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EXHIBIT 2.2
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AGREEMENT AND PLAN OF CONSOLIDATION
DATED AS OF JUNE 11, 2001
BETWEEN
BANKNORTH GROUP, INC.,
AND
METROWEST BANK
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TABLE OF CONTENTS
RECITALS
ARTICLE I
CERTAIN DEFINITIONS
Page No.
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1.01. Certain Definitions................................................................2
ARTICLE II
THE CONVERSION, THE CONSOLIDATION AND THE BANK MERGER
2.01 The Conversion.....................................................................7
2.02. The Consolidation..................................................................8
2.03. Effective Date and Effective Time; Closing.........................................9
2.04 The Bank Merger....................................................................9
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Consolidation Consideration........................................................9
3.02. Rights as Shareholders; Stock Transfers...........................................10
3.03. Dissenting Shares.................................................................10
3.04. Exchange Procedures...............................................................10
3.05. Company Options...................................................................11
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forbearances of the Company.......................................................12
4.02. Forbearances of Parent............................................................14
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules..............................................................15
5.02. Standard..........................................................................15
5.03. Representations and Warranties of the Company.....................................15
5.04. Representations and Warranties of Parent..........................................27
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ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts...........................................................30
6.02. Shareholder Approval..............................................................30
6.03. Regulatory Filings................................................................30
6.04. Press Releases....................................................................31
6.05. Access; Information...............................................................31
6.06. Acquisition Proposals.............................................................32
6.07. Certain Policies..................................................................33
6.08. Indemnification...................................................................33
6.09. Benefit Plans.....................................................................34
6.10. The Bank Merger...................................................................36
6.11. Interim Sub.......................................................................36
6.12 Director of Parent................................................................36
6.13. Notification of Certain Matters...................................................36
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE CONSOLIDATION
7.01. Conditions to Obligations of the Company and Interim Sub to
Effect the Consolidation..........................................................36
7.02. Conditions to Obligations of the Company..........................................37
7.03. Conditions to Obligations of Parent and Interim Sub...............................37
ARTICLE VIII
TERMINATION
8.01. Termination.......................................................................38
8.02. Effect of Termination and Abandonment.............................................39
ARTICLE IX
MISCELLANEOUS
9.01. Survival..........................................................................39
9.02. Waiver; Amendment.................................................................39
9.03. Counterparts......................................................................40
9.04. Governing Law.....................................................................40
9.05. Expenses..........................................................................40
9.06 Notices...........................................................................40
9.07. Entire Understanding; No Third Party Beneficiaries................................41
9.08. Severability......................................................................41
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9.09. Enforcement of the Agreement......................................................41
9.10. Interpretation....................................................................41
9.11 Assignment........................................................................42
9.12. Alternative Structure.............................................................42
EXHIBIT A Form of Shareholder Agreement
EXHIBIT B Form of Stock Option Agreement
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AGREEMENT AND PLAN OF CONSOLIDATION, dated as of June 11, 2001 (this
"Agreement"), between Banknorth Group, Inc. ("Parent") and MetroWest Bank (the
"Company").
RECITALS
A. The Company. The Company is a Massachusetts-chartered savings
bank, having its principal place of business in Framingham, Massachusetts.
B. Parent. Parent is a Maine corporation, having its principal
place of business in Portland, Maine.
C. Board Action. The respective Boards of Directors of Parent and
the Company have determined that it is in the best interests of their
respective companies and their shareholders to consummate the Transactions,
consisting of (a) the Conversion, pursuant to which the Company shall convert
to a national bank, (b) the Consolidation, pursuant to which Interim Sub and
the Company shall consolidate and in connection therewith each share of
Company Common Stock outstanding immediately prior to the Effective Time
(excluding Dissenting Shares and Treasury Stock) shall be cancelled in
exchange for the right to receive the Consolidation Consideration and (c) the
Bank Merger, pursuant to which the Company shall be merged with and into
Parent Bank, it being the intention of the parties that the Conversion, the
Consolidation and the Bank Merger occur in that order substantially
simultaneously.
D. Shareholder Agreements. As a material inducement to Parent to
enter into this Agreement, and simultaneously with the execution of this
Agreement, each Shareholder (as defined herein) is entering into an agreement,
in the form of Exhibit A hereto, (collectively, the "Shareholder Agreements")
pursuant to which they have agreed, among other things, to vote their shares
of Company Common Stock in favor of this Agreement.
E. Stock Option Agreement. As a material inducement to the
willingness of Parent to consummate the transactions contemplated by this
Agreement, the Company is simultaneously entering into the Stock Option
Agreement, substantially in the form of Exhibit B hereto (the "Stock Option
Agreement"), pursuant to which the Company will grant to Parent an option to
acquire shares of Company Common Stock.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements contained herein
the parties agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
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 6.06.
"Agreement" means this Agreement, as amended or modified from
time to time in accordance with Section 9.02.
"Bank Insurance Fund" means the Bank Insurance Fund maintained
by the FDIC.
"Bank Merger" has the meaning set forth in Section 6.10.
"Bank Merger Agreement" has the meaning set forth in Section
6.10.
"Benefit Plans" has the meaning set forth in Section 5.03(m).
"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 State of Maine or the
Commonwealth of Massachusetts are authorized or obligated to close.
"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 2.03(b).
"Certificate of Consolidation" has the meaning set forth in
Section 2.03(a).
"Code" means the Internal Revenue Code of 1986, as amended (the
"Code").
"Community Reinvestment Act" means the Community Reinvestment
Act of 1977, as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Articles" means the Charter of the Company, as
amended.
"Company Board" means the Board of Directors of the Company.
"Company Bylaws" means the Bylaws of the Company.
"Company Common Stock" means the common stock, $0.10 par value
per share, of the Company.
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"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
5.03(o).
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, $0.10 per
share, of the Company.
"Company Stock" means, collectively, the Company Common Stock and
the Company Preferred Stock.
"Company Options" means the options to acquire Company Common
Stock issued under the Company Stock Option Plans.
"Company Stock Option Plans" means the Company's 2001 Stock
Option Plan, 1997 Stock Incentive Plan and 1986 Stock Option Plan, in
each case as amended as of the date hereof.
"Consolidated Corporation" has the meaning set forth in Section
2.02(a).
"Consolidation" has the meaning set forth in Section 2.02(a).
"Consolidation Consideration" means $11.50 in cash, without
interest, for each share of Company Common Stock that is outstanding
immediately prior to the Effective Time (but excluding Dissenting
Shares and Treasury Stock).
"Conversion" has the meaning set forth in Section 2.01(a).
"Converted Company" has the meaning set forth in Section
2.01(a).
"Derivatives Contract" has the meaning set forth in Section
5.03(q).
"Disclosure Schedule" has the meaning set forth in Section
5.01.
"Dissenting Shares" has the meaning set forth in Section 3.03.
"Effective Date" has the meaning set forth in Section 2.03(a).
"Effective Time" has the meaning set forth in Section 2.03(a).
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Laws" has the meaning set forth in Section
5.03(o).
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"Equal Credit Opportunity Act" means the Equal Credit
Opportunity Act, as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" means an exchange agent designated by Parent.
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FDIC Documents" has the meaning set forth in Section 5.03(g).
"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
5.03(o).
"Indemnified Party" and "Indemnifying Party" have the meanings
set forth in Section 6.08(a).
"Insurance Amount" has the meaning set forth in Section
6.08(b).
"Insurance Policies" has the meaning set forth in Section
5.03(s).
"Interim Sub" means an interim national bank to be formed and
wholly-owned by Parent as a transitory Subsidiary to effect the
Consolidation.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Loans" has the meaning set forth in Section 5.03(r).
"Maine Superintendent" means the Superintendent of the Bureau
of Banking of the State of Maine.
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"Massachusetts Board" means the Massachusetts Board of Bank
Incorporation.
"Massachusetts Commissioner" means the Commissioner of Banks of
the Commonwealth of Massachusetts.
"Material Adverse Effect" means (a) with respect to the
Company, any effect that (i) is material and adverse to the financial
position, results of operations or business of the Company and its
Subsidiaries taken as a whole, or would materially impair the ability
of the Company to perform its obligations under this 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 (i) changes in banking and similar laws of
general applicability or interpretations thereof by Governmental
Authorities, (ii) changes in GAAP or regulatory accounting
requirements applicable to banks generally, (iii) changes in general
economic conditions affecting banks generally, (iv) any modifications
or changes to valuation policies and practices in connection with the
Transactions or restructuring charges taken in connection with the
Transactions, in each case in accordance with GAAP, and (v) the
effects of any action or omission taken with the prior consent of
Parent (it being understood that Parent has consented to the actions
taken by the Company and Previously Disclosed pursuant to this
Agreement); and (b) with respect to Parent, any effect that materially
impairs the ability of Parent or Parent Bank to make payment at the
Effective Time of the aggregate Consolidation Consideration or
otherwise materially impairs the ability of Parent, Parent Bank or
Interim Sub to consummate the Transactions.
"MHPF" means the Massachusetts Housing Partnership Fund.
"Nasdaq" means The Nasdaq Stock Market, Inc.'s National Market
System.
"National Bank Act" means the National Bank Act, as amended.
"National Labor Relations Act" means the National Labor
Relations Act, as amended.
"OCC" means the Office of the Comptroller of the Currency.
"Organization" means the organization of Interim Sub by Parent.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Bank" means First Massachusetts Bank, National
Association and any successor thereto.
"Parent Benefit Plans" has the meaning set forth in Section
6.09(a).
"Parent Bylaws" means the Bylaws of Parent.
"Parent Board" means the Board of Directors of Parent.
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"Pension Plan" has the meaning set forth in Section 5.03(m)(ii).
"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.
"Proxy Statement" means the proxy statement, together with any
amendments and supplements thereto, to be delivered to holders of
Company Common Stock in connection with the solicitation of their
approval of this Agreement.
"Regulatory Authorities" has the meaning set forth in Section
5.03(i).
"Rights" 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.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.04(f).
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Shareholder Agreements" has the meaning set forth in the
recitals to this Agreement.
"Shareholders" means each director of the Company.
"Subsidiary has the meaning ascribed to such term in Rule 1-02 of
Regulation S-X of the SEC.
"Stock Option Agreement" has the meaning set forth in the
recitals to this Agreement.
"Tax" and "Taxes" mean all federal, state, local or foreign
income, gross income, gains, 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.
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"Transactions" means the Organization, the Conversion, the
Consolidation 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.
ARTICLE II
THE CONVERSION, THE CONSOLIDATION AND THE BANK MERGER
2.01. The Conversion.
(a) The Conversion. Subject to the terms and conditions of this
Agreement, immediately prior to the Effective Time, the Company shall convert
in accordance with the provisions of Section 35 of the National Bank Act and
the regulations of the OCC thereunder and any applicable Massachusetts law and
regulations (the "Conversion") into a national bank incorporated under the
laws of the United States (the Company, after the Conversion, sometimes being
referred to herein as the "Converted Company").
(b) Name. The name of the Converted Company shall be "MetroWest
Bank, National Association."
(c) Articles and Bylaws. The Articles of Association and Bylaws of
the Converted Company shall be in the form of the model forms for such
instruments set forth in the regulations of the OCC.
(d) Directors and Officers of the Converted Company. The directors
of the Converted Company shall be the directors of the Company immediately
prior to the Conversion. The executive officers of the Converted Company shall
be the executive officers of the Company immediately prior to the Conversion.
(e) Authorized Capital Stock. The authorized capital stock of the
Converted Company upon consummation of the Conversion shall be as set forth in
the Articles of Association of the Converted Company.
(f) Common Stock. Each share of Company Common Stock outstanding
immediately prior to the Conversion shall remain outstanding and be deemed to
represent one share of Converted Company Common Stock.
(g) Effect of the Conversion. At the Effective Time, the effect of
the Conversion shall be as provided in Section 35 of the National Bank Act and
the regulations of the OCC thereunder. 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
Converted Company, and all debts, liabilities, obligations, restrictions,
disabilities and duties of
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the Company shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Converted Company.
2.02 The Consolidation.
(a) The Consolidation. Subject to the terms and conditions of this
Agreement and the prior consummation of the Organization and the Conversion,
at the Effective Time, Interim Sub and the Company shall consolidate in
accordance with the requirements of Section 215 of the National Bank Act and
the regulations of the OCC thereunder (the "Consolidation"), the separate
corporate existence of Interim Sub shall cease and the Company shall continue
to exist as a national bank incorporated under the laws of the United States
(the Company, as the surviving corporation in the Consolidation, sometimes
being referred to herein as the "Consolidated Corporation").
(b) Name. The name of the Consolidated Corporation upon
consummation of the Consolidation shall be "MetroWest Bank, National
Association."
(c) Articles and Bylaws. The Articles of Association and Bylaws of
the Consolidated Corporation upon consummation of the Consolidation shall be
the Articles of Association and Bylaws of the Company as in effect immediately
prior to consummation of the Consolidation.
(d) Directors and Officers of the Consolidated Corporation. The
directors of the Company immediately after the Consolidation shall be the
directors of Parent Bank immediately prior to the Consolidation, plus two
persons serving as a director of the Company immediately prior to the
Consolidation designated by the Company who both meet the director
qualification requirements set forth in the Bylaws of Parent Bank and are
otherwise acceptable to Parent and Parent Bank. The executive officers of the
Company immediately after the Consolidation shall be the executive officers of
Parent Bank immediately prior to the Consolidation. Each of the directors and
executive officers of the Company immediately after the Consolidation shall
hold office until his or her successor is elected and qualified or otherwise
in accordance with the Articles of Association and Bylaws of the Company.
(e) Authorized Capital Stock. The authorized capital stock of the
Consolidated Corporation upon consummation of the Consolidation shall be as
set forth in the Articles of Association of the Company immediately prior to
the Consolidation.
(f) Effect of the Consolidation. At the Effective Time, the effect
of the Consolidation shall be as provided in Section 215 of the National Bank
Act and the regulations of the OCC thereunder. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of Interim Sub and the
Company shall vest in the Consolidated Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of Interim Sub
and the Company shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Consolidated Corporation.
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2.03. Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in Article VII (other than those conditions that by their nature are to
be satisfied at the consummation of the Consolidation, but subject to the
fulfillment or waiver of those conditions), the parties shall request the OCC
to issue a certificate of consolidation (the "Certificate of Consolidation"),
and in connection therewith make such filing or filings as may be required to
consummate the Consolidation by applicable laws and regulations, on (i) a date
selected by Parent after such satisfaction or waiver which is not 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 Consolidation provided for
herein shall become effective upon the issuance of a Certificate of
Consolidation by the OCC or on such date as may be specified therein. The date
of such filing or such later effective date is herein called the "Effective
Date." The "Effective Time" of the Consolidation shall be the time of such
filing or as set forth in such filing.
(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
Parent in Portland, Maine, or 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 VII hereof.
2.04. The Bank Merger. After the Consolidation, the Consolidated
Corporation shall merge with and into the Parent Bank pursuant to the Bank
Merger Agreement, as provided in Section 6.10.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Consolidation Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Consolidation
and without any action on the part of any Person:
(a) Outstanding Company Common Stock. Each share of Company Common
Stock, excluding (i) Treasury Stock and (ii) Dissenters' Shares, issued and
outstanding immediately prior to the Effective Time shall become and be
converted into the right to receive the Consolidation Consideration.
(b) Outstanding Interim Sub Common Stock. Each share of Interim
Sub common stock issued and outstanding immediately prior to the Effective
Time shall be converted into and become one share of Company Common Stock.
(c) Treasury Stock. Each share of Company 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.
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3.02. 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 the right 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 Consolidated
Corporation of shares of Company Stock.
3.03 Dissenting Shares Each outstanding share of Company Common
Stock the holder of which has perfected his right to dissent under Section 215
of the National Bank Act and has not effectively withdrawn or lost such right
as of the Effective Time (the "Dissenting Shares") shall not be converted into
or represent a right to receive the Consolidation Consideration specified in
Section 3.01(a) hereof, and the holder thereof shall be entitled only to such
rights as are granted by Section 215 of the National Bank Act. If any holder
of Dissenting Shares shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the Dissenting Shares held by such holder shall
thereupon be treated as though such Dissenting Shares had been converted into
the right to receive the aggregate Consolidation Consideration to which such
holder would be entitled pursuant to Section 3.01(a) hereof. The Company shall
give Parent prompt notice upon receipt by the Company of any such written
demands for payment of the fair value of shares of Company Common Stock and of
withdrawals of such demands and any other instruments provided pursuant to
Section 215 of the National Bank Act. Any payments made in respect of
Dissenting Shares shall be made by the Consolidated Corporation.
3.04. Exchange Procedures.
(a) No later than five Business Days following the Effective Time,
Parent shall cause the Exchange Agent to mail or make available to each holder
of record of a Certificate a notice and letter of transmittal disclosing the
effectiveness of the Consolidation and the procedure for exchanging
Certificates for the Consolidation Consideration. Such letter of transmittal
shall specify that delivery shall be effected and risk of loss and title shall
pass only upon proper delivery of Certificates to the Exchange Agent.
(b) At or prior to the Effective Time, or at such other time or
times as the Exchange Agent may otherwise request, Parent shall deliver, or
cause Parent Bank to deliver, to the Exchange Agent for the benefit of the
holders of Certificates (other than the holders of Dissenting Shares and
Treasury Stock) an amount of cash equal to the aggregate Consolidation
Consideration for payment of the aggregate Consolidation Consideration to such
holders of Certificates.
(c) Each holder of any outstanding Certificate (other than holders
of Dissenting Shares and Treasury Stock) who surrenders such Certificate to
the Exchange Agent will, upon acceptance thereof by the Exchange Agent, be
entitled to the Consolidation Consideration. The Exchange Agent shall accept
Certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange in accordance with
normal exchange practices. Each outstanding Certificate which is not
surrendered to the Exchange Agent shall, except as provided in Section 3.03,
evidence ownership of only the right to receive the Consolidation
Consideration without interest.
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(d) The Exchange Agent shall not be obligated to deliver the
Consolidation Consideration until the holder surrenders a Certificate 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 in
each case by the Exchange Agent or Parent. If any check is to be issued in a
name other than that in which the Certificate 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 check 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.
(e) Any portion of the cash delivered to the Exchange Agent by
Parent or Parent Bank pursuant to Section 3.04(b) that remains unclaimed by
the former shareholders of the Company for six months after the Effective Time
shall be delivered by the Exchange Agent to Parent or Parent Bank, as
applicable. Any shareholders of the Company who have not theretofore complied
with Section 3.04(c) shall thereafter look only to Parent for the
Consolidation Consideration. If outstanding Certificates are not surrendered
or the payment for them is not claimed prior to the date on which such payment
would otherwise escheat to or become the property of any Governmental
Authority, the unclaimed items shall, to the extent permitted by abandoned
property and any other applicable law, become the property of Parent or Parent
Bank, as applicable (and to the extent not in its possession shall be
delivered to it), free and clear of all Liens of any Person previously
entitled to such property. Neither the Exchange Agent nor any of the parties
hereto shall be liable to any holder of Company Common Stock represented by
any Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Parent, Parent Bank
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 Consolidation Consideration, which books shall be conclusive with respect
thereto.
(f) The Exchange Agent, Parent or Parent Bank shall be entitled to
deduct and withhold from the Consolidation Consideration otherwise payable
pursuant to this Agreement to any holder of Certificates such amounts as it is
required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Exchange Agent, Parent or Parent
Bank, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates in respect of
which such deduction and withholding was made.
3.05 Company Options. At the Effective Time, 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 Consolidation 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 to
cause to be taken all action necessary to provide for such termination and
payment effective at or before the Effective Time.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forbearances of the Company. From the date hereof until the
Effective Time, except as expressly contemplated or permitted by this
Agreement or as Previously Disclosed, without the prior written consent of
Parent, the Company will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct its business other than in the
ordinary and usual course consistent with past practice or fail to use
reasonable best efforts to preserve its business organization, keep available
the present services of its employees and preserve for itself and Parent the
goodwill of the customers of the Company and its Subsidiaries and others with
whom business relations exist.
(b) Capital Stock. Other than pursuant to the Stock Option
Agreement, (i) issue, sell or otherwise permit to become outstanding, or
authorize the creation of, any additional shares of stock or any Rights or
(ii) permit any additional shares of stock to become subject to grants of
employee or director stock options or other Rights or similar stock-based
employee rights.
(c) 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 (A) regular quarterly cash dividends not
in excess of $ 0.07 per share on the Company Common Stock and (B) 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; provided, however, that any dividend under the Company's normal
quarterly dividend payment schedule that has been declared by the Company
Board but not paid prior to the Effective Time shall be paid immediately prior
to the Effective Time or added to the Consolidation Consideration.
(d) Compensation; Employment Agreements; Etc. Enter into or 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), except (i) for normal
individual increases in compensation to employees and payment of bonuses in
the ordinary course of business consistent with past practice, provided that
such increases shall not result in an annual adjustment of more than 5% 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(d) of the Company's Disclosure Schedule or (iv) for
grants of awards to newly-hired employees consistent with past practice. In
addition, the Company may pay retention bonuses to such employees of the
Company and its Subsidiaries and in such amounts as may be mutually agreeable
to the Company and Parent.
(e) 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
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the date hereof and set forth on Schedule 4.01(e) of the Company's Disclosure
Schedule and (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 $50,000.
(f) Benefit Plans. Enter into, establish, adopt or amend (except
(i) as may be required by applicable law or (ii) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule 4.01(f)
of the Company's Disclosure Schedule) 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.
(g) 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 and in
a transaction that, together with all other such transactions, is not material
to the Company and its Subsidiaries taken as a whole.
(h) 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, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of
the assets, business, deposits or properties of any other entity.
(i) Capital Expenditures. Make any capital expenditures other than
capital expenditures in the ordinary course of business consistent with past
practice in amounts not exceeding $100,000 individually or $250,000 in the
aggregate.
(j) Governing Documents. Amend the Company Articles or Company
Bylaws (except as may be required in connection with the Transactions) or the
articles of incorporation or bylaws (or equivalent documents) of any
Subsidiary of the Company.
(k) 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.
(l) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as defined
in Section 5.03(k) or amend or modify in any material respect any of its
existing material contracts.
(m) 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 or create
precedent for
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claims that are reasonably likely to be material to the Company and its
Subsidiaries taken as a whole.
(n) Banking Operations. Enter into any new material line of
business or change its material lending, investment, underwriting, risk and
asset liability management and other material banking and operating policies,
except as required by applicable law, regulation or policies imposed by any
Governmental Authority.
(o) Derivative Contracts. Enter into any Derivatives Contract,
except in the ordinary course of business consistent with past practice.
(p) 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 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.
(q) Adverse Actions. Take any action that is intended or is
reasonably likely to result in (i) 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, (ii) any of the conditions to
the Consolidation set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement or the Stock Option
Agreement except, in each case, as may be required by applicable law or
regulation.
(r) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.02. Forbearances of Parent. From the date hereof until the
Effective Time, 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) Acquisitions. Make any acquisition (including acquisitions of
branch offices and related deposit liabilities), other than the proposed
acquisition of Andover Bancorp, Inc. on terms not materially different than
those publicly announced on the date hereof, that individually or in the
aggregate could result in the Consolidation not being consummated or otherwise
materially adversely affect the ability of Parent to consummate the
Transactions and the other transactions contemplated hereby in a reasonably
timely manner.
(b) Adverse Actions. Take any action that is intended or is
reasonably likely to result in (i) 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, (ii) any of the conditions to
the Consolidation set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement or the Stock Option
Agreement except, in each case, as may be required by applicable law or
regulation.
(c) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, the
Company has delivered to Parent a schedule (the "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 Section 5.03 or to one or more of its covenants
contained in Article IV; provided, however, that (a) no such item is required
to be set forth in a Disclosure Schedule as an exception to a representation
or warranty if its absence would not be reasonably likely to result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 5.02 and (b) the mere inclusion of an item in
a Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by the Company that such item represents a material
exception or fact, event or circumstance or that such item is reasonably
likely to result in a Material Adverse Effect.
5.02. Standard. No representation or warranty of the Company or
Parent contained in Sections 5.03 or 5.04, respectively, shall be deemed
untrue or incorrect, and no party hereto shall be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
event or circumstance unless such fact, circumstance or event, individually or
taken together with all other facts, events or circumstances inconsistent with
any representation or warranty contained in Section 5.03 or 5.04, has had or
is reasonably likely to have a Material Adverse Effect on the party making
such representation or warranty.
5.03. Representations and Warranties of the Company. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed, the Company hereby
represents and warrants to Parent:
(a) Organization, Standing and Authority. The Company is a
Massachusetts- chartered savings bank regulated by the Massachusetts
Commissioner. The Company's deposits are insured by the FDIC through the Bank
Insurance Fund and by the Depositors Insurance Fund in the manner and to the
fullest extent provided by applicable law. The Company is duly qualified to do
business and is in good standing in each foreign jurisdiction where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) Company Capital Stock. The authorized capital stock of the
Company consists solely of 20,000,000 shares of Company Common Stock, of which
14,330,435 shares were outstanding (excluding treasury shares) as of the date
hereof, and 2,000,000 shares of Company Preferred Stock, of which no shares
are outstanding. As of the date hereof, 180,377 shares of the 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 5.03(b) of the
Company's Disclosure Schedule sets forth for each Company Stock 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
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Common Stock subject to options that are currently exercisable and the
exercise price per share. Except as set forth in the preceding sentence and
other than pursuant to the Stock Option Agreement, there are no shares of
Company Stock authorized and reserved for issuance, the Company does not have
any Rights 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 Rights, except pursuant to this Agreement or the Stock Option
Agreement.
(c) Subsidiaries.
(i) (A) The Company has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) the Company owns, directly or indirectly,
all the issued and outstanding equity securities of each of its
Subsidiaries (except for shares of preferred stock in the Company's
REIT Subsidiary), (C) 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 Right or otherwise, (D) 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), (E) there are no contracts, commitments,
understandings, or arrangements relating to the Company's rights to
vote or to dispose of such securities and (F) 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.
(ii) 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, the Savings Bank Life Insurance
Company of Massachusetts and the Federal National Mortgage
Association.
(iii) 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.
(d) 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 the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject to receipt of all
necessary approvals of Governmental Authorities and the approval of the
Company's shareholders of this Agreement.
(e) Corporate Authority. Subject to the approval of this Agreement
by the holders of not less than two-thirds of the outstanding Company Common
Stock, this Agreement and the Stock Option Agreement and the transactions
contemplated hereby and thereby have been
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authorized by all necessary corporate action of the Company and the Company
Board on or prior to the date hereof. The Company has duly executed and
delivered this Agreement and the Stock Option Agreement and, assuming due
authorization, execution and delivery by Parent, each of this Agreement and
the Stock Option 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).
(f) Regulatory Approvals; No Defaults.
(i) 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 in connection
with the execution, delivery or performance by the Company of this
Agreement, the Bank Merger Agreement and the Stock Option Agreement 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
FDIC, the OCC, the Maine Superintendent, the Massachusetts Board and
the MHPF, as required, and (B) the approval of this Agreement by the
holders of two-thirds of the outstanding shares of the Company Common
Stock. As of the date hereof, the Company is not aware of any reason
why the approvals set forth above and referred to in Section 7.01(b)
will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the approvals referred to in the
preceding paragraph, and the expiration of related waiting periods,
the execution, delivery and performance of this Agreement, the Bank
Merger Agreement and the Stock Option Agreement by the Company 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 articles of association 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.
(g) Financial Reports; Undisclosed Liabilities.
(i) The Company's Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000, December 31, 1999 and December 31, 1998
and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it
subsequent to December 31, 1998 with the FDIC (collectively, the
Company's "FDIC Documents"), as of the date filed or to be filed and
as amended prior
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to the date hereof, (A) complied or will comply in all material
respects as to form with the applicable securities regulations of the
FDIC 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; and each of the balance sheets contained in any such
FDIC 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 each
of the consolidated statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such FDIC 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
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, except in each case as may be noted therein.
(ii) Since March 31, 2001, neither the Company nor any of its
Subsidiaries has incurred any liability other than in the ordinary
course of business consistent with past practice (excluding the
incurrence of expenses and actions taken related to this Agreement and
the transactions contemplated hereby).
(iii) Since March 31, 2001, (A) the Company and its
Subsidiaries have conducted their respective businesses in the
ordinary and usual course consistent with past practice (excluding the
incurrence of expenses and actions taken related to this Agreement and
the transactions contemplated hereby) and (B) 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 Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to the Company.
(iv) 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. Except for regular
quarterly cash dividends at the rate of $0.10 per share on the Company
Common Stock, since December 31, 1999, no cash, stock or other
dividend or any other distribution with respect to the stock of the
Company or any of its Subsidiaries have been declared, set aside or
paid. No shares of the stock of the Company have been purchased,
redeemed or otherwise acquired, directly or indirectly, by the Company
since March 31, 2001, and no agreements have been made to do the
foregoing.
(h) 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.
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(i) Regulatory Matters.
(i) 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 "Regulatory Authorities"). The Company and
its Subsidiaries have paid all assessments made or imposed by any
Regulatory Authority.
(ii) Neither the Company 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 Regulatory Authority that such
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.
(j) Compliance With Laws. Each of the Company and its
Subsidiaries:
(i) is in compliance in all material respects with all
applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees
applicable 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;
(ii) 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 Company's knowledge, no suspension or cancellation
of any of them is threatened; and
(iii) 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 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).
(k) Material Contracts; Defaults. Except for documents listed as
exhibits to the FDIC Documents, neither the Company nor any of its
Subsidiaries is a party to, bound by or subject to
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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.
(l) No Brokers. No action has been taken by the Company or any of
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 and the Stock
Option Agreement, excluding a Previously Disclosed fee to be paid to ▇▇▇▇▇▇▇▇▇
Associates, Inc.
(m) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies
or arrangements covering current or former employees of the Company
and its Subsidiaries (the "Employees") and 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 (the "Benefits Plans"), are
Previously Disclosed in the 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.
(ii) All Benefits Plans other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees, 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, 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. 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.
(iii) 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
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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). 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.
(iv) All contributions required to be made 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 FDIC Documents.
Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302
of ERISA 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.
(v) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the
date hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the
Pension Plan's most recent actuarial valuation), did not exceed the
then current value of the assets of such Pension Plan, and there has
been no material change in the financial condition of such Plan since
the last day of the most recent plan year.
(vi) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit
Plan other than 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.
(vii) None of the execution of this Agreement, shareholder
approval of this Agreement or consummation of the Transactions 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
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in Section 280G of the Code, without regard to whether such payment is
reasonable compensation for personal services performed or to be
performed in the future.
(n) 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.
(o) Environmental Matters.
(i) The Company and its Subsidiaries are in compliance with
applicable Environmental Laws; (ii) 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; (iii) neither the Company nor any
of its Subsidiaries could be deemed the owner or operator of any
Company Loan Property which such Company Loan Property has been
contaminated with, or has had any release of, any Hazardous Substance
except in compliance with Environmental Laws; (iv) neither the Company
nor any of its Subsidiaries has any liability for any Hazardous
Substance disposal or contamination on any third party property; (v)
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; (vi) 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; (vii) 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 ownership, use, or transfer of any property pursuant to any
Environmental Law, or adversely affect the value of any Company Loan
Property; and (viii) the Company has delivered 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.
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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.
(p) Tax Matters.
(i) (A) All Tax Returns that are required to be filed on or
before the Effective Date (taking into account any extensions of time
within which to file which have not expired) by or with respect to the
Company Group, have been or will be timely filed on or before the
Effective Date, (B) all such Tax Returns are or will be true and
complete in all material respects, (C) all Taxes shown to be due on
the Tax Returns referred to in clause (A) have been or will be timely
paid in full, (D) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate tax
authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (E) all
material deficiencies asserted or assessments made as a result of
examinations conducted by any taxing authority have been paid in full,
(F) no material issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (A) are currently pending and (G) no member of
the Company Group has waived any statutes of limitation with respect
to any material Taxes.
(ii) The Company has made available to Parent true and
correct copies of the United States federal income Tax Returns filed
by the Company and its Subsidiaries for each of the three most recent
fiscal years ended on or before December 31, 2000.
(iii) The unpaid income, franchise and similar Taxes of the
Company and its Subsidiaries did not, as of the end of the most recent
period covered by the FDIC Documents filed prior to the date hereof,
exceed by any material amount the reserve for income, franchise and
similar 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 FDIC
Documents filed on or prior to the date hereof (rather than in any
notes thereto).
(iv) Neither the Company nor any of its Subsidiaries is a
party to any Tax allocation or sharing agreement, is or has been a
member of an affiliated group filing consolidated or combined Tax
Returns (other than a group the common parent of which is or was the
Company) or otherwise has any liability for the Taxes of any Person
(other than the Company and its Subsidiaries).
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(v) No closing agreements, private letter rulings, technical
advice memoranda or similar agreement or rulings have been entered
into or issued by any taxing authority with respect to the Company and
its Subsidiaries.
(vi) Neither the Company nor any of its Subsidiaries
maintains any compensation plans, programs or arrangements the
payments under which would not reasonably be expected to be deductible
as a result of the limitations under Section 162(m) of the Code and
the regulations issued thereunder.
(vii) All material Taxes that the Company or any of its
Subsidiaries is or was required by law to withhold or collect have
been duly withheld or collected and, to the extent required by
applicable law, have been paid to the proper Governmental Authority or
other Person.
(q) 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.
(r) Loans; Nonperforming and Classified Assets.
(i) 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 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.
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(ii) 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" or "special mention"
(or words of similar import) by the Company or an applicable
regulatory authority (it being understood that no representation is
being made that the FDIC or the Massachusetts Commissioner would agree
with the loan classifications established by the Company); (iii) a
listing of the real estate owned 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.
(s) Properties. All real and 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 March 31, 2001 included in the FDIC
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 March 31,
2001 included in the FDIC 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.
(t) 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 of its
Subsidiaries have performed in all material respects all the obligations
required to be performed by them and are not in default under any contract,
agreement, arrangement or commitment relating to any of the foregoing.
(u) 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
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Subsidiaries, nor any of their respective directors, officers or employees,
has committed any breach of trust with respect to any fiduciary account and
the records for each such fiduciary account are true and correct and
accurately reflect the assets of such fiduciary account.
(v) Books and Records. The books and records of the Company 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.
(w) 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.
(x) 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 as well as the standards established by applicable
Governmental Authorities and the Financial Accounting Standards Board and is
and shall be adequate under all such standards.
(y) Transactions With Affiliates. All "covered transactions"
between the Company and an "affiliate" within the meaning of Sections 23A and
23B of the Federal Reserve Act have been in compliance with such provisions.
(z) Required Vote; Antitakeover Provisions.
(i) The affirmative vote of the holders of two-thirds of the
issued and outstanding shares of Company Common Stock is necessary to
approve this Agreement and the Transactions on behalf of the Company.
(ii) Based on the representation and warranty of Parent in
Section 5.04(i), no "control share acquisition," "business combination
moratorium," "fair price" or other form of antitakeover statute or
regulation is applicable to this Agreement or the Stock Option
Agreement and the transactions contemplated hereby and thereby.
Without limiting the foregoing, the Board of Directors of the Company
has approved the transactions contemplated by this Agreement and the
Stock Option Agreement and taken all other requisite action such that
the provisions of Ch. 110F of the Massachusetts General Laws and the
provisions of the Company Articles relating to special voting
requirements for certain business combinations will not apply to this
Agreement or the Stock Option Agreement or any of the transactions
contemplated hereby or thereby.
(aa) Proxy Statement Information. None of the information which is
included or incorporated by reference in the Proxy Statement (except for any
such information relating to Parent and its Subsidiaries expressly provided by
Parent to the Company for inclusion therein),
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as of the date of the Proxy Statement and the date of the meeting of the
shareholders of the Company to which such Proxy Statement relates, will
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided that information as of a
later date shall be deemed to modify information as of an earlier date.
(bb) Fairness Opinion. The Company Board has received the written
opinion of ▇▇▇▇▇▇▇▇▇ Associates, Inc. to the effect that as of the date
hereof the Consolidation Consideration is fair to the holders of Company
Common Stock from a financial point of view.
(cc) Disclosure. The representations and warranties contained in
this Section 5.03, 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 Section 5.03
not misleading.
5.04. Representations and Warranties of Parent. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed, Parent hereby represents and
warrants to the Company as follows:
(a) Organization, Standing and Authority. Parent is duly organized,
validly existing and in good standing under the laws of the State of Maine.
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.
(b) Subsidiaries. Parent Bank has been duly organized and is
validly existing in good standing under the laws of the United States, 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. Upon its organization, Interim Sub will be duly
organized, and validly existing in good standing under the laws of the United
States. Parent owns all of the outstanding equity securities of Parent Bank,
and following the organization of Interim Sub, Parent will own all of the
outstanding equity securities of Interim Sub.
(c) Corporate Power. Each of Parent and 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, and upon its
organization Interim Sub will have, the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby; and Parent has the corporate
power and authority to execute, deliver and perform its obligations under the
Stock Option Agreement and to consummate the transactions contemplated
thereby, subject to receipt of all necessary approvals of Governmental
Authorities.
(d) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
Parent and the Parent Board and following its organization this Agreement and
the transactions contemplated hereby will be authorized by all necessary
corporate action of Interim Sub and the Board of Directors of ▇▇▇▇▇▇▇
▇▇
▇▇
Sub. The Stock Option Agreement and the transactions contemplated thereby have
been authorized by all necessary corporate action of Parent and the Parent
Board. Neither the Agreement nor the consummation of any of the Transactions
requires the approval of the shareholders of Parent. 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). Following its organization, this Agreement will be duly executed
and delivered by Interim Sub and, following such execution and delivery,
assuming due authorization, execution and delivery by the Company, this
Agreement will be a valid and legally binding agreement of Interim Sub
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).
(e) Regulatory Approvals; No Defaults
(i) 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, Parent Bank or Interim Sub of this Agreement, the Bank
Merger Agreement or the Stock Option Agreement, as applicable, or to
consummate the Transactions and any other transactions contemplated
hereby and thereby, except for filings of applications or notices with
and approvals or waivers by the Federal Reserve Board, the FDIC, the
OCC, the Maine Superintendent, the Massachusetts Board and the MHPF,
as required. As of the date hereof, Parent is not aware of any reason
why the approvals set forth above and referred to in Section 7.01(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 7.01(b).
(ii) Subject to receipt, or the making, of the consents,
approvals and filings referred to in the preceding paragraph and
expiration of the related waiting periods, the execution, delivery and
performance of this Agreement, the Bank Merger Agreement and the Stock
Option Agreement by Parent, Parent Bank and Interim Sub, 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.
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(f) Financial Reports and SEC Documents; Material Adverse Effect.
(i) Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 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; 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.
(ii) Since March 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 Section 5.04 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Parent.
(g) Financial Ability. On the Effective Date, Parent or Parent Bank
will have all funds necessary to consummate the Consolidation and pay the
aggregate Consolidation Consideration to holders of Company Common Stock
pursuant to Section 3.01(a) 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.
(h) Proxy Statement Information. None of the information relating
to Parent or its Subsidiaries which is expressly provided by Parent to the
Company for inclusion in the Proxy Statement, as of the date of the Proxy
Statement and the date of the meeting of the shareholders of the Company to
which such Proxy Statement relates, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided that information as of a later date shall be deemed
to modify information as of an earlier date.
(i) Ownership of Company Common Stock. Except for the Stock Option
Agreement, 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
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(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.
(j) Disclosure. The representations and warranties contained in
this Section 5.04, 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 Section 5.04
not misleading.
ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of the parties to the Agreement 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 Consolidation promptly as practicable and the consummation of the Bank
Merger immediately after the Consolidation, and otherwise to enable
consummation of the Transactions, including the satisfaction of the conditions
set forth in Article VII hereof, and shall cooperate fully with the other
parties hereto to that end.
6.02. Shareholder Approval. The Company agrees to take, in accordance
with applicable law and the Company Articles and Company 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 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. 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 6.06 shall govern the
withholding, withdrawing, amending or modifying of such recommendation in the
circumstances described therein.
6.03 Regulatory Filings.
(a) The parties shall promptly cooperate with each other in the
preparation of the Proxy Statement to be filed by the Company with the FDIC,
and after the FDIC has cleared the Proxy Statement the Company shall promptly
mail the Proxy Statement to its shareholders.
(b) 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
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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 (including the
consolidation of any Company branches with Parent Bank branches or branches of
any other Subsidiary of Parent or the closure of any Company branches, in each
case as Parent in its sole discretion shall deem necessary), the Bank Merger
Agreement and the Stock Option Agreement; and any initial filings with
Governmental Authorities (other than the Proxy Statement) shall be made by
Parent as soon as reasonably practicable after the execution hereof. Each of
Parent and the Company shall have the right to review 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
material written information submitted to any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement
and the Stock Option 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 material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement, the
Bank Merger Agreement and the Stock Option Agreement and each party shall keep
the other parties apprised of the status of material matters relating to
completion of the transactions contemplated hereby.
(c) 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.
6.04 Press Releases. The Company and Parent shall consult with each
other before 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. 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.
6.05 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 its 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.
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(b) Parent agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (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, Parent shall keep confidential, and shall
cause its representatives to keep confidential, all information and documents
obtained pursuant to this Section 6.05 (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 Company 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, Parent shall promptly cause all copies of documents or
extracts thereof containing information and data as to the Company to be
returned to the Company or destroyed. No investigation by Parent of the
business and affairs of the Company shall affect or be deemed to modify or
waive any representation, warranty, covenant or agreement in this Agreement,
or the conditions to the obligations of Parent and Interim Sub to consummate
the Transactions.
6.06 Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries nor any of their respective officers or 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, 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 10% 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; (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
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favorable to the Company's shareholders from a financial point of view than
the Consolidation. 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.
6.07 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 the condition set forth in Section 7.01(b); and
further provided that in any event, no accrual or reserve made by the Company
or any of its Subsidiaries pursuant to this Section 6.07 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.
6.08 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
(i) 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, (ii) the negotiation, execution and
performance of this Agreement, the Stock Option Agreement or any of the
transactions contemplated hereby and thereby, to the fullest extent which such
Indemnified Parties would be entitled under the Company Articles and Company
Bylaws or equivalent documents of any Company Subsidiary, as applicable, or
any agreement, arrangement or understanding which has been Previously
Disclosed by the Company pursuant to this Section, in each case as in effect
on the date hereof. Without limiting the foregoing, Parent also agrees that
limitations on liability existing in favor of the Indemnified Parties as
provided in the Company Articles and Company Bylaws or similar governing
documents of the Company Subsidiaries as in effect on the date hereof with
respect to matters occurring prior to the Effective Time shall survive the
Merger and the Bank Merger and shall continue in full force and effect from
and after the Effective Time.
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(b) Any Indemnified Party wishing to claim indemnification under
this Section 6.08, 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 in
the manner contemplated hereby is prohibited by applicable laws and
regulations.
(c) Prior the Effective Time, the Company shall 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 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.
(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 6.08.
6.09 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 take into account for purposes of eligibility
and vesting thereunder the service of such employees with the Company and its
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Subsidiaries to the same extent as such service was credited for such purpose
by the Company. Nothing herein shall limit the ability of Parent to amend or
terminate any of the Company's Benefits Plans in accordance with their terms
at any time.
(b) 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 or severance agreements, plans or policies of the Company which are
Previously Disclosed.
(c) 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 covered under the applicable medical, health or
dental plans of Parent, (ii) honor under such plans any deductible, co-payment
and out-of-pocket expenses incurred by the employees and their beneficiaries
during the portion of the calendar year prior to such participation and (iii)
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.
(d) For a period of six months following the Effective Time, Parent
or Parent Bank shall provide 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 desires, 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.
(e) All employees of the Company or a Company Subsidiary as of the
Effective Time shall become employees of a Parent Subsidiary as of the
Effective Time, and Parent or a Parent Subsidiary will use its reasonable best
efforts to give such persons (other than any such person who is party to an
employment agreement or a severance agreement) at least four weeks prior
written notice of any job elimination after the Effective Time for a period of
90 days following the Effective Time. Subject to such four-week notice
requirement, Parent or a Parent Subsidiary shall have no obligation to
continue the employment of any such person and nothing contained herein shall
give any employee of the Company or a Company Subsidiary the right to continue
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 or a severance 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 Company employee severance plan with respect to the
Transactions, a copy of which the Parent acknowledges has been provided to it
by the Company.
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6.10. The 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
Consolidated Corporation to merge with and into Parent Bank (the "Bank
Merger") in accordance with applicable laws and regulations and the terms of
the Bank Merger Agreement immediately following consummation of the
Consolidation. The Bank Merger Agreement shall provide that the directors of
Parent Bank upon consummation of the Bank Merger shall be the directors of
Parent Bank immediately prior to the Bank Merger, plus two persons serving as
a director of the Company as of the date hereof designated by the Company who
both meet the director qualification requirements set forth in the Bylaws of
Parent Bank and are otherwise acceptable to Parent.
6.11 Interim Sub. Following the organization of Interim Sub, Parent
shall (i) cause Interim Sub to execute and deliver this Agreement and take all
necessary action to complete the Consolidation, subject to the terms and
conditions hereof, and (ii) adopt and ratify this Agreement in its capacity as
the sole shareholder of Interim Sub.
6.12 Director of Parent. Parent agrees to take all action necessary
to appoint or elect, effective as of the Effective Time, one non-employee
director of the Company as of the date hereof who is designated by the Company
and who both meets the director qualification requirements set forth in the
Parent Bylaws and is otherwise reasonably acceptable to Parent as a director
of Parent.
6.13 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) 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 (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE CONSOLIDATION
7.01. Conditions to Obligations of the Company and Interim Sub to
Effect the Consolidation. The respective obligations of the Company, Parent
and Interim Sub to consummate the Consolidation are subject to the fulfillment
or written waiver by the parties hereto prior to the Effective Time of each of
the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by holders of not less than two-thirds of the outstanding shares of
the Company 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 approvals 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
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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 any of the Transactions.
(d) Organization and Conversion. The Organization and the
Conversion shall have been consummated in accordance with all applicable
requirements.
7.02. Conditions to Obligation of the Company. The obligation of the
Company to consummate the Consolidation also is subject to the fulfillment or
written waiver by the Company prior to the Effective Time of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement, subject in all cases to the
standard set forth in Section 5.02, shall be true and correct as of the date
of this Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct as of such date), and the Company shall have received a certificate,
dated the Effective Date, signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent and Interim Sub
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Effective Time, and
the Company shall have received a certificate, dated the Effective Date,
signed on behalf of Parent by the Chief Executive Officer and the Chief
Financial Officer of Parent to such effect.
(c) Other Actions. Parent and Interim Sub shall have furnished the
Company with such certificates of its respective officers or others and such
other documents to evidence fulfillment of the conditions set forth in
Sections 7.01 and 7.02 as the Company may reasonably request.
7.03. Conditions to Obligations of Parent and Interim Sub. The
obligations of Parent and Interim Sub to consummate the Consolidation are also
subject to the fulfillment or written waiver by Parent and Interim Sub prior
to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement, subject in all cases to
the standard set forth in Section 5.02, shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and as
of the Effective Date (except that representations and warranties that by
their terms speak as of the date of this Agreement or some other date shall be
true and correct as of such date), and Parent and Interim Sub shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
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(b) Performance of Obligations of Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Parent and
Interim Sub shall have received a certificate, dated the Effective Date,
signed on behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(c) Dissenting Shares. Dissenting Shares shall not represent 10%
or more of the outstanding Company Common Stock.
(d) Other Actions. The Company shall have furnished Parent and
Interim Sub with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in Sections 7.01
and 7.03 as Parent and Interim Sub may reasonably request.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Transactions may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by
the 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) Breach. At any time prior to the Effective Time, by Parent or
the Company if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of: (i) a breach by Parent and
Interim Sub or the Company, as the case may be, of any representation or
warranty contained herein (subject to the standard set forth in Section 5.02),
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; (ii) a
breach by Parent and Interim Sub 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 or (iii) in the case of a
termination by Parent, a breach by a Shareholder or Shareholders of any of the
covenants or agreements contained in the Shareholder Agreements, 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, provided that such
breach (whether under (i), (ii) or (iii)) 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.
(c) Delay. At any time prior to the Effective Time, by Parent or
the Company if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Transactions are not
consummated by March 31, 2002, except to the extent that the failure of the
Consolidation 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 8.01(c), (ii) Interim Sub (if Parent is the party seeking to
terminate) or (iii) any of the Shareholders (if the Company is the party
seeking to terminate), which action or inaction is in violation of its
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obligations under this Agreement or, in the case of the Shareholders, his, her
or its obligations under the relevant Shareholder Agreement.
(d) 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 (i) the approval of any Governmental Authority required
for consummation of any of the Transactions 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 or (ii) the shareholder approval referred to in Section 7.01(a)
herein is not obtained at the Company Meeting.
(e) Failure to Recommend. At any time prior to the Company Meeting,
by Parent if the Company shall have breached Section 6.06 or the Company Board
shall have failed to make its recommendation referred to in Section 6.02,
withdrawn such recommendation or modified or changed such recommendation in a
manner adverse in any respect to the interests of Parent.
8.02. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Consolidation
pursuant to this Article VIII, no party to this Agreement shall have any
liability or further obligation to any other party hereunder except (i) as set
forth in Section 9.01 and (ii) that termination will not relieve a breaching
party from liability for any willful breach of any covenant, agreement,
representation or warranty of this Agreement giving rise to such termination.
ARTICLE IX
MISCELLANEOUS
9.01. 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 Stock Option Agreement,
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 6.05(b), 8.02 and, excepting Section 9.12 hereof, this
Article IX, which shall survive any such termination, and the Stock Option
Agreement, which shall terminate in accordance with the terms thereof).
Notwithstanding anything in the foregoing to the contrary, no representations,
warranties, agreements and covenants contained in this Agreement shall be
deemed to be terminated or extinguished so as to deprive a party hereto or any
of its affiliates of any defense at law or in equity which otherwise would be
available against the claims of any Person, including without limitation any
shareholder or former shareholder.
9.02. 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 by law requires
further approval by the shareholders of the Company without obtaining such
approval.
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9.03. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Maine applicable to
contracts made and to be performed entirely within such State.
9.05. Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby.
9.06. 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.
If to the Company to:
MetroWest Bank
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Chief Executive Officer
Fax:
With a copy to:
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Interim Sub to:
Banknorth Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman, President
and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
12th Floor, The ▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.07. Entire Understanding; No Third Party Beneficiaries. This
Agreement, the Shareholder Agreements and the Stock Option Agreement represent
the entire understanding of the parties hereto and thereto with reference to
the transactions contemplated hereby and thereby and this Agreement, the
Shareholder Agreements and the Stock Option Agreement supersede any and all
other oral or written agreements heretofore made. Except for the Indemnified
Parties' right to enforce Parent's obligations under Section 6.08, 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.
9.08. Severability. Except to the extent that application of this
Section 9.08 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.
9.09. 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.
9.10. 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."
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9.11 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.
9.12 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 Consolidation 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 and (ii) such modification will not
materially delay or jeopardize receipt of any required approvals of
Governmental Authorities.
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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.
BANKNORTH GROUP, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President, Chief
Operating Officer and Chief
Executive Officer
METROWEST BANK
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Chief Executive Officer
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
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EXHIBIT A
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement"), dated as of June 11, 2001, by
and between _________, a shareholder ("Shareholder") of MetroWest Bank, a
Massachusetts-chartered savings bank (the "Company"), and Banknorth Group, Inc.,
a Maine corporation ("Parent"). All terms used herein and not defined herein
shall have the meanings assigned thereto in the Consolidation Agreement (defined
below).
WHEREAS, Parent and the Company have entered into an Agreement and Plan
of Consolidation, dated as of the date hereof (the "Consolidation Agreement"),
providing for the business combination transactions contemplated therein,
pursuant to which the Company will be combined with an existing national bank
subsidiary of Parent in a series of transactions and in connection therewith
each outstanding share of Company Common Stock (except Dissenting Shares and
Treasury Stock) shall be converted into the right to receive $11.50, without
interest; and
WHEREAS, Shareholder 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 Shareholder during the term of this Agreement, being
referred to as the "Shares"); and
WHEREAS, in order to induce Parent to enter into the Consolidation
Agreement, Shareholder, solely in such Shareholder'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. Shareholder shall vote or cause to
be voted, or execute a written consent with respect to, the Shares, to
the extent such Shares are entitled to vote, in favor of approval and
adoption of (i) the Consolidation Agreement and all transactions
contemplated thereby at every meeting of the shareholders of the Company
at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent
with respect thereto and (ii) any amendment to the Company Articles
and/or the Company Bylaws required to be made to effect any of the
transactions contemplated by the Consolidation Agreement at every
meeting of the shareholders of the Company at which such matters are
considered and at every adjournment thereof and in connection with every
proposal to take action by written consent with respect thereto.
2. No Voting Trusts. Shareholder agrees that Shareholder will
not, nor will Shareholder permit any entity under Shareholder's control
to, deposit any Shares in a voting trust or subject the Shares to any
agreement, arrangement or understanding with respect to the voting of
the Shares inconsistent with this Agreement, except to the extent that
such
49
Shares are currently subject to any such voting trust agreement,
arrangement or understanding.
3. Representations and Warranties of Shareholder. Shareholder
represents and warrants to and agrees with Parent and Parent Bank as
follows:
A. Capacity. Shareholder 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 Shareholder, 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 Shareholder does not, and the performance by
Shareholder of his, her or its obligations hereunder and the
consummation by Shareholder 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 Shareholder is
a party or by which Shareholder is bound, or any statute, rule or
regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity,
any charter, bylaw or other organizational document of Shareholder.
D. Ownership of Shares. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex II
hereto, the Shares are so owned free and clear of any liens,
security interests, charges or other encumbrances.
4. Specific Performance and Remedies. Shareholder acknowledges
that it will be impossible to measure in money the damage to Parent if
Shareholder 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, Shareholder
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. Shareholder agrees that
Shareholder 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 Shareholder, Parent shall have the right to inform any third
party that Parent reasonably believes to be, or to be contemplating,
participating with Shareholder or receiving from Shareholder 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 Shareholder in activities in violation of Shareholder's
agreement with Parent set forth in this Agreement may give rise to
claims by Parent against such third party.
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50
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 Consolidation 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 Consolidation Agreement is not terminated
prior in accordance with its terms, this Agreement (except for
the provisions of Sections 3, 8 and 9, 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 such Section prior to such termination.
6. 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.
7. 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):
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51
If to Parent:
Banknorth Group, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman, President and
Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Shareholder:
------------------------
------------------------
------------------------
With a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8. 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.
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52
B. Capacity. The covenants contained herein shall apply
to Shareholder solely in his or her capacity as a shareholder of
the Company, and no covenant contained herein shall apply to
Shareholder 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 Shareholder 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 STATE OF MAINE, WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PRINCIPLES.
9. 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 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.
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53
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
BANKNORTH GROUP, INC.
By:
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President, Chief
Operating Officer and Chief
Executive Officer
[SHAREHOLDER]
------------------------------------------
(Signature)
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54
ANNEX I
SHAREHOLDER AGREEMENT
Number of Shares Owned:
7
55
EXHIBIT B
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of June 11, 2001, between Banknorth
Group, Inc., a Maine corporation ("Grantee"), and MetroWest Bank, a
Massachusetts-chartered savings bank ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Consolidation of even date herewith (the "Consolidation Agreement"), pursuant to
which the Company will be combined with an existing national bank subsidiary of
Parent in a series of transactions and in connection therewith each outstanding
share of Company Common Stock (except Dissenting Shares and Treasury Stock)
shall be converted into the right to receive the Consolidation Consideration;
and
WHEREAS, as a condition and an inducement to Grantee to enter into the
Consolidation Agreement, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Consolidation Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 2,851,756 fully paid and nonassessable shares (the "Option
Shares") of common stock, par value $0.10 per share, of Issuer (the "Common
Stock") at a price per share equal to $8.76 (the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement and other than pursuant to an
event described in Section 5 hereof), including, without limitation, pursuant to
stock option or other employee plans or as a result of the exercise of
conversion rights, or (ii) redeemed, repurchased, retired or otherwise cease to
be outstanding after the date of this Agreement, the number of shares of Common
Stock subject to the Option shall be increased or decreased, as appropriate, so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or
Grantee to breach any provision of the Consolidation Agreement.
56
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the Exercise Notice (as hereinafter defined) within ninety (90)
days following such Subsequent Triggering Event (or such later period as
provided in Section 10). Each of the following shall be an Exercise Termination
Event: (i) the Effective Time (as defined in the Consolidation Agreement); (ii)
termination of the Consolidation Agreement in accordance with the provisions
thereof if such termination occurs prior to the occurrence of an Initial
Triggering Event, except a termination by Grantee pursuant to Section 8.01(b) of
the Consolidation Agreement (unless the breach by Issuer giving rise to such
right of termination was non-volitional ( a "Listed Termination")); or (iii) the
passage of 12 months (or such longer period as provided in Section 10) after
termination of the Consolidation Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a Listed Termination, provided
that if an Initial Triggering Event continues or occurs beyond such termination
and prior to the passage of such 12-month-period, the Exercise Termination Event
shall be 12 months from the expiration of the Last Triggering Event but in no
event more than 18 months after such termination. The term "Last Triggering
Event" shall mean the last Initial Triggering Event to be in effect, and the
term "Holder" shall mean the permitted holder or holders of the Option pursuant
to this Agreement. Notwithstanding anything to the contrary contained herein,
the Option may not be exercised at any time when Grantee shall be in willful
material breach of any of its covenants or agreements contained in the
Consolidation Agreement such that Issuer shall be entitled to terminate the
Consolidation Agreement pursuant to Section 8.01(b) thereof as a result of such
a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary (as hereinafter
defined) of Issuer (an "Issuer Subsidiary"), without having
received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder), other than Grantee or any Subsidiary of
Grantee (a "Grantee Subsidiary") or the Board of Directors of
Issuer (the "Issuer Board") shall have recommended that the
stockholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Grantee
Subsidiary. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Issuer Subsidiary,
(x) a purchase, lease or other acquisition or assumption of all
or any substantial part of the consolidated assets or
consolidated deposits of Issuer or any Issuer Subsidiary, (y) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any
Issuer Subsidiary or (z) any substantially similar
2
57
transaction, provided that in no event shall (i) any merger,
consolidation, purchase or similar transaction involving only
Issuer and one or more of its Subsidiaries, or involving only
any two or more of such Subsidiaries, be deemed to be an
Acquisition Transaction, provided that any such transaction is
not entered into in violation of the terms of the Consolidation
Agreement, or (ii) the transactions contemplated by the
Consolidation Agreement or the entering into of the
Consolidation Agreement be deemed to be an Acquisition
Transaction; and (b) "Subsidiary" shall have the meaning set
forth in Rule 12b-2 under the 1934 Act;
(ii) After the date hereof, any person, other than
Grantee or a Grantee Subsidiary, shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and
failed to approve the Consolidation Agreement at a meeting which
has been held for that purpose or any adjournment or
postponement thereof, or such meeting shall not have been held
in violation of the Consolidation Agreement or shall have been
cancelled prior to termination of the Consolidation Agreement
if, in each case prior to such meeting (or if such meeting shall
not have been held or shall have been cancelled, prior to such
termination), it shall have been publicly announced that any
person (other than Grantee or a Grantee Subsidiary) shall have
made, or publicly disclosed an intention to make, a proposal to
engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received
Grantee's prior written consent, shall have withdrawn or
modified, or publicly announced its intention to withdraw or
modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Consolidation Agreement in
anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized,
recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee
Subsidiary shall have filed with the Securities and Exchange
Commission ("SEC") a registration statement or tender offer
materials with respect to a potential exchange offer or tender
offer that would constitute an Acquisition Transaction (or filed
a preliminary proxy statement with the SEC with respect to a
potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer);
(vi) Issuer shall have breached any covenant or
obligation contained in the Consolidation Agreement after a
proposal is made by any third party, other than
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58
Grantee or a Grantee Subsidiary, to engage in an Acquisition
Transaction and following such breach (x) Grantee would be
entitled to terminate the Consolidation Agreement (whether
immediately or after the giving of notice or passage of time or
both) and (y) such breach shall not have been cured prior to the
Notice Date (as defined below); or
(vii) Any person other than Grantee or a Grantee
Subsidiary, without Grantee's prior written consent, shall have
filed an application or notice with the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") or
other federal or state bank regulatory or antitrust authority,
which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of
25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in clause (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) of the
second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event") of which it has notice, it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (an "Exercise Notice," the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 60 business days from the Notice Date for the
closing of such purchase (the "Closing," the date of which being herein referred
to as the "Closing Date"); provided that if prior notification to or approval of
the Federal Reserve Board or any other regulatory or antitrust agency is
required in connection with such purchase, the Holder shall promptly file the
required notice or application for approval, shall promptly notify Issuer of
such filing and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto. The term "business day" for purposes of this Agreement
means any day, excluding Saturdays, Sundays and any other day that is a legal
4
59
holiday in the Commonwealth of Massachusetts or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized by law or
executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the
aggregate purchase price for the Option Shares purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a bank
account designated by Issuer and (ii) present and surrender this Agreement to
Issuer at its principal executive offices, provided that the failure or refusal
of the Issuer to designate such a bank account or accept surrender of this
Agreement shall not preclude the Holder from exercising the Option.
(g) At a Closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of Option Shares purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the Option Shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Option Shares delivered at a Closing
hereunder may be endorsed (in the sole discretion of Issuer) with a restrictive
legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder,
which shall be set forth in a written opinion in form and substance reasonably
satisfactory to Issuer; and (iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under paragraph (e) of this
Section 2, the tender of the applicable purchase price in immediately available
funds and the tender of a copy of this Agreement to Issuer, the Holder shall
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60
be deemed, subject to the receipt of any necessary regulatory approvals, to be
the holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in
Bank Control Act of 1978, as amended, or any state or other federal banking law,
prior approval of or notice to the Federal Reserve Board or to any state or
other federal regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in connection with the preparation
of such applications or notices and providing such information to the Federal
Reserve Board or such state or other federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase
on the same terms and subject to the same conditions as are set forth herein in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
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61
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or distributions in
respect of, the Common Stock by reason of stock dividend, stock split, split-up,
merger, recapitalization, stock combination, subdivision, conversion, exchange
of shares, distribution on or in respect of the Common Stock or similar
transaction, the type and number of Option Shares subject to the Option, and the
Option Price therefor, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction, so that Grantee
shall receive upon exercise of the Option the number and class of Option Shares
or other securities or property that Grantee would have received in respect of
Option Shares if the Option had been exercised immediately prior to such event,
or the record date therefor, as applicable.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six (6) months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option and the Option Shares, a registration statement under
the 1933 Act, to the extent applicable, and/or any applicable securities
offering rules of a federal or state banking authority, and qualify such Option
and Option Shares for resale or other disposition under applicable state
securities laws, in each case in accordance with any plan of disposition
requested by Grantee. Issuer will use all reasonable efforts to cause such
registration statement promptly to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. Issuer shall bear the costs of such
registrations (including, but not limited to, Issuer's attorneys' fees, printing
costs and filing fees, except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's counsel related
thereto). The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public offering by
Issuer of shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the sole underwriter
or underwriters, of such offering, the inclusion of the Option and/or Option
Shares would interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of shares represented by the Option and/or
the number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; provided, however, that after any
such required reduction the number of shares represented by the Option and/or
the number of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares to be
sold by the Holder and Issuer in the aggregate; and provided further, however,
that if such reduction occurs, then Issuer shall file a registration statement
for the balance as promptly as practicable thereafter as to which no reduction
pursuant to this Section 6 shall be permitted or occur and Holder shall
thereafter be entitled to one additional registration and the twelve (12) month
period referred to in the first sentence of this section shall be increased to
twenty four (24) months. Each such Holder shall provide all
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information reasonably requested by Issuer for inclusion in any such
registration statement to be filed hereunder. If requested by any such Holder in
connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person known to Issuer
to be entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall the number of registrations that
Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of this
Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as described below), (i) at the request of any Holder delivered prior to
an Exercise Termination Event (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which the Option may then be exercised, and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the greater of (A) the
Market/Offer Price and (B) the average exercise price per share paid by the
Owner for the Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any person, other than Grantee or a Grantee
Subsidiary, pursuant to an agreement with Issuer of the kind described in
Section 2(b)(i), (iii) the highest closing price for shares of Common Stock
within the six-month period immediately preceding the date of such required
repurchase of the Option or Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of Issuer's assets or deposits,
the sum of the price paid in such sale for such consolidated assets or
consolidated deposits and the current market value of the remaining assets of
Issuer as determined by a nationally-recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that such Holder
or Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event
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within five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor
or the portion thereof that Issuer is not then prohibited under applicable law
and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, or as a result
of a written agreement or other binding obligation with a governmental or
regulatory body or agency, from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify each Holder and/or each Owner and
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or such Owner, as appropriate, the portion of the Option Repurchase Price
and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within two business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and Issuer
hereby undertakes to use all reasonable efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), such Holder or Owner may
revoke its notice of repurchase of the Option and/or the Option Shares either in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering with respect to Options or Option
Shares as to which the Holder or the Owner, as the case may be, has not revoked
its repurchase demand; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares of
Common Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to such Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing.
(d) For purposes of this Agreement, a "Repurchase Event"
shall be deemed to have occurred upon the occurrence of any of the following
events or transactions after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 50% or
more of the then outstanding Common Stock; or
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(ii) the consummation of any Acquisition Transaction
described in Section 2(b)(i) hereof, except that the percentage referred
to in clause (y) of the second sentence thereof shall be 50%;
provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of any Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or a Grantee Subsidiary, or engage in a plan of
exchange with any person, other than Grantee or a Grantee Subsidiary, and Issuer
shall not be the continuing or surviving corporation of such consolidation or
merger or the acquiror in such plan of exchange, (ii) to permit any person,
other than Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired
by Issuer in a plan of exchange and Issuer shall be the continuing or surviving
or acquiring corporation, but, in connection with such merger or plan of
exchange, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding shares of Common Stock shall after such merger
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's
consolidated assets or consolidated deposits to any person, other than Grantee
or a Grantee Subsidiary, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of any Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with Issuer
(if other than Issuer), (ii) the acquiring person in a plan of exchange
in which Issuer is acquired, (iii) Issuer in a merger or plan of
exchange in which Issuer is the continuing or surviving or acquiring
person, and (iv) the transferee of all or a substantial part of Issuer's
consolidated assets or consolidated deposits (or the assets or deposits
of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
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(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger, share exchange or sale
in question, but in no event higher than the closing price of the shares
of Substitute Common Stock on the day preceding such consolidation,
merger, share exchange or sale; provided that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or
by any company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option also shall
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as this Agreement (after giving effect for such
purpose to the provisions of Section 9), which agreement shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this paragraph (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
paragraph (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this paragraph (e). This difference in value shall be
determined by a nationally-recognized investment banking firm selected by a
majority in interest of the Holders and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder") delivered to the Substitute Option Issuer, the
Substitute Option Issuer shall repurchase the
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Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of each owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the greater of (A) the Highest Closing Price and (B) the average exercise price
per share paid by the Substitute Share Owner for the Substitute Shares so
designated, multiplied by the number of Substitute Shares so designated. The
term "Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding the
date the Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within two business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor, or the portion(s) thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from repurchasing
the Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to this
Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within two business days after the date on which the
Substitute Option Issuer is no longer so prohibited; provided, however, that if
the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
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Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use all reasonable efforts to
obtain all required regulatory and legal approvals as promptly as practicable in
order to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing.
10. The 90-day or six-month periods for exercise of certain rights
under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (for so long as
the Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the
case may be, is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii) during
the pendency of any order, injunction or judgment that prohibits or delays
exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as
follows:
(i) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Issuer Board and no other corporate
proceedings on the part of Issuer are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(ii) The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and compliance
by Issuer with any of the provisions hereof will not (i) conflict with
or result in a breach of any provision of its Charter or Bylaws or a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
note, bond, debenture, mortgage, indenture, license, material agreement
or other material instrument or obligation to which Issuer is a party,
or by which it or any of its properties or assets may be bound, or (ii)
violate any order,
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writ, injunction, decree, statute, rule or regulation applicable to
Issuer or any of its properties or assets.
(iii) Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal to
the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, and all such shares, upon issuance pursuant
thereto, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any
preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Grantee and
the performance of its obligations hereunder by Grantee have been duly
and validly authorized by all necessary corporate action on the part of
Grantee and no other corporate proceedings on the part of Grantee are
necessary to authorize this Agreement for Grantee to perform its
obligations hereunder. This Agreement has been duly and validly executed
and delivered by Grantee.
(ii) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon exercise of
the Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the 1933 Act
and any applicable securities offering rules of a federal or state
banking authority.
12. Neither of the parties hereto may assign or otherwise transfer
any of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder, provided, however, that until the date 15 days following the date on
which the Federal Reserve Board approves an application by Grantee under the
BHCA to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the sole purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use all reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
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Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder and applying for listing or quotation of such shares on any exchange
or quotation system on which the Common Stock is then listed or quoted.
14. (a) Notwithstanding any other provision of this Agreement,
in no event shall the Grantee's Total Profit (as hereinafter defined) exceed
$10,000,000 (the "Maximum Profit") and, if it otherwise would exceed such
amount, the Grantee, at its sole election, shall either (i) reduce the number of
shares of Common Stock subject to this Option, (ii) deliver to the Issuer for
cancellation Option Shares previously purchased by Grantee, (iii) pay cash to
the Issuer or (iv) any combination thereof, so that Grantee's actually realized
Total Profit shall not exceed the Maximum Profit after taking into account the
foregoing actions. As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 7 hereof, (ii) (x) the amount received by Grantee pursuant
to Issuer's repurchase of the Option Shares pursuant to Section 7 hereof, less
(y) the Grantee's purchase price for such Option Shares, (iii) (x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price of such Option Shares,
(iv) any amounts received by Grantee on the transfer of the Option (or any
portion thereof) to any unaffiliated party and (v) any equivalent amount with
respect to the Substitute Option.
(b) Notwithstanding any other provision of this Agreement,
this Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as hereinafter defined) of more
than the Maximum Profit, provided that nothing in this sentence shall restrict
any exercise of the Option permitted hereby on any subsequent date. As used
herein, the term "Notional Total Profit" with respect to any number of shares as
to which Grantee may propose to exercise this Option shall be the Total Profit
determined as of the date of such proposed exercise assuming that this Option
were exercised on such date for such number of shares and assuming that such
shares, together with all other Option Shares held by Grantee and its affiliates
as of such date, were sold for cash at the closing market price for the Common
Stock as of the close of business on the preceding trading day (less customary
brokerage commissions).
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. In connection therewith,
both parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of
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Common Stock provided in Section l(a) hereof (as adjusted pursuant to Section
l(b) or Section 5 hereof), it is the express intention of Issuer (which shall be
binding on the Substitute Option Issuer) to allow the Holder to acquire or to
require Issuer or Substitute Option Issuer, as the case may be, to repurchase
such lesser number of shares as may be permissible, without any amendment or
modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Consolidation Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of Maine, without regard to the conflict of law
principles thereof.
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Except as otherwise expressly provided herein or in the
Consolidation Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto, and their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Consolidation Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
METROWEST BANK
By:
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: Chief Executive Officer
BANKNORTH GROUP, INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President, Chief Operating
Officer and Chief Executive Officer
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