EXHIBIT 2.1
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 10, 2002
BETWEEN
ABINGTON BANCORP, INC.
AND
MASSACHUSETTS FINCORP, INC.
================================================================================
TABLE OF CONTENTS
RECITALS
ARTICLE I. DEFINITIONS; DISCLOSURE................................................................................1
1.01. CERTAIN DEFINITIONS......................................................................................1
1.02. OTHER DEFINITIONAL MATTERS...............................................................................8
1.03. DISCLOSURE SCHEDULES.....................................................................................8
ARTICLE II. THE MERGER............................................................................................8
2.01. THE MERGER...............................................................................................8
2.02. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING..............................................................10
ARTICLE III. CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES.....................................................10
3.01. CONVERSION OF SHARES....................................................................................10
3.02. OPTIONAL TERMINATION....................................................................................11
3.03. ELECTION PROCEDURES.....................................................................................12
3.04. EXCHANGE PROCEDURES.....................................................................................14
3.05. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS.................................................................16
3.06. NO FRACTIONAL SHARES....................................................................................16
3.07. DISSENTING SHARES.......................................................................................16
3.08. ANTI-DILUTION PROVISIONS................................................................................16
3.09. WITHHOLDING RIGHTS......................................................................................17
3.10. COMPANY OPTIONS.........................................................................................17
ARTICLE IV. ACTIONS PENDING ACQUISITION..........................................................................18
4.01. AGREEMENTS OF THE COMPANY...............................................................................18
4.02. AGREEMENTS OF PARENT....................................................................................22
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................22
5.01. ORGANIZATION, STANDING AND AUTHORITY....................................................................22
5.02. COMPANY CAPITAL STOCK...................................................................................22
5.03. SUBSIDIARIES............................................................................................23
5.04. CORPORATE POWER.........................................................................................23
5.05. CORPORATE AUTHORITY.....................................................................................23
5.06. REGULATORY APPROVALS; NO DEFAULTS.......................................................................24
5.07. SEC REPORTS.............................................................................................24
5.08. ABSENCE OF CERTAIN CHANGES OR EVENTS....................................................................25
5.09. LITIGATION..............................................................................................26
5.10. REGULATORY MATTERS......................................................................................26
5.11. COMPLIANCE WITH LAWS....................................................................................26
5.12. MATERIAL CONTRACTS; DEFAULTS............................................................................27
5.13. NO BROKERS..............................................................................................27
5.14. EMPLOYEE BENEFIT PLANS..................................................................................27
5.15. LABOR MATTERS...........................................................................................30
5.16. ENVIRONMENTAL MATTERS...................................................................................30
5.17. TAX MATTERS.............................................................................................31
5.18. RISK MANAGEMENT INSTRUMENTS.............................................................................33
- i -
5.19. LOANS; NONPERFORMING AND CLASSIFIED ASSETS..............................................................33
5.20. PROPERTIES..............................................................................................34
5.21. INTELLECTUAL PROPERTY...................................................................................34
5.22. FIDUCIARY ACCOUNTS......................................................................................34
5.23. BOOKS AND RECORDS.......................................................................................35
5.24. INSURANCE...............................................................................................35
5.25. ALLOWANCE FOR LOAN LOSSES...............................................................................35
5.26. TRANSACTIONS WITH AFFILIATES............................................................................35
5.27. REQUIRED VOTE; ANTITAKEOVER PROVISIONS..................................................................35
5.28. FAIRNESS OPINION........................................................................................35
5.29. TRANSACTIONS IN SECURITIES..............................................................................35
5.30. DISCLOSURE..............................................................................................36
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PARENT.............................................................36
6.01. ORGANIZATION, STANDING AND AUTHORITY....................................................................36
6.02. PARENT STOCK............................................................................................36
6.03. SUBSIDIARIES............................................................................................36
6.04. CORPORATE POWER.........................................................................................37
6.05. CORPORATE AUTHORITY.....................................................................................37
6.06. REGULATORY APPROVALS; NO DEFAULTS.......................................................................37
6.07. FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT............................................38
6.08. LITIGATION..............................................................................................39
6.09. NO BROKERS..............................................................................................39
6.10. TAX MATTERS.............................................................................................39
6.11. REGULATORY MATTERS......................................................................................39
6.12. OWNERSHIP OF COMPANY COMMON STOCK.......................................................................39
6.13. FINANCIAL ABILITY.......................................................................................39
6.14. DISCLOSURE..............................................................................................39
6.15. COMPLIANCE WITH LAWS....................................................................................40
6.16. MATERIAL CONTRACTS; DEFAULTS............................................................................40
6.17. LABOR MATTERS...........................................................................................40
6.18. ENVIRONMENTAL MATTERS...................................................................................41
6.19. LOANS; NONPERFORMING AND CLASSIFIED ASSETS..............................................................41
6.20. ALLOWANCE FOR LOAN LOSSES...............................................................................42
ARTICLE VII. COVENANTS...........................................................................................42
7.01. REASONABLE BEST EFFORTS.................................................................................42
7.02. SHAREHOLDER APPROVALS...................................................................................42
7.03. REGISTRATION STATEMENT..................................................................................43
7.04. REGULATORY FILINGS......................................................................................44
7.05. PRESS RELEASES..........................................................................................44
7.06. ACCESS; INFORMATION.....................................................................................45
7.07. AFFILIATES..............................................................................................45
7.08. ACQUISITION PROPOSALS...................................................................................46
7.09. CERTAIN POLICIES........................................................................................47
7.10. NASDAQ LISTING..........................................................................................47
7.11. INDEMNIFICATION.........................................................................................47
- ii -
7.12. BENEFIT PLANS...........................................................................................48
7.13. BANK MERGER.............................................................................................50
7.14. NOTIFICATION OF CERTAIN MATTERS.........................................................................50
7.15. PAYMENTS AND RELATED AGREEMENTS.........................................................................50
ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGER...........................................................50
8.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER..............................................50
8.02. CONDITIONS TO OBLIGATION OF THE COMPANY.................................................................51
8.03. CONDITIONS TO OBLIGATIONS OF PARENT.....................................................................52
ARTICLE IX. TERMINATION..........................................................................................53
9.01. TERMINATION.............................................................................................53
9.02. EFFECT OF TERMINATION; EXPENSES.........................................................................55
9.03. COMPANY SPECIAL PAYMENT.................................................................................55
9.04. PARENT SPECIAL PAYMENT..................................................................................56
ARTICLE X. MISCELLANEOUS.........................................................................................57
10.01. SURVIVAL...............................................................................................57
10.02. WAIVER; AMENDMENT......................................................................................57
10.03. COUNTERPARTS...........................................................................................57
10.04. GOVERNING LAW..........................................................................................57
10.05. EXPENSES...............................................................................................57
10.06. NOTICES................................................................................................57
10.07. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES.....................................................58
10.08. SEVERABILITY...........................................................................................59
10.09. ENFORCEMENT OF THE AGREEMENT...........................................................................59
10.10. INTERPRETATION.........................................................................................59
10.11. ASSIGNMENT.............................................................................................59
10.12. ALTERNATIVE STRUCTURE..................................................................................59
ANNEX A Form of Voting Agreement
ANNEX B List of Shareholders
- iii -
AGREEMENT AND PLAN OF MERGER, dated as of April 10, 2002 (this
"AGREEMENT"), between Abington Bancorp, Inc. ("PARENT") and
Massachusetts
Fincorp, Inc. (the "COMPANY").
RECITALS
WHEREAS, The Company is a Delaware corporation, having its principal
place of business in Boston,
Massachusetts.
WHEREAS, Parent is a
Massachusetts corporation, having its principal
place of business in Abington,
Massachusetts.
WHEREAS, the Boards of Directors of Parent and the Company have each
determined that it is in the best interests of their respective companies and
their stockholders for the Company to merge with and into Parent (the "MERGER"),
subject to the terms and conditions set forth herein.
WHEREAS, as a condition and inducement to Parent to enter into this
Agreement, each Shareholder (as defined herein) is entering into an agreement,
simultaneously with the execution of this Agreement, in the form of ANNEX A
hereto (collectively, the "VOTING AGREEMENTS") pursuant to which each
Shareholder has agreed, among other things, to vote the Shareholder's shares of
Company Common Stock in favor of this Agreement.
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and to prescribe certain conditions
to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I.
DEFINITIONS; DISCLOSURE
1.01. CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" has the meaning set forth in Section 7.08.
"ACQUISITION TRANSACTION" shall mean (i) a merger, consolidation or
similar transaction involving the Company, the Company Bank or any of the
Company's Subsidiaries, (ii) the disposition, by sale, lease, exchange or
otherwise, of assets of the Company, the Company Bank or any of the Company's
Subsidiaries representing 24.9% or more of the consolidated assets of the
Company, the Company Bank and the Company's Subsidiaries, in a single
transaction or series of transactions, other than sales of mortgages into the
secondary market in the ordinary course of business consistent with past
practice, (iii) the issuance, sale or other disposition of (including by way of
merger, consolidation, share exchange or any similar transaction) securities
representing 24.9% or more of the voting power of the Company, the Company Bank
or any of the Company's Subsidiaries, (iv) any Person (other than Parent or any
affiliate of Parent) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have
filed a registration statement under the Securities Act, with respect to, a
tender offer or exchange offer to purchase any shares of Company Common Stock
such that, upon consummation of such offer, such Person would own or control
24.9% or more of the then outstanding shares of Company Common Stock, or (v) any
Person (other than Parent or any affiliate of Parent) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act) of, or the right to acquire beneficial ownership of, or any
"GROUP" (as such term is defined under the Exchange Act) shall have been formed
which shall have acquired beneficial ownership of, or the right to acquire
beneficial ownership of, 24.9% or more of the then outstanding shares of Company
Common Stock.
"ADJUSTED PER SHARE STOCK CONSIDERATION" has the meaning set forth in
Section 3.02.
"AFFILIATE AGREEMENT" has the meaning set forth in Section 7.07.
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 10.02.
"AGGREGATE CASH CONSIDERATION" has the meaning set forth in Section
3.01(c)(2)(i).
"ARTICLES OF MERGER" has the meaning set forth in Section 2.02.
"AVERAGE CLOSING PRICE" has the meaning set forth in Section
3.01(c)(2)(ii).
"BANK INSURANCE FUND" means the Bank Insurance Fund maintained by the
FDIC.
"BANK MERGER" has the meaning set forth in Section 7.13.
"BANK
MERGER AGREEMENT" has the meaning set forth in Section 7.13.
"BENEFIT PLANS" has the meaning set forth in Section 4.01(b)(5).
"BUSINESS DAY" means Monday through Friday of each week, except a legal
holiday recognized as such by the U.S. Government or any day on which banking
institutions in the Commonwealth of
Massachusetts are authorized or obligated to
close.
"CASH ELECTION SHARES" has the meaning set forth in Section 3.03(a).
"CERTIFICATE" means any certificate which immediately prior to the
Effective Time represented shares of Company Common Stock.
"CLOSING" and "CLOSING DATE" have the meanings set forth in Section
2.02(b).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNITY REINVESTMENT ACT" means the Community Reinvestment Act of
1977, as amended.
"COMPANY" has the meaning set forth in the preamble to this Agreement.
2
"COMPANY AFFILIATES" has the meaning set forth in Section 7.07.
"COMPANY BANK" means The
Massachusetts Co-operative Bank.
"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY BREACH PAYMENT" has the meaning set forth in Section 9.03(a).
"COMPANY BYLAWS" means the Bylaws of the Company.
"COMPANY CERTIFICATE" means the Certificate of Incorporation of the
Company.
"COMPANY CHANGE IN CONTROL PAYMENT" has the meaning set forth in
Section 9.03(b).
"COMPANY COMMON STOCK" means the common stock, $.01 par value per
share, of the Company.
"COMPANY GROUP" means any "affiliated group" (as defined in Section
1504(a) of the Code without regard to the limitations contained in Section
1504(b) of the Code) that includes the Company and its Subsidiaries or any
predecessor of or any successor to the Company (or to another such predecessor
or successor).
"COMPANY LOAN PROPERTY" has the meaning set forth in Section 5.16(b).
"COMPANY MEETING" has the meaning set forth in Section 7.02.
"COMPANY OPTIONS" means the options to acquire Company Common Stock
issued under the Company Stock Option Plan.
"COMPANY PREFERRED STOCK" means the preferred stock, par value $.01 per
share, of the Company.
"COMPANY REGULATORY AUTHORITIES" has the meaning set forth in Section
5.10(a).
"COMPANY SPECIAL PAYMENT" shall mean each of the Company Breach Payment
and the Company Change in Control Payment.
"COMPANY STOCK" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"COMPANY STOCK OPTION PLAN" means the
Massachusetts Fincorp, Inc. 1999
Stock-Based Incentive Plan.
"CONSULTING AGREEMENT" has the meaning set forth in Section 7.15.
"DEPOSIT INSURANCE FUND" means the Deposit Insurance Fund maintained by
the Depositors Insurance Fund established by The Commonwealth of
Massachusetts.
"DERIVATIVES CONTRACT" has the meaning set forth in Section 5.18.
3
"DETERMINATION DATE" means the date on which the last required approval
of a Governmental Authority is obtained with respect to the Transactions,
without regard to any requisite waiting period.
"DGCL" means the Delaware General Corporation Law, as amended.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 1.03.
"DISSENTING SHARES" has the meaning set forth in Section 3.07.
"EFFECTIVE DATE" has the meaning set forth in Section 2.02(a).
"EFFECTIVE TIME" has the meaning set forth in Section 2.02(a).
"ELECTION DEADLINE" has the meaning set forth in Section 3.03(b).
"ELECTION FORM" has the meaning set forth in Section 3.03(a).
"EMPLOYEES" has the meaning set forth in Section 5.14(a).
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 5.16.
"EQUAL CREDIT OPPORTUNITY ACT" means the Equal Credit Opportunity Act,
as amended.
"EQUITY INTERESTS" means, with respect to any Person, warrants,
options, rights, convertible securities and other arrangements or commitments
which obligate the Person to issue or dispose of any of its capital stock or
other ownership interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.14(c).
The term "EXCESS PARACHUTE PAYMENT" has the meaning set forth in
Section 8.03(g).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.03(a).
"EXISTING EMPLOYMENT AGREEMENTS" shall mean, collectively, (i) the
employment agreement between ▇▇▇▇ ▇. ▇▇▇▇▇ and the Company, effective July 13,
2000 and amended December 31, 2001, (ii) the employment agreement between ▇▇▇▇
▇. ▇▇▇▇▇ and the Company Bank, effective July 13, 2000, (iii) the employment
agreement between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Company, effective December 22,
1998 and amended December 31, 2001, and (iv) the employment agreement between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Company Bank, effective July 13, 2000.
"EXPENSES" has the meaning set forth in Section 9.02(b)
4
"EXPIRATION DATE" has the meaning set forth in Section 9.01(b).
"FAIR HOUSING ACT" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE ACT" means the Federal Reserve Act, as amended.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
"GAAP" means generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" means any federal, state or local court,
administrative agency or commission or other governmental authority or
instrumentality.
"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 5.16.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" have the meanings set
forth in Section 7.11(a).
"INSURANCE AMOUNT" has the meaning set forth in Section 7.11(c).
"INSURANCE POLICIES" has the meaning set forth in Section 5.24.
"JOINT PROXY STATEMENT" has the meaning set forth in Section 7.03(a).
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"LOANS" has the meaning set forth in Section 5.19(a).
"
MASSACHUSETTS BANK COMMISSIONER" means the Commissioner of Banks of
The Commonwealth of Massachusetts.
"MASSACHUSETTS BOARD" means the Massachusetts Board of Bank
Incorporation.
"MATERIAL ADVERSE EFFECT" means, with respect to Parent or the Company
any effect that (i) is material and adverse to the financial position, results
of operations or business of Parent and its Subsidiaries taken as a whole or the
Company and its Subsidiaries taken as a whole, as the case may be or (ii) would
materially impair the ability of any of Parent and its Subsidiaries or the
Company and its Subsidiaries to perform their respective obligations under this
Agreement or the Bank
Merger Agreement or otherwise materially impede the
consummation of the Transactions; provided however, that Material Adverse Effect
shall not be deemed to include the impact of (a) changes in banking and similar
laws of general applicability or interpretations thereof by Governmental
Authorities, (b) changes in GAAP or regulatory accounting requirements
applicable to financial institutions and their holding companies generally, (c)
changes in general economic conditions affecting financial institutions and
their holding companies generally, (d) any modifications or changes to valuation
policies and practices, or expenses incurred, in connection with the Merger or
restructuring charges taken in connection
5
with the Merger, in each case in accordance with GAAP and with the consent of
Parent, and (e) with respect to the Company, the effects of any action or
omission taken with the prior consent of Parent or as otherwise contemplated by
the Agreement.
"MATERIAL CONTRACT" has the meaning set forth in Sections 5.12.
"MBCL" means the Massachusetts Business Corporation Law, as amended.
"MERGER" has the meaning set forth in Section 2.01(a).
"MERGER CONSIDERATION" means the number of whole shares of Parent
Common Stock, plus cash in lieu of any fractional share interest, and/or the
amount of cash into which shares of Company Common Stock shall be converted
pursuant to the provisions of Article III.
"MHPF" means the Massachusetts Housing Partnership Fund.
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market.
"NATIONAL LABOR RELATIONS ACT" means the National Labor Relations Act,
as amended.
"NO-ELECTION SHARES" has the meaning set forth in Section 3.03(a).
"OREO" means other real estate owned.
"ORIGINAL PER SHARE STOCK CONSIDERATION" has the meaning set forth in
Section 3.01(c)(2)(iii).
"OTS" means Office of Thrift Supervision.
"PARENT" has the meaning set forth in the preamble to this Agreement.
"PARENT ARTICLES" means the Articles of Organization of Parent, as
amended.
"PARENT BANK" means Abington Savings Bank, and any successor thereto.
"PARENT BANK EMPLOYMENT AGREEMENT" has the meaning set forth in Section
7.15.
"PARENT BENEFITS PLANS" has the meaning set forth in Section 7.12(a).
"PARENT BOARD" means the Board of Directors of Parent.
"PARENT BYLAWS" means the Bylaws of Parent.
"PARENT COMMON STOCK" means the common stock, $.10 par value per share,
of Parent.
"PARENT LOAN PROPERTY" has the meaning set forth in Section 6.18(b).
"PARENT MEETING" has the meaning set forth in Section 7.02.
"PARENT PREFERRED STOCK" means the preferred stock, $.10 par value per
share, of Parent.
6
"PARENT REGULATORY AUTHORITIES" has the meaning set forth in Section
6.11(a).
"PARENT SPECIAL PAYMENT" has the meaning set forth in Section 9.04(a).
"PAYMENTS AGREEMENTS" shall have the meaning set forth in Section 7.15.
"PENSION PLAN" has the meaning set forth in Section 5.14(b).
"PER SHARE CASH CONSIDERATION" has the meaning set forth in Section
3.01(c)(1)(ii).
"PER SHARE STOCK CONSIDERATION" has the meaning set forth in Section
3.01(c)(2)(iv), subject to adjustment pursuant to Sections 3.02, 3.08 and
9.01(h).
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability company or
unincorporated organization.
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in a
section of its Disclosure Schedule corresponding to the section of this
Agreement where such term is used (except as otherwise specifically provided in
this Agreement).
"REALLOCATED CASH SHARES" has the meaning set forth in Section
3.03(d)(i)(3).
"REALLOCATED STOCK SHARES" has the meaning set forth in Section
3.03(d)(ii)(2).
"REGISTRATION STATEMENT" has the meaning set forth in Section 7.03(a).
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Sections 5.07 and 6.07(a)
in the case of the Company and Parent, respectively.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"SHARE INSURANCE FUND" means the Share Insurance Fund maintained by The
Co-operative Central Bank established by The Commonwealth of Massachusetts.
"SHAREHOLDERS" means the Persons listed on ANNEX B to this Agreement.
"SIGNING DATE AVERAGE CLOSING PRICE" has the meaning set forth in
Section 3.01(c)(2)(v).
"STOCK ELECTION SHARES" has the meaning set forth in Section 3.03(a).
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
those terms in Rule 1-02 of Regulation S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01(a).
"TAX" and "TAXES" mean all federal, state, local or foreign income,
gross income, gains,
7
gross receipts, sales, use, ad valorem, goods and services, capital, production,
transfer, franchise, windfall profits, license, withholding, payroll,
employment, disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, custom duties, unemployment or other taxes
of any kind whatsoever, together with any interest, additions or penalties
thereto and any interest in respect of such interest and penalties.
"TAX RETURNS" means any return, declaration or other report (including
elections, declarations, schedules, estimates and information returns) with
respect to any Taxes.
"TRANSACTIONS" means the Merger and the Bank Merger.
"TREASURY STOCK" means shares of Company Stock held by the Company or
any of its Subsidiaries or by Parent or any of its Subsidiaries, in each case
other than in a fiduciary (including custodial or agency) capacity or as a
result of debts previously contracted in good faith.
"VOTING AGREEMENTS" has the meaning set forth in the recitals to this
Agreement.
1.02. OTHER DEFINITIONAL MATTERS. Unless the context otherwise
requires, a term defined anywhere in this Agreement has the same meaning
throughout; all references to "the Agreement" or "this Agreement" are to this
Agreement as modified, supplemented or amended from time to time; and terms
defined in the singular shall have a comparable meaning when used in the plural,
and VICE VERSA.
1.03. DISCLOSURE SCHEDULES. On or prior to the date hereof, Parent has
delivered to the Company a schedule and the Company has delivered to Parent a
schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Article V or Article VI or to one or more of its covenants contained in Article
IV.
ARTICLE II.
THE MERGER
2.01. THE MERGER.
(a) THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall merge, either directly or
indirectly, by use of one or more interim corporations, with and into Parent in
accordance with the applicable provisions of the DGCL and the MBCL (the
"MERGER"), the separate corporate existence of the Company shall cease and
Parent shall survive and continue to exist as a corporation incorporated under
the MBCL (Parent, as the surviving corporation in the Merger, sometimes being
referred to herein as the "SURVIVING CORPORATION").
(b) NAME. The name of the Surviving Corporation shall be
"Abington Bancorp, Inc."
(c) ARTICLES AND BYLAWS. The articles of organization and
bylaws of Parent
8
immediately after the Merger shall be the Parent Articles and the Parent Bylaws
as in effect immediately prior to the Merger.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
(1) Except as set forth in Section 2.01(d)(2), the directors
and officers of Parent immediately after the Merger shall be the directors and
officers of Parent immediately prior to the Merger, until such time as their
successors shall be duly elected and qualified.
(2) Prior to or at the Effective Time, two directors of the
Company or the Company Bank to be designated by Parent after consultation with
the Company shall be elected to the Parent Board, to be divided proportionately
among the classes.
(e) DIRECTORS OF THE PARENT BANK.
(1) Except as set forth in Section 2.01(e)(2), the directors
and officers of Parent Bank immediately after the Bank Merger shall be the
directors and officers of Parent Bank immediately prior to the Bank Merger,
until such time as their successors shall be duly elected and qualified.
(2) Prior to or at the Effective Time, two directors of the
Company or Company Bank to be designated by Parent after consultation with the
Company shall be elected to the Parent Bank Board of Directors, to be divided
proportionately among the classes.
(f) AUTHORIZED CAPITAL STOCK. The authorized capital stock of
the Surviving Corporation upon consummation of the Merger shall be as set forth
in the Parent Articles immediately prior to the Merger.
(g) EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and in the applicable
provisions of the DGCL and the MBCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Company shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
(h) ADDITIONAL ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider that any further assignments or
assurances in law or any other acts are necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of the Company acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger, or (ii) otherwise carry out the
purposes of this Agreement, the Company, and its proper officers and directors,
shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Surviving Corporation or otherwise to take
9
any and all such action.
2.02. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING.
(a) Subject to the satisfaction or waiver of the conditions
set forth in Article VIII (other than those conditions that by their nature are
to be satisfied at the consummation of the Merger, but subject to the
fulfillment or waiver of those conditions), the parties shall cause articles of
merger or a certificate of merger relating to the Merger (the "ARTICLES OF
MERGER") to be filed with the Secretary of State of the State of Delaware
pursuant to the DGCL and the Secretary of State of The Commonwealth of
Massachusetts pursuant to the MBCL on (i) a date selected by Parent after such
satisfaction or waiver which is no later than the later of (A) five Business
Days after such satisfaction or waiver or (B) the first month end following such
satisfaction or waiver, or (ii) such other date to which the parties may agree
in writing. The Merger provided for herein shall become effective upon such
filings or on such date as may be specified therein. The date of such filings or
such later effective date is herein called the "EFFECTIVE DATE." The "EFFECTIVE
TIME" of the Merger shall be the time of such filings or as set forth in such
filings.
(b) A closing (the "CLOSING") shall take place immediately
prior to the Effective Time at 10:00 a.m., Eastern Time, at the principal
offices of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, Boston, Massachusetts, or at such other
place, at such other time, or on such other date as the parties may mutually
agree upon (such date, the "CLOSING DATE"). At the Closing, there shall be
delivered to Parent and the Company the opinions, certificates and other
documents required to be delivered under Article VIII hereof.
ARTICLE III.
CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
3.01. CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of a holder of shares of Company
Common Stock:
(a) Each share of Parent Common Stock that is issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall be unchanged by the Merger.
(b) Each share of Company Common Stock held as Treasury Stock
immediately prior to the Effective Time shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
(c) (1) Subject to Sections 3.03, 3.06, 3.07, and 3.08, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
3.01(b)) shall be converted into, and shall be canceled in exchange for, the
right to receive, at the election of the holder thereof:
(i) the Per Share Stock Consideration, or
(ii) a cash amount equal to $30.00 per share of
Company Common Stock (the "PER SHARE CASH CONSIDERATION").
10
(2) For purposes of this Agreement:
(i) the "AGGREGATE CASH CONSIDERATION" shall amount
to the product of the number of shares of Company Common Stock
(other than Treasury Stock) outstanding immediately prior to
the Effective Time times .40 times $30.00;
(ii) the "AVERAGE CLOSING PRICE" of the Parent Common
Stock shall be determined by averaging the closing bid and
asked prices per share of Parent Common Stock on Nasdaq (as
reported by the WALL STREET JOURNAL or, if not reported
thereby, another authoritative source), for the 10 consecutive
Nasdaq trading days ending on and including the Determination
Date, discarding the two highest asked prices and the two
lowest bid prices, and averaging the remaining closing bid and
asked prices;
(iii) the "ORIGINAL PER SHARE STOCK CONSIDERATION" is
equal to the quotient obtained by dividing $30.00 by the
Signing Date Average Closing Price.
(iv) except as otherwise provided in Section 3.02 and
in Section 9.01(h), the "PER SHARE STOCK CONSIDERATION" shall
be the number of shares of Parent Common Stock determined (to
four decimal places) by multiplying the Original Per Share
Stock Consideration by a fraction, as follows:
(A) If the Average Closing Price is more
than 110% of the Signing Date Average Closing Price,
the fraction shall be equal to 0.909.
(B) If the Average Closing Price is between
90% and 110% of the Signing Date Average Closing
Price, the numerator of such fraction shall be the
Signing Date Average Closing Price and the
denominator of such fraction shall be the Average
Closing Price.
(C) If the Average Closing Price is less
than 90% of the Signing Date Average Closing Price,
the fraction shall be equal to 1.111.
(v) the "SIGNING DATE AVERAGE CLOSING PRICE" of
Parent Common Stock shall be determined by averaging the
closing bid and asked prices per share of Parent Common Stock
on Nasdaq (as reported by the Wall Street Journal or, if not
reported thereby, another authoritative source), for the 10
consecutive Nasdaq trading days ending on the date before the
date of this Agreement, discarding the two highest asked
prices and the two lowest bid prices, and averaging the
remaining closing bid and asked prices.
3.02. OPTIONAL TERMINATION. Notwithstanding the provisions of Section
3.01(c)(2)(iv), if the Average Closing Price is equal to or less than 75 percent
of the Signing Date Closing Price, the Company shall have the right, waivable by
it, to terminate this Agreement pursuant to Section 9.01(h) hereof, unless the
Parent elects, at its option, to adopt as the Per Share Stock Consideration the
"ADJUSTED PER SHARE STOCK CONSIDERATION" as described in such Section 9.01(h).
11
3.03. ELECTION PROCEDURES.
(a) Parent shall designate an exchange agent to act as agent
(the "EXCHANGE AGENT") for purposes of conducting the election procedure and the
exchange procedure described in Sections 3.03 and 3.04. Provided that the
Company has delivered, or caused to be delivered, to the Exchange Agent all
information which is necessary for the Exchange Agent to perform its obligations
as specified herein, the Exchange Agent shall, no later than four (4) Business
Days after the Effective Date, mail or make available to each holder of record
of a Certificate or Certificates (i) a notice and letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates theretofore representing shares of Company Common Stock shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) advising
such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent such Certificate or Certificates in exchange
for the consideration set forth in Section 3.01(c) hereof deliverable in respect
thereof pursuant to this Agreement and (ii) an election form in such form as
Parent and the Company shall mutually agree (the "ELECTION FORM"). Each Election
Form shall permit the holder (or in the case of nominee record holders, the
beneficial owner through proper instructions and documentation) (i) to elect to
receive Parent Common Stock with respect to all of such holder's Company Common
Stock as hereinabove provided (the "STOCK ELECTION SHARES"), (ii) to elect to
receive cash with respect to all of such holder's Company Common Stock as
hereinabove provided (the "CASH ELECTION SHARES"), or (iii) to indicate that
such holder makes no such election with respect to such holder's shares of
Company Common Stock (the "NO-ELECTION SHARES"). Nominee record holders who hold
Company Common Stock on behalf of multiple beneficial owners shall indicate how
many of the shares held by them are Stock Election Shares, Cash Election Shares
and No-Election Shares. If a shareholder either (i) does not submit a properly
completed Election Form in a timely fashion or (ii) revokes an Election Form
prior to the Election Deadline and does not resubmit a properly completed
Election Form prior to the Election Deadline, the shares of Company Common Stock
held by such shareholder shall be designated No-Election Shares. Any Dissenting
Shares shall be deemed to be Cash Election Shares, and with respect to such
shares the holders thereof shall in no event be classified as Reallocated Stock
Shares (as hereinafter defined).
(b) The term "ELECTION DEADLINE" shall mean 5:00 p.m., Eastern
Time, on the 20th day following but not including the date of mailing of the
Election Form or such other date as Parent and the Company shall mutually agree
upon.
(c) Any election to receive Parent Common Stock or cash 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
will be properly completed only if accompanied by Certificates representing all
shares of Company Common Stock covered thereby, subject to the provisions of
Section 3.04(c). 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 written notice is actually received by the Exchange
Agent at or prior to the Election Deadline. The Certificate or Certificates
representing Company Common Stock relating to any revoked Election Form shall be
promptly returned without charge to the Person submitting the Election Form to
the Exchange Agent. The Exchange Agent shall have reasonable discretion to
determine when any election, modification or revocation is received, whether any
such election, modification or revocation has been properly made and to
disregard
12
immaterial defects in any Election Form, and any good faith decisions of the
Exchange Agent regarding such matters shall be binding and conclusive. Neither
Parent nor the Exchange Agent shall be under any obligation to notify any Person
of any defect in an Election Form.
(d) Within ten (10) Business Days after the Election Deadline,
the Exchange Agent shall effect the allocation among holders of Company Common
Stock of rights to receive Parent Common Stock or cash in the Merger in
accordance with the Election Forms as follows:
(i) If the number of Cash Election Shares times the
Per Share Cash Consideration is less than the Aggregate Cash
Consideration, then:
(1) all Cash Election Shares (subject to
Section 3.07 with respect to Dissenting Shares) shall
be converted into the right to receive cash,
(2) No-Election Shares shall then be deemed
to be Cash Election Shares to the extent necessary to
have the total number of Cash Election Shares times
the Per Share Cash Consideration equal the Aggregate
Cash Consideration. If less than all of the
No-Election Shares need to be treated as Cash
Election Shares, then the Exchange Agent shall select
which No-Election Shares shall be treated as Cash
Election Shares in such manner as the Exchange Agent
shall determine, and all remaining No-Election Shares
shall thereafter be treated as Stock Election Shares,
(3) If all of the No-Election Shares are
treated as Cash Election Shares under the preceding
subsection and the total number of Cash Election
Shares times the Per Share Cash Consideration is less
than the Aggregate Cash Consideration, then the
Exchange Agent shall convert on a pro rata basis as
described below a sufficient number of Stock Election
Shares into Cash Election Shares ("REALLOCATED CASH
SHARES") such that the sum of the number of Cash
Election Shares plus the number of Reallocated Cash
Shares times the Per Share Cash Consideration equals
the Aggregate Cash Consideration, and all Reallocated
Cash Shares will be converted into the right to
receive cash, and
(4) the Stock Election Shares which are not
Reallocated Cash Shares shall be converted into the
right to receive Parent Common Stock.
(ii) If the number of Cash Election Shares times the
Per Share Cash Consideration is greater than the Aggregate
Cash Consideration, then:
(1) all Stock Election Shares and all
No-Election Shares shall be converted into the right
to receive Parent Common Stock,
(2) the Exchange Agent shall convert on a
pro rata basis as described below a sufficient number
of Cash Election Shares (excluding any Dissenting
Shares) ("REALLOCATED STOCK SHARES") such that the
number of remaining Cash Election Shares (including
Dissenting Shares) times the Per Share Cash
Consideration equals the Aggregate Cash
13
Consideration, and all Reallocated Stock Shares shall
be converted into the right to receive Parent Common
Stock, and
(3) the Cash Election Shares (subject to
Section 3.07 with respect to Dissenting Shares) which
are not Reallocated Stock Shares shall be converted
into the right to receive cash.
(iii) If the number of Cash Election Shares times the
Per Share Cash Consideration is equal to the Aggregate Cash
Consideration, then Sections 3.03(d)(i) and 3.03(d)(ii) above
shall not apply and all No-Election Shares and all Stock
Election Shares will be converted into the right to receive
Parent Common Stock.
(e) In the event that the Exchange Agent is required pursuant
to Section 3.03(d)(i)(3) to convert some Stock Election Shares into Reallocated
Cash Shares, each holder of Stock Election Shares shall be allocated a pro rata
portion of the total Reallocated Cash Shares. In the event the Exchange Agent is
required pursuant to Section 3.03(d)(ii)(2) to convert some Cash Election Shares
into Reallocated Stock Shares, each holder of Cash Election Shares shall be
allocated a pro rata portion of the total Reallocated Stock Shares.
3.04. EXCHANGE PROCEDURES.
(a) Immediately prior to the Effective Time, for the benefit
of the holders of Certificates, (i) Parent shall deliver to the Exchange Agent
certificates evidencing the number of shares of Parent Common Stock issuable and
(ii) Parent shall deliver, or cause Parent Bank to deliver, to the Exchange
Agent the Aggregate Cash Consideration payable pursuant to this Article III in
exchange for Certificates representing outstanding shares of Company Common
Stock. The Exchange Agent shall not be entitled to vote or exercise any rights
of ownership with respect to the shares of Parent Common Stock held by it from
time to time hereunder, except that it shall receive and hold all dividends or
other distributions paid or distributed with respect to such shares for the
account of the Persons entitled thereto.
(b) After completion of the allocation referred to in Section
3.03(d), each holder of an outstanding Certificate or Certificates who has
surrendered such Certificate or Certificates to the Exchange Agent will, upon
acceptance thereof by the Exchange Agent, be entitled to a certificate or
certificates representing the number of whole shares of Parent Common Stock
and/or the amount of cash into which the aggregate number of shares of Company
Common Stock previously represented by such Certificate or Certificates
surrendered shall have been converted pursuant to this Agreement and, if such
holder's shares of Company Common Stock have been converted into Parent Common
Stock, any other distribution theretofore paid with respect to Parent Common
Stock issuable in the Merger, in each case without interest. The Exchange Agent
shall accept such Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. Each outstanding
Certificate which prior to the Effective Time represented Company Common Stock
and which is not surrendered to the Exchange Agent in accordance with the
procedures provided for herein shall, except as otherwise herein provided, until
duly surrendered to the Exchange Agent be deemed to evidence ownership of the
number of shares of Parent Common Stock or the right to receive the amount of
14
cash intowhich such Company Common Stock shall have been converted. After the
Effective Time, there shall be no further transfer on the records of the Company
of Certificates representing shares of Company Common Stock and if such
Certificates are presented to the Company for transfer, they shall be cancelled
against delivery of certificates for Parent Common Stock or cash as hereinabove
provided. No dividends which have been declared will be remitted to any Person
entitled to receive shares of Parent Common Stock under Section 3.03 until such
Person surrenders the Certificate or Certificates representing Company Common
Stock, at which time such dividends shall be remitted to such Person, without
interest.
(c) Parent shall not be obligated to deliver cash and/or a
certificate or certificates representing shares of Parent Common Stock to which
a holder of Company Common Stock would otherwise be entitled as a result of the
Merger until such holder surrenders the Certificate or Certificates representing
the shares of Company Common Stock for exchange as provided in this Section
3.04, or, in default thereof, an appropriate affidavit of loss and indemnity
agreement and/or a bond as may be required by Parent. If any certificates
evidencing shares of Parent Common Stock are to be issued in a name other than
that in which the Certificate evidencing Company Common Stock surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed or accompanied by
an executed form of assignment separate from the Certificate and otherwise in
proper form for transfer and that the Person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
certificate for shares of Parent Common Stock in any name other than that of the
registered holder of the Certificate surrendered or otherwise establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) Any portion of the shares of Parent Common Stock and cash
delivered to the Exchange Agent by Parent pursuant to Section 3.04(a) that
remains unclaimed by the shareholders of the Company for six months after the
Effective Time (as well as any proceeds from any investment thereof) shall be
delivered by the Exchange Agent to Parent. Any shareholders of Company who have
not theretofore complied with Section 3.04(c) shall thereafter look only to
Parent for the consideration deliverable in respect of each share of Company
Common Stock such shareholder holds as determined pursuant to this Agreement
without any interest thereon. If outstanding Certificates for shares of Company
Common Stock are not surrendered or the payment for them is not claimed prior to
the date on which such shares of Parent Common Stock or cash would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of Parent (and to the extent not in
its possession shall be delivered to it), free and clear of all claims or
interest of any Person previously entitled to such property. Neither the
Exchange Agent nor any party to this Agreement shall be liable to any holder of
stock represented by any Certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Parent and the Exchange Agent shall be entitled to rely upon the stock transfer
books of the Company to establish the identity of those Persons entitled to
receive the consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Parent and the Exchange Agent
shall be entitled to deposit any consideration represented thereby in escrow
with an independent third party and thereafter be relieved with respect to any
claims thereto.
15
(e) Notwithstanding anything in this Agreement to the
contrary, Certificates surrendered for exchange by any Company Affiliate shall
not be exchanged for certificates representing shares of Parent Common Stock to
which such Company Affiliate may be entitled pursuant to the terms of this
Agreement until Parent has received a written agreement from such Person as
specified in Section 7.07.
3.05. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
shareholders of the Company other than to receive the consideration provided
under this Article III. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company or the Surviving Corporation of shares
of Company Stock.
3.06. NO FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of Parent Common
Stock shall be issued in the Merger. Each holder of Company Common Stock who
otherwise would have been entitled to a fraction of a share of Parent Common
Stock shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the Average Closing Price. No such holder shall
be entitled to dividends, voting rights or any other rights in respect of any
fractional share.
3.07. DISSENTING SHARES. Each outstanding share of Company Common Stock
the holder of which has perfected his right to dissent under 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
shares of Parent Common Stock or cash hereunder, and the holder thereof shall be
entitled only to such rights as are granted by the DGCL. The Company shall give
Parent prompt notice upon receipt by the Company of any such written demands for
payment of the fair value of such shares of Company Common Stock and of
withdrawals of such demands and any other instruments provided pursuant to the
DGCL. If any holder of dissenting shares shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent (which shares are referred to
as "Unperfected Dissenting Shares") at or prior to the Effective Time and shall
have delivered a properly completed Election Form to the Exchange Agent by the
Election Deadline, the Unperfected Dissenting Shares held by such holder shall
be converted into a right to receive Company Common Stock and/or cash in
accordance with the applicable provisions of this Agreement; and if any such
holder of Unperfected Dissenting Shares shall not have delivered a properly
completed Election Form to the Exchange Agent by the Election Deadline, the
Unperfected Dissenting Shares held by such holder shall be designated
No-Election Shares. If any holder of dissenting shares shall have effectively
withdrawn or lost the right to dissent (through failure to perfect or otherwise)
after the Effective Time, the Unperfected Dissenting Shares held by such holder
shall be converted on a share by share basis into either the right to receive
Parent Common Stock and/or cash in accordance with the applicable provisions of
this Agreement as Parent or the Exchange Agent shall determine. Any payments
made in respect of Dissenting Shares shall be made by the Surviving Corporation.
3.08. ANTI-DILUTION PROVISIONS. If, between the date hereof and the
Effective Time, the shares of Parent Common Stock shall be changed into a
different number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
16
readjustment, or a stock dividend thereon shall be declared with a record date
within said period, the Per Share Stock Consideration shall be adjusted
accordingly. The provisions of this Agreement assume that there will be 578,864
shares of Company Common Stock outstanding or issuable upon the exercise of
options or warrants or otherwise, at the Effective Time. If there is any change
in this number as of the Effective Time, the Merger Consideration will be
appropriately adjusted.
3.09. WITHHOLDING RIGHTS. Parent (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent is required under the Code or any state, local or
foreign tax law or regulation thereunder to deduct and withhold with respect to
the making of such payment. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the holder of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
3.10. COMPANY OPTIONS.
(a) At the Effective Time and subject to the provisions of
Section 3.10(b), each Company Option which is outstanding and unexercised
immediately prior to the Effective Time, whether or not then vested and
exercisable, shall be terminated and each grantee thereof shall be entitled to
receive, in lieu of each share of Company Common Stock that would otherwise have
been issuable upon the exercise thereof, an amount of cash computed by
multiplying (i) the difference between (x) the Per Share Cash Consideration and
(y) the per share exercise price applicable to such Company Option by (ii) the
number of such shares of Company Common Stock subject to such Company Option.
The Company agrees to take or cause to be taken all action necessary to provide
for termination of the Company Options covered by this Section 3.10(a) and the
payment of the amounts required in connection therewith effective at or before
the Effective Time.
(b) Notwithstanding the provisions of Section 3.10(a), in the
event that a holder of Company Options so elects pursuant to a written election
submitted to the Company prior to the Election Deadline, which shall be in such
form as shall be prescribed by the Company and reasonably satisfactory to
Parent, each Company Option held by such holder which is outstanding and
unexercised immediately prior to the Effective Time, whether or not then vested
and exercisable, shall cease to represent a right to acquire shares of Company
Common Stock and shall be converted automatically into an option to purchase
shares of Parent Common Stock, and Parent shall assume each Company Option, in
accordance with the terms of the applicable Company Stock Option Plan and stock
option or other agreement by which it is evidenced, except that from and after
the Effective Time, (i) Parent and the Compensation Committee of its Board of
Directors shall be substituted for the Company and the committee of the
Company's Board of Directors (including, if applicable, the entire Board of
Directors of the Company) administering such Company Stock Option Plan, (ii)
each Company Option assumed by Parent may be exercised solely for shares of
Parent Common Stock, (iii) the number of shares of Parent Common Stock subject
to such Company Option shall be equal to the number of shares of Company Common
Stock subject to such Company Option immediately prior to the Effective Time
multiplied by the Per Share Stock Consideration, provided that any fractional
shares of Parent Common Stock resulting from such multiplication shall be
rounded down to the nearest share, and (iv) the per share exercise price under
each such Company Option shall be adjusted by
17
dividing the per share exercise price under each such Company Option by the Per
Share Stock Consideration, provided that such exercise price shall be rounded up
to the nearest cent. Notwithstanding clauses (iii) and (iv) of the preceding
sentence, each Company Option which is an "incentive stock option" shall be
adjusted in order to comply with the requirements of Section 424(a) of the Code,
and the regulations promulgated thereunder, and so as not to constitute a
modification, extension or renewal of the option within the meaning of Section
424(h) of the Code. Parent and the Company agree to take all necessary steps to
effect the foregoing provisions of this Section 3.10(b).
(c) Prior to the Effective Time, the Company shall take or
cause to be taken all actions required under the Company Stock Option Plans to
provide for the actions set forth in Sections 3.10(a) and 3.10(b), which actions
shall be reasonably satisfactory to Parent.
(d) Within five Business Days after the Effective Time, Parent
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the shares of
Parent Common Stock subject to the options referred to in Section 3.10(b) and
shall use its reasonable efforts to maintain the current status of the
prospectus or prospectuses contained therein for so long as such options remain
outstanding in the case of a Form S-8 or, in the case of a Form S-3, until the
shares subject to such options may be sold without a further holding period
under Rule 144 under the Securities Act.
ARTICLE IV.
ACTIONS PENDING ACQUISITION
4.01. AGREEMENTS OF THE COMPANY.
(a) The Company covenants and agrees that, except as
contemplated by this Agreement, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the business of
the Company, the Company Bank and the Company's Subsidiaries shall be conducted
only in, and the Company, the Company Bank and the Company's Subsidiaries shall
not take any action except in the usual, regular and ordinary course of business
and in a manner consistent with prudent banking practice and generally to
conduct their business in substantially the same way as heretofore conducted,
and without limiting the foregoing, to continue to operate in the same
geographic markets serving the same market segments. The Company shall use its
reasonable best efforts to preserve substantially intact the business
organization of the Company, the Company Bank and the Company's Subsidiaries, to
keep available the present services of the officers, employees and consultants
of the Company, the Company Bank and the Company's Subsidiaries and to preserve
the current relationships and goodwill of the Company, the Company Bank and the
Company's Subsidiaries with customers, suppliers and other Persons with which
the Company, the Company Bank or any of the Company's Subsidiaries have business
relationships.
(b) By way of amplification and not limitation of Section
4.01(a) above, except as contemplated by this Agreement, the Company shall not,
nor shall the Company permit the Company Bank or any of the Company's
Subsidiaries, between the date of this Agreement and the Effective Time,
directly or indirectly to do, or publicly announce an intention to do, any of
the following without the prior written consent of Parent through its
representative, its Chief Executive Officer (which consent shall not be
unreasonably withheld):
18
(1) CAPITAL STOCK. Other than pursuant to the Equity Interests
set forth on Schedule 4.01(b)(1) of the Company's Disclosure Schedule
and outstanding on the date hereof, (i) issue, sell or otherwise permit
to become outstanding, or authorize the creation of, any additional
shares of stock or any Equity Interests or (ii) permit any additional
shares of stock to become subject to grants of employee or director
stock options or other Equity Interests.
(2) DIVIDENDS; ETC. (a) Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any
distribution on any shares of Company Stock, other than dividends from
wholly-owned Subsidiaries to the Company or another wholly-owned
Subsidiary of the Company or (b) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares
of its capital stock.
(3) CONTRACTS. Except in the ordinary course of business
consistent with past practice, as required by law, as contemplated by
this Agreement or as otherwise permitted under this Section 4.01, enter
into or terminate any Material Contract (as defined in Section 5.12) or
amend or modify in any material respect any of its existing Material
Contracts.
(4) HIRING. Hire any Person as an employee of the Company or
any of its Subsidiaries or promote any employee, except (i) to satisfy
contractual obligations existing as of the date hereof and set forth on
Schedule 4.01(b)(4) of the Company's Disclosure Schedule, (ii) Persons
hired to fill any vacancies arising after the date hereof and whose
employment is terminable at the will of the Company or a Subsidiary of
the Company, as applicable, other than any Person to be hired who would
have a base salary, including any guaranteed bonus or any similar
bonus, considered on an annual basis of more than $40,000, and (iii)
Persons employed by the Company or any of its Subsidiaries as of the
date of this Agreement who fill any vacancies arising after the date
hereof and whose employment is terminable at the will of the Company or
a Subsidiary of the Company, as applicable.
(5) BENEFIT PLANS. Enter into, establish, adopt or amend
(except (i) as may be required by applicable law, (ii) to satisfy
contractual obligations existing as of the date hereof and set forth on
Schedule 4.01(b)(5) of the Company's Disclosure Schedule or (iii) as
otherwise contemplated by this Agreement) any pension, retirement,
stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement (or similar arrangement) related thereto, in respect of
any director, officer or employee of the Company or its Subsidiaries or
take any action to accelerate the vesting or exercisability of stock
options, restricted stock or other compensation or benefits payable
thereunder except pursuant to this Agreement.
(6) DISPOSITIONS. Sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits,
business or properties except in the ordinary course of business
consistent with past practice.
(7) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as
contemplated by this Agreement or as necessary to respond to any
regulatory requirement, enter into or
19
amend or renew any employment, consulting, severance or similar
agreements or arrangements with any director, officer or employee of
the Company or its Subsidiaries or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments
other than pursuant to existing bonus programs Previously Disclosed),
except (i) for normal individual increases in compensation to employees
in the ordinary course of business consistent with past practice,
provided that such increases shall not result in an aggregate annual
adjustment in total compensation of more than 7% in the aggregate, (ii)
for other changes that are required by applicable law, (iii) to satisfy
contractual obligations existing as of the date hereof and set forth in
Schedule 4.01(b)(7) of the Company's Disclosure Schedule, or (iv) for
grants of awards to newly-hired employees consistent with past
practice.
(8) ENVIRONMENTAL. Foreclose upon or take a deed or title to
any commercial real estate without first conducting a Phase I
environmental assessment of the property or foreclose upon any
commercial real estate if such environmental assessment indicates the
presence of Hazardous Substance in amounts which, if such foreclosure
were to occur, would be material.
(9) PARACHUTE PAYMENTS. The provisions of this Section
4.01(b)(9) shall not be construed to limit Parent or the Parent Bank
from making any payments required to be made to ▇▇. ▇▇▇▇▇ under the
Consulting Agreement or to ▇▇. ▇▇▇▇▇▇▇▇ under the Parent Bank
Employment Agreement.
(i) The provisions of this Section 4.01(b)(9)(i)
shall apply to payments to or for the benefit of Persons OTHER
THAN Messrs. Green and ▇▇▇▇▇▇▇▇. Notwithstanding anything to
the contrary contained in this Agreement, in no event shall
the Company or any of its Subsidiaries take any action or make
any payments that could result, in the reasonable opinion of
Parent or its professional advisors, either individually or in
the aggregate, in the payment of an "excess parachute payment"
within the meaning of Section 280G of the Code or that could
result, in the reasonable opinion of Parent or its
professional advisors, either individually or in the
aggregate, in payments that would be nondeductible pursuant to
Section 162(m) of the Code.
(ii) The provisions of this Section 4.01(b)(9)(ii)
shall only apply to payments to or for the benefit of Messrs.
Green and ▇▇▇▇▇▇▇▇. In no event shall the Company or any of
its Subsidiaries pay (or agree to pay) to or for the benefit
of either ▇▇. ▇▇▇▇▇ or ▇▇. ▇▇▇▇▇▇▇▇ any amount that could be
deemed to be in the nature of compensation other than (i)
regular incremental payments of his salary and fringe benefits
of general applicability at the rates and under the programs
now in effect, (ii) reimbursement in the ordinary course of
his business expenses, and (iii) payments required to be made
to such individual under the applicable Payments Agreement.
(10) ACQUISITIONS. Acquire (other than by way of foreclosures
or acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith) all or any
portion of the assets, business, deposits or properties of any other
entity other than in the ordinary course of business consistent with
past practice.
20
(11) CAPITAL EXPENDITURES. Make any capital expenditures other
than capital expenditures in the ordinary course of business consistent
with past practice in amounts not exceeding $50,000 individually or
$250,000 in the aggregate.
(12) GOVERNING DOCUMENTS. Amend the Company Certificate or
Company Bylaws or the articles of organization or bylaws (or equivalent
documents) of any Subsidiary of the Company.
(13) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by changes in laws or regulations or GAAP.
(14) CLAIMS. Enter into any settlement or similar agreement
with respect to any action, suit, proceeding, order or investigation to
which the Company or any of its Subsidiaries is or becomes a party
after the date of this Agreement, which settlement, agreement or action
involves payment by the Company and its Subsidiaries of an amount which
exceeds $50,000 and/or would impose any material restriction on the
business of the Company.
(15) DERIVATIVES CONTRACTS. Enter into any Derivatives
Contract, except in the ordinary course of business consistent with
past practice.
(16) INDEBTEDNESS. Incur any indebtedness for borrowed money
(other than deposits, federal funds purchased, cash management
accounts, borrowings from the Federal Home Loan Bank of Boston and
securities sold under agreements to repurchase, in each case in the
ordinary course of business consistent with past practice or assume,
guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other Person, other than in the ordinary
course of business consistent with past practice.
(17) LENDING. Other than in the ordinary course of business
and consistent with existing lending policies, make any commercial,
commercial real estate, or commercial and industrial loan.
(18) CHARITABLE FOUNDATION. Except to the extent necessary to
maintain its tax-exempt status permit its Charitable Foundation to make
any contributions (other than those that have been Previously
Disclosed) or make any contributions to its Charitable Foundation.
(19) ADVERSE ACTIONS. (A) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (B)
take any action that is intended or is reasonably likely to result in
(x) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (y) any of the conditions to the
Merger set forth in Article VIII not being satisfied or (z) a material
violation of any provision of this Agreement or the Bank
Merger
Agreement except, in each case, as may be required by applicable law or
regulation.
21
(20) COMMITMENTS. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.02. AGREEMENTS OF PARENT. From the date hereof until the Effective
Time, Parent will operate in the ordinary course of business consistent with
past practice. In addition, except as expressly contemplated or permitted by
this Agreement, without the prior written consent of the Company, Parent will
not, and will cause each of its Subsidiaries not to:
(a) ADVERSE ACTIONS. (1) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code, or (2) take any
action that is intended or is reasonably likely to result in (x) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(y) any of the conditions to the Merger set forth in Article VIII not being
satisfied or (z) a material violation of any provision of this Agreement or the
Bank
Merger Agreement except, in each case, as may be required by applicable law
or regulation.
(b) STOCK REPURCHASES. Repurchase any shares of Parent Common
Stock.
(c) COMMITMENTS. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as Previously Disclosed, the Company hereby represents and
warrants to Parent:
5.01. ORGANIZATION, STANDING AND AUTHORITY. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified to do business and is in good standing
in each jurisdiction where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. The Company has in
effect all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted.
5.02. COMPANY CAPITAL STOCK. The authorized capital stock of the
Company consists solely of 2,500,000 shares of Company Common Stock, of which
525,384 shares are outstanding as of the date hereof, and 500,000 shares of
Company Preferred Stock, of which no shares are outstanding. As of the date
hereof, 74,675 shares of Company Common Stock were held in treasury by the
Company or otherwise directly or indirectly owned by the Company. The
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, and none of the outstanding shares
of Company Common Stock have been issued in violation of the preemptive rights
of any Person. Section 5.02 of the Company's Disclosure Schedule sets forth for
each Company Option, the name of the grantee, the date of the grant, the type of
grant, the status of the option grant as qualified or non-qualified under
Section 422 of the Code, the number of shares of Company Common Stock subject to
each option, the number of shares of Company Common Stock subject to options
that are currently exercisable and the exercise price per share. Except as set
forth in the preceding sentence, there
22
are no shares of Company Stock reserved for issuance, the Company does not have
any Equity Interests issued or outstanding with respect to Company Stock, and
the Company does not have any commitment to authorize, issue or sell any Company
Stock or Equity Interests.
5.03. SUBSIDIARIES.
(a) (1) The Company has Previously Disclosed a list of all of
its Subsidiaries together with the jurisdiction of organization of each such
Subsidiary, (2) the Company owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (3) no equity
securities of any of its Subsidiaries are or may become required to be issued
(other than to the Company) by reason of any Equity Interest or otherwise, (4)
there are no contracts, commitments, understandings or arrangements by which any
of its Subsidiaries is or may be bound to sell or otherwise transfer any of its
equity securities (other than to the Company or any of its wholly-owned
Subsidiaries), (5) there are no contracts, commitments, understandings, or
arrangements relating to the Company's rights to vote or to dispose of such
securities, and (6) all the equity securities of the Company's Subsidiaries held
by the Company or its Subsidiaries are fully paid and nonassessable and are
owned by the Company or its Subsidiaries free and clear of any Liens.
(b) Except for securities and other interests held in a
fiduciary capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted, the Company does not own
beneficially, directly or indirectly, any equity securities or similar interests
of any Person or any interest in a partnership or joint venture of any kind
other than its Subsidiaries and stock in the Federal Home Loan Bank of Boston.
(c) Each of the Company's Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the jurisdiction of
its organization and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct of
its business requires it to be so qualified (it being understood that the
Massachusetts Commissioner does not issue good standing certificates for
Massachusetts-chartered banks).
(d) The deposit accounts of the Company Bank are insured by
the Bank Insurance Fund and the Share Insurance Fund in the manner and to the
maximum extent provided by applicable law, and the Company Bank has paid all
deposit insurance premiums and assessments required by applicable laws and
regulations.
5.04. CORPORATE POWER. Each of the Company and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby,
subject to receipt of all necessary approvals of Governmental Authorities and
the approval of this Agreement by the holders of a majority of the outstanding
Company Common Stock.
5.05. CORPORATE AUTHORITY. Subject to the approval of this Agreement by
the holders of a majority of the outstanding Company Common Stock, this
Agreement and the transactions contemplated hereby have been authorized by all
necessary corporate action of the Company and
23
the Company Board on or prior to the date hereof. The Company has duly executed
and delivered this Agreement and, assuming due authorization, execution and
delivery by Parent, this Agreement is a valid and legally binding obligation of
the Company, 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).
5.06. REGULATORY APPROVALS; NO DEFAULTS.
(a) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by the Company or any of its Subsidiaries in
connection with the execution, delivery or performance by the Company or the
Company Bank of this Agreement and the Bank
Merger Agreement, as applicable, or
to consummate the Transactions and the other transactions contemplated hereby
and thereby, except for (A) filings of applications or notices with, and
approvals or waivers by, the Federal Reserve Board, the OTS, the FDIC, the
Massachusetts Bank Commissioner, The Co-operative Central Bank, the Depositors
Insurance Fund, the Massachusetts Board and the MHPF, as required, (B) filings
with the SEC and state securities authorities in connection with the issuance of
Parent Common Stock in the Merger, (C) the filing of a Certificate of Merger
with the Secretary of State of the State of Delaware pursuant to the DGCL and
Articles of Merger with the Secretary of State of The Commonwealth of
Massachusetts pursuant to the MBCL, (D) the approval of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock and by
the holders of a majority of the outstanding shares of Parent Common Stock and
(E) such corporate approvals and such consents or approvals of, or waivers by,
or filings or registrations with, certain of the foregoing federal and state
banking agencies in connection with the Bank Merger. As of the date hereof, the
Company is not aware of any reason why the approvals set forth above and
referred to in Section 8.01(b) will not be received in a timely manner and
without the imposition of a condition, restriction or requirement of the type
described in Section 8.01(b) or that the requisite approval of the Company's
stockholders will not be obtained.
(b) Subject to receipt of the approvals referred to in Section
5.06(a), and the expiration of related waiting periods, the execution, delivery
and performance of this Agreement and the Bank
Merger Agreement by the Company
and the Company Bank, as applicable, and the consummation of the Transactions
and the other transactions contemplated hereby and thereby do not and will not
(A) constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries or any of their
respective properties is subject or bound, (B) constitute a breach or violation
of, or a default under, the certificate of incorporation or bylaws (or similar
governing documents) of the Company or any of its Subsidiaries or (C) require
any consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
5.07. SEC REPORTS. The Company's Annual Reports on Form 10-KSB for the
fiscal years ended December 31, 2001, December 31, 2000 and December 31, 1999
and all other reports, registration statements, definitive proxy statements or
information statements filed or to
24
be filed by it subsequent to December 31, 1998 with the SEC (collectively, the
Company's "SEC DOCUMENTS"), as of the date filed or to be filed and as amended
prior to the date hereof, (A) complied or will comply in all material respects
as to form with the applicable securities regulations of the SEC as the case may
be, and (1) did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that information as of a later date shall be
deemed to modify information as of an earlier date; and (2) each of the balance
sheets contained in any such SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date, and (3)
each of the consolidated statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such SEC Documents (including
any related notes and schedules thereto) fairly presents, or will fairly
present, the consolidated results of operations, changes in shareholders' equity
and changes in cash flows, as the case may be, of the Company and its
Subsidiaries for the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved.
5.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2001,
except as contemplated by this Agreement, the Company and each of its
Subsidiaries have conducted their businesses in the ordinary course and in
manners consistent with past practice and, since December 31, 2001, except as
set forth in Section 5.08 of the Company's Disclosure Schedule, there has not
been (a) either individually or in the aggregate, any Material Adverse Effect,
(b) any material damage, destruction or loss with respect to any property or
asset of the Company or any of its Subsidiaries, (c) any change by the Company
or any of its Subsidiaries in its accounting methods, principles or practices,
other than changes required by applicable law or GAAP or regulatory accounting
as concurred in by the Company's independent accountants, (d) any revaluation by
the Company or any of its Subsidiaries of any asset, including, without
limitation, writing off of notes or accounts receivable, other than in the
ordinary course of business consistent with past practice, (e) any entry by the
Company or any of its Subsidiaries into any contract or commitment (other than
with respect to Loans, as hereinafter defined) of more than $10,000, (f) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of the Company or any of its Subsidiaries except in the
ordinary course of business in an amount consistent with past practice or any
redemption, purchase or other acquisition of any of its securities, (g) except
as would have been permitted by Section 4.01(b)(5) or Section 4.01(b)(7) hereof,
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any directors, officers or employees of the Company or any of
its Subsidiaries, or any grant of severance or termination pay, or any contract
or arrangement entered into to make or grant any severance or termination pay,
any payment of any bonus, or the taking of any other material action not in the
ordinary course of business with respect to the compensation or employment of
directors, officers or employees of the Company or any of its Subsidiaries, (h)
any strike, work stoppage, slowdown or other labor disturbance, (i) any material
election made by the Company or any of its Subsidiaries for federal or state
income tax purposes, (j) any change in the credit policies or procedures of the
Company or any of its Subsidiaries, the effect of which was or is to make any
25
such policy or procedure materially less restrictive in any material respect,
(k) any material liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise and whether due or to become due), including
without limiting the generality of the foregoing, liabilities as guarantor under
any guarantees or liabilities for taxes, other than in the ordinary course of
business consistent with past practice, (l) any forgiveness or cancellation of
any indebtedness or contractual obligation other than in the ordinary course of
business consistent with past practice, (m) except with respect to funds
borrowed by the Company or any of its Subsidiaries from the Federal Home Loan
Bank, any mortgage, pledge, lien or lease of any assets, tangible or intangible,
of the Company or any of its Subsidiaries with a value in excess of $25,000 in
the aggregate (n) any acquisition or disposition of any assets or properties
having a value in excess of $40,000, or any contract for any such acquisition or
disposition entered into, (o) any lease of real or personal property entered
into, other than in connection with foreclosed property or in the ordinary
course of business consistent with past practice.
5.09. LITIGATION. No litigation, claim or other proceeding before any
court or governmental agency is pending against the Company or any of its
Subsidiaries and, to the Company's knowledge, no such litigation, claim or other
proceeding has been threatened and there are no facts which could reasonably
give rise to such litigation, claim or other proceeding.
5.10. REGULATORY MATTERS.
(a) Neither the Company nor any of its Subsidiaries nor any of
any of their respective properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits or the supervision or regulation of it
(collectively, the "COMPANY REGULATORY AUTHORITIES"). The Company and its
Subsidiaries have paid all assessments made or imposed by any Company Regulatory
Authority.
(b) Neither the Company nor any its Subsidiaries has been
advised by, or has any knowledge of facts which could give rise to an advisory
notice by, any Company Regulatory Authority that such Company Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
5.11. COMPLIANCE WITH LAWS. Each of the Company and its Subsidiaries:
(a) is in material compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices;
(b) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently
26
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the Company's knowledge, no
suspension or cancellation of any of them is threatened; and
(c) has received, since December 31, 1999, no notification or
communication from any Governmental Authority (A) asserting that the Company or
any of its Subsidiaries is not in material compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to the Company's knowledge, do any grounds for any of the
foregoing exist).
5.12. MATERIAL CONTRACTS; DEFAULTS. Except for documents listed as
exhibits to the SEC Documents, neither the Company nor any of its Subsidiaries
is a party to, bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is a "MATERIAL
CONTRACT" within the meaning of Item 601(b)(10) of the SEC's Regulation S-K or
(ii) that materially restricts the conduct of business by the Company or by any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in
material default under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives 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. No power of attorney or
similar authorization given directly or indirectly by the Company or any of its
Subsidiaries is currently outstanding.
5.13. NO BROKERS. No action has been taken by the Company or any of its
Subsidiaries that would give rise to any valid claim against the Company or its
Subsidiaries for a brokerage commission, finder's fee or other like payment with
respect to the transactions contemplated by this Agreement, excluding a
Previously Disclosed fee to be paid to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
5.14. EMPLOYEE BENEFIT PLANS.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering one or more current or former employees of the Company and
its Subsidiaries (the "EMPLOYEES") or current or former directors of the Company
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans, contracts,
policies or arrangements (the "BENEFIT PLANS"), are Previously Disclosed in the
Company's Disclosure Schedule. True and complete copies of all Benefit Plans
including, but not limited to, any trust instruments and insurance contracts
forming a part of any Benefit Plans and all amendments thereto have been
provided or made available to Parent. The Benefit Plans include two
multiple-employer plans as described in Section 413(c) of the Code and Section
210 of ERISA for which neither the Company nor any ERISA Affiliate (as defined
below) is the plan sponsor or plan administrator: the Cooperative Banks
Employees Retirement Program - Plan A and the Cooperative Banks Employees
Retirement Program - Plan C (the "MULTIPLE-EMPLOYER PLANS").
(b) All Benefit Plans covering Employees other than
"multiemployer plans"
27
within the meaning of Section 3(37) of ERISA, and other than with respect to the
participation of employers other than the Company and its Subsidiaries in, and
conduct by persons other than the Company and its Subsidiaries and their
employees in connection with, the Multiple-Employer Plans, to the extent subject
to ERISA, are in substantial compliance with ERISA. Each Benefit Plan which is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("PENSION PLAN") and which is intended to be qualified under Section 401(a) of
the Code, has received a favorable determination letter from the Internal
Revenue Service, or an application for a favorable determination letter has been
filed within the period described in Section 401(b) of the Code, and the Company
is not aware of any circumstances likely to result in revocation of any such
favorable determination letter or the loss of the qualification of such Pension
Plan under Section 401(a) of the Code. There is no material pending or, to the
Company's knowledge, threatened litigation relating to the Benefits Plans, other
than with respect to employers other than the Company and its Subsidiaries in,
and conduct by persons other than the Company and its Subsidiaries and their
employees in connection with, the Multiple-Employer Plans. Neither the Company
nor any of its Subsidiaries has engaged in a transaction with respect to any
Benefit Plan or Pension Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject the Company or any of
its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code
or Section 502(i) of ERISA in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA AFFILIATE"). Neither the Company nor any of its Subsidiaries has
incurred, and neither expects to incur, any withdrawal liability with respect to
a multiemployer plan under Subtitle E of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate). With respect to the
Company's participation in the Multiple-Employer Plans, no notice of a
"reportable event," within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been waived, has been required to be filed
for any Pension Plan or by any ERISA Affiliate within the 12-month period ending
on the date hereof or will be required to be filed in connection with the
transactions contemplated by this Agreement.
(d) All contributions required to be made by the Company and
its Subsidiaries under the terms of any Benefit Plan have been timely made or
have been reflected on the financial statements of the Company included in the
Company's SEC Documents. Neither Multiple-Employer Plan has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA attributable to any ERISA Affiliate and no
ERISA Affiliate has an outstanding funding waiver. Neither the Company nor any
of its Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(e) None of the Company, the Company Bank or any ERISA
Affiliate has incurred any liability under Title IV of ERISA which will not have
been paid in full prior to the
28
Closing. There has been no "accumulated funding deficiency" (whether or not
waived) attributable to the Company or any ERISA Affiliate with respect to any
Multiple-Employer Plan subject to Code Section 412 or ERISA Section 302. With
respect to any Pension Plan maintained by the Company or any ERISA Affiliate and
subject to Title IV of ERISA, there has been no (nor will be any as a result of
the transaction contemplated by this Agreement) (i) "reportable event," within
the meaning of ERISA Section 4043, or the regulations thereunder (for which
notice the notice requirement is not waived under 29 C.F.R. Part 2615) with
respect to the Company, and (ii) no event or condition which presents a material
risk of plan termination or any other event that may cause the Company, the
Company Bank or any ERISA Affiliate to incur liability or have a lien imposed on
its assets under Title IV of ERISA. No Pension Plan maintained by the Company,
the Company Bank or any ERISA Affiliate and subject to Title IV of ERISA has any
"unfunded benefit liabilities" for which the Company would be liable, within the
meaning of ERISA Section 4001(a)(18), as of the Closing Date, for which the
Company would be liable, and, without any additional contributions being made to
such Plan, the assets of such Plan are sufficient to satisfy all obligations of
the Plan if the Plan were to be terminated as of the Effective Time for which
the Company would be liable. None of the Company, the Company Bank or any ERISA
Affiliate has ever maintained a Multiemployer Plan.
(f) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Benefit Plans, or by or on behalf of
any individual participants or beneficiaries of any Benefit Plans, alleging any
breach of fiduciary duty on the part of the Company or any of its officers,
directors or employees under ERISA or any other applicable regulations, or
claiming benefit payments for which the Company may be liable (other than those
made in the ordinary operation of such plans), nor is there, to the knowledge of
the Company, any basis for such claim. Other than with respect to the
Multiple-Employer Plans, the Benefit Plans are not the subject of any pending
(or to the knowledge of the Company, any threatened) investigation or audit by
the Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation, other than determination letter applications pending with
the Internal Revenue Service. With respect to the Multiple-Employer Plans, the
Company has been advised by those Plans' administrators that no such
investigation is pending or, to the administrators' knowledge, threatened.
(g) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan, other
than coverage as may be required under Section 4980B of the Code or Part 6 of
Title I of ERISA, or under the continuation of coverage provisions of the laws
of any state or locality. The Company or any of its Subsidiaries may amend or
terminate any such Benefit Plan at any time without incurring any liability
thereunder.
(h) None of the execution of this Agreement, shareholder
approval of this Agreement or consummation of the transactions contemplated by
this Agreement will (A) entitle any employees of the Company or any of its
Subsidiaries to severance pay or any increase in severance pay upon any
termination of employment after the date hereof, (B) accelerate the time of
payment or vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Benefit Plans, (C)
result in any breach or violation of, or a default under, any of the Benefit
Plans or (D) result in any payment that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code,
29
without regard to whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
5.15. LABOR MATTERS. Neither the Company nor any of its Subsidiaries is
a party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is the
Company or any of its Subsidiaries the subject of a proceeding asserting that it
has committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel the Company or any of its Subsidiaries to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving it or any of its
Subsidiaries pending or, to the Company's knowledge, threatened, nor is the
Company or any of its Subsidiaries aware of any activity involving its employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
5.16. ENVIRONMENTAL MATTERS.
(a) The Company and its Subsidiaries are in compliance with
applicable Environmental Laws;
(b) to the Company's knowledge, no real property (including
buildings or other structures) currently or formerly owned or operated by the
Company or any of its Subsidiaries, or any property in which the Company or any
of its Subsidiaries has held a security interest, Lien or a fiduciary or
management role ("COMPANY LOAN PROPERTY"), has been contaminated with, or has
had any release of, any Hazardous Substance except in compliance with
Environmental Laws;
(c) neither the Company nor any of its Subsidiaries has
participated in the management regarding Hazardous Substances of, any Company
Loan Property which has been contaminated with, or has had any release of, any
Hazardous Substance except in compliance with Environmental Laws;
(d) neither the Company nor any of its Subsidiaries has any
liability for any Hazardous Substance disposal or contamination on any third
party property;
(e) neither the Company nor any of its Subsidiaries has
received any notice, demand letter, claim or request for information alleging
any violation of, or liability under, any Environmental Law;
(f) neither the Company nor any of its Subsidiaries is subject
to any order, decree, injunction or other agreement with any Governmental
Authority or any third party relating to any Environmental Law;
(g) to the Company's knowledge, there are no circumstances or
conditions (including the presence of asbestos, underground storage tanks, lead
products, polychlorinated biphenyls, prior manufacturing operations,
dry-cleaning, or automotive services) involving the Company or any of its
Subsidiaries, any currently or formerly owned or operated property, or any
Company Loan Property, that could reasonably be expected to result in any
claims, liability or investigations against the Company or any of its
Subsidiaries, result in any restrictions on the
30
ownership, use, or transfer of any property pursuant to any Environmental Law,
or adversely affect the value of any Company Loan Property; and
(h) the Company has delivered or made available to Parent
copies of all environmental reports, studies, sampling data, correspondence,
filings and other environmental information in its possession or reasonably
available to it relating to the Company, its Subsidiaries and any currently or
formerly owned or operated property or any Company Loan Property.
As used herein, the term "ENVIRONMENTAL LAWS" means any federal, state
or local law, regulation, order, decree, permit, authorization, opinion or
agency requirement relating to: (A) the protection or restoration of the
environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) wetlands, indoor air, pollution, contamination or any injury or threat of
injury to Persons or property in connection with any Hazardous Substance; and
the term "HAZARDOUS SUBSTANCE" means any substance that is: (A) listed,
classified or regulated pursuant to any Environmental Law, (B) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon or (C) any
other substance which is the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
5.17. TAX MATTERS.
(a) For the taxable periods ended December 31, 1998, 1999 and
2000, each of the Company and its Subsidiaries has filed all Tax Returns that it
was required to file under applicable laws and regulations. All such Tax Returns
were correct and complete in all respects and have been prepared in substantial
compliance with all applicable laws and regulations. All Taxes due and owing by
any of the Company and its Subsidiaries (whether or not shown on any Tax Return)
have been paid. Neither the Company nor any of its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where any of the
Company and its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens for Taxes (other
than Taxes not yet due and payable) upon any of the assets of the Company or any
of its Subsidiaries.
(b) Each of the Company and its Subsidiaries has withheld and
paid all Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) No director or officer (or employee responsible for Tax
matters) of any of the Company and its Subsidiaries expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. No foreign, federal, state, or local tax audits or administrative or
judicial Tax proceedings are pending or being conducted with respect to the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has received from any foreign, federal, state, or local taxing
authority (including jurisdictions where the Company or its Subsidiaries have
not filed Tax Returns) any (i) notice indicating an intent to open an audit or
other review, (ii) request for information related to Tax matters, or (iii)
notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted, or assessed by any
31
taxing authority against the Company or any of its Subsidiaries.
(d) The Company has Previously Disclosed the United States
federal, state, local, and foreign income Tax Returns filed with respect to any
of the Company and its Subsidiaries for taxable periods ended December 31, 1999
and 2000. The Company has Previously Disclosed those Tax Returns that have been
audited, and those Tax Returns that currently are the subject of audit. The
Company has delivered to Parent correct and complete copies of all United States
federal income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by any of the Company and its Subsidiaries filed
for the years ended December 31, 1999 and 2000.
(e) Neither the Company nor any of its Subsidiaries has waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(f) Neither the Company nor any of its Subsidiaries has
filed a consent under Code section 341(f) concerning collapsible
corporations. Neither the Company nor any of its Subsidiaries is a party to
any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of (i) any "excess
parachute payment" within the meaning of Code section 280G (or any
corresponding provision of state, local or foreign Tax law) and (ii) any
amount that will not be fully deductible as a result of Code section 162(m)
(or any corresponding provision of state, local or foreign Tax law). Neither
the Company nor any of its Subsidiaries has been a United States real
property holding corporation within the meaning of Code section 897(c)(2)
during the applicable period specified in Code section 897(c)(1)(A)(ii). Each
of the Company and its Subsidiaries has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code section 6662.
Neither the Company nor any of its Subsidiaries is a party to or bound by any
Tax allocation or sharing agreement. Neither the Company nor any of its
Subsidiaries (A) has been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common parent
of which was the Company) or (B) has any Liability for the Taxes of any
Person (other than any of the Company and its Subsidiaries) under Reg.
section 1.1502-6 (or any similar provision of state, local, or foreign law),
as a transferee or successor, by contract, or otherwise.
(g) The unpaid Taxes of the Company and its Subsidiaries (A)
did not, as of the end of the most recent period covered by the Company's SEC
Documents filed on or prior to the date hereof, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
financial statements included in the Company's SEC Documents filed on or prior
to the date hereof (rather than in any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and its Subsidiaries
in filing their Tax Returns. Since the end of the most recent period covered by
the Company's SEC Documents filed prior to the date hereof, neither the Company
nor any of its Subsidiaries has incurred any liability for Taxes arising from
extraordinary gains or losses, as that term is used in GAAP, outside the
ordinary course of business consistent with past custom and practice.
(h) None of the Company and its Subsidiaries will be required
to include any item
32
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any: (A) change in method of accounting for a taxable period ending on or prior
to the Closing Date; (B) "closing agreement" as described in Code section 7121
(or any corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date; (C) intercompany transactions or
any excess loss account described in Treasury Regulations under Code section
1502 (or any corresponding or similar provision of state, local or foreign
income Tax law); (D) installment sale or open transaction disposition made on or
prior to the Closing Date; or (E) prepaid amount received on or prior to the
Closing Date.
5.18. RISK MANAGEMENT INSTRUMENTS. Neither the Company nor any of its
Subsidiaries is a party or has agreed to enter into an exchange traded or
over-the-counter equity, interest rate, foreign exchange or other swap, forward,
future, option, cap, floor or collar or any other contract that is not included
on the balance sheet and is a derivatives contract (including various
combinations thereof) (each, a "DERIVATIVES CONTRACT") or owns securities that
(i) are referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate mortgage
derivatives" or (ii) are likely to have changes in value as a result of interest
or exchange rate changes that significantly exceed normal changes in value
attributable to interest or exchange rate changes, except for those Derivatives
Contracts and other instruments legally purchased or entered into in the
ordinary course of business, consistent with safe and sound banking practices
and regulatory guidance. All of such Derivatives Contracts or other instruments,
are legal, valid and binding obligations of the Company or any of its
Subsidiaries enforceable in accordance with their terms (except as enforcement
may be limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally), and are in full force and effect. The
Company and its Subsidiaries have duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations to
perform have accrued; and, to the Company's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder which would have or would reasonably be expected to have a Material
Adverse Effect on the Company.
5.19. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.
(a) Each loan agreement, note or borrowing arrangement,
including without limitation portions of outstanding lines of credit and loan
commitments (collectively, "LOANS"), on the books and records of the Company and
its Subsidiaries, was made and has been serviced in all material respects in
accordance with customary lending standards in the ordinary course of business,
is evidenced in all material respects by appropriate and sufficient
documentation and, to the knowledge of the Company, constitutes the legal, valid
and binding obligation of the obligor named therein, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditor's rights or by general
equity principles.
(b) The Company has Previously Disclosed as to the Company and
each Company Subsidiary as of the latest practicable date: (i) any written or,
to the Company's knowledge, oral Loan under the terms of which the obligor is 60
or more days delinquent in payment of principal or interest, or to the Company's
knowledge, in default of any other material provision thereof; (ii) each Loan
which has been classified as "substandard," "doubtful," "loss"
33
or "special mention" (or words of similar import) by the Company, a Company
Subsidiary or an applicable regulatory authority (it being understood that no
representation is being made that the FDIC or the Massachusetts Bank
Commissioner would agree with the loan classifications established by the
Company); (iii) a listing of the OREO acquired by foreclosure or by deed-in-lieu
thereof, including the book value thereof; and (iv) each Loan with any director,
executive officer or five percent or greater shareholder of the Company or a
Company Subsidiary, or to the best knowledge of the Company, any Person
controlling, controlled by or under common control with any of the foregoing.
(c) No agreement pursuant to which any loans or other assets
have been or shall be sold by the Company or its Subsidiaries entitled the buyer
of such loans or other assets, unless there is material breach of a
representation or covenant by the Company or its Subsidiaries, to cause the
Company or its Subsidiaries to repurchase such loan or other asset or the buyer
to pursue any other form of recourse against the Company or its Subsidiaries.
5.20. PROPERTIES. All real and material personal property owned by the
Company or a Subsidiary of the Company or presently used by any of them in its
respective business is in an adequate condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with its past practices. The Company has good and marketable
title free and clear of all Liens to all of the material properties and assets,
real and personal, reflected on the consolidated statement of financial
condition of the Company as of December 31, 2001 included in the Company's SEC
Documents or acquired after such date, other than properties sold by the Company
in the ordinary course of business, except (i) Liens for current taxes and
assessments not yet due or payable (ii) pledges to secure deposits and other
Liens incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Company as of December 31, 2001 included
in the Company's SEC Documents. All real and personal property which is material
to the Company's business on a consolidated basis and leased or licensed by the
Company or a Subsidiary of the Company is held pursuant to leases or licenses
which are valid and enforceable in accordance with their respective terms and
such leases will not terminate or lapse prior to the Effective Time.
5.21. INTELLECTUAL PROPERTY. The Company and each Subsidiary of the
Company owns or possesses valid and binding licenses and other rights to use
without payment of any material amount all material patents, copyrights, trade
secrets, trade names, service marks and trademarks used in its businesses, all
of which have been Previously Disclosed by the Company, and none of the Company
or any of its Subsidiaries has received any notice of conflict with respect
thereto that asserts the right of others. The Company and each Subsidiary has
performed in all material respects all the obligations required to be performed
by it and is not in default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
5.22. FIDUCIARY ACCOUNTS. The Company and each of its Subsidiaries has
properly administered all accounts for which it acts as a fiduciary, including
but not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in
accordance with the terms of the governing documents and applicable laws and
regulations. Neither the Company nor any of its Subsidiaries, nor any of their
respective directors, officers or employees, has committed any breach of trust
with respect to any
34
fiduciary account and the records for each such fiduciary account are true and
correct and accurately reflect the assets of such fiduciary account.
5.23. BOOKS AND RECORDS. The books and records of the Company and its
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and such books and records accurately reflect in
all material respects all dealings and transactions in respect of the business,
assets, liabilities and affairs of the Company and its Subsidiaries.
5.24. INSURANCE. The Company has Previously Disclosed all of the
material insurance policies, binders, or bonds currently maintained by the
Company or any of its Subsidiaries ("INSURANCE POLICIES"). The Company and its
Subsidiaries are insured with reputable insurers against such risks and in such
amounts as the management of the Company reasonably has determined to be prudent
in accordance with industry practices. All the Insurance Policies are in full
force and effect; the Company and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely fashion.
5.25. ALLOWANCE FOR LOAN LOSSES. The Company's allowance for loan
losses is, and shall be as of the Effective Date, in compliance with the
Company's existing methodology for determining the adequacy of its allowance for
loan losses and, to the knowledge of the Company, the standards established by
applicable Governmental Authorities and the Financial Accounting Standards Board
and is and shall be adequate under all such standards.
5.26. TRANSACTIONS WITH AFFILIATES. All "covered transactions" between
the Company Bank and an "affiliate" within the meaning of Sections 23A and 23B
of the Federal Reserve Act have been in compliance with such provisions.
5.27. REQUIRED VOTE; ANTITAKEOVER PROVISIONS.
(a) The affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock is necessary to approve this
Agreement and the Transactions on behalf of the Company.
(b) Based on the representation and warranty of Parent
contained in Section 6.12, no "control share acquisition," "business combination
moratorium," "fair price" or other form of antitakeover statute or regulation is
applicable to this Agreement and the transactions contemplated hereby. Without
limiting the foregoing, the Board of Directors of the Company has approved the
transactions contemplated by this Agreement and taken all other requisite action
such that the provisions of Section 203 of the DGCL and the provisions of the
Company Articles relating to special voting requirements for certain business
combinations will not apply to this Agreement or any of the transactions
contemplated hereby.
5.28. FAIRNESS OPINION. The Company Board has received the written
opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. to the effect that as of the date
hereof the Merger Consideration is fair to the holders of Company Common Stock
from a financial point of view.
5.29. TRANSACTIONS IN SECURITIES. The Company has questioned its
directors and executive officers concerning known stock transfers since December
31, 1999 and based upon
35
that investigation the Company has not, and to the Company's knowledge (a) no
director or officer of the Company or the Company's Subsidiaries, (b) no Person
related to any such director or officer by blood, marriage or adoption and
residing in the same household and (c) no Person who has been knowingly provided
material nonpublic information by any one or more of these Persons, has
purchased or sold, or caused to be purchased or sold, any shares of Company
Common Stock or other securities issued by the Company (i) during any period
when the Company was in possession of material nonpublic information or (ii) in
violation of any applicable provision of the Exchange Act.
5.30. DISCLOSURE. The representations and warranties contained in this
Article V, when considered as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Article V not misleading.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as Previously Disclosed, Parent hereby represents and warrants
to the Company as follows:
6.01. ORGANIZATION, STANDING AND AUTHORITY. Parent is duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts. Parent is duly qualified to do business and is in good standing
in each jurisdiction where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. Parent has in effect all
federal, state, local and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now conducted.
6.02. PARENT STOCK.
(a) The authorized capital stock of Parent consists solely of
12,000,000 shares of Parent Common Stock, of which 3,184,352 shares were
outstanding as of the date hereof, and 3,000,000 shares of Parent Preferred
Stock, of which no shares were outstanding as of the date hereof. The
outstanding shares of Parent Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, and none of the shares of Parent
Common Stock have been issued in violation of the preemptive rights of any
Person. As of the date hereof, there are no Equity Interests authorized, issued
or outstanding with respect to the capital stock of Parent, except for (i)
shares of Parent Common Stock issuable pursuant to the Parent Benefits Plans and
any other plan or arrangement pursuant to which shares of Parent Common Stock
may be issued and (ii) by virtue of this Agreement.
(b) The shares of Parent Common Stock to be issued in exchange
for shares of Company Common Stock in the Merger, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable and the issuance thereof is not subject to any preemptive
right.
6.03. SUBSIDIARIES.
(a) As of the date hereof, the only subsidiary of the Company
which constitutes a
36
Significant Subsidiary is the Parent Bank. The Parent Bank has been duly
organized and is validly existing under the laws of The Commonwealth of
Massachusetts and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified. The Parent Bank is duly licensed by the
Massachusetts Commissioner and its deposits are insured by the FDIC and the
Deposit Insurance Fund in the manner and to the maximum extent provided by law.
(b) As of the date hereof, (A) Parent owns, directly or
indirectly, all the issued and outstanding equity securities of the Parent Bank,
(B) no equity securities of the Parent Bank are or may become required to be
issued (other than to Parent) by reason of any Equity Interest or otherwise, (C)
there are no contracts, commitments, understandings or arrangements by which the
Parent Bank is or may be bound to sell or otherwise transfer any of its equity
securities (other than to Parent or any of its wholly-owned Subsidiaries) and
(D) there are no contracts, commitments, understandings, or arrangements
relating to Parent's rights to vote or to dispose of such securities.
6.04. CORPORATE POWER. Each of Parent and the Parent Bank has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets. Parent has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, subject to the
receipt of all necessary approvals of Governmental Authorities and the approval
of this Agreement by the holders of a majority of the outstanding Parent Common
Stock.
6.05. CORPORATE AUTHORITY. Subject to the approval of this Agreement by
the holders of a majority of the outstanding Parent Common Stock, this Agreement
and the transactions contemplated hereby has been authorized by all necessary
corporate action of Parent and the Parent Board. This Agreement has been duly
executed and delivered by Parent and, assuming due authorization, execution and
delivery by the Company, this Agreement is a valid and legally binding agreement
of Parent 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).
6.06. REGULATORY APPROVALS; NO DEFAULTS.
(a) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Parent or any of its Subsidiaries in
connection with the execution, delivery or performance by Parent and the Parent
Bank of this Agreement and the Bank
Merger Agreement, as applicable, or to
consummate the Transactions and the other transactions contemplated hereby and
thereby, except for (A) filings of applications or notices with and approvals or
waivers by the Federal Reserve Board, the OTS, the FDIC, the Massachusetts Bank
Commissioner, The Co-operative Central Bank, the Depositors Insurance Fund, the
Massachusetts Board and the MHPF, as required, (B) filings with the SEC and
state securities authorities in connection with the issuance of Parent Common
Stock in the Merger, (C) the approval of the listing on Nasdaq of the Parent
Common Stock to be issued in the Merger, (D) the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware pursuant to the DGCL
and Articles of Merger with the Secretary of State of The Commonwealth of
Massachusetts pursuant to the MBCL, (E) the
37
approval of this Agreement by the holders of a majority of the outstanding
shares of Parent Common Stock, and (F) such corporate approvals and such
consents or approvals of, or waivers by, or filings or registrations with,
certain of the foregoing federal and state banking agencies in connection with
the Bank Merger. As of the date hereof, Parent is not aware of any reason why
the approvals set forth above and referred to in Section 8.01(b) will not be
received in a timely manner and without the imposition of a condition,
restriction or requirement of the type described in Section 8.01(b) or that the
requisite approval of Parent's stockholders will not be obtained.
(b) Subject to receipt, or the making, of the consents,
approvals and filings referred to in Section 6.06(a) and expiration of the
related waiting periods, the execution, delivery and performance of this
Agreement and the Bank
Merger Agreement by Parent and the Parent Bank, as
applicable, and the consummation of the Transactions and the other transactions
contemplated hereby and thereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or Agreement, indenture
or instrument of Parent or of any of its Subsidiaries or to which Parent or any
of its Subsidiaries or properties is subject or bound, (B) constitute a breach
or violation of, or a default under, the articles of incorporation or bylaws (or
similar governing documents) of Parent or any of its Subsidiaries or (C) require
any consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
6.07. FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(a) Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 and all other reports, registration statements,
definitive proxy statements or information statements filed or to be filed by it
subsequent to December 31, 1998 under the Securities Act, or under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act in the form filed or to be filed
(collectively, Parent's "SEC DOCUMENTS") with the SEC, as of the date filed or
to be filed, (A) complied or will comply in all material respects as to form
with the applicable requirements under the Securities Act or the Exchange Act,
as the case may be and (B) did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that information as of a
later date shall be deemed to modify information as of an earlier date; and each
of the balance sheets contained in or incorporated by reference into any such
SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of Parent and its
Subsidiaries as of its date, and each of the statements of income and changes in
shareholders' equity and cash flows or equivalent statements in such SEC
Documents (including any related notes and schedules thereto) fairly presents,
or will fairly present, the results of operations, changes in shareholders'
equity and changes in cash flows, as the case may be, of Parent and its
Subsidiaries for the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved, except in each case
as may be noted therein.
(b) Since December 31, 2001, no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Article VI or
otherwise), is reasonably likely to have a Material Adverse Effect
38
with respect to Parent.
6.08. LITIGATION. No litigation, claim or other proceeding before any
court or governmental agency is pending against Parent or its Subsidiaries and,
to Parent's knowledge, no such litigation, claim or other proceeding has been
threatened and there are no facts which could reasonably give rise to such
litigation, claim or other proceeding.
6.09. NO BROKERS. No action has been taken by Parent or its
Subsidiaries that would give rise to any valid claim against any party hereto
for a brokerage commission, finder's fee or other like payment with respect to
the transactions contemplated by this Agreement, excluding a fee to be paid to
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, Inc.
6.10. TAX MATTERS. As of the date hereof, Parent does not have any
reason to believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
6.11. REGULATORY MATTERS.
(a) Neither Parent nor any of its Subsidiaries nor any of any
of their respective properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits or the supervision or regulation of it
(collectively, the "PARENT REGULATORY AUTHORITIES"). Parent and its Subsidiaries
have paid all assessments made or imposed by any Parent Regulatory Authority.
(b) Neither Parent nor any its Subsidiaries has been advised
by, and does not have any knowledge of facts which could give rise to an
advisory notice by, any Parent Regulatory Authority that such Parent Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
6.12. OWNERSHIP OF COMPANY COMMON STOCK. None of Parent or any of its
Subsidiaries, or to Parent's knowledge, any of its other affiliates or
associates (as such terms are defined under the Exchange Act), owns beneficially
or of record, directly or indirectly, or is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of, shares of Company Common Stock (other than shares held in a
fiduciary capacity that are beneficially owned by third parties or as a result
of debts previously contracted) which in the aggregate represent 5% or more of
the outstanding Company Common Stock.
6.13. FINANCIAL ABILITY. Parent or Parent Bank has all funds necessary
to consummate the Merger and pay the Aggregate Cash Consideration to holders of
Company Common Stock pursuant to Section 3.01(c) hereof. Each of Parent and
Parent Bank is, and immediately following completion of the Transactions will
be, in compliance with all capital requirements applicable to it.
6.14. DISCLOSURE. The representations and warranties contained in this
Article VI, when
39
considered as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Article VI not misleading.
6.15. COMPLIANCE WITH LAWS. Each of the Parent and its Subsidiaries:
(a) is in material compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices;
(b) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to the Parent's knowledge, no suspension or
cancellation of any of them is threatened; and
(c) has received, since December 31, 1999, no notification or
communication from any Governmental Authority (A) asserting that the Parent or
any of its Subsidiaries is not in material compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to the Parent's knowledge, do any grounds for any of the
foregoing exist).
6.16. MATERIAL CONTRACTS; DEFAULTS. Except for documents listed as
exhibits to the SEC Documents, neither the Parent nor any of its Subsidiaries is
a party to, bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is a Material
Contract or (ii) that materially restricts the conduct of business by the Parent
or by any of its Subsidiaries. Neither the Parent nor any of its Subsidiaries is
in material default under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives 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. No power of attorney or
similar authorization given directly or indirectly by the Parent or any of its
Subsidiaries is currently outstanding.
6.17. LABOR MATTERS. Neither the Parent nor any of its Subsidiaries is
a party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is the
Parent or any of its Subsidiaries the subject of a proceeding asserting that it
has committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel the Parent or any of its Subsidiaries to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving it or any of its
Subsidiaries pending or, to the Parent's knowledge, threatened, nor is the
Parent or any of its Subsidiaries aware of any activity involving its employees
seeking to certify a collective bargaining unit or engaging in other
40
organizational activity.
6.18. ENVIRONMENTAL MATTERS.
(a) The Parent and its Subsidiaries are in compliance with
applicable Environmental Laws;
(b) to the Parent's knowledge, no real property (including
buildings or other structures) currently or formerly owned or operated by the
Parent or any of its Subsidiaries, or any property in which the Parent or any of
its Subsidiaries has held a security interest, Lien or a fiduciary or management
role ("PARENT LOAN PROPERTY"), has been contaminated with, or has had any
release of, any Hazardous Substance except in compliance with Environmental
Laws;
(c) neither the Parent nor any of its Subsidiaries has
participated in the management regarding Hazardous Substances of, any Parent
Loan Property which has been contaminated with, or has had any release of, any
Hazardous Substance except in compliance with Environmental Laws;
(d) neither the Parent nor any of its Subsidiaries has any
liability for any Hazardous Substance disposal or contamination on any third
party property;
(e) neither the Parent nor any of its Subsidiaries has
received any notice, demand letter, claim or request for information alleging
any violation of, or liability under, any Environmental Law;
(f) neither the Parent nor any of its Subsidiaries is subject
to any order, decree, injunction or other agreement with any Governmental
Authority or any third party relating to any Environmental Law;
(g) to the Parent's knowledge, there are no circumstances or
conditions (including the presence of asbestos, underground storage tanks, lead
products, polychlorinated biphenyls, prior manufacturing operations,
dry-cleaning, or automotive services) involving the Parent or any of its
Subsidiaries, any currently or formerly owned or operated property, or any
Parent Loan Property, that could reasonably be expected to result in any claims,
liability or investigations against the Parent or any of its Subsidiaries,
result in any restrictions on the ownership, use, or transfer of any property
pursuant to any Environmental Law, or adversely affect the value of any Parent
Loan Property; and
(h) the Parent has delivered or made available to the Company
copies of all environmental reports, studies, sampling data, correspondence,
filings and other environmental information in its possession or reasonably
available to it relating to the Parent, its Subsidiaries and any currently or
formerly owned or operated property or any Parent Loan Property.
6.19. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.
(a) Each Loan on the books and records of the Parent and its
Subsidiaries, was made and has been serviced in all material respects in
accordance with customary lending standards in the ordinary course of business,
is evidenced in all material respects by appropriate
41
and sufficient documentation and, to the knowledge of the Parent, constitutes
the legal, valid and binding obligation of the obligor named therein, subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditor's rights
or by general equity principles.
(b) The Parent has Previously Disclosed as to the Parent and
each Parent Subsidiary as of the latest practicable date: (i) any written or, to
the Parent's knowledge, oral Loan under the terms of which the obligor is 60 or
more days delinquent in payment of principal or interest, or to the Parent's
knowledge, in default of any other material provision thereof; (ii) each Loan
which has been classified as "substandard," "doubtful," "loss" or "special
mention" (or words of similar import) by the Parent, a Parent Subsidiary or an
applicable regulatory authority (it being understood that no representation is
being made that the FDIC or the Massachusetts Bank Commissioner would agree with
the loan classifications established by the Parent); (iii) a listing of the OREO
acquired by foreclosure or by deed-in-lieu thereof, including the book value
thereof; and (iv) each Loan with any director, executive officer or five percent
or greater shareholder of the Parent or a Parent Subsidiary, or to the best
knowledge of the Parent, any Person controlling, controlled by or under common
control with any of the foregoing.
(c) No agreement pursuant to which any loans or other assets
have been or shall be sold by the Parent or its Subsidiaries entitled the buyer
of such loans or other assets, unless there is material breach of a
representation or covenant by the Parent or its Subsidiaries, to cause the
Parent or its Subsidiaries to repurchase such loan or other asset or the buyer
to pursue any other form of recourse against the Parent or its Subsidiaries.
6.20. ALLOWANCE FOR LOAN LOSSES. The Parent's allowance for loan losses
is, and shall be as of the Effective Date, in compliance with the Parent's
existing methodology for determining the adequacy of its allowance for loan
losses and, to the knowledge of the Company, the standards established by
applicable Governmental Authorities and the Financial Accounting Standards Board
and is and shall be adequate under all such standards.
ARTICLE VII.
COVENANTS
7.01. REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of the Company and Parent agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Transactions as promptly as
practicable and otherwise to enable consummation of the Transactions, including
the satisfaction of the conditions set forth in Article VIII hereof, and shall
cooperate fully with the other party hereto to that end.
7.02. SHAREHOLDER APPROVALS. The Company agrees to take, in accordance
with applicable law and the Company Certificate and Company Bylaws, all action
necessary to call, give notice of, convene, and hold as soon as reasonably
practicable a meeting of its shareholders to consider and vote upon the approval
of this Agreement and any other matters required to be approved by the Company's
shareholders for consummation of the Transactions (including any adjournment or
postponement, the "COMPANY MEETING"). Except with the prior approval of Parent,
no other matters shall be submitted for the approval of the Company shareholders
at the
42
Company Meeting, other than the annual election of directors of the Company. The
Company Board shall at all times prior to and during such meeting recommend such
approval and shall take all reasonable lawful action to solicit such approval by
its shareholders; provided that nothing in this Agreement shall prevent the
Company Board from withholding, withdrawing, amending or modifying its
recommendation if the Company Board determines, after consultation with its
outside counsel, that such action is legally required in order for the directors
to comply with their fiduciary duties to the Company shareholders under
applicable law; provided, further, that Section 7.08 shall govern the
withholding, withdrawing, amending or modifying of such recommendation in the
circumstances described therein. Nothing contained in Section 7.08 shall affect
or otherwise limit the obligation of the Company to call, give notice of,
convene, and hold the Company Meeting. Parent agrees to take, in accordance with
applicable law and Parent Articles and Parent Bylaws, all action necessary to
convene as soon as reasonably practicable a meeting of its shareholders to
consider and vote upon the approval of this Agreement and any other matters
required to be approved by Parent's shareholders for consummation of the
Transactions (including any adjournment or postponement, the "PARENT MEETING").
Parent Board shall at all times prior to and during such meeting recommend such
approval and shall take all reasonable lawful action to solicit such approval by
its shareholders.
7.03. REGISTRATION STATEMENT.
(a) Parent agrees to prepare a registration statement on Form
S-4 or other applicable form (the "REGISTRATION STATEMENT") to be filed by
Parent with the SEC in connection with the issuance of Parent Common Stock in
the Merger, and the parties will jointly prepare the joint proxy statement and
prospectus and other proxy solicitation materials of Parent and the Company
constituting a part thereof (the "JOINT PROXY STATEMENT") and all related
documents. The parties agree to cooperate, and to cause their Subsidiaries to
cooperate, with the other party, its counsel and its accountants, in the
preparation of the Registration Statement and the Joint Proxy Statement and
provide the other with a reasonable opportunity to review and comment on drafts
of the Registration Statement and Joint Proxy Statement (and any amendments
thereto) prior to filing the Registration Statement and Joint Proxy Statement
(and any amendments thereto); and provided that both parties and their
respective Subsidiaries have cooperated as required above, Parent and the
Company agree to file the Registration Statement, including the Joint Proxy
Statement in preliminary form, with the SEC as promptly as reasonably
practicable. Each of Parent and the Company will use all reasonable best efforts
to cause the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after filing thereof.
Parent also agrees to use its reasonable 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. After the Registration
Statement is declared effective under the Securities Act, each of Parent and the
Company shall promptly mail at its own expense the Joint Proxy Statement to its
shareholders.
(b) Each of the Company and Parent agrees that none of the
information supplied or to be supplied by it for inclusion or incorporation by
reference in (i) the Registration Statement shall, at the time the Registration
Statement and each amendment or supplement thereto, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) the Joint Proxy Statement
and any amendment or
43
supplement thereto shall, at the date(s) of mailing to shareholders and at the
time of Parent Meeting or the Company Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. Each of the Company
and Parent further agrees that if such party shall become aware prior to the
Effective Date of any information furnished by such party that would cause any
of the statements in the Registration Statement or the Joint Proxy Statement to
be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other parties thereof and to take the
necessary steps to correct the Registration Statement or the Joint Proxy
Statement.
(c) The parties shall provide the other party with copies of
any written comments and advise the other party of any oral comments from the
SEC. Parent agrees to advise the Company, promptly after Parent receives notice
thereof, of the time when the 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 qualification of Parent Common Stock for offering or sale in
any jurisdiction, of the initiation or, to the extent Parent is aware thereof,
threat of any proceeding for any such purpose, or of any request by the SEC for
the amendment or supplement of the Registration Statement or for additional
information.
7.04. REGULATORY FILINGS.
(a) Each of Parent and the Company and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the Transactions and any other transactions
contemplated by this Agreement and the Bank
Merger Agreement; and any initial
filings with Governmental Authorities (other than the Joint Proxy Statement)
shall be made by Parent as soon as reasonably practicable after the execution
hereof. Each of Parent and the Company shall have a reasonable time to review
such filings in advance, and to the extent practicable each shall consult with
the other, in each case subject to applicable laws relating to the exchange of
information, with respect to all written information submitted to any third
party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of such
parties agrees to act reasonably and as promptly as practicable. Each party
hereto agrees that it shall consult with the other parties hereto with respect
to the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and the Bank
Merger Agreement
and each party shall keep the other parties apprised of the status of material
matters relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other
parties with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with any filing, notice or application made by or on
behalf of such other parties or any of their respective Subsidiaries to any
third party or Governmental Authority.
7.05. PRESS RELEASES. The Company and Parent shall consult with each
other before
44
issuing any press release with respect to the Transactions or this Agreement and
shall not issue any such press release or make any such public statements
without the prior consent of the other party, which shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of the
other party (but after such consultation, to the extent practicable in the
circumstances), issue such press release or make such public statements as may
upon the advice of outside counsel be required by law or the rules or
regulations of Nasdaq or other regulatory authority. The Company and Parent
shall cooperate to develop all public announcement materials and make
appropriate management available at presentations related to the Transactions as
reasonably requested by the other party.
7.06. ACCESS; INFORMATION.
(a) The Company agrees that upon reasonable notice and subject
to applicable laws relating to the exchange of information, it shall afford
Parent and Parent's officers, employees, counsel, accountants and other
authorized representatives such access during normal business hours throughout
the period prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties and
personnel and to such other information as Parent may reasonably request and,
during such period, it shall furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request.
(b) Parent agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford the
Company and its authorized representatives such access to Parent's personnel as
the Company may reasonably request.
(c) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
7.06 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party shall keep confidential, and shall cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 7.06 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the party to which such information pertains or (iv) is or becomes
readily ascertainable from publicly available sources. In the event that this
Agreement is terminated or the transactions contemplated by this Agreement shall
otherwise fail to be consummated, each party shall promptly cause all copies of
documents or extracts thereof containing information and data as to another
party hereto to be returned to the party which furnished the same. No
investigation by any party of the business and affairs of any other party shall
affect or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to any party's obligation to
consummate the transactions contemplated by this Agreement.
7.07. AFFILIATES. The Company shall use its reasonable best efforts to
identify those Persons who may be deemed to be "affiliates" of the Company
within the meaning of Rule 145 promulgated by the SEC under the Securities Act
(the "COMPANY AFFILIATES") and to cause each Person so identified to deliver to
Parent as soon as practicable, and in any event prior to the date
45
of the Company Meeting, a written agreement ("AFFILIATE AGREEMENT") to comply
with the requirements of Rule 145 under the Securities Act in connection with
the sale or other transfer of Parent Common Stock received in the Merger, which
agreement shall be in a form reasonably satisfactory to the Company.
7.08. ACQUISITION PROPOSALS. The Company agrees that neither it nor any
of its Subsidiaries nor any of their respective officers shall, and that it
shall direct and use its reasonable best efforts to cause its and each such
Subsidiary's directors, employees, agents and representatives not to, directly
or indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or substantially all of the assets of the Company or more
than 15% of the outstanding equity securities of the Company or any of its
Subsidiaries (any such proposal or offer being hereinafter referred to as an
"ACQUISITION PROPOSAL"). The Company further agrees that neither the Company nor
any of its Subsidiaries nor any of their respective officers and directors
shall, and that it shall direct and use its reasonable best efforts to cause its
and each such Subsidiary's employees, agents and representatives not to,
directly or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent the Company or the Company
Board from (A) complying with its disclosure obligations under federal or state
law; (B) providing information in response to a request therefor by a Person who
has made an unsolicited bona fide written Acquisition Proposal if the Company
Board receives from the Person so requesting such information an executed
confidentiality agreement no less favorable to it than the Confidentiality
Agreement entered into on January 23, 2002 by Parent with ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc. as agent of the Company; (C) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal or (D) recommending such an Acquisition Proposal to the
shareholders of the Company, if and only to the extent that, (i) in each such
case referred to in clause (B), (C) or (D) above, the Company Board determines
in good faith (after consultation with outside legal counsel) that such action
would be required in order for its directors to comply with their respective
fiduciary duties under applicable law and (ii) in the case referred to in clause
(D) above, the Company Board determines in good faith (after consultation with
its financial advisor) that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the Person making the proposal and
would, if consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the Merger. The Company agrees
that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposals. The Company agrees that it will
notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives. The Company will promptly (within one business day) advise
Parent following receipt of any Acquisition Proposal and the substance thereof
(including the identity of the Person making such Acquisition Proposal), and
will keep Parent apprised of any related developments, discussions and
negotiations (including the terms and conditions of the Acquisition Proposal) on
a current basis. The Company will use its reasonable best efforts to enforce
(and will not waive any provisions of) any confidentiality or
46
similar agreement entered into on its behalf by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. or
otherwise relating to a potential Acquisition Proposal. Notwithstanding the
requirements of the previous sentence, the Company may waive standstill
provisions of such an agreement with respect to a particular Acquisition
Proposal if (i) the Company Board determines in good faith (after consultation
with outside legal counsel) that such action would be required in order for its
directors to comply with their respective fiduciary duties under applicable law
and (ii) the Company Board also determines in good faith (after consultation
with its financial advisor) that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated, taking into account all legal, financial
and regulatory aspects of the proposal and the Person making the proposal and
would, if consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the Merger.
7.09. CERTAIN POLICIES. Prior to the Effective Date, each of the
Company and its Subsidiaries shall, consistent with GAAP, the rules and
regulations of the SEC and applicable banking laws and regulations, modify or
change its loan, OREO, accrual, reserve, tax, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied on a basis that is consistent with that of Parent;
provided, however, that no such modifications or changes need be made prior to
the satisfaction of all of the conditions set forth in Article VIII; and further
provided that in any event, no accrual or reserve made by the Company or any of
its Subsidiaries pursuant to this Section 7.09 shall constitute or be deemed to
be a breach, violation of or failure to satisfy any representation, warranty,
covenant, agreement, condition or other provision of this Agreement or otherwise
be considered in determining whether any such breach, violation or failure to
satisfy shall have occurred. The recording of any such adjustments shall not be
deemed to imply any misstatement of previously furnished financial statements or
information and shall not be construed as concurrence of the Company or its
management with any such adjustments.
7.10. NASDAQ LISTING. Parent agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the Nasdaq the shares of Parent Common
Stock to be issued in connection with the Merger.
7.11. INDEMNIFICATION.
(a) From and after the Effective Time, Parent (the
"INDEMNIFYING PARTY") shall indemnify and hold harmless each present and former
director, officer and employee of the Company or a Company Subsidiary, as
applicable, determined as of the Effective Time (the "INDEMNIFIED PARTIES")
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, arising in whole or in part out of, or pertaining to
the fact that he or she was a director, officer, employee, fiduciary or agent of
the Company or any Company Subsidiary or is or was serving at the request of the
Company or any of the Company Subsidiaries as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint venture, trust or
other enterprise, including without limitation matters related to the
negotiation, execution and performance of this Agreement or any of the
transactions contemplated hereby, to the fullest extent which such Indemnified
Parties would be entitled under the Company Certificate and Company Bylaws.
47
(b) Any Indemnified Party wishing to claim indemnification
under this Section 7.11, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Indemnifying Party, but
the failure to so notify shall not relieve the Indemnifying Party of any
liability it may have to such Indemnified Party if such failure does not
actually prejudice the Indemnifying Party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Indemnifying Party shall have the right to assume the
defense thereof and the Indemnifying Party shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Indemnifying Party elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between the Indemnifying Party and the
Indemnified Parties, the Indemnified Parties may retain counsel which is
reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party
shall pay, promptly as statements therefor are received, the reasonable fees and
expenses of such counsel for the Indemnified Parties (which may not exceed one
firm in any jurisdiction), (ii) the Indemnified Parties will cooperate in the
defense of any such matter, (iii) the Indemnifying Party shall not be liable for
any settlement effected without its prior written consent and (iv) the
Indemnifying Party shall have no obligation hereunder in the event that a
federal or state banking agency or a court of competent jurisdiction shall
determine that indemnification of an Indemnified Party by the Indemnifying Party
in the manner contemplated hereby is prohibited by applicable laws and
regulations; provided, however, that in the event of such determination, the
Indemnified Party may seek indemnification from Parent Bank, which shall assume
the Indemnifying Party's obligation under this Section 7.11 to the extent that
any payment by Parent Bank is not prohibited by applicable laws or regulations.
(c) Prior the Effective Time, Parent shall use its reasonable
best efforts to purchase an extended reporting period endorsement under the
Company's existing directors' and officers' liability insurance coverage for the
Company's directors and officers in a form reasonably acceptable to the Company
which shall provide such directors and officers with coverage for six years
following the Effective Time of not less than the existing coverage under, and
have other terms no materially less favorable on the whole to the insured
Persons than the directors' and officers' liability insurance coverage presently
maintained by the Company, provided that in no event shall Parent be required to
expend in any one year an amount in excess of 150% of the annual premiums
currently paid by the Company for such insurance (the "INSURANCE AMOUNT"), and
further provided that if Parent is unable to maintain or obtain the insurance
called for by this Section 7.11(c) as a result of the preceding provision,
Parent shall use its reasonable best efforts to obtain as much comparable
insurance as is available for the Insurance Amount with respect to acts or
omissions occurring prior to the Effective Time by such directors and officers
in their capacities as such.
(d) If Parent or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any other entity, then and in each case,
proper provision shall be made so that the successors and assigns of Parent
shall assume the obligations set forth in this Section 7.11.
48
7.12. BENEFIT PLANS.
(a) As soon as administratively practicable after the
Effective Time, Parent shall take all reasonable action so that employees of the
Company and its Subsidiaries shall be entitled to participate in each employee
benefit plan, program or arrangement of Parent of general applicability (the
"PARENT BENEFITS PLANS") to the same extent as similarly-situated employees of
Parent and its Subsidiaries (it being understood that inclusion of the employees
of the Company and its Subsidiaries in the Parent Benefits Plans may occur at
different times with respect to different plans.) Parent shall cause each Parent
Benefits Plan in which employees of the Company and its Subsidiaries are
eligible to participate to recognize, for purposes of determining eligibility to
participate in, the vesting of benefits and for all other purposes (but not for
accrual of pension benefits) under the Parent Benefit Plans, the service of such
employees with the Company and its Subsidiaries to the same extent as such
service was credited for such purpose by the Company.
(b) Notwithstanding anything to the contrary contained herein,
Parent shall have sole discretion with respect to the determination as to
whether or when to terminate, merge or continue any employee benefit plans and
programs of the Company or any of its Subsidiaries. The Company's Employee Stock
Ownership Plan ("Company ESOP") shall be terminated as of the Effective Time. As
of the Effective Time, all shares held by the Company ESOP shall be converted
into the right to receive the Merger Consideration. As soon as administratively
practicable following the Effective Time, all outstanding indebtedness of the
Company ESOP shall be repaid in full and out of the proceeds of the Merger
Consideration and the balance remaining with respect to unallocated shares
previously held by the Company ESOP shall be allocated and distributed to
Company ESOP participants as provided in the Company ESOP, subject to receipt of
a favorable determination letter from the IRS and unless otherwise required by
applicable law.
(c) Except as otherwise expressly provided in this Agreement
or in the Payments Agreements, Parent shall honor, and the Surviving Corporation
shall continue to be obligated to perform, in accordance with their terms, all
benefit obligations to, and contractual rights of, current and former employees
of the Company existing as of the Effective Date, as well as all employment,
severance, deferred compensation or "change-in-control" agreements, plans or
policies of the Company, but only to the extent that such obligations are
Previously Disclosed in Sections 4.01(b)(5) and 5.14(a) of the Company
Disclosure Schedule. Parent acknowledges that the consummation of the Merger
will constitute a "change-in-control" of the Company for purposes of any
employee benefit plans, agreements and arrangements of the Company.
(d) If employees of the Company or any of its Subsidiaries
become eligible to participate in a medical, dental or health plan of Parent,
Parent shall cause each such plan to (i) waive any preexisting condition
limitations to the extent such conditions are covered under the applicable
medical, health or dental plans of Parent and (ii) waive any waiting period
limitation or evidence of insurability requirement which would otherwise be
applicable to such employee on or after the Effective Time to the extent such
employee had satisfied any similar limitation or requirement under an analogous
Plan prior to the Effective Time, and (iii) provide full credit under such plans
for any deductibles, co-payments and out-of-pocket expenses incurred by the
employees and their beneficiaries during the portion of the calendar year prior
to such participation.
(e) For a period of six months following the Effective Time,
Parent shall provide
49
all employees of the Company and its Subsidiaries whose employment was
terminated other than for cause, disability or retirement at or following the
Effective Time, and who so desire, job counseling and outplacement assistance
services in accordance with Parent's employment policies and practices, shall
assist such employees in locating new employment and shall notify all such
employees who want to be so notified of opportunities for positions with Parent
or any of its Subsidiaries for which Parent reasonably believes such Persons are
qualified and shall consider any application for such positions submitted by
such Persons, provided, however, that any decision to offer employment to any
such Person shall be made in the sole discretion of Parent.
(f) Parent or a Parent Subsidiary shall have no obligation to
continue the employment of any employee of the Company or a Company Subsidiary
and nothing contained herein shall give any such Person the right to continued
employment with Parent or a Parent Subsidiary after the Effective Time. An
employee of the Company or a Company Subsidiary (other than an employee who is
party to an employment agreement, a severance agreement or a special termination
agreement) whose employment is involuntarily terminated other than for cause
following the Effective Time shall be entitled to receive severance payments in
accordance with, and to the extent provided in, The Massachusetts Co-operative
Bank's Employee Severance Compensation Plan, as the same may be amended with the
approval of Parent.
7.13. BANK MERGER. Parent and the Company agree to take all action
necessary and appropriate, including causing the entering into of an appropriate
merger agreement (the "BANK MERGER AGREEMENT"), to cause the Company Bank to
merge, either directly or indirectly, by use of one or more interim
corporations, with and into the Parent Bank (the "BANK MERGER") in accordance
with applicable laws and regulations and the terms of the Bank Merger Agreement
and as soon as practicable after consummation of the Merger.
7.14. NOTIFICATION OF CERTAIN MATTERS. Each of the Company and Parent
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) if it had been known as of the date of this Agreement, would have
been required to have been included in the Company Disclosure Schedule, (ii) is
reasonably likely, individually or taken together with all other facts, events
and circumstances known to it, to result in any Material Adverse Effect with
respect to it, or (iii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
7.15. PAYMENTS AND RELATED AGREEMENTS. Concurrently with the execution
of this Agreement by the Company and Parent, (i) Parent, the Company and the
Company Bank have entered into a Payments Agreement with each of ▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in a form that has been Previously Disclosed (the
"PAYMENTS AGREEMENTS"), (ii) ▇▇. ▇▇▇▇▇ has entered into a Consulting Agreement
(the "CONSULTING AGREEMENT") with Parent in a form that has been Previously
Disclosed, and (iii) and ▇▇. ▇▇▇▇▇▇▇▇ has entered into an Employment Agreement
(the "PARENT BANK EMPLOYMENT AGREEMENT") with Parent Bank in a form that has
been Previously Disclosed.
ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGER
8.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective
50
obligation of each of the parties hereto to consummate the Merger is subject to
the fulfillment or written waiver by the parties hereto prior to the Closing
Date of each of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been duly
approved by holders of not less than a majority of the outstanding Company
Common Stock and by holders of not less than a majority of the outstanding
Parent Common Stock.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the Transactions shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired and no such approval shall contain any conditions, restrictions or
requirements which the Parent Board reasonably determines in good faith would,
individually or in the aggregate, materially reduce the benefits of the
Transactions to such a degree that Parent would not have entered into this
Agreement had such conditions, restrictions or requirements been known at the
date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Transactions.
(d) REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated by the SEC
and not withdrawn and Parent shall have received all required approvals by state
securities or "blue sky" authorities.
(e) LISTING. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing on the Nasdaq.
(f) TAX OPINION. Parent shall have received a letter setting
forth the written opinion of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, in form and substance
reasonably satisfactory to Parent, dated as of the Effective Date, substantially
to the effect that, on the basis of the facts, representations and assumptions
set forth in such letter, each of the Merger and the Bank Merger will constitute
a tax-free reorganization described in section 368(a) of the Internal Revenue
Code.
8.02. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Closing Date of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Parent in this Agreement which is qualified as
to materiality shall be true and correct and each such representation or
warranty that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, as applicable, and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Effective Time, and the Company shall have received a
certificate, dated the Effective Date, signed by the Chief Executive Officer and
the Chief Financial Officer of Parent to such effect.
51
(b) PERFORMANCE OF OBLIGATIONS OF PARENT. Parent shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Effective Time, and the Company shall have received a
certificate, dated the Effective Date, to such effect signed by the Chief
Executive Officer and Chief Financial Officer of Parent.
(c) OTHER ACTIONS. Parent shall have furnished the Company
with such certificates of its respective officers or others and such other
documents to evidence fulfillment of the conditions set forth in Sections 8.01
and 8.02 as the Company may reasonably request.
(d) EXCHANGE AGENT CERTIFICATE. The Exchange Agent shall have
delivered to the Company a certificate dated as of the Effective Time to the
effect that it has received from Parent due authorization to issue the required
number of shares of Parent Common Stock to be issued in the Merger and the full
amount of cash to pay for the aggregate cash portion of the Merger Consideration
and cash in lieu of fractional shares.
8.03. CONDITIONS TO OBLIGATIONS OF PARENT. The obligations of Parent to
consummate the Merger are also subject to the fulfillment or written waiver by
Parent prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Company in this Agreement which is
qualified as to materiality shall be true and correct and each such
representation or warranty that is not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement, and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Effective Time, and Parent shall have received a certificate,
dated the Effective Date, signed by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY. The Company shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and Parent shall have received a
certificate, dated the Effective Date, to such effect signed by the Chief
Executive Officer and Chief Financial Officer of the Company.
(c) DISSENTING SHARES. Dissenting Shares shall not represent
25% or more of the outstanding Company Common Stock.
(d) PAYMENTS AGREEMENTS. The Payments Agreements referred to
in Section 7.15 shall have been duly executed and delivered by the respective
parties thereto and shall be in full force and effect, and each party thereto
other than Parent shall have performed in all material respects all obligations
required to be performed by it thereunder at or prior to the Effective Time.
(e) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each Person (other than regulatory approvals contemplated in Section 8.01(b))
whose consent or approval shall be required in order to permit the succession by
the Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company or any of its Company's Subsidiaries under any loan or
credit agreement, note mortgage, indenture, lease, license or other agreement or
instrument shall have been obtained, except for such consents the failure of
which to be obtained would not, individually or in the aggregate, have a
Material
52
Adverse Effect on Parent after giving effect to the consummation of the
Transactions, and none of such permits, consents, waivers, clearances, approvals
and authorizations shall contain any term or condition which would materially
impair the value of the Company to Parent.
(f) TERMINATION OF CERTAIN EXISTING AGREEMENTS. The Existing
Employment Agreements shall each have been terminated without cost to Company
Bank or any party to this Agreement, except for such payments as are provided
for under the Payments Agreements.
(g) NO PARACHUTE PAYMENTS. Neither Company or any of the
Company's Subsidiaries shall have taken any action or made any payments that
would result, either individually or in the aggregate, in any violation of the
requirements set forth in Section 4.01(b)(9).
(h) OTHER ACTIONS. The Company shall have furnished Parent
with such certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 8.01 and 8.03 as
Parent may reasonably request.
ARTICLE IX.
TERMINATION
9.01. TERMINATION. This Agreement may be terminated and the Merger and
the other transactions contemplated by this Agreement may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of this Agreement and the transactions contemplated in this Agreement
by the stockholders of the Company:
(a) MUTUAL CONSENT. By mutual consent of Parent and the
Company, if the Board of Directors of each so determines by vote of a majority
of the members of its entire Board.
(b) DELAY. By either Parent or the Company (if its Board of
Directors so determines by vote of a majority of the members of its entire
Board) if (i) the Effective Time shall not have occurred on or before January
31, 2003 or such later date as the parties may have agreed upon in writing (the
"EXPIRATION DATE"), except to the extent that the failure of the Merger then to
be consummated arises out of or results from the knowing action or inaction of
(i) the party seeking to terminate pursuant to this Section 9.01(b) or (ii) any
of the Shareholders (if the Company is the party seeking to terminate), which
action or inaction is in violation of its obligations under this Agreement or,
in the case of the Shareholders, his, her or its obligations under the relevant
Voting Agreement.
(c) NO APPROVAL. By the Company or Parent, if its Board of
Directors so determines by a vote of a majority of the members of its entire
Board, in the event the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or an application therefor shall have been permanently
withdrawn at the request of a Governmental Authority.
(d) BREACH. At any time prior to the Effective Time, by Parent
or the Company (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein) if its Board of Directors so determines
53
by vote of a majority of the members of its entire Board, in the event of: (i) a
breach by Parent or the Company, as the case may be, of any representation or
warranty contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party or parties of
such breach; or (ii) a breach by Parent or the Company, as the case may be, of
any of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party or parties of such breach, which breach (whether under (i) or
(ii)) would be reasonably expected, individually or in the aggregate with other
breaches, to result in a Material Adverse Effect with respect to Parent or the
Company, as the case may be.
(e) NO SHAREHOLDER APPROVAL. By either Parent or the Company
(provided, that the terminating party shall not be in material breach of any of
its obligations under Section 7.02) if any approval of the stockholders of the
Company or the Parent required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at duly held
meetings of their respective stockholders or at any adjournment or postponement
thereof, or, if such meetings of stockholders shall not have been held or shall
have been canceled prior to the Expiration Date.
(f) FAILURE TO RECOMMEND. At any time prior to the Company
Meeting or Parent Meeting, (i) by Parent, if the Company shall have breached
Section 7.08 or (ii) by Parent, if the Company Board shall have failed to make
its recommendation referred to in Section 7.02, withdrawn such recommendation or
modified or changed such recommendation in a manner adverse in any respect to
the interests of Parent, or (iii) by Parent, if the Company shall have
materially breached its obligations to call, give notice of, convene and hold
the Company Meeting in accordance with Section 7.02, or (iv) by the Company, if
Parent shall have materially breached its obligations pursuant to Section 7.02.
(g) CERTAIN TENDER OR EXCHANGE OFFERS. By Parent if a tender
offer or exchange offer for 10% or more of the outstanding shares of Company
Common Stock is commenced (other than by Parent or a Subsidiary thereof), and
the Company Board recommends that the shareholders of the Company tender their
shares in such tender or exchange offer or otherwise fails to recommend that
such shareholders reject such tender offer or exchange offer within the 10
business day period specified in Rule 14e-2(a) under the Exchange Act.
(h) POSSIBLE ADJUSTMENT. By the Company, if the Company Board
so determines by the vote of a majority of all of its members, by giving written
notice to Parent not later than the end of the first Business Day next following
the Determination Date, if the Average Closing Price shall be less than 75
percent of the Signing Date Average Closing Price. If the Company elects to
exercise its termination right pursuant to the immediately preceding sentence,
it shall give written notice to Parent. During the two-day period commencing
with its receipt of such notice, Parent shall have the option of increasing the
consideration to be received by the holders of Company Common Stock hereunder by
adjusting the Per Share Stock Consideration to equal the quotient obtained by
dividing $25.00 by the Average Closing Price. If Parent makes an election
contemplated by the preceding sentence within such two-day period, it shall give
prompt written notice to the Company of such election and the revised Per Share
Stock Consideration, whereupon no termination shall have occurred pursuant to
this Section 9.01(h) and this Agreement shall remain in effect in accordance
with its terms (except as the Per Share Stock Consideration shall have been so
modified), and any references in this Agreement to "PER SHARE
54
STOCK CONSIDERATION" shall thereafter be deemed to refer to the Per Share Stock
Consideration as adjusted pursuant to this Section 9.01(h).
9.02. EFFECT OF TERMINATION; EXPENSES.
(a) In the event of the termination of this Agreement pursuant
to Section 9.01, this Agreement shall forthwith become void (except as set forth
in Section 10.01), and there shall be no liability on the part of any party
hereto, except (i) each party shall remain liable in any action at law or
otherwise for any liabilities or damages arising out of its gross negligence or
willful breach of any provision of this Agreement, (ii) as otherwise provided in
this Section 9.02, and (iii) as provided in Section 9.03 or Section 9.04.
(b) If this Agreement is terminated as a result of any breach
of a representation, warranty, covenant or other agreement which is caused by
the gross negligence or willful breach of a party hereto, such party shall be
liable to the other party for all out-of-pocket costs and expenses (but in no
event in an amount in excess of $250,000), including, without limitation, the
reasonable fees and expenses of lawyers, accountants and investment bankers,
incurred by such other party in connection with the entering into of this
Agreement and the carrying out of any and all acts contemplated hereunder
("EXPENSES"). The payment of Expenses is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto
(whether at law or in equity) arising out of the gross negligence of a party or
willful breach of any provision of this Agreement or under this Agreement.
(c) Except as otherwise provided in this Section 9.02 or in
Section 9.03 or Section 9.04, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses, whether or not any of the transactions
contemplated by this Agreement is consummated.
9.03. COMPANY SPECIAL PAYMENT. As a condition of Parent's willingness,
and in order to induce Parent, to enter into this Agreement and to reimburse
Parent for incurring the damages, costs and expenses related to entering into
this Agreement and consummating the transactions contemplated by this Agreement,
the Company agrees to make a Company Special Payment to Parent, under the
circumstances described below.
(a) COMPANY BREACH PAYMENT.
(1) The Company will pay to Parent the sum of $250,000 (the
"COMPANY BREACH PAYMENT") if Parent has terminated this Agreement
pursuant to Section 9.01(d) and the breach of the representation,
warranty, covenant or agreement under Section 9.01(d) was caused by the
willful conduct or gross negligence of the Company. Under such
circumstances the Company shall also pay to Parent Expenses as provided
in Section 9.02(b).
(2) NON-EXCLUSIVITY OF COMPANY BREACH PAYMENT AS REMEDY. The
payment of a Company Breach Payment is not an exclusive remedy, but is
in addition to any other rights or remedies available to the parties
hereto (whether at law or in equity) arising out of the gross
negligence of a party or willful breach of any provision of this
Agreement or under this Agreement.
55
(b) COMPANY CHANGE IN CONTROL PAYMENT. The Company will pay to
Parent the sum of $1,000,000 (as such amount may be adjusted pursuant to Section
9.03(b)(3), the "COMPANY CHANGE IN CONTROL PAYMENT"), if
(1) (x) Parent or the Company has terminated this Agreement
pursuant to Section 9.01(e) as a result of the non-receipt of approval
of the Company's shareholders, or (y) Parent has terminated this
Agreement pursuant to Section 9.01(d), Section 9.01(f), or Section
9.01(g), AND
(2) within eighteen months of any termination described in
Section 9.03(b)(1), the Company or the Company Bank shall have entered
into an agreement to engage in an Acquisition Transaction (as defined
in Section 1.01) with any Person other than Parent or any affiliate of
Parent.
(3) ADJUSTMENT TO AMOUNT OF COMPANY CHANGE IN CONTROL PAYMENT.
The amount of the Company Change in Control Payment shall be reduced by
(i) the amount of any Expenses paid by the Company to Parent pursuant
to Section 9.02(b) and (ii) by the amount of any Company Breach Payment
paid by the Company to Parent pursuant to Section 9.03(a).
Notwithstanding the foregoing, in no event shall the amount of the
Company Change in Control Payment be less than $500,000.
(4) EXCLUSIVITY OF COMPANY CHANGE IN CONTROL PAYMENT AS
REMEDY. Notwithstanding anything to the contrary set forth in this
Agreement, if the Company pays or causes to be paid to Parent the
Company Change in Control Payment, neither the Company nor any
affiliate will have any further obligations or liabilities to Parent or
Parent Bank or any other Person with respect to this Agreement or the
transactions contemplated by this Agreement.
(5) EFFECT ON STANDSTILL ARRANGEMENTS. In the event the
Company pays to Parent the Company Change in Control Payment, any
standstill provisions contained in the Confidentiality Agreements
referred to in Section 7.08 shall terminate.
(c) PAYMENT REQUIRED. Any payment required under this Section
9.03 will be (i) payable by the Company to Parent (by wire transfer of
immediately available funds to an account designated by Parent) within five
business days after demand by Parent.
9.04. PARENT SPECIAL PAYMENT.
(a) PAYMENT AMOUNT. As a condition of the Company's
willingness to, and in order to induce the Company to, enter into this
Agreement, and to reimburse the Company for incurring the damages, costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, Parent hereby agrees to pay to the
Company a cash payment in the amount of $250,000 (the "PARENT SPECIAL PAYMENT")
if and only if the Company has terminated this Agreement in accordance with
Section 9.01(d) and the breach of the representation, warranty, covenant or
agreement under Section 9.01(d) was caused by the willful conduct or gross
negligence of Parent. Under such circumstances Parent will also pay to the
Company Expenses as provided in Section 9.02(b).
56
(b) PAYMENTS REQUIRED. Any payment required to be made under
this Section 9.04 shall be paid by Parent to the Company by wire transfer of
immediately available funds to an account designated by the Company within five
business days after demand by the Company.
(c) NON-EXCLUSIVITY OF PARENT SPECIAL PAYMENT AS REMEDY The
payment of a Parent Special Payment is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto
(whether at law or in equity) arising out of the gross negligence of a party or
willful breach of any provision of this Agreement or under this Agreement.
ARTICLE X.
MISCELLANEOUS
10.01. SURVIVAL. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than agreements or covenants contained herein that by their express terms are to
be performed after the Effective Time, and the Voting Agreements and the
Payments Agreements, which shall terminate in accordance with the terms thereof)
or the termination of this Agreement if this Agreement is terminated prior to
the Effective Time (other than Sections 7.06(c), 9.02, 9.03, 9.04, and,
excepting Section 10.12 hereof, this Article X, which shall survive any such
termination).
10.02. WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision or (ii)
amended or modified at any time, by an agreement in writing among the parties
hereto executed in the same manner as this Agreement, except that after the
Company Meeting no amendment shall be made which changes in kind or reduces in
amount the Merger Consideration without the further approval of the
stockholders.
10.03. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
10.04. GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of The Commonwealth of Massachusetts
applicable to contracts made and to be performed entirely within such state.
10.05. EXPENSES. Except as otherwise provided in Section 9.02, each
party hereto will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, including fees and expenses
of its own financial consultants, accountants and counsel and, in the case of
Parent, the registration fee to be paid to the SEC in connection with the
Registration Statement, except that expenses of printing the Joint Proxy
Statement shall be shared equally between the Company and Parent.
10.06. NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
57
If to the Company to:
Massachusetts Fincorp, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ Ronon ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent to:
Abington Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President & Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10.07. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Voting Agreements, the Payments Agreements, the Parent Bank
Employment Agreement and the Consulting Agreement represent the entire
understanding of the parties hereto and thereto with reference to the
transactions contemplated hereby and thereby and this Agreement, the Voting
Agreements, the Payments Agreements, the Parent Bank Employment Agreement and
the Consulting Agreement supersede any and all other oral or written agreements
heretofore made. Except for the Indemnified Parties' right to enforce Parent's
obligation under Section 7.11, which are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives, nothing in this Agreement, expressed or
implied, is intended to confer upon any Person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
58
10.08. SEVERABILITY. Except to the extent that application of this
Section 10.08 would have a Material Adverse Effect on the Company or Parent, any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. In all such cases, the parties shall use their reasonable best
efforts to substitute a valid, legal and enforceable provision which, insofar as
practicable, implements the original purposes and intents of this Agreement.
10.09. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
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 hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.10. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part 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." References to sections include
subsections which are part of the related sections (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").
10.11. ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of the other party. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
10.12. ALTERNATIVE STRUCTURE. Notwithstanding any provision of this
Agreement to the contrary, Parent may at any time modify the structure of the
acquisition of the Company set forth herein, subject to the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed, provided that (i) the Merger Consideration to be paid to the holders of
Company Common Stock is not thereby changed in kind or reduced in amount as a
result of such modification, (ii) such modification will not adversely affect
the tax treatment of the Company's shareholders as a result of receiving the
Merger Consideration and (iii) such modification will not materially delay or
jeopardize receipt of any required approvals of Governmental Authorities.
59
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
ABINGTON BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President & Chief Executive
Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President &
Chief Financial Officer
MASSACHUSETTS FINCORP, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
60
ANNEX A
VOTING AGREEMENT
Voting Agreement (the "AGREEMENT"), dated as of April 10, 2002, by and
between the undersigned holder of capital stock ("STOCKHOLDER") of Massachusetts
Fincorp, Inc., a Delaware corporation (the "COMPANY"), and Abington Bancorp,
Inc., a Massachusetts corporation ("PARENT"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
WHEREAS, Parent and the Company have entered into an Agreement and Plan
of Merger, dated as of the date hereof (the "MERGER AGREEMENT"), pursuant to
which the Company will merge with and into Parent on the terms and conditions
set forth therein and, in connection therewith, outstanding shares of Company
Common Stock will be converted into shares of Parent Common Stock and/or cash in
the manner set forth therein; and
WHEREAS, Stockholder owns the shares of Company Common Stock identified
on Annex I hereto (such shares, together with all shares of Company Common Stock
subsequently acquired by Stockholder during the term of this Agreement, being
referred to as the "SHARES"); and
WHEREAS, in order to induce Parent to enter into the Merger Agreement,
Stockholder, solely in such Stockholder's capacity as a shareholder of the
Company and not in any other capacity, has agreed to enter into and perform this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Stockholder agrees that at any meeting of
the shareholders of the Company, or in connection with any written consent of
the shareholders of the Company, Stockholder shall:
(i) appear at each such meeting or otherwise cause the Shares
to be counted as present thereat for purposes of calculating a quorum;
and
(ii) vote (or cause to be voted), in person or by proxy, or
deliver a written consent (or cause a consent to be delivered)
covering, all the Shares (whether acquired heretofore or hereafter)
that are beneficially owned by Stockholder or as to which Stockholder
has, directly or indirectly, the right to vote or direct the voting,
(x) in favor of adoption and approval of the Merger Agreement and the
Merger and any other action requested by Parent in furtherance thereof;
(y) against any action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or
agreement of the Company contained in the Merger Agreement or of
Stockholder contained in this Agreement; and (z) against any
Acquisition Proposal or any other action, agreement or transaction that
is intended, or could reasonably be expected, to materially impede,
interfere or be inconsistent with, delay, postpone, discourage or
materially and adversely affect consummation of the Merger or this
Agreement.
A-1
2. NO TRANSFERS. Prior to the Company Meeting (as defined in the Merger
Agreement), Stockholder agrees not to, directly or indirectly, sell transfer,
pledge, assign or otherwise dispose of, or enter into any contract option,
commitment or other arrangement or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, any of the Shares. In the
case of any transfer by operation of law, this Agreement shall be binding upon
and inure to the transferee(s). Any transfer or other disposition in violation
of the terms of this Section 0 shall be null and void.
3. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
represents and warrants to and agrees with Parent as follows:
(a) CAPACITY. Stockholder has all requisite capacity and
authority to enter into and perform his, her or its obligations under this
Agreement.
(b) BINDING AGREEMENT. This Agreement constitutes the valid
and legally binding obligation of Stockholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(c) NON-CONTRAVENTION. The execution and delivery of this
Agreement by Stockholder does not, and the performance by Stockholder of his,
her or its obligations hereunder and the consummation by Stockholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Stockholder is a party or by which Stockholder is bound, or any statute, rule or
regulation to which Stockholder is subject or, in the event that Stockholder is
a corporation, partnership, trust or other entity, any charter, bylaw or other
organizational document of Stockholder.
(d) OWNERSHIP OF SHARES. Stockholder has good title to all of
the Shares as of the date hereof, and, except as set forth on Annex I hereto,
the Shares are so owned free and clear of any liens, security interests, charges
or other encumbrances.
4. SPECIFIC PERFORMANCE AND REMEDIES. Stockholder acknowledges that it
will be impossible to measure in money the damage to Parent if Stockholder fails
to comply with the obligations imposed by this Agreement and that, in the event
of any such failure, Parent will not have an adequate remedy at law or in
equity. Accordingly, Stockholder agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or in damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that Parent has an adequate remedy at law. Stockholder
agrees that Stockholder will not seek, and agrees to waive any requirement for,
the securing or posting of a bond in connection with Parent's seeking or
obtaining such equitable relief. In addition, after discussing the matter with
Stockholder, Parent shall have the right to inform any third party that Parent
reasonably believes to be, or to be contemplating, participating with
Stockholder or receiving from Stockholder assistance in violation of this
Agreement, of the terms of this Agreement and of the rights of Parent hereunder,
and that participation by any such persons with Stockholder in activities in
violation of Stockholder's agreement with Parent set forth in this Agreement may
give rise to claims by Parent against such third party.
A-2
5. TERM OF AGREEMENT; TERMINATION.
(a) The term of this Agreement shall commence on the date
hereof.
(b) This Agreement shall terminate upon the date, if any, of
termination of the Merger Agreement in accordance with its terms. Upon such
termination, no party shall have any further obligations or liabilities
hereunder; provided, however, such termination shall not relieve any party from
liability for any breach of this Agreement prior to such termination.
(c) If the Merger Agreement is not terminated in accordance
with its terms, this Agreement (except for the provisions of Sections 0, 0, and
0, which shall survive the Effective Time) shall terminate upon the Effective
Time. Upon such termination, no party shall have any further obligations or
liabilities under this Agreement; provided, however, such termination shall not
relieve any party from liability for any breach of this Agreement prior to such
termination.
5. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
6. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Parent:
Abington Bancorp, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A-3
If to Stockholder:
------------------------
------------------------
------------------------
With a copy to:
------------------------
------------------------
------------------------
Attention:
Fax:
7. MISCELLANEOUS.
(a) SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, and the remainder of this
Agreement, shall not be affected.
(b) CAPACITY. The covenants contained herein shall apply to
Stockholder solely in his or her capacity as a shareholder of the Company, and
no covenant contained herein shall apply to Stockholder in his or her capacity
as a director, officer or employee of the Company or in any other capacity.
Nothing contained in this Agreement shall be deemed to apply to, or limit in any
manner, the obligations of the Stockholder to comply with his or her fiduciary
duties as a director of the Company.
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(d) HEADINGS. All section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
(e) CHOICE OF LAW. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
The Commonwealth of Massachusetts, without reference to its conflicts of law
principles.
(8) ATTORNEY'S FEES. The prevailing party or parties in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("PROCEEDING") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All
A-4
such judgments and awards shall contain a specific provision for the recovery of
all such subsequently incurred costs, expenses, and fees and disbursements of
counsel.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
ABINGTON BANCORP, INC.
By:
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
STOCKHOLDER
-------------------------------------------------
Signature
-------------------------------------------------
Print Name
A-5
ANNEX I
VOTING AGREEMENT
Number of Shares Owned:
A-6
ANNEX B
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇'▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇-▇