11.1.3 unless the breach of covenant or agreement, together with all other
such breaches, would entitle the terminating party not to consummate the
transactions contemplated hereby under Section 9.2.2 (in the case of a
breach of covenant by MFI) or Section 9.3.2 (in the case of a breach of
covenant by Brookline Bancorp);
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11.1.4. At the election of either party, if the Closing shall
not have occurred by the Termination Date, or such later date as shall have
been agreed to in writing by Brookline Bancorp and MFI; provided, that no
party may terminate this Agreement pursuant to this Section 11.1.4 if the
failure of the Closing to have occurred on or before said date was due to
such party's material breach of any representation, warranty, covenant or
other agreement contained in this Agreement;
11.1.5. By either party, if the stockholders of MFI shall have
voted at the MFI Stockholders Meeting on the transactions contemplated by
this Agreement and such vote shall not have been sufficient to approve and
adopt such transactions;
11.1.6. By either party if (i) final action has been taken by
a Bank Regulator whose approval is required in order to satisfy the
conditions to the parties' obligations to consummate the transactions
contemplated hereby as set forth in Article IX, which final action (x) has
become unappealable and (y) does not approve this Agreement or the
transactions contemplated hereby, or (ii) any court of competent
jurisdiction or other governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and unappealable;
11.1.7. By the Board of Directors of Brookline Bancorp if MFI
has received a Superior Proposal and the Board of Directors of MFI has
entered into an acquisition agreement with respect to the Superior
Proposal, terminated this Agreement, withdrawn its recommendation of this
Agreement, has failed to make such recommendation or has modified or
qualified its recommendation in a manner adverse to Brookline Bancorp.
11.1.8. By the Board of Directors of MFI if MFI has received a
Superior Proposal and the Board of Directors of MFI has made a
determination to accept such Superior Proposal; provided that MFI shall not
terminate this Agreement pursuant to this Section 11.1.8 and enter in a
definitive agreement with respect to the Superior Proposal until the
expiration of five (5) business days following Brookline Bancorp's receipt
of written notice advising Brookline Bancorp that MFI has received a
Superior Proposal, specifying the material terms and conditions of such
Superior Proposal (and including a copy thereof with all accompanying
documentation, if in writing) identifying the person making the Superior
Proposal and stating whether MFI intends to enter into a definitive
agreement with respect to the Superior Proposal. After providing such
notice, MFI shall provide a reasonable opportunity to Brookline Bancorp
during the five-day period to make such adjustments in the terms and
conditions of this Agreement as would enable MFI to proceed with the Merger
on such adjusted terms.
11.1.9. By MFI, if its Board of Directors so determines by a
majority vote of the members of its entire Board, at any time during the
five business-day period commencing on the Determination Date if both of
the following conditions are satisfied:
(i) The Brookline Bancorp Market Value on the Determination
Date is less than $12.01, adjusted as indicated on the last sentence
of this Section 11.1.9; and
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(ii) the number obtained by dividing the Brookline Bancorp
Market Value on the Determination Date by the Initial Brookline
Bancorp Market Value ("Brookline Bancorp Ratio") shall be less than
the quotient obtained by dividing the Final Index Price by the
Initial Index Price, minus 0.175;
subject, however, to the following three sentences. If MFI elects to
exercise its termination right pursuant to this Section 11.1.9, it shall
give prompt written notice thereof to Brookline Bancorp. During the fifth
business day period commencing with its receipt of such notice, Brookline
Bancorp shall have the option to increase the consideration to be received
by the holders of MFI Common Stock who elect to receive Brookline Bancorp
Common Stock hereunder by adjusting the Exchange Ratio to one of the
following quotients at its sole discretion: (i) a quotient, the numerator
of which is equal to the product of the Initial Brookline Bancorp Market
Value, the Exchange Ratio (as then in effect), and the Index Ratio minus
0.175, and the denominator of which is equal to Brookline Bancorp Market
Value on the Determination Date; or (ii) the quotient determined by
dividing the Initial Brookline Bancorp Market Value by the Brookline
Bancorp Market Value on the Determination Date, and multiplying the
quotient by the product of the Exchange Ratio (as then in effect) and
0.825. If Brookline Bancorp so elects, it shall give, within such five
business-day period, written notice to MFI of such election and the revised
Exchange Ratio, whereupon no termination shall be deemed to have occurred
pursuant to this Section 11.1.9 and this Agreement shall remain in full
force and effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified).
For purposes of this Section 11.1.9, the following terms shall have
the meanings indicated below:
"Acquisition Transaction" shall mean (i) a merger or consolidation,
or any similar transaction, involving the relevant companies, (ii) a
purchase, lease or other acquisition of all or substantially all of the
assets of the relevant companies, (iii) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of the relevant
companies; or (iv) an agreement or commitment by the relevant companies to
take any action referenced above.
"Determination Date" shall mean the first date on which all
Regulatory Approvals (and waivers, if applicable) necessary for
consummation of the Merger have been received (disregarding any waiting
period).
"Final Index Price" means the sum of the Final Prices for each
company comprising the Index Group multiplied by the weighting set forth
opposite such company's name in the definition of Index Group below.
"Final Price," with respect to any company belonging to the Index
Group, means the average of the daily closing sales prices of a share of
common stock of such company (and if there is no closing sales price on any
such day, then the mean between the closing bid and the closing asked
prices on that day), as reported on the consolidated transaction reporting
system for the market or exchange on which such common stock is principally
traded, for the ten consecutive trading days immediately preceding the
Determination Date.
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"Index Group" means the financial institution holding companies
listed below, the common stock of all of which shall be publicly traded and
as to which there shall not have been an Acquisition Transaction involving
such company publicly announced at any time during the period beginning on
the date of this Agreement and ending on the Determination Date. In the
event that the common stock of any such company ceases to be publicly
traded or an Acquisition Proposal for such company to be acquired, or for
such company to acquire another company in a transaction with a value
exceeding 25% of the acquiror's market capitalization based on the table
below, is announced at any time during the period beginning on the date of
this Agreement and ending on the Determination Date, such company will be
removed from the Index Group, and the weights attributed to the remaining
companies will be adjusted proportionately for purposes of determining the
Final Index Price and the Initial Index Price. The financial institution
holding companies and the weights attributed to them are as follows:
Market Cap Market Cap 7/1/2004 Weighted
Company Name Ticker (millions) Weighting Price Price
------------ ------ ---------- ---------- -------- --------
1. Anchor BanCorp Wisconsin Inc. ABCW 607.70 3.9% $25.64 $ 0.99
2. Bank Mutual Corporation BKMU 858.70 5.5% $10.99 $ 0.60
3. BankAtlantic Bancorp, Inc. BBX 1,004.80 6.4% $17.24 $ 1.10
4. BankUnited Financial Corporation BKUNA 759.70 4.8% $25.73 $ 1.24
5. Dime Community Bancshares, Inc. DCOM 652.00 4.1% $17.19 $ 0.71
6. Fidelity Bankshares, Inc. FFFL 534.20 3.4% $33.96 $ 1.15
7. First Financial Holdings, Inc. FFCH 362.20 2.3% $28.38 $ 0.65
8. First Niagara Financial Group, Inc. FNFG 1,009.50 6.4% $11.98 $ 0.77
9. First Place Financial Corp. FPFC 285.50 1.8% $17.77 $ 0.32
10. Flushing Financial Corporation FFIC 342.90 2.2% $17.31 $ 0.38
11. Harbor Florida Bancshares, Inc. HARB 654.20 4.2% $27.23 $ 1.13
12. Independence Community Bank Corp. ICBC 3,019.20 19.2% $36.25 $ 6.95
13. KNBT Bancorp, Inc. KNBT 510.10 3.2% $16.67 $ 0.54
14. NewAlliance Bancshares, Inc. NABC 1,593.70 10.1% $14.29 $ 1.45
15. OceanFirst Financial Corp. OCFC 319.60 2.0% $23.85 $ 0.48
16. Provident Bancorp, Inc. PBCP 451.70 2.9% $11.23 $ 0.32
17. Provident Financial Services, Inc. PFS 1,055.60 6.7% $17.35 $ 1.16
18. TrustCo Bank Corp NY TRST 974.70 6.2% $12.82 $ 0.79
19. United Community Financial Corp. UCFC 404.90 2.6% $12.36 $ 0.32
20. WSFS Financial Corporation WSFS 350.80 2.2% $47.74 $ 1.06
------------------------------------------------------------------------------------------------
Weighted Index Share Price 100.0% $22.12
------------------------------------------------------------------------------------------------
"Index Ratio" shall be the Final Index Price divided by the Initial
Index Price.
"Initial Index Price" means the sum of the per share closing sales
price of the common stock of each company comprising the Index Group
multiplied by the applicable weighting, as such prices are reported on the
consolidated transaction reporting system for the market or exchange on
which such common stock is principally traded, for the ten consecutive
trading days ended and including July 1, 2004.
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"Initial Brookline Bancorp Market Value" means the average of the
daily closing sales prices of a share of Brookline Bancorp Common Stock, as
reported on the Nasdaq, for the ten consecutive trading days ended and
including July 1, 2004, adjusted as indicated in the last sentence of this
Section 11.1.9.
"Brookline Bancorp Market Value" shall be the average of the daily
closing sales prices of a share of Brookline Bancorp Common Stock as
reported on the Nasdaq for the ten consecutive trading days immediately
preceding the Determination Date.
If Brookline Bancorp or any company belonging to the Index Group declares
or effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the date of
this Agreement and the Determination Date, the prices for the common stock
of such company shall be appropriately adjusted for the purposes of
applying this Section 11.1.9.
11.2. Effect of Termination.
11.2.1. In the event of termination of this Agreement pursuant
to any provision of Section 11.1, this Agreement shall forthwith become
void and have no further force, except that (i) the provisions of Sections
11.2, 12.1, 12.2, 12.3, 12.4, 12.5, 12.6, 12.9, 12.10, 12.11, and any other
Section which, by its terms, relates to post-termination rights or
obligations, shall survive such termination of this Agreement and remain in
full force and effect.
11.2.2. If this Agreement is terminated, expenses and damages
of the parties hereto shall be determined as follows:
(A) Except as provided below, whether or not the Merger
is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expenses.
(B) In the event of a termination of this Agreement
because of a willful breach of any representation, warranty, covenant or
agreement contained in this Agreement, the breaching party shall remain
liable for any and all damages, costs and expenses, including all
reasonable attorneys' fees, sustained or incurred by the non-breaching
party as a result thereof or in connection therewith or with respect to the
enforcement of its rights hereunder.
(C) As a condition of Brookline Bancorp's willingness,
and in order to induce Brookline Bancorp to enter into this Agreement, and
to reimburse Brookline Bancorp for incurring the costs and expenses related
to entering into this Agreement and consummating the transactions
contemplated by this Agreement, MFI hereby agrees to pay Brookline Bancorp,
and Brookline Bancorp shall be entitled to payment of, a fee of $3,250,000
(the "Fee"), within three business days after written demand for payment is
made by Brookline Bancorp, following the occurrence of any of the events
set forth below:
(i) MFI terminates this Agreement pursuant to Section 11.1.8
or Brookline Bancorp terminates this Agreement pursuant to Section
11.1.7; or
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(ii) The entering into a definitive agreement by MFI relating
to an Acquisition Proposal or the consummation of an Acquisition
Proposal involving MFI within twelve months after the occurrence of
any of the following: (i) the termination of this Agreement by
Brookline Bancorp pursuant to Section 11.1.2 or 11.1.3 because of a
willful breach by MFI or any MFI Subsidiary after the occurrence of
an Acquisition Proposal has been publicly announced or otherwise made
known to MFI; or (ii) the termination of this Agreement by Brookline
Bancorp or MFI pursuant to Section 11.1.5 because of the failure of
the stockholders of MFI to approve this Agreement at the MFI
Stockholders Meeting after the occurrence of an Acquisition Proposal
has been publicly announced or otherwise made known to the
stockholders of MFI.
(D) If demand for payment of the Fee is made pursuant
to Section 11.2.2(C) and payment is timely made, then Brookline Bancorp
will not have any other rights or claims against MFI or its Subsidiaries,
or their respective officers and directors, under this Agreement, it being
agreed that the acceptance of the Fee under Section 11.2.2(C) will
constitute the sole and exclusive remedy of Brookline Bancorp against MFI
and its Subsidiaries and their respective officers and directors.
11.3. Amendment, Extension and Waiver.
Subject to applicable law, at any time prior to the Effective Time
(whether before or after approval thereof by the stockholders of MFI), the
parties hereto by action of their respective Boards of Directors, may (a)
amend this Agreement, (b) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (c) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, or (d) waive compliance with any of
the agreements or conditions contained herein; provided, however, that
after any approval of this Agreement and the transactions contemplated
hereby by the stockholders of MFI, there may not be, without further
approval of such stockholders, any amendment of this Agreement which
reduces the amount or value, or changes the form of, the Merger
Consideration to be delivered to MFI's stockholders pursuant to this
Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. Any agreement on
the part of a party hereto to any extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party,
but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Any
termination of this Agreement pursuant to this Article XI may only be
effected upon a vote of a majority of the entire Board of Directors of the
terminating party.
ARTICLE XII
MISCELLANEOUS
12.1. Confidentiality.
Except as specifically set forth herein, Brookline Bancorp and MFI
mutually agree to be bound by the terms of the confidentiality agreement
dated May 26, 2004 (the "Confidentiality Agreement") previously executed by
the parties hereto, which Confidentiality Agreement is hereby incorporated
herein by reference, and all information furnished by either party to the
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other party or its representatives pursuant hereto (including pursuant to
Sections 6.2 and 6.3) shall be subject to, and the parties shall hold such
information in confidence in accordance with, the provisions of the
Confidentiality Agreement. The parties hereto agree that such
Confidentiality Agreement shall continue in accordance with its terms,
notwithstanding the termination of this Agreement.
12.2. Public Announcements.
MFI and Brookline Bancorp shall cooperate with each other in the
development and distribution of all news releases and other public
disclosures with respect to this Agreement, and except as may be otherwise
required by law, neither MFI nor Brookline Bancorp shall issue any news
release, or other public announcement or communication with respect to this
Agreement unless such news release or other public announcement or
communication has been mutually agreed upon by the parties hereto.
12.3. Survival.
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto shall expire and be terminated and
extinguished at the Effective Time, except for those covenants and
agreements contained herein which by their terms apply in whole or in part
after the Effective Time.
12.4. Notices.
All notices or other communications hereunder shall be in writing and
shall be deemed given if delivered by receipted hand delivery or mailed by
prepaid registered or certified mail (return receipt requested) or by
recognized overnight courier addressed as follows:
If to MFI, to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board of Directors
Mystic Financial, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With required copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Brookline Bancorp, to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President and Chief Executive Officer
Brookline Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With required copies to: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as shall be furnished in writing by any party, and
any such notice or communication shall be deemed to have been given: (a) as
of the date delivered by hand; (b) three (3) business days after being
delivered to the U.S. mail, postage prepaid; or (c) one (1) business day
after being delivered to the overnight courier.
12.5. Parties in Interest.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns;
provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, and that (except as
provided in Article III and Section 7.8) nothing in this Agreement is
intended to confer upon any other person any rights or remedies under or by
reason of this Agreement.
12.6. Complete Agreement.
This Agreement, including the Exhibits and Disclosure Schedules
hereto and the documents and other writings referred to herein or therein
or delivered pursuant hereto, and the Confidentiality Agreements referred
to in Section 12.1, contains the entire agreement and understanding of the
parties with respect to its subject matter. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the
parties other than those expressly set forth herein or therein. This
Agreement supersedes all prior agreements and understandings (other than
the Confidentiality Agreement referred to in Section 12.1) between the
parties, both written and oral, with respect to its subject matter.
12.7. Counterparts.
This Agreement may be executed in one or more counterparts all of
which shall be considered one and the same agreement and each of which
shall be deemed an original. A facsimile copy of a signature page shall be
deemed to be an original signature page.
12.8. Severability.
In the event that any one or more provisions of this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, by
any court of competent jurisdiction, such
75
invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement and the parties shall use their reasonable
efforts to substitute a valid, legal and enforceable provision which,
insofar as practical, implements the purposes and intents of this
Agreement.
12.9. Governing Law.
This Agreement shall be governed by the laws of Delaware, without
giving effect to its principles of conflicts of laws.
12.10. Interpretation.
When a reference is made in this Agreement to Sections or Exhibits,
such reference shall be to a Section of or Exhibit to this Agreement unless
otherwise indicated. The recitals hereto constitute an integral part of
this Agreement. References to Sections include subsections, which are part
of the related Section (e.g., a section numbered "Section 5.5.1" would be
part of "Section 5.5" and references to "Section 5.5" would also refer to
material contained in the subsection described as "Section 5.5.1"). The
table of contents, index and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to the date set forth
in the Recitals to this Agreement. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
12.11. Specific Performance.
The parties hereto agree that irreparable damage would occur in the
event that the provisions contained in this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United
States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
12.12. Waiver of Trial by Jury.
The parties hereto hereby knowingly, voluntarily and intentionally
waive the right any may have to a trial by jury in respect to any
litigation based hereon, or rising out of, under, or in connection with
this agreement and any agreement contemplated to be executed in connection
herewith, or any course of conduct, course of dealing, statements (whether
verbal or written) or actions of either party in connection with such
agreements.
76
IN WITNESS WHEREOF, Brookline Bancorp and MFI have caused this
Agreement to be executed under seal by their duly authorized officers as of
the date first set forth above.
Brookline Bancorp, Inc.
Dated: July 7, 2004 By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President and Chief
Executive Officer
Mystic Financial, Inc.
Dated: July 7, 2004 By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board of
Directors
77
EXHIBIT A
VOTING AGREEMENT
July 7, 2004
Brookline Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Brookline Bancorp, Inc. ("Brookline Bancorp") and Mystic Financial,
Inc. ("MFI") have entered into an Agreement and Plan of Merger dated as of
July 7, 2004 (the "Merger Agreement"), pursuant to which, subject to the
terms and conditions set forth therein, (a) MFI will merge with and into
Brookline Bancorp, with Brookline Bancorp surviving the merger, to be
followed by the merger of Medford Co-Operative with and into Brookline
Bank, with Brookline Bank surviving the merger (collectively referred to as
the "Merger"); and (b) shareholders of MFI will receive common stock of
Brookline Bancorp and/or cash, as stated in the Merger Agreement. Terms
that are undefined herein shall have the meaning set forth in the Merger
Agreement.
Brookline Bancorp has requested, as a condition to its execution and
delivery to MFI of the Merger Agreement, that the undersigned, being
directors and executive officers of MFI and Medford Co-Operative, execute
and deliver to Brookline Bancorp this Letter Agreement.
Each of the undersigned, in order to induce Brookline Bancorp to
execute and deliver to MFI the Merger Agreement, and intending to be
legally bound, hereby irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of MFI called to vote for approval of the Merger Agreement and
the Merger so that all shares of common stock of MFI over which the
undersigned or a member of the undersigned's immediate family now has sole
or shared voting power will be counted for the purpose of determining the
presence of a quorum at such meetings and to vote, or cause to be voted,
all such shares (i) in favor of approval and adoption of the Merger
Agreement and the transactions contemplated thereby (including any
amendments or modifications of the terms thereof approved by the Board of
Directors of MFI), and (ii) against approval or adoption of any other
merger, business combination, recapitalization, partial liquidation or
similar transaction involving MFI, it being understood that as to immediate
family members, the undersigned will use his/her reasonable efforts to
cause the shares to be present and voted in accordance with (i) and (ii)
above;
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a shareholder of
MFI, to approve or adopt the Merger Agreement;
(c) Agrees not to sell, transfer or otherwise dispose of any common
stock of MFI on
A-1
or prior to the date of the meeting of MFI shareholders to vote on the
Merger Agreement, except for transfers to charities, charitable trusts, or
other charitable organizations under Section 501(c)(3) of the Code, lineal
descendant or a spouse of the undersigned, or to a trust or other entity
for the benefit of one or more of the foregoing persons, provided that the
transferee agrees in writing to be bound by the terms of this Letter
Agreement; and
(d) Agrees in accordance with Section 6.10 of the Merger Agreement
not to solicit, initiate or engage in any negotiations or discussions with
any party other than Brookline Bancorp with respect to an Acquisition
Proposal, except as otherwise permitted by Section 6.10.
(e) Represents that the undersigned has the capacity to enter into
this Letter Agreement and that it is a valid and binding obligation
enforceable against the undersigned in accordance with its terms, subject
to bankruptcy, insolvency and other laws affecting creditors' rights and
general equitable principles.
The obligations set forth herein shall terminate concurrently with
any termination of the Merger Agreement.
____________________________
This Letter Agreement may be executed in two or more counterparts,
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same Letter Agreement.
____________________________
The undersigned intend to be legally bound hereby.
Sincerely,
---------------------------------------
Name
---------------------------------------
Title
A-2
EXHIBIT B
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
the _____________ day of _________________, 2005, by and between Medford Co-
operative Bank, a Massachusetts-chartered co-operative bank, and Brookline
Bank, a Federal savings association.
RECITALS:
1. Medford Co-operative Bank and Brookline Bank are wholly-owned
subsidiaries of Brookline Bancorp, Inc., a Delaware corporation ("Brookline
Bancorp");
2. Brookline Bancorp desires that Medford Co-operative Bank merge
with and into Brookline Bank following the consummation of the merger of
Mystic Financial, Inc., a Delaware corporation ("MFI"), with and into
Brookline Bancorp, or a subsidiary thereof, pursuant to the Agreement and
Plan of Merger, dated as of July 7, 2004, by and between Brookline Bancorp
and MFI (the "Holding Company Merger Agreement"); and
3. In consideration of the premises and the mutual covenants and
agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Medford Co-
operative Bank and Brookline Bank hereby agree as follows:
1. DEFINITIONS
Each of the following terms shall have the meanings set forth below:
1.1 "Effective Time" shall refer to the date and time at which the
Merger becomes effective in accordance with the rules and regulations of the
OTS.
1.2 "Merger" shall refer to the merger of Medford Co-operative Bank
with and into Brookline Bank as provided in Section 2.1 of this Agreement.
1.3 "Holding Company Merger" shall refer to the merger of MFI with
and into Brookline Bancorp as contemplated by the Holding Company Merger
Agreement.
1.4 "Merging Institutions" shall collectively refer to Medford
Co-operative Bank and Brookline Bank.
1.5 "OTS" shall refer to the Office of Thrift Supervision.
1.6 "Surviving Institution" shall refer to Brookline Bank as the
surviving institution of the Merger.
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2. TERMS OF THE MERGER
2.1 The Merger.
(a) Subject to the terms and conditions set forth in this Agreement,
at the Effective Time, Medford Co-operative Bank shall be merged with and
into Brookline Bank pursuant to applicable Federal laws and regulations.
Brookline Bank shall be the Surviving Institution of the Merger and shall
continue as a savings association chartered and regulated by the OTS. As of
a result of the Merger, (i) each share of common stock, par value $1.00 per
share, of Medford Co-operative Bank issued and outstanding immediately
prior to the Effective Time shall be canceled and (ii) each share of common
stock, par value $1.00 per share, of Brookline Bank issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
and shall constitute the only shares of capital stock of the Surviving
Institution issued and outstanding following consummation of the Merger.
(b) The consummation of the transactions contemplated by this
Agreement is specifically conditioned upon receipt of all necessary
regulatory approvals, including the approval of the OTS, and the expiration
of all applicable waiting periods with respect to both the Holding Company
Merger and the Merger. The stockholder of Medford Co-operative Bank and
Brookline Bank shall have taken appropriate action to vote to approve this
Agreement and the Merger.
(c) At the Effective Time, the Surviving Institution shall be
considered the same business and corporate entity as each of the Merging
Institutions and thereupon and thereafter all the property, rights, powers
and franchises of each of the Merging Institutions shall vest in the
Surviving Institution and the Surviving Institution shall be subject to and
be deemed to have assumed all of the debts, liabilities, obligations and
duties of each of the Merging Institutions and shall have succeeded to all
of each of their relationships, fiduciary or otherwise, as fully and to the
same extent as if such property, rights, privileges, powers, franchises,
debts, obligations, duties and relationship had been originally acquired,
incurred or entered into by the Surviving Institution. In addition, any
reference to either of the Merging Institutions in any contract, will or
document, whether executed or taking effect before or after the Effective
Time, shall be considered a reference to the Surviving Institution if not
inconsistent with the other provisions of the contract, will or document;
and any pending, action or other judicial proceeding to which either of the
Merging Institutions is a party shall not be deemed to have abated or to
have been discontinued by reason of the Merger, but may be prosecuted to
final judgment, order or decree in the same manner as if the Merger had not
been made or the Surviving Institution may be substituted as a party to such
action or proceeding, and any judgment, order or decree may be rendered for
or against it that might have been rendered for or against either of the
Merging Institutions if the Merger had not occurred.
(d) All deposit accounts of Medford Co-operative Bank shall be and
become deposit accounts in the Surviving Institution without change in their
respective terms, maturity, minimum required balances or withdrawal value.
Appropriate evidence of the deposit account in the Surviving Institution
shall be provided by the Surviving Institution to each deposit account
holder of Medford Co-operative Bank, as necessary, after consummation of the
Merger. Any liquidation account, as such term is defined in OTS
regulations, maintained by Medford Co-operative Bank shall be assumed by
Brookline Bank as the Surviving Institution.
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(e) All deposit accounts of Brookline Bank prior to consummation of
the Merger shall continue to be deposit accounts in the Surviving
Institution after consummation of the Merger without any change whatsoever
in any of the provisions of such deposit accounts, including, without
limitation, their respective terms, maturity, minimum required balances or
withdrawal value.
(f) The principal office of Brookline Bank shall continue to be ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ after the Effective Time. The
former offices of Medford Co-operative Bank will be operated as offices of
Brookline Bank immediately following the Effective Time.
2.2 Effective Time; Closing Date. A closing in respect of the
transactions contemplated by this Agreement (the "Closing") shall be held at
the offices of Brookline Bank, on such time and date as Brookline Bank shall
designate, which date shall be the date of the Effective Time of the Holding
Company Merger.
2.3 Name of Surviving Institution. The name of the Surviving
Institution shall be "Brookline Bank."
2.4 Charter. On and after the Effective Time, the Charter of
Brookline Bank as a Federal savings association shall be the Charter of the
Surviving Institution until amended in accordance with applicable law.
2.5 Bylaws. On and after the Effective Time, the Bylaws of
Brookline Bank as a Federal savings association shall be the Bylaws of the
Surviving Institution until amended in accordance with applicable law.
2.6 Directors. Except as otherwise provided in the Merger
Agreement, on and after the Effective Time, until changed in accordance with
the Charter and Bylaws of the Surviving Institution, the directors of the
Surviving Institution shall be those persons serving as directors of
Brookline Bank immediately prior to the Effective Time, subject to the
provision of Section 2.5 of the Holding Company Merger Agreement. The
directors of the Surviving Institution shall hold office in accordance with
the Charter and Bylaws of the Surviving Institution.
3. MISCELLANEOUS
3.1 Conditions Precedent. The respective obligations of each party
under this Agreement shall be subject to: (i) the receipt or waiver of all
required regulatory approvals and the expiration of any required waiting
periods specified by applicable Federal law; (ii) the completion of the
Holding Company Merger; and (iii) the approval of this Agreement by
Brookline Bancorp in its capacity as sole stockholder of Medford Co-
operative Bank and Brookline Bank.
3.2 Amendments. To the extent permitted by the applicable Federal
banking law, this Agreement may be amended by a subsequent writing signed by
the parties hereto upon the approval of the board of directors of each of
the parties hereto.
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3.3 Successors. This Agreement shall be binding on the successors
of Medford Co-operative Bank and Brookline Bank.
3.4 Governing Law. This Agreement shall be governed by the laws of
the United States of America except to the extent Massachusetts law governs.
3.5 Paragraph Headings. The paragraph headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.
3.6 Miscellaneous. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which constitute one
and the same instrument.
3.7 Termination. This Agreement shall terminate upon the
termination of the Holding Company Merger Agreement in accordance with its
terms. This Agreement also may be terminated at any time prior to the
Effective Time by mutual consent of the parties. In the event of the
termination of this Agreement as provided in this Section 3.7, this
Agreement shall forthwith become null and void and of no further force or
effect and there shall be no liability or obligation under this Agreement on
the part of any of the parties hereto or any of their respective directors,
officers or affiliates.
[Signature page follows]
B-4
IN WITNESS WHEREOF, Medford Co-operative Bank and Brookline Bank have
caused this Agreement to be executed by their duly authorized officers as of
the day and year first above written.
ATTEST: MEDFORD CO-OPERATIVE BANK
By:
--------------------------------- --------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary Chairman of the Board
ATTEST: BROOKLINE BANK
By:
--------------------------------- --------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Secretary Chief Executive Officer
B-5
EXHIBIT C
AFFILIATE AGREEMENT
July 7, 2004
Brookline Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
I have been advised that I might be considered to be an "affiliate"
of Mystic Financial, Inc., a Delaware corporation ("MFI"), for purposes of
paragraphs (c) and (d) of Rule 145 of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act").
Brookline Bancorp, Inc. ("Brookline Bancorp") and MFI have entered
into an Agreement and Plan of Merger, dated as of July 7, 2004 (the
"Agreement"). Upon consummation of the merger contemplated by the
Agreement (the "Merger"), I may receive shares of common stock of Brookline
Bancorp ("Brookline Bancorp Common Stock") in exchange for my shares of
common stock, par value $.01 per share, of MFI ("MFI Common Stock"). This
agreement is hereinafter referred to as the "Letter Agreement." Terms that
are undefined herein shall have the meaning set forth in the Merger
Agreement.
I represent and warrant to, and agree with, Brookline Bancorp as
follows:
1. I have read this Letter Agreement and the Agreement and have
discussed their requirements and other applicable limitations upon my
ability to sell, pledge, transfer or otherwise dispose of shares of
Brookline Bancorp Common Stock that I may receive pursuant to the Merger,
to the extent I felt necessary, with my counsel or counsel for MFI.
2. I have been advised that any issuance of shares of Brookline
Bancorp Common Stock to me pursuant to the Merger will be registered with
the SEC. I have also been advised, however, that, because I may be an
"affiliate" of MFI at the time the Merger will be submitted for a vote of
the stockholders of MFI and my disposition of such shares has not been
registered under the Securities Act, I must hold such shares indefinitely
unless (i) such disposition of such shares is subject to an effective
registration statement and to the availability of a prospectus under the
Securities Act, (ii) a sale of such shares is made in conformity with the
provisions of Rule 145(d) under the Securities Act, (iii) a sale of such
shares is made following expiration of the restrictive period set forth in
Rule 145(d)(2) or (3) or (iv) in an opinion of counsel, in form and
substance reasonably satisfactory to Brookline Bancorp, such disposition of
such shares is otherwise exempt from registration under the Securities Act.
3. I understand and agree that stop transfer instructions will be
given to the transfer agent of Brookline Bancorp with respect to the shares
of Brookline Bancorp Common Stock I
C-1
receive pursuant to the Merger and that there will be placed on the
certificate representing such shares, or any certificates delivered in
substitution therefor, a legend stating in substance:
The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act applies. The
shares represented by this certificate may only be transferred in
accordance with Rule 145(d) or an effective registration statement or
exemption from registration under the Securities Act.
4. Brookline Bancorp reserves the right to put an appropriate
legend on the certificate issued to my transferee unless (i) a transfer of
my shares of the Brookline Bancorp Common Stock is a sale made in
conformity with the provisions of Rule 145(d) or made pursuant to any
effective registration statement under the Securities Act, or (ii) I shall
have delivered to Brookline Bancorp an opinion of counsel reasonably
satisfactory to Brookline Bancorp to the effect that such legend is not
required for purposes of the Securities Act.
5. I recognize and agree that the foregoing provisions also apply
to (i) my spouse, (ii) any relative of mine or my spouse's occupying my
home, (iii) any trust or estate in which I, my spouse or any such relative
owns at least 10% beneficial interest or of which any of us serves as
trustee, executor or in any similar capacity and (iv) any corporation or
other organization in which I, my spouse and any such relative collectively
own at least 10% of any class of equity securities or of the equity
interest.
6. I understand and agree that Brookline Bancorp is under no
obligation to register under the Securities Act the sale, transfer or other
disposition of the shares of Brookline Bancorp that I receive as a result
of the Merger.
7. I further recognize that in the event I become a director or
officer of Brookline Bancorp upon consummation of the Merger, any sale of
Brookline Bancorp Common Stock by me may subject me to liability pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as amended.
8. Execution of this Letter Agreement should not be construed as
an admission on my part that I am an "affiliate" of MFI as described in the
first paragraph of this Letter Agreement or as a waiver of any rights I may
have to object to any claim that I am such an affiliate on or after the
date of this Letter Agreement.
It is understood and agreed that this Letter Agreement shall
terminate and be of no further force and effect if the Agreement is
terminated in accordance with its terms. It is also understood and agreed
that this Letter Agreement shall terminate and be of no further force and
effect and the stop transfer instructions set forth above shall be lifted
forthwith upon the delivery by the undersigned to Brookline Bancorp of an
opinion of counsel in form and substance reasonably satisfactory to
Brookline Bancorp, or other evidence reasonably satisfactory to Brookline
Bancorp, to the effect that a transfer of my shares of Brookline Bancorp
Common Stock will not violate the Securities Act or any of the rules and
regulations of the SEC thereunder. In addition, it is understood and
agreed that the legend set forth in Paragraph 3 above shall be removed
forthwith from the certificate or certificates representing my shares of
Brookline Bancorp Common Stock upon (i) expiration of the restrictive
period set forth in Rule 145(d)(2), so long as Brookline
C-2
Bancorp is then in compliance with SEC Rule 144(c), or the restrictive
period set forth in Rule 145(d)(3) or (ii) if Brookline Bancorp shall have
received an opinion of counsel in form and substance reasonably
satisfactory to Brookline Bancorp, or other evidence satisfactory to
Brookline Bancorp that a transfer of my shares of the Brookline Bancorp
Common Stock represented by such certificate or certificates will be a sale
made in conformity with the provisions of Rule 145(d), made pursuant to an
effective registration statement under the Securities Act or made pursuant
to an exemption from registration under the Securities Act.
* * * * *
By acceptance hereof, Brookline Bancorp agrees that, for a period of
two years after the effective time of the Merger, so long as it is
obligated to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, it will use its reasonable best efforts
to timely file such reports so that the public information requirements of
Rule 144(c) promulgated under the Securities Act are satisfied and the
resale provisions of Rule 145(d)(1) and (2) are therefore available to me
if I desire to transfer Brookline Bancorp Common Stock issued to me in the
Merger.
This Letter Agreement shall be binding on my heirs, legal
representatives and successors.
Very truly yours,
Signature
------------------------------------
Name (Please Print)
Accepted as of the date first above written
BROOKLINE BANCORP, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
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