EXHIBIT 2.1
-------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 25, 2004
BETWEEN
FIRST NATIONAL LINCOLN CORPORATION
AND
FNB BANKSHARES
------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER, dated as of August 25, 2004 (this "Agreement"),
between FIRST NATIONAL LINCOLN CORPORATION ("Parent") and FNB BANKSHARES (the
"Company").
RECITALS
A. The Company. The Company is a Maine corporation, having its
principal place of business in Bar Harbor, Maine
B. Parent. Parent is a Maine corporation, having its principal place
of business in Damariscotta, Maine.
C. Intention of the Parties. It is the intention of the parties to
this Agreement that the Merger provided for herein be treated as a
"reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
D. Board Action. The respective Boards of Directors of each of
Parent and the Company have determined that it is in the best interests of
their respective companies and their shareholders to consummate the Merger
provided for herein.
E. Shareholder Agreements. As a material inducement to Parent to enter
into this Agreement, and simultaneously with, the execution of this Agreement,
each director who is also an officer of the Company, namely Messrs. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, is entering into an agreement, in the form of Annex A
hereto (collectively, the "Shareholder Agreements") pursuant to which he has
agreed, among other things, to vote his shares of Company Stock (as defined
herein) in favor of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
Page 1
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 6.08.
"Acquisition Agreement" has the meaning set forth in Section 8.01(g).
"Additional Director" has the meaning set forth in Section 6.15.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Articles of Merger" has the meaning set forth in Section 2.02(a).
"Average Share Price" has the meaning set forth in Section 3.01(b)(2).
"Bank Insurance Fund" means the Bank Insurance Fund maintained by the
FDIC.
"Bank Merger Agreement" has the meaning set forth in Section 6.13.
"Bank Merger" has the meaning set forth in Section 6.13.
"Bank Secrecy Act" means the Bank Secrecy Act of 1970, as amended.
"Benefit Plans" has the meaning set forth in Section 5.03(m)(i).
"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 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
2.02(b).
"Code" has the meaning set forth in the recitals to this Agreement.
"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 Affiliates" has the meaning set forth in Section 6.07.
"Company Articles" means the Articles of Incorporation of the Company, as
amended.
"Company Bank" means First National Bank of Bar Harbor, a national banking
association.
"Company Board" means the Board of Directors of the Company.
"Company Bylaws" means the Bylaws of the Company, as amended.
"Company Common Stock" means the common stock of the Company.
"Company ESOP" means the Company's Employee Stock Ownership Plan, as
amended.
"Company 401(k) Plan" means the First National Bank of Bar Harbor 401(k)
Savings Plan.
"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 Intellectual Property" has the meaning set forth in Section
5.03(u).
"Company Loan Property" has the meaning set forth in Section 5.03(o)(i).
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock means the Serial Preferred Stock 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.
"Company Regulatory Authorities" has the meaning set forth in Section
5.03(i).
Page 2
"Company Stock Option Plan" means the Company's Stock Option Plan dated
July 31, 2001.
"Derivatives Contract" has the meaning set forth in Section 5.03(r).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenting Shares" has the meaning set forth in Section 3.05.
"D&O Insurance" has the meaning set forth in Section 6.11 (c).
"D&O Tail Coverage" has the meaning set forth in Section 6.11(c).
"ECA Agreements" has the meaning set forth in Section 6.12(b).
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Laws" has the meaning set forth in Section 5.03(o).
"Equal Credit Opportunity Act" means the Equal Credit Opportunity Act, as
amended.
"Equity Investment" means (i) an Equity Security; and (ii) an ownership
interest in any company or other entity, any membership interest that includes
a voting right in any company or other entity, any interest in real estate; and
any investment or transaction which in substance falls into any of these
categories even though it may be structured as some other form of investment or
transaction.
"Equity Security" means any stock (other than adjustable-rate preferred
stock, money market (auction rate) preferred stock or other instrument
determined by the OCC to have the character of debt securities), certificate of
interest or participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferable share,
investment contract, or voting-trust certificate; any security convertible into
such a security; any security carrying any warrant or right to subscribe to or
purchase any such security; and any certificate of interest or participation
in, temporary or interim certificate for, or receipt for any of the foregoing.
"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" has the meaning set forth in Section 3.02(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(b)(1), subject
to adjustment pursuant to Section 3.06.
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Act" means the Federal Reserve Act, as amended.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"GAAP" means accounting principles generally accepted in the United States
of America.
"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 Parties" and "Indemnifying Party" have the meanings set forth
in Section 6.11(a).
"Insurance Policies" has the meaning set forth in Section 5.03(x).
"IRS" means the Internal Revenue Service.
"Leases" has the meaning set forth in Section 5.03(t)
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Loans" has the meaning set forth in Section 4.01(r).
Page 3
"Maine Superintendent" means the Superintendent of the Bureau of Banking
of the State of Maine.
"Material Adverse Effect" means, with respect to Parent or the Company any
effect that (i) is material and adverse to the financial position, results of
operations or business of Parent and its Subsidiaries taken as a whole or the
Company and its Subsidiaries taken as a whole, as the case may be, or (ii)
would materially impair the ability of any of Parent and its Subsidiaries or
the Company and its Subsidiaries to perform their respective obligations under
this Agreement or the Bank Merger Agreement or otherwise materially impede the
consummation of the Transactions; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking,
corporate or tax laws or regulations of general applicability or
interpretations thereof by Governmental Authorities, (b) changes in GAAP or
regulatory accounting requirements applicable to banks or bank holding
companies generally, (c) changes in interest rates or general economic
conditions affecting banks and their holding companies generally, (d) any
modifications or changes to valuation policies and practices, or expenses
incurred, in connection with the Transactions or restructuring charges taken in
connection with the Transactions, in each case in accordance with GAAP, and (e)
with respect to the Company, the effects of any action or omission taken with
the prior consent of Parent or as otherwise contemplated by the Agreement.
"Material Contracts" has the meaning set forth in Section 5.03(k)(i).
"MBCA" means the Maine Business Corporation Act, as amended.
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" means the number of whole shares of Parent Common
Stock, plus cash in lieu of any fractional share interest, into which shares of
Company Common Stock shall be converted pursuant to the provisions of Article
III.
"Nasdaq" means The Nasdaq Stock Market, Inc.'s NASDAQ National Market or
such national securities exchange on which the Parent Common Stock may be
listed.
"National Labor Relations Act" means the National Labor Relations Act, as
amended.
"OCC" means the Office of the Comptroller of the Currency.
"Option Cash-Out Amount" means, for each Company Option a cash amount
equal to the difference between (x) the exercise price applicable to such
Company Option and (y) $42.00; provided, however, that if the Average Share
Price is less than $17.00, "(y)" shall equal the product of the Exchange Ratio
and the Average Share Price.
"OREO" means other real estate owned.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Parent Articles" means the Articles of Incorporation of Parent, as
amended.
"Parent Bank" means The First National Bank of Damariscotta and any successor
thereto.
"Parent Benefits Plans" has the meaning set forth in Section 6.12(a).
"Parent Board" means the Board of Directors of Parent.
"Parent Bylaws" means the Bylaws of Parent, as amended.
"Parent Common Stock" means the common stock of Parent.
"Parent Regulatory Authorities" has the meaning set forth in Section
5.04(k).
"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.
Page 4
"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" has the meaning set forth in Section 6.03(a).
"Registration Statement" has the meaning set forth in Section 6.03(a).
"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.
"Rollover Option" means the Company Options described in Exhibit 3.08 that
are to be converted into options for Parent Common Stock pursuant to Section
3.08.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Section 5.04(g).
"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.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
those terms in Rule 1-02 of Regulation S-X of the SEC.
"Superior Proposal" has the meaning set forth in Section 6.08.
"Surviving Corporation" has the meaning set forth in Section 2.01(a).
"Tax" and "Taxes" mean all federal, state, local or foreign income, gross
income, gains, 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.
"Termination Fee" has the meaning set forth in Section 8.02(b).
"Transactions" means the Merger and the Bank Merger and any other
transaction contemplated by this Agreement.
Page 5
ARTICLE II
THE MERGER
2.01. The Merger.
(a) The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall merge with and into Parent
in accordance with the applicable provisions of the MBCA (the "Merger"), and
the separate corporate existence of the Company shall cease and Parent shall
survive and continue to exist as a corporation incorporated under the MBCA
(Parent, as the surviving corporation in the Merger, sometimes being referred
to herein as the "Surviving Corporation").
(b) Name. The name of the Surviving Corporation shall be "First
National Lincoln Corporation."
(c) Articles and Bylaws. The Articles of Incorporation and Bylaws of
Parent immediately after the Merger shall be the Parent Articles and the Parent
Bylaws as in effect immediately prior to the Merger.
(d) Directors and Officers of the Surviving Corporation. The
directors and officers of Parent immediately after the Merger shall be the
directors and officers of Parent immediately prior to the Merger, and the
individuals appointed as directors as provided in Section 6.15, until such time
as their successors shall be duly elected and qualified.
(e) Authorized Capital Stock. The authorized capital stock of the
Surviving Corporation upon consummation of the Merger shall be as set forth in
the Parent Articles immediately prior to the Merger.
(f) Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in Section 1106 of the MBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of the Company shall
vest in the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.
(g) Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider that any further assignments or
assurances in law or any other acts are necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or (ii) otherwise carry out
the purposes of this Agreement, the Company, and its proper officers and
directors, shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties or
assets in the Surviving Corporation and otherwise to carry out the purposes of
this Agreement, and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of the Surviving Corporation or
otherwise to take any and all such action.
2.02 Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the consummation of the Merger, but subject to the fulfillment or
waiver of those conditions), the parties shall cause Articles of Merger
relating to the Merger (the "Articles of Merger") to be filed with the
Secretary of State of the State of Maine pursuant to the MBCA on (i) a date
selected by Parent after such satisfaction or waiver which is no later than the
later of (A) five Business Days after such satisfaction or waiver or (B) the
Page 6
first month end following such satisfaction or waiver, or (ii) such other date
to which the parties may mutually agree in writing. The Merger provided for
herein shall become effective upon such filings or on such date as may be
specified therein. The date of such filings or such later effective date is
herein called the "Effective Date." The "Effective Time" of the Merger shall be
the time of such filings or as set forth in such filings.
(b) A closing (the "Closing") shall take place immediately prior to the
Effective Time at 10:00 a.m., local time, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
in Portland, Maine, or at such other place, at such other time, or on such
other date as the parties may mutually agree upon (such date, the "Closing
Date"). At the Closing, there shall be delivered to Parent and the Company the
opinions, certificates and other documents required to be delivered under
Article VII hereof.
Page 7
ARTICLE III
CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
3.01. Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of a holder of shares of Company
Common Stock:
(a) Each share of Parent Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall be unchanged by the Merger.
(b) (1) Subject to Sections 3.04, 3.05 and 3.06, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
shall be converted into, and shall be canceled in exchange for, the right to
receive, the number of shares of Parent Common Stock which is equal to the
quotient (the "Exchange Ratio") determined by dividing (x) $42.00 by (y) the
Average Share Price of the Parent Common Stock ; provided, however, that the
Exchange Ratio shall be not more than 2.47 and not less than 1.91.
(2) For purposes of this Agreement, the "Average Share Price" of the
Parent Common Stock shall mean the sum of the average of the high and low sales
price of a share of Parent Common Stock, for each trading day for which a high
and low sales price is reported on Nasdaq (as reported by an authoritative
source), during the 30 day period ending with the fifth Business Day
immediately preceding the Effective Date, divided by the number of trading days
for which a high and low price is so reported during such period.
3.02. Exchange Procedures.
(a) Parent shall designate an exchange agent to act as agent (the
"Exchange Agent") for purposes of conducting the exchange procedure described
in Section 3.01. At the Effective Time, for the benefit of the holders of
Certificates, Parent shall deliver to the Exchange Agent one or more
certificates evidencing the aggregate number of shares of Parent Common Stock
issuable. The Exchange Agent shall not be entitled to vote or exercise any
rights of ownership with respect to the shares of Parent Common Stock held by
it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to such
shares for the account of the persons entitled thereto.
(b) Each holder of an outstanding Certificate or Certificates who has
surrendered such Certificate or Certificates to the Exchange Agent will, upon
acceptance thereof by the Exchange Agent, be entitled to a certificate or
certificates representing the number of whole shares of Parent Common Stock and
cash in respect of any fractional shares as provided in Section 3.04, into
which the aggregate number of shares of Company Common Stock previously
represented by such Certificate or Certificates surrendered shall have been
converted pursuant to this Agreement and any other distribution theretofore
paid with respect to Parent Common Stock issuable in the Merger, in each case
without interest. The Exchange Agent shall accept such Certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. Each outstanding Certificate which prior to the Effective Time
represented Company Common Stock and which is not surrendered to the Exchange
Agent in accordance with the procedures provided for herein shall, except as
otherwise herein provided, until duly surrendered to the Exchange Agent be
deemed to evidence ownership of the number of shares of Parent Common Stock
into which such Company Common Stock shall have been converted or the right to
receive cash in respect of any fractional shares as provided in Section 3.04.
After the Effective Time, there shall be no further transfer on the records of
the Company of Certificates representing shares of Company Common Stock and if
such Certificates are presented to the Company for transfer, they shall be
cancelled against delivery of certificates for Parent Common Stock or cash as
Page 8
herein above provided. No dividends which have been declared will be remitted
to any person entitled to receive shares of Parent Common Stock under Section
3.01 until such person surrenders the Certificate or Certificates representing
Company Common Stock, at which time such dividends shall be remitted to such
person, without interest.
(c) The Exchange Agent and Parent, as the case may be, shall not be
obligated to deliver a certificate or certificates representing shares of
Parent Common Stock to which a holder of Company Common Stock would otherwise
be entitled as a result of the Merger or cash in respect of any fractional
shares as provided in Section 3.04 until such holder surrenders the Certificate
or Certificates representing the shares of Company Common Stock for exchange as
provided in this Section 3.02, or, in default thereof, an appropriate affidavit
of loss and indemnity agreement and/or a bond in an amount as may be reasonably
required in each case by Parent. If any certificates evidencing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificate evidencing Company Common Stock surrendered in exchange therefor is
registered, it shall be a condition of the issuance thereof that the
Certificate so surrendered shall be properly endorsed or accompanied by an
executed form of assignment separate from the Certificate and otherwise in
proper form for transfer and that the person requesting such exchange pay to
the Exchange Agent any transfer or other tax required by reason of the issuance
of a certificate for shares of Parent Common Stock in any name other than that
of the registered holder of the Certificate surrendered or otherwise establish
to the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) Any portion of the shares of Parent Common Stock and cash delivered
to the Exchange Agent by Parent pursuant to Section 3.02(a) that remains
unclaimed by the shareholders of the Company for six months after the Effective
Time (as well as any proceeds from any investment thereof) shall be delivered
by the Exchange Agent to Parent. Any shareholders of Company who have not
theretofore complied with Section 3.02(b) shall thereafter look only to Parent
for the consideration deliverable in respect of each share of Company Common
Stock such shareholder holds as determined pursuant to this Agreement without
any interest thereon. Neither the Exchange Agent nor any party to this
Agreement shall be liable to any holder of stock represented by any Certificate
for any consideration paid to a public official pursuant to applicable
abandoned property, escheat or similar laws. Parent and the Exchange Agent
shall be entitled to rely upon the stock transfer books of the Company to
establish the identity of those persons entitled to receive the consideration
specified in this Agreement, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, Parent and the Exchange Agent shall be entitled
to deposit any consideration represented thereby in escrow with an independent
third party and thereafter be relieved with respect to any claims thereto.
(e) Notwithstanding anything in this Agreement to the contrary,
Certificates surrendered for exchange by any Company Affiliate shall not be
exchanged for certificates representing shares of Parent Common Stock to which
such Company Affiliate may be entitled pursuant to the terms of this Agreement
until Parent has received a written agreement from such person as specified in
Section 6.07.
3.03. Rights as Shareholders; Stock Transfers. At the Effective
Time, holders of Company Stock shall cease to be, and shall have no rights as,
shareholders of the Company other than to receive the consideration provided
under this Article III. After the Effective Time, there shall be no transfers
on the stock transfer books of the Company or the Surviving Corporation of
shares of Company Stock.
Page 9
3.04. No Fractional Shares. Notwithstanding any other provision of
this Agreement, neither certificates nor scrip for fractional shares of Parent
Common Stock shall be issued in the Merger. Each holder of Company Common Stock
who otherwise would have been entitled to a fraction of a share of Parent
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the Average Share Price, rounded to the nearest
whole cent. No such holder shall be entitled to dividends, voting rights or any
other rights in respect of any fractional share.
3.05. Dissenting Shares. Notwithstanding Section 3.02 above, each
outstanding share of Company Common Stock the holder of which has perfected
his, her or its right to dissent under the MBCA and has not effectively
withdrawn or lost such right as of the Effective Time (the "Dissenting Shares")
shall not be converted into or represent a right to receive shares of Parent
Common Stock hereunder, and the holder thereof shall be entitled only to such
rights as are granted by the MBCA. The Company shall give Parent prompt notice
upon receipt by the Company of any such written demands for payment of the fair
value of such shares of Company Common Stock and of withdrawals of such demands
and any other instruments provided pursuant to the MBCA. If any holder of
Dissenting Shares shall fail to perfect or shall have effectively withdrawn or
lost the right to dissent at or prior to the Effective Time, the Dissenting
Shares held by such holder shall be converted into a right to receive Parent
Common Stock and cash in respect of any fractional shares as provided in
Section 3.04 in accordance with the applicable provisions of this Agreement.
If any holder of Dissenting Shares shall have effectively withdrawn or lost the
right to dissent (through failure to perfect or otherwise) after the Effective
Time, the Dissenting Shares held by such holder shall be converted into the
right to receive Parent Common Stock and cash in respect of any fractional
shares in accordance with the applicable provisions of this Agreement as Parent
or the Exchange Agent shall determine. Any payments made in respect of
Dissenting Shares shall be made by the Surviving Corporation.
3.06. Anti-Dilution Provisions. If, between the date hereof and the
Effective Time, the shares of Parent Common Stock shall be changed into a
different number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date within said
period, the Exchange Ratio shall be adjusted accordingly.
3.07. Withholding Rights. Parent (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock or Company Options such amounts as Parent is required under the Code or
any state, local or foreign tax law or regulation thereunder to deduct and
withhold with respect to the making of such payment. Any amounts so withheld
shall be treated for all purposes of this Agreement as having been paid to the
holder of Company Common Stock or Company Options in respect of which such
deduction and withholding was made by Parent.
3.08. Company Options.
(a) At the Effective Time, each Company Option (other than a Rollover
Option) which is then outstanding, whether or not exercisable, shall become
fully vested and exercisable, and shall cease to represent a right to acquire
shares of Company Common Stock. All such Company Options (other than Rollover
Options) shall, at the Effective Time, be converted automatically into the
right to receive the Option Cash-Out Amount. Each Rollover Option shall be
converted automatically into an option to purchase shares of Parent Common
Stock, and Parent shall assume each such Rollover Option, in accordance with
Page 10
the terms of the Company Stock Option Plan and stock option or other agreement
by which it is evidenced, except that from and after the Effective Time, (i)
Parent and the Options Committee of its Board of Directors shall be substituted
for the Company and its Board of Directors (which administers the Company Stock
Option Plan), (ii) each Rollover Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (iii) the number of shares of Parent
Common Stock subject to such Rollover Option shall be equal to the number of
shares of Company Common Stock subject to such Rollover Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, provided that any
fractional shares of Parent Common Stock resulting from such multiplication
shall be rounded down to the nearest share, and (iv) the per share exercise
price under each such Rollover Option shall be adjusted by dividing the per
share exercise price under each such Rollover Option by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest cent.
Parent and the Company agree to take all necessary steps to effect the
foregoing provisions of this Section 3.08(a) and Section 3.07.
(b) Within five Business Days after the Effective Time, Parent shall file
a registration statement on Form S-8 (or any successor or other appropriate
forms), with respect to the shares of Parent Common Stock subject to the
options referred to in paragraph (a) of this Section 3.08 and shall use its
reasonable efforts to maintain the current status of the prospectus or
prospectuses contained therein for so long as such options remain outstanding.
Page 11
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. Issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of stock or
permit any additional shares of stock to become subject to grants of stock
options, other than upon the exercise of Company Options outstanding on the
date hereof under the Company Stock Option Plan.
(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) subject to Section 6.14 hereof, regular
semi-annual cash dividends at a rate not in excess of $.33 per share on the
Company Common Stock, after taking into account any dividend under clause (B),
(B) to the extent necessary to effect the purposes of Section 6.14 and subject
to the provision of prior written notice to, and consultation with, the Parent,
quarterly cash dividends, at the same annualized rate as the regular dividends
paid by the Company, on the same record date provided by Parent with respect to
dividends payable to Parent shareholders, and (C) 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. Parent shall
give the Company advance notice of the determination of any record date with
respect to the payment of any dividend on Parent Common Stock.
(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) normal individual
increases in compensation to employees in the ordinary course of business
consistent with past practice, provided that no such increase with respect to
any individual employee shall result in an annualized adjustment of more than
4% of such employee's compensation and provided that any such increases to all
employees since June 30, 2004 shall not exceed 3.5% in the aggregate, (ii)
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, (iv) grants or awards to newly-hired
employees consistent with past practice, (v) discretionary bonuses in the
ordinary course of business and consistent with past practice to employees of
the Company or the Company Bank for services rendered during the period from
January 1, 2004 to the Effective Time of up to $200,000 in the aggregate for
all employees, provided that in the case of any individual recipient any such
bonus, either alone or in combination with the payment of other amounts payable
to the recipient in the event his or her employment is terminated following the
Merger, would not be nondeductible by the Company or the Company Bank (or their
successors) under Section 280G of the Code and subject to the excise tax
imposed under Section 4999 of the Code, and (vi) any increase in the premium
costs of an existing insured employee benefit. Notwithstanding anything to the
Page 12
contrary set forth in this Agreement, prior to the Closing Date, the Company
and its Subsidiaries shall be permitted to make cash contributions to the
Company 401(k) Plan for the 2004 calendar year as long as the total amount of
such cash contributions do not exceed the amount derived by application of the
calendar 2003 formula based on calendar 2004 compensation levels.
(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 the date hereof and set forth on Schedule 4.01(e) of
the Company's Disclosure Schedule and (ii) persons hired or promoted 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, and
(iii) any person to be hired or promoted who would have a base salary,
including any guaranteed bonus or any similar bonus, considered on an annual
basis of less than $50,000.
(f) Benefit Plans. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law, subject to the provision of prior written
notice to, and consultation with, the Parent, (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, or (iii) with respect to the Company's
401(k) Plan, as, and to the extent necessary, to allow the Company to make the
contribution to the Company's 401(k) Plan that is contemplated by the last
sentence of Section 4.01(d)) 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 current or former director, officer or employee of
the Company or its Subsidiaries or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder, except that the Company shall accelerate the
vesting of Company Options in a manner consistent with Section 3.08(a). The
Company shall take such action as may be reasonably requested by Parent to
terminate one or more of the Benefits Plans effective as of the Effective Time.
(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 $50,000 individually or $250,000 in the
aggregate.
(j) Governing Documents. Amend the Company Articles or Company
Bylaws 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 or as otherwise permitted under this Section 4.01, enter
into or terminate any Material Contract or amend or modify in any material
respect any of its existing Material Contracts.
Page 13
(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 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; 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; or file any application or make any contract with
respect to branching or site location or branching or site relocation.
(o) Derivatives 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 Reserve Bank of Boston and securities sold under agreements to
repurchase, in each case in the ordinary course of business consistent with
past practice) or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other Person, other than in the
ordinary course of business consistent with past practice.
(q) Investment Securities. Acquire (other than by way of
foreclosures or acquisitions in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in the
ordinary course of business consistent with past practice) (i) any debt
security or Equity Investment of a type or in an amount that is not permissible
for a national bank or (ii) any other debt security other than in the ordinary
course of business consistent with past practice; or restructure or materially
change its investment securities portfolio, through purchases, sales or
otherwise, or the manner in which such portfolio or any securities therein are
classified under GAAP or reported for regulatory purposes.
(r) Loans. Make, renew or otherwise modify any loan, loan
commitment, letter of credit or other extension of credit (collectively,
"Loans") other than in the ordinary course of business consistent with past
practice.
(s) Investments in Real Estate. Make any investment or commitment to
invest in real estate or in any real estate development project (other than by
way of foreclosure or acquisitions in a bona fide fiduciary capacity or in
satisfaction of a debt previously contracted in good faith, in each case in the
ordinary course of business consistent with past practice).
(t) Transactions with Affiliates. Except pursuant to agreements or
arrangements in effect on the date hereof, pay, loan or advance any amount to,
or sell, transfer or lease any properties or assets (real, personal or mixed,
tangible or intangible) to, or enter into any agreement or arrangement with,
any of its officers or directors or any of their immediate family members or
any affiliates or associates (as such terms are defined under the Exchange Act)
of any of its officers or directors other than compensation in the ordinary
course of business consistent with past practice.
(u) Taxes. Except as may be required by applicable laws or
regulations, make or change any material Tax election, file any material
amended Tax Return, enter into any material closing agreement, settle or
compromise any material liability with respect to Taxes, or consent to any
extension or waiver of the limitation period applicable to any material Tax
claim or assessment. For purposes of this subparagraph (u), "material" shall
mean affecting or relating to $50,000 or more of Taxes.
Page 14
(u) Compliance with Agreements. Knowingly commit any act or omission
which constitutes a material breach or default by the Company or any of its
Subsidiaries under any agreement with any Governmental Authority or under any
Material Contract, lease or other agreement or material license to which any of
them is a party or by which any of them or their respective properties is
bound.
(v) Environmental Assessments. Foreclose on or take a deed or title
to any commercial real estate without first conducting a Phase I environmental
assessment of the property or foreclose on any commercial real estate if such
environmental assessment indicates the presence of a Hazardous Substance in
amounts which, if such foreclosure were to occur, would be material.
(w) Adverse Actions. (i) Take any action that would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code, or (ii) take any action that
is intended or is reasonably likely to result in (x) any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect at any time at or prior to the Effective Time, (y) any of the
conditions to the Merger set forth in Article VII not being satisfied or (z) a
material violation of any provision of this Agreement or the Bank Merger
Agreement, except, in each case, as may be required by applicable law or
regulation.
(x) 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) Adverse Actions. (i) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) take
any action that is intended or is reasonably likely to result in (x) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(y) any of the conditions to the Merger set forth in Article VII not being
satisfied or (z) a material violation of any provision of this Agreement or the
Bank Merger Agreement, except, in each case, as may be required by applicable
law or regulation.
(b) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
(c) Suspension of Stock Buy-back Program. Purchase or acquire, for its
own account, any shares of Parent Common Stock, except for non-market
repurchases of Parent Common Stock from employees of Parent.
Page 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, Parent
has delivered to the Company a schedule and the Company has delivered to Parent
a schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 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 a party that such item represents a material exception or fact, event or
circumstance or that, absent such inclusion in the Disclosure Schedule, such
item is or would be 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 duly
organized, validly existing and in good standing under the laws of the State of
Maine. The Company is duly qualified to do business and is in good standing in
each jurisdiction where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. The Company has in
effect all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted. The Company Articles and Company Bylaws, copies of
which have been delivered to Parent, are true, complete and correct copies of
such documents as in effect on the date of this Agreement.
(b) Company Capital Stock. The authorized capital stock of the
Company consists solely of 2,000,000 shares of Company Common Stock, of which
1,047,722 shares are outstanding as of the date hereof, and 100,000 shares of
Serial Preferred Stock, of which none are outstanding as of the date hereof.
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
Common Stock subject to options that are currently exercisable and the exercise
price per share. Except as set forth in the preceding sentence, there are no
shares of Company Stock reserved for issuance, the Company does not have any
Page 16
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.
(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, (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 Reserve Bank of Boston and the Federal
Home Loan Bank of Boston.
(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. The articles of incorporation, bylaws
and similar governing documents of each Subsidiary of the Company, copies of
which have been delivered to Parent, are true, complete and correct copies of
such documents as in effect as of the date of this Agreement.
(iv) The Company Bank is the only Subsidiary of the Company that is an
insured depository institution. The deposit accounts of the Company Bank are
insured by the Bank Insurance Fund in the manner and to the maximum extent
provided by applicable law, and the Company Bank has paid all deposit insurance
premiums and assessments required by applicable laws and regulations.
(d) Corporate Power; Minute Books. Each of the Company and its
Subsidiaries has the corporate power and authority to carry on its business as
it is now being conducted and to own all its properties and assets; and the
Company has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the Transactions,
subject to receipt of all necessary approvals of Governmental Authorities and
the approval of the Company's shareholders of this Agreement. The minute books
of the Company and each of its Subsidiaries contain true, complete and accurate
records of all meetings and other corporate actions held or taken since
December 31, 1999 of their respective shareholders and boards of directors
(including committees of their respective boards of directors).
(e) Corporate Authority. Subject to the approval of this Agreement
by the holders of 67% of the outstanding Company Common Stock, this Agreement
and the Transactions have been authorized and adopted by all necessary
corporate action of the Company and the Company Board on or prior to the date
hereof. The Company Board has directed that this Agreement be submitted to the
Company's shareholders for approval at a meeting of such shareholders and,
except for the approval and adoption of this Agreement by the affirmative vote
of the holders of a 67% of the outstanding shares of Company Common Stock, no
other vote of the shareholders of the Company is required by law, the Company
Page 17
Articles, the Company Bylaws or otherwise to approve this Agreement and the
Transactions. The Company has duly executed and delivered this Agreement and,
assuming due authorization, execution and delivery by Parent, this Agreement is
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).
(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 or any of its Subsidiaries in
connection with the execution, delivery or performance by the Company or the
Company Bank of this Agreement and the Bank Merger Agreement, as applicable, or
to consummate the Transactions, except for (A) filings of applications or
notices with, and approvals or waivers by, the Federal Reserve Board, the OCC,
and the Maine Superintendent, as required, (B) filings with the SEC and state
securities authorities, as applicable, in connection with the submission of
this Agreement for the approval of the holders of Company Common Stock and the
issuance of Parent Common Stock in the Merger, (C) the filing of Articles of
Merger with the Secretary of State of the State of Maine pursuant to the MBCA,
(D) the approval of this Agreement by the holders of 67% of the outstanding
shares of Company Common Stock and (E) such corporate approvals and such
consents or approvals of, or waivers by, or filings or registrations with,
certain of the foregoing federal and state banking agencies in connection with
the Bank Merger. As of the date hereof, the Company is not aware of any reason
why the approvals set forth above and referred to in Section 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,
waivers and filings referred to in the preceding paragraph and the expiration
of related waiting periods, the execution, delivery and performance of this
Agreement and the Bank Merger Agreement by the Company and the Company Bank, as
applicable, and the consummation of the Transactions 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 incorporation or bylaws (or similar
governing documents) of the Company or any of its Subsidiaries or (C) require
any consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
(g) Financial Reports; Undisclosed Liabilities. (i) The Company
has previously made available to Parent copies of (i) the consolidated balance
sheet of the Company and its Subsidiary as of December 31, 2003, December 31,
2002 and December 31, 2001, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal years ended
December 31, 2003, 2002 and 2001, in each case accompanied by the audit report
of Berry, Dunn, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLC, independent accountants with respect to
the Company, and (ii) the unaudited consolidated balance sheet of the Company
and its Subsidiary as of June 30, 2004 and the related unaudited consolidated
statements of income, cash flows and changes in shareholders' equity for the
three month and six month periods then ended. The December 31, 2003
consolidated balance sheet of the Company (including the related notes and
schedules thereto) fairly presents the consolidated financial position of the
Page 18
Company and its Subsidiary as of its date, and the other financial statements
referred to in this Section 5.03(g) (including any related notes and schedules
thereto, where applicable) fairly present (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount and the
absence of notes), the results of consolidated operations and consolidated
financial position of the Company and its Subsidiary for the respective fiscal
periods or as of the respective dates therein set forth; each of such
statements (including any related notes and schedules thereto, where
applicable) has been prepared in accordance with GAAP consistently applied
during the periods involved, except in each case as may be noted therein. The
books and records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
(ii) Since December 31, 2003, 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
related to this Agreement and the transactions contemplated hereby).
(iii) Since December 31, 2003, (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 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 semi-annual cash dividends on the Company Common Stock and a stock
dividend of two shares of Company Common Stock per share of Company Common
Stock paid April 2, 2004, since December 31, 2003, 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 December 31, 2003, 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.
(i) Regulatory Matters.
(i) The Company and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since December
31, 1999 with any Governmental Authority, and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by any Governmental Authority in the regular course of
the business of the Company and its Subsidiaries, no Governmental Authority has
initiated any proceeding, or to the knowledge of the Company, investigation
into the business or operations of the Company or any of its Subsidiaries since
December 31, 1999. Each of the Company and the Company Bank is "well
capitalized" and "well managed" as those terms are defined in applicable laws
and regulations, and the Company Bank has a Community Reinvestment Act rating
of "satisfactory" or better.
Page 19
(ii) Neither the Company nor any of its Subsidiaries nor any of their
respective properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits or the supervision or regulation of it
(collectively, the "Company Regulatory Authorities"). The Company and its
Subsidiaries have paid all assessments made or imposed by any Company
Regulatory Authority.
(iii) Neither the Company nor any of its Subsidiaries has been advised
by, or has any knowledge of facts which could give rise to an advisory notice
by, any Company Regulatory Authority that such Company Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(j) Compliance With Laws. Each of the Company and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act,
the Bank Secrecy Act, Truth in Lending and Bank Privacy laws, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 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, 2001, 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.
(i) Neither the Company nor any of its Subsidiaries is a party to,
bound by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers, employees or consultants, (ii) which would entitle any
present or former director, officer, employee or agent of the Company or its
Subsidiaries to indemnification from the Company or its Subsidiaries (other
than indemnity provisions of their respective bylaws), (iii) which would be a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC
if the Company or its Subsidiary, as the case may be, were subject to the
Exchange Act) to be performed after the date of this Agreement, (iv) which is a
consulting agreement (including data processing, software programming and
licensing contracts) not terminable on 60 days or less notice and involving the
payment of more than $50,000 per annum, or (v) which restricts the conduct of
any business by the Company or any of its Subsidiaries (collectively, "Material
Contracts"). The Company has Previously Disclosed and made available to Parent
true and correct copies of each such document.
Page 20
(ii) Neither the Company nor any of its Subsidiaries is in 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, excluding a Previously Disclosed fee to be paid to
RBC Capital Markets Corporation, a member company of RBC Financial Group.
(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, and
where no such documents exist with respect to a Benefit Plan, a written summary
of such Benefit Plan has been provided to 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, and have been administered, in substantial compliance with ERISA,
and, if applicable, the Code, including the filing requirements thereof. Each
Benefit Plan which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code, has received a favorable determination letter
from the IRS (or with respect to a master or prototype plan, has an opinion
letter from the IRS to the effect that such plan so qualifies). The Pension
Plans have been administered in accordance with the written terms of the plan
documents and the Company is not aware of any circumstances likely to result
in revocation of any such favorable determination letter (or withdrawal of such
opinion letter) or the loss of the qualification of such Pension Plan under
Section 401(a) of the Code. There is no 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 .
(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 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 is
obligated to contribute to any multiemployer plan, and neither has incurred, or
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
Page 21
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 provided to Parent to the extent required by the terms of any
such Benefit Plan and to the extent required by GAAP. 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) Neither the Company nor any of its Subsidiaries has any obligations
for retiree health or retiree life benefits under any Benefit Plan, other than
coverage as may be required under Section 4980B of the Code or Part 6 of Title
I of ERISA, or under the continuation of coverage provisions of the laws of any
state or locality. Except as Previously Disclosed, the Company or any of its
Subsidiaries may amend or terminate any such Benefit Plan under which such
obligations for retiree health or retiree life exist at any time without
incurring any liability thereunder.
(vi) Except as provided in Section 3.08(a) with respect to the
acceleration of Company Options and except as provided in Section 6.12(f) with
respect to the Company ESOP, none of the execution of this Agreement,
shareholder approval of this Agreement or consummation of the transactions
contemplated by this Agreement will (A) entitle any employees of the Company or
any of its Subsidiaries to severance pay or any increase in severance pay upon
any termination of employment after the date hereof, (B) accelerate the time of
payment or vesting or trigger any payment or funding (through a grantor trust
or otherwise) of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Benefit Plans,
(C) result in any breach or violation of, or a default under, any of the
Benefit Plans or (D) result in any payment that would be a "parachute payment"
to a "disqualified individual" as those terms are defined in Section 280G of
the Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(vii) Each of the "group health plans" (as defined in 45 C.F.R.
s. 160.103) sponsored by the Company or any Subsidiary has been timely amended
as required to comply with the Health Insurance Portability and Accountability
Act of 1996 ("HIPAA") and the rules and regulations promulgated thereunder and
all such plans have been administered in conformity with HIPAA and applicable
rules and regulations promulgated thereunder. All policies, forms, notices,
plan amendments, and agreements adopted or entered into by the Company or such
Subsidiary with respect to its group health plans have been Previously
Disclosed. Neither the Company nor any Subsidiary is aware of, or has receive
notice of, an impermissible use or disclosure of "protected health information"
(as defined in 45 C.F.R. s. 164.501) that would require an accounting of such
use or disclosure (as required under 45 C.F.R. s. 164.528).
(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
Page 22
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 except in compliance
with Environmental Laws; (iii) neither the Company nor any of its Subsidiaries
could be deemed the owner or operator of, or has participated in the management
regarding Hazardous Substances of, any Company Loan Property which has been
contaminated with, or has had any release of, any Hazardous Substance except in
compliance with Environmental Laws; (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 Previously Disclosed and made available to Parent copies of all
environmental reports or studies, sampling data, correspondence and filings in
its possession or reasonably available to it relating to the Company, its
Subsidiaries and any currently or formerly owned or operated property or any
Company Loan Property.
As used herein, the term "Environmental Laws" means any federal, state or
local law, regulation, order, decree, permit, authorization, opinion or agency
requirement relating to: (A) the protection or restoration of the environment,
health, safety, or natural resources, (B) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance or (C)
wetlands, indoor air, pollution, contamination or any injury or threat of
injury to persons or property in connection with any Hazardous Substance; and
the term "Hazardous Substance" means any substance that is: (A) listed,
classified or regulated pursuant to any Environmental Law, (B) any petroleum
product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon or (C) any
other substance which is the subject of regulatory action by any Governmental
Authority in connection with any Environmental Law.
(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
Page 23
will be timely filed on or before the Effective Date, (B) all such Tax Returns
are or will be true and complete , (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 IRS 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
deficiencies asserted or assessments made as a result of examinations conducted
by any taxing authority have been paid in full, (F) no 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 Taxes of the Company or any of its Subsidiaries.
(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 for which such
returns have been filed.
(iii) Neither the Company nor any of its Subsidiaries has any liability
with respect to income, franchise or similar Taxes that accrued on or before
June 30, 2004 in excess of the amounts accrued or subject to a reserve with
respect thereto that are reflected in the Company's unaudited financial
statements dated as of June 30, 2004 and provided to Parent.
(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).
(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. Neither
the Company nor any of its Subsidiaries has entered into any "tax shelter" or
"listed transaction" within the meaning provided in the Code and the
regulations, rules and procedures promulgated pursuant thereto or any similar
transaction.
(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) As of the date hereof, the Company has no reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(viii)(A) No Tax is required to be withheld pursuant to Section 1445 of
the Code as a result of the Transactions and (B) all 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) Investment Securities. The Company has previously disclosed the
book and market value as of June 30, 2004 of the investment securities,
mortgage backed securities and securities held for sale of the Company and its
Subsidiaries, as well as, with respect to such securities, descriptions
thereof, CUSIP numbers, book values, fair values and coupon rates.
(r) 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
Page 24
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
respects all of their 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.
(s) Loans; Nonperforming and Classified Assets.
(i) Each Loan on the books and records of the Company and its
Subsidiaries, was made and has been serviced in all respects in accordance
with customary lending standards in the ordinary course of business, is
evidenced in all respects by appropriate and sufficient documentation and, to
the knowledge of the Company, constitutes the legal, valid and binding
obligation of the obligor named therein in accordance with such documentation,
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.
(ii) The Company has Previously Disclosed as to the Company and each
Company Subsidiary as of the latest practicable date: (A) any written or, to
the Company's knowledge, oral Loan under the terms of which the obligor is 90
or more days delinquent in payment of principal or interest, or to the
Company's knowledge, in default of any other provision thereof; (B) each Loan
which has been classified as "substandard," "doubtful," "loss," "pass watch, "
"non-accrual" or "special mention" (or words of similar import) by the Company,
a Company Subsidiary or an applicable regulatory authority (it being understood
that no representation is being made that the FDIC, the OCC or the Maine
Superintendent would agree with the loan classifications established by the
Company); (C) a listing of the OREO acquired by foreclosure or by deed-in-lieu
thereof, including the book value thereof; and (D) 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.
(iii) The loan documents with respect to each Loan were in compliance
with applicable laws and regulations and the Company's lending policies at the
time of origination of such Loans and are complete and correct.
(iv) Except as Previously Disclosed, neither the Company nor any of its
Subsidiaries is a party to any agreement or arrangement with (or otherwise
obligated to) any Person which obligates the Company or any of its Subsidiaries
to repurchase from any such Person any Loan or other asset of the Company or
its Subsidiary.
(t) 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 properties and
Page 25
assets, real and personal, reflected on the consolidated statement of financial
condition of the Company as of December 31, 2003 or acquired after such date,
other than properties sold by the Company in the ordinary course of business,
except (i) Liens for current taxes and assessments not yet due or payable (ii)
pledges to secure deposits and other Liens incurred in the ordinary course of
its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent and
(iv) as reflected on the consolidated statement of financial condition of the
Company as of December 31, 2003. All real and personal property leased or
licensed by the Company or a Subsidiary of the Company is held pursuant to
leases or licenses ("Leases") which are valid and enforceable in accordance
with their respective terms and such leases will not terminate or lapse prior
to the Effective Time. There has not occurred any event, and no condition
exists that would constitute a termination event or a breach by the Company or
any Company Subsidiary of, or default by the Company or any Company Subsidiary
in, the performance of any covenant, agreement or condition contained in any
Lease, and to the Company's knowledge, no lessor under any such Lease is in
breach or default in the performance of any covenant, agreement or condition
contained in such Lease. The Company and the Company Subsidiaries have paid all
rents and other charges to the extent due under such Leases.
(u) 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 amount all patents, copyrights, computer programs,
whether in source code or object code form (including all software, data bases
and compilations, and the documentation thereto), trade secrets, trade names,
service marks and trademarks used in its businesses ("Company Intellectual
Property"), 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 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. To the
knowledge of the Company, the conduct of the business of the Company and its
Subsidiaries does not violate, misappropriate or infringe on the intellectual
property rights of others. The consummation of the Merger and the Bank Merger
will not result in the loss or impairment of the right of the Company or any of
its Subsidiaries to own or use any of the Company Intellectual Property, and
Parent will have substantially the same rights to own or use the Company
Intellectual Property following the consummation of the Merger and the Bank
Merger as the Company and its Subsidiaries had prior to the consummation of the
Merger and the Bank Merger, subject to the receipt of consents of the
applicable counterparties to any licenses to use Company Intellectual Property.
(v) Fiduciary Accounts. The Company and each of its Subsidiaries has
properly administered all accounts for which it acts as a fiduciary, including
but not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in
accordance with the terms of the governing documents and applicable laws and
regulations. Neither the Company nor any of its Subsidiaries, nor any of their
respective directors, officers or employees, has committed any breach of trust
with respect to any fiduciary account and the records for each such fiduciary
account are true and correct and accurately reflect the assets of such
fiduciary account.
(w) Books and Records. The books and records of the Company and its
Subsidiaries have been fully, properly and accurately maintained in all
respects, and there are no inaccuracies or discrepancies of any kind contained
or reflected therein, and they fairly present the financial position of the
Company and its Subsidiaries.
Page 26
(x) Insurance. The Company has Previously Disclosed all of the
insurance policies, binders, or bonds currently maintained or owned 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 default
thereunder; and all claims thereunder have been filed in due and timely
fashion.
(y) 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.
(z) Transactions With Affiliates. All "covered transactions" between
a Company Bank and an "affiliate" within the meaning of Sections 23A and 23B of
the Federal Reserve Act have been in compliance with such provisions and the
regulations of the Federal Reserve Bank thereunder.
(aa) Required Vote; Antitakeover Provisions.
(i) The affirmative vote of the holders of 67% of the issued and
outstanding shares of Company Common Stock is necessary to approve this
Agreement and the Transactions on behalf of the Company. No other vote of the
shareholders of the Company is required by law, the Company Articles, the
Company Bylaws or otherwise to approve this Agreement and the Transactions.
(ii) Based on the representation and warranty of Parent contained in
Section 5.04(m), no "control share acquisition," "business combination
moratorium," "fair price" or other form of antitakeover statute or regulation
is applicable to this Agreement or the Transactions.
(bb) Fairness Opinion. The Company Board has received the written
opinion of RBC Capital Markets Corporation, a member company of RBC Financial
Group, to the effect that as of the date hereof the Merger Consideration is
fair to the holders of Company Common Stock from a financial point of view.
(cc) Transactions in Securities. Neither the Company nor any
Subsidiary of the Company has purchased or sold, or caused to be purchased or
sold, any shares of Company Common Stock or other securities issued by the
Company during any period when the Company was in possession of material
nonpublic information.
(dd) 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.
(ee) Ownership of Parent Common Stock. None of Company or any of its
Subsidiaries, or to Company'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 Parent Common Stock (other than shares held
in a fiduciary capacity that are beneficially owned by third parties or as a
result of debts previously contracted) which in the aggregate represent 5% or
more of the outstanding Parent Common Stock.
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.
Page 27
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) Parent Stock.
(i) As of the date hereof, the authorized capital stock of Parent
consists solely of 18,000,000 shares of Parent Common Stock, of which 7,348,971
shares were outstanding as of the date hereof. The outstanding shares of Parent
Common Stock have been duly authorized and validly issued and are fully paid
and non-assessable, and none of the shares of Parent Common Stock have been
issued in violation of the preemptive rights of any Person. As of the date
hereof, there are no Rights authorized, issued or outstanding with respect to
the capital stock of Parent, except for (i) shares of Parent Common Stock
issuable pursuant to the Parent Benefits Plans and (ii) by virtue of this
Agreement.
(ii) The shares of Parent Common Stock to be issued in exchange for
shares of Company Common Stock in the Merger, when issued in accordance with
the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and the issuance thereof is not subject to any
preemptive right.
(c) Subsidiaries.
(i) As of the date hereof, the only subsidiary of Parent which
constitutes a Significant Subsidiary is the Parent Bank. The 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. The Parent Bank is duly licensed
by the OCC, and its deposits are insured by the Bank Insurance Fund
administered by the FDIC in the manner and to the maximum extent provided by
law.
(ii) As of the date hereof, (A) Parent owns, directly or indirectly, all
the issued and outstanding equity securities of the Parent Bank, (B) no equity
securities of the Parent Bank are or may become required to be issued (other
than to Parent) by reason of any Right or otherwise, (C) there are no
contracts, commitments, understandings or arrangements by which the Parent Bank
is or may be bound to sell or otherwise transfer any of its equity securities
(other than to Parent or any of its wholly-owned Subsidiaries) and (D) there
are no contracts, commitments, understandings, or arrangements relating to
Parent's rights to vote or to dispose of such securities.
(d) Corporate Power. Each of Parent and the Parent Bank has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets. Parent has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the Transactions, subject to the receipt of all
necessary approvals of Governmental Authorities and the approval of the holders
of a majority of the Parent Common Stock of this Agreement.
(e) Corporate Authority. This Agreement and the Transactions have
been authorized by all necessary corporate action of Parent and the Parent
Board. This Agreement has been duly executed and delivered by Parent and,
assuming due authorization, execution and delivery by the Company, this
Agreement is a valid and legally binding agreement of Parent enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).
Page 28
(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 Parent or any of its Subsidiaries in
connection with the execution, delivery or performance by Parent and the Parent
Bank of this Agreement and the Bank Merger Agreement, as applicable, or to
consummate the Transactions, except for (A) filings of applications or notices
with and approvals or waivers by the Federal Reserve Board, the OCC, the Maine
Superintendent, as required, with copies to the Department of Justice and
Federal Trade Commission pursuant to the exemption from filing under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 provided by 15 U.S.C.A. s.
18a(c)(7), (B) filings with the SEC and state securities authorities, as
applicable, in connection with the submission of this Agreement for the
approval of the holders of Company Common Stock and the issuance of Parent
Common Stock in the Merger, (C) application for, and the approval of, the
listing on Nasdaq of the Parent Common Stock to be issued in the Merger, (D)
the approval of this Agreement by the holders of a majority of the outstanding
shares of Parent Common Stock, (E) the filing of Articles of Merger with the
Secretary of State of the State of Maine pursuant to the MBCA, and (F) such
corporate approvals and such consents or approvals of, or waivers by, or
filings or registrations with, certain of the foregoing federal and state
banking agencies in connection with the Bank Merger. As of the date hereof,
Parent is not aware of any reason why the approvals set forth above and
referred to in Section 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,
waivers and filings referred to in the preceding paragraph and expiration of
the related waiting periods, the execution, delivery and performance of this
Agreement and the Bank Merger Agreement by Parent and the Parent Bank, as
applicable, and the consummation of the Transactions 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.
(g) Financial Reports and SEC Documents; Material Adverse Effect.
(i) Parent's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 and all other reports, registration statements, definitive
proxy statements or information statements filed or to be filed by it
subsequent to December 31, 2001 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, "SEC Documents") with the SEC, as of the date filed or to be
filed, (A) complied or will comply in all respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that information as of a
later date shall be deemed to modify information as of an earlier date; and
each of the balance sheets contained in or incorporated by reference into any
such SEC Document (including the related notes and schedules thereto) fairly
Page 29
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 June 30, 2004, 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.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Parent or its Subsidiaries and,
to Parent's knowledge, no such litigation, claim or other proceeding has been
threatened and there are no facts which could reasonably give rise to such
litigation, claim or other proceeding.
(i) No Brokers. No action has been taken by Parent or its
Subsidiaries that would give rise to any valid claim against any party hereto
for a brokerage commission, finder's fee or other like payment with respect to
the Transactions.
(j) Tax Matters. As of the date hereof, Parent does not have any
reason to believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(k) Regulatory Matters.
(i) Neither Parent nor any of its Subsidiaries nor any of their
respective properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority charged with the
supervision or regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits or the supervision or regulation of it
(collectively, the "Parent Regulatory Authorities"). Parent and its
Subsidiaries have paid all assessments made or imposed by any Parent Regulatory
Authority.
(ii) Neither Parent nor any its Subsidiaries has been advised by, or has
any knowledge of facts which could give rise to an advisory notice by, any
Parent Regulatory Authority that such Parent Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(l) Compliance With Laws. Each of Parent and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act,
the Bank Secrecy Act, Truth in Lending and Bank Privacy laws, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 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
Page 30
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to Parent'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 Parent 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
Parent's knowledge, do any grounds for any of the foregoing exist).
(m) Ownership of Company Common Stock. None of Parent or any of its
Subsidiaries, or to Parent's knowledge, any of its other affiliates or
associates (as such terms are defined under the Exchange Act), owns
beneficially or of record, directly or indirectly, or is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, shares of Company Common Stock (other than shares held
in a fiduciary capacity that are beneficially owned by third parties or as a
result of debts previously contracted) which in the aggregate represent 5% or
more of the outstanding Company Common Stock.
(n) Financial Ability. 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.
(o) 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.
Page 31
ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each of the Company and Parent agrees to use its reasonable
best efforts in good faith to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or desirable, or
advisable under applicable laws, so as to permit consummation of the
Transactions as promptly as practicable and otherwise to enable consummation of
the Transactions, including the satisfaction of the conditions set forth in
Article VII hereof, and shall cooperate fully with the other party 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 special meeting
of its shareholders to consider and vote upon the approval of this Agreement
and any other matters required to be approved by the Company's shareholders for
consummation of the Transactions (including any adjournment or postponement,
the "Company Meeting"). Except with the prior approval of Parent, no other
matters shall be submitted for the approval of the Company shareholders at the
Company Meeting. 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 6.08 shall
govern the withholding, withdrawing, amending or modifying of such
recommendation in the circumstances described therein.
6.03. Registration Statement.
(a) Parent agrees to prepare a registration statement on Form S-4 or
other applicable form (the "Registration Statement") to be filed by Parent with
the SEC in connection with the issuance of Parent Common Stock in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of the Company constituting a part thereof (the "Proxy Statement")
and all related documents). The Company shall prepare and furnish such
information relating to it and its directors, officers and shareholders as may
be reasonably required in connection with the above referenced documents based
on its knowledge of and access to the information required for said documents,
and the Company, and its legal, financial and accounting advisors, shall have
the right to review in advance such Registration Statement prior to its filing.
The Company agrees to cooperate with Parent and Parent's counsel and
accountants in requesting and obtaining appropriate opinions, consents and
letters from its financial advisor and independent auditor in connection with
the Registration Statement and the Proxy Statement. Provided that the Company
has cooperated as described above, Parent agrees to file, or cause to be filed,
the Registration Statement and the Proxy Statement with the SEC as promptly as
reasonably practicable. Each of the Company and Parent agrees to use its
reasonable best efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
the filing thereof. Parent also agrees to use its reasonable best efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement. After
the Registration Statement is declared effective under the Securities Act, the
Company shall promptly mail at its expense the Proxy Statement to its
shareholders.
Page 32
(b) Each of the Company and Parent agrees that none of the information
supplied or to be supplied by it for inclusion or incorporation by reference in
(i) the Registration Statement shall, at the time the Registration Statement
and each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the Proxy Statement and any
amendment or supplement thereto shall, at the date(s) of mailing to
shareholders and at the time of the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. Each
of the Company and Parent further agrees that if such party shall become aware
prior to the Effective Date of any information furnished by such party that
would cause any of the statements in the Registration Statement or the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other parties thereof and to take
the necessary steps to correct the Registration Statement or the Proxy
Statement.
(c) Parent agrees to advise the Company, promptly after Parent receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Parent Common Stock for
offering or sale in any jurisdiction, of the initiation or, to the extent
Parent is aware thereof, threat of any proceeding for any such purpose, or of
any request by the SEC for the amendment or supplement of the Registration
Statement or for additional information.
6.04. Regulatory Filings.
(a) Each of Parent and the Company and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the Transactions and any other transactions
contemplated by this Agreement; and any initial filings with Governmental
Authorities 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 written information submitted to any third party or any
Governmental Authority in connection with the Transactions. In exercising the
foregoing right, each of such parties agrees to act reasonably and as promptly
as practicable. Each party hereto agrees that it shall consult with the other
parties hereto with respect to the obtaining of all permits, consents,
approvals, waivers and authorizations of all third parties and Governmental
Authorities necessary or advisable to consummate the Transactions, and each
party shall keep the other parties apprised of the status of material matters
relating to completion of the Transactions.
(b) Each party agrees, upon request, to furnish the other parties with
all information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other parties or any of their respective Subsidiaries to any third party
or Governmental Authority.
6.05. 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
Page 33
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.
6.06. Access; Information.
(a) The Company agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford Parent
and Parent's officers, employees, counsel, accountants and other authorized
representatives such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties
and personnel of the Company and the Company Bank and to such other information
relating to the Company or the Company Bank as Parent may reasonably request
and, during such period, it shall furnish promptly to Parent all information
concerning the business, properties and personnel of the Company and the
Company Bank as Parent may reasonably request. Parent has, prior to the
execution and delivery of this Agreement, been given access to and the
opportunity to examine certain materials provided by the Company, including the
year-end financials, credit files, ALCO packages and minutes, loan loss reserve
adequacy reports and loan risk analyses, and an opportunity to ask questions of
and to receive answers from officers and representatives of the Company and the
Subsidiaries. As of the date of this Agreement, the Parent has, in all
material respects, completed its review of the materials so provided by the
Company and the Subsidiaries.
(b) Parent agrees that upon reasonable notice and subject to applicable
laws relating to the exchange of information, it shall afford the Company and
its authorized representatives such access to Parent's personnel as the Company
may reasonably request.
(c) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.06 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the Transactions. Subject to the requirements of law,
each party shall keep confidential, and shall cause its representatives to keep
confidential, all information and documents obtained pursuant to this Section
6.06 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable
from publicly available sources. In the event that this Agreement is terminated
or the Transactions shall otherwise fail to be consummated, each party shall
promptly cause all copies of documents or extracts thereof containing
information and data as to another party hereto to be returned to the party
which furnished the same. No investigation by any party of the business and
affairs of any other party shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to any party's obligation to consummate the Transactions.
(d) 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 to consummate the Merger.
Page 34
6.07. Affiliates. The Company shall use its reasonable best efforts
to identify those persons who may be deemed to be "affiliates" of the Company
within the meaning of Rule 145 promulgated by the SEC under the Securities Act
(the "Company Affiliates") and to cause each person so identified to deliver to
Parent as soon as practicable, and in any event prior to the date of the
Company Meeting, a written agreement to comply with the requirements of Rule
145 under the Securities Act in connection with the sale or other transfer of
Parent Common Stock received in the Merger, which agreement shall be in a form
reasonably satisfactory to Parent.
6.08. Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause its and each such Subsidiary's directors, officers,
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 shall, and that it shall direct and use its reasonable best
efforts to cause its and each such Subsidiary's directors, officers, 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, in
each such case referred to in clause (B), (C) or (D) above, (i) the Company
Board determines in good faith (after consultation with outside legal counsel)
that such action would be required in order for its directors to comply with
their respective fiduciary duties under applicable law and (ii) the Company
Board determines in good faith (after consultation with its financial advisor)
that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal and would, if consummated,
result in a transaction more favorable to the Company's shareholders from a
financial point of view than the Merger. An Acquisition Proposal which is
received and considered by the Company in compliance with this Section 6.08 and
which meets the requirements set forth in clause (D) of the preceding sentence
is herein referred to as a "Superior Proposal." 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 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, the Company or any of its representatives as soon
as the Company becomes aware of the same.
Page 35
6.09. Certain Policies. Prior to the Effective Date, each of the
Company and its Subsidiaries shall, consistent with GAAP, the rules and
regulations of the SEC and applicable banking laws and regulations, modify or
change its loan, OREO, accrual, reserve, tax, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied on a basis that is consistent with that of
Parent; provided, however, that no such modifications or changes need be made
prior to the satisfaction of the conditions 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 6.09 shall constitute or be
deemed to be a breach, violation of or failure to satisfy any representation,
warranty, covenant, agreement, condition or other provision of this Agreement
or otherwise be considered in determining whether any such breach, violation or
failure to satisfy shall have occurred. The recording of any such adjustments
shall not be deemed to imply any misstatement of previously furnished financial
statements or information and shall not be construed as concurrence of the
Company or its management with any such adjustments.
6.10. Nasdaq Listing. Parent agrees to use its reasonable best
efforts to list, prior to the Effective Date, on the Nasdaq the shares of
Parent Common Stock to be issued in connection with the Merger.
6.11. Indemnification.
(a) From and after the Effective Time, Parent (the "Indemnifying Party")
shall indemnify and hold harmless each present and former director, officer and
employee of the Company or a Company Subsidiary, as applicable, determined as
of the Effective Time (the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, arising in whole or in part out of or pertaining to the fact that he or
she was a director, officer, employee, fiduciary or agent of the Company or any
Company Subsidiary or is or was serving at the request of the Company or any of
the Company Subsidiaries as a director, officer, employee, fiduciary or agent
of another corporation, partnership, joint venture, trust or other enterprise,
including without limitation matters related to the negotiation, execution and
performance of this Agreement or consummation of the Transactions, 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.
(b) Any Indemnified Party wishing to claim indemnification under this
Section 6.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not actually prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether asserted 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
Page 36
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) The Company shall purchase an extended reporting period endorsement
(the "D & O Tail Coverage") under the Company's existing directors' and
officers' liability insurance (the "D&O Insurance") which covers persons who
are currently covered by the Company's D&O Insurance that shall provide such
directors and officers with coverage for a period of six years after the
Effective Time on terms no less favorable than those in effect on the date
hereof and at the Effective Time shall provide evidence of such D & O Tail
Coverage to Parent; provided, however, that the Company may substitute for its
existing coverage a policy or policies providing substantially comparable
coverage and containing terms and conditions no less favorable than those in
effect on the date hereof if necessary or advisable to obtain such extension of
coverage.
(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 6.11.
6.12 Benefit Plans.
(a) As soon as administratively practicable after the Effective Time,
Parent shall take all reasonable action so that employees of the Company and
its Subsidiaries shall be entitled to participate in each employee benefit
plan, program or arrangement of Parent of general applicability (the "Parent
Benefits Plans") to the same extent as similarly-situated employees of Parent
and its Subsidiaries (it being understood that inclusion of the employees of
the Company and its Subsidiaries in the Parent Benefits Plans may occur at
different times with respect to different plans), provided, however, that
nothing contained herein shall require Parent or any of its Subsidiaries to
make any grants to any former employee of the Company or its Subsidiaries under
any discretionary equity compensation plan of Parent. Parent shall cause each
Parent Benefits Plan in which employees of the Company and its Subsidiaries are
eligible to participate to recognize, for purposes of determining eligibility
to participate in, the vesting of benefits and for all other purposes (but not
for accrual of pension benefits other than 401(k) benefits) under the Parent
Benefit Plans, the service of such employees with the Company and its
Subsidiaries to the same extent as such service was credited for such purpose
by the Company; provided, however, that such service shall not be recognized to
the extent that such recognition would result in a duplication of benefits or
in a violation of any applicable non-discrimination rules.
Page 37
(b) At and following the Effective Time, 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 and its Subsidiaries existing as of
the Effective Date, as well as all employment, severance, deferred
compensation, split dollar, supplemental retirement or "change-in-control"
agreements, plans or policies of the Company which are Previously Disclosed;
provided that nothing herein shall limit the ability of Parent, after the
Effective Time, to amend or terminate any of the Company's Benefits Plans in
accordance with their terms at any time; and provided further, that Section II
(a) of the Employment Continuity Agreements of Messrs. McKim, Lay, ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇ (collectively, the "ECA Agreements") shall be amended as of the
Effective Time (i) to establish the "base amount" as their respective base
salaries as of December 31, 2004, (ii) to extend the 30 day period referred to
therein to 24 months. Parent acknowledges that the consummation of the Merger
will constitute a "change-in-control" of the Company for purposes of any
employee benefit plans, agreements and arrangements of the Company and (iii) to
change the reference in Section IX thereof to "▇▇▇▇▇▇▇ County, Maine" to "any
of Knox, Lincoln, ▇▇▇▇▇▇▇ or Washington counties, Maine."
(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) provide full credit under such plans for any
deductibles, 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 the two year period following the Effective Time, Parent shall
provide all employees of the Company and its Subsidiaries whose employment is
terminated by Parent or a Parent Subsidiary other than for cause, disability or
retirement at or following the Effective Time, and who so desires, job
counseling and outplacement assistance services to a reasonable extent and for
a reasonable period of time following such employees' termination of
employment, and, shall, to a reasonable extent, assist any such employees in
locating new employment and shall notify all such employees who request 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. For purposes of this
Section 6.12(d) and Section 6.12(e) below, a termination other than for cause
shall include, but not be limited to, resignation following a reduction in pay
or assignment to a work site located more than 20 miles from the employee's
work site as of the Effective Time.
(e) All employees of the Company or a Company Subsidiary as of the
Effective Time shall become employees of Parent or 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, a severance agreement or a special termination
agreement, including an ECA Agreement) at least 60 days prior written notice
of any job elimination after the Effective Time for a period of 90 days
following the Effective Time. Subject to such 60 day notice requirement,
Parent or a Parent Subsidiary shall have no obligation to continue the
Page 38
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, a severance agreement or a special
termination agreement, including an ECA Agreement) whose employment is
involuntarily terminated other than for cause (as defined in Section 6.12(d)
above) during the two year period following the Effective Time shall be
entitled to receive severance payments equal to one (1) week's compensation for
each year of service of such employee with the Company and/or a Company
Subsidiary, or such payments to which they may be entitled under any employee
severance plan now in effect or hereafter adopted by the Parent or a Parent
Subsidiary, whichever is greater.
(f) As soon as practicable after the date hereof, the Company's Board of
Directors shall take such corporate action as is necessary to terminate the
First National Bank of Bar Harbor Employee Stock Ownership Plan (the "Company
ESOP") and provide that the account of each participant in the Company ESOP
shall become fully vested and nonforfeitable, in each case effective as of the
Effective Time and subject to the consummation of the Merger. Following the
Effective Time, the Parent shall be the sponsor of the Company ESOP and shall
take any and all such further actions as may be necessary to terminate the
Company ESOP and distribute the assets of the Company ESOP to participants in
the Company ESOP as soon as reasonably practicable after the receipt of a
favorable determination letter on termination of the Company ESOP from the IRS
confirming the qualified status of the Company ESOP upon termination, and
Parent shall take the action necessary (including any amendment of Parent's
401(k) plan) to permit the participants who are employees of Parent or its
Subsidiaries as of the date of such distribution to roll any eligible rollover
distributions over into Parent's 401(k) plan. As soon as practicable after the
date hereof, if permitted by the applicable procedures of the Internal Revenue
Service, the Company shall apply to the IRS for a favorable determination
letter on the tax-qualified status of the Company ESOP on termination of the
Company ESOP.
6.13. Bank Merger. If requested by Parent, Company shall take all
action necessary and appropriate, including causing the entering into of an
appropriate merger agreement (the "Bank Merger Agreement"), to cause the
Company Bank to merge with and into the Parent Bank (the "Bank Merger") in
accordance with applicable laws and regulations and the terms of the Bank
Merger Agreement as soon as practicable after consummation of the Merger.
6.14. Coordination of Dividends. After the date of this Agreement, the
Company shall coordinate the declaration of any dividends in respect of the
Company Common Stock and the record dates and payment dates relating thereto
with that of the Parent Common Stock, it being the intention of the parties
that the holders of Parent Common Stock or Company Common Stock shall not
receive more than one dividend, or fail to receive one dividend, for any single
semi-annual period with respect to their shares of Company Common Stock, or
for any single calendar quarter with respect to any shares of Parent Common
Stock any holder of Company Common Stock receives in exchange therefor in the
Merger.
6.15. Board Representation. Upon consummation of the Transactions,
the Board of Directors of Parent shall increase the number of authorized
directors who serve on its Board of Directors and appoint ▇▇. ▇▇▇▇▇ and one
other director of the Company, as mutually determined by the Company and Parent
(the "Additional Director") to fill the vacancies created thereby and to serve
on the same basis as other Parent directors until the first Annual Meeting of
Parent's Shareholders following the Effective Time. With respect to that
Annual Meeting, the Board of Directors of Parent shall, subject to compliance
Page 39
with the fiduciary duties of the Parent Board and any director qualification
provisions of the Parent's bylaws, include ▇▇. ▇▇▇▇▇ as a nominee (to serve as
a director until the 2007 Annual Meeting), and the Additional Director as a
nominee (to serve as a director until the 2006 Annual Meeting). The Board of
Directors shall consider including an additional resident of the area served by
the Company Bank as a nominee to serve as a director following the first Annual
Meeting of Parent's Shareholders following the Effective Time.
6.16. 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. From time to time prior to the Effective Time (and
on the date prior to the Closing Date), each party will supplement or amend its
Disclosure Schedules delivered in connection with the execution of this
Agreement to reflect any matter which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described
in such Disclosure Schedules or which is necessary to correct any information
in such Disclosure Schedules which has been rendered materially inaccurate
thereby. No supplement or amendment to such Disclosure Schedules shall have any
effect for the purpose of determining the accuracy of the representations and
warranties of the parties contained in Article V in order to determine the
fulfillment of the conditions set forth in Sections 7.02(a) or 7.03(a) hereof,
as the case may be, or the compliance by the Company or Parent, as the case may
be, with the respective covenants and agreements of such parties contained
herein.
Page 40
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each of the parties hereto to consummate the
Merger is subject to the fulfillment or, to the extent permitted by applicable
law, written waiver by the parties hereto prior to the Closing Date of each of
the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by the requisite vote of the holders of outstanding shares of Company
Common Stock and Parent Common Stock.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the Transactions shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall
have expired and no such 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 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,
restricts or makes illegal the consummation of the Transactions.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated by the SEC and not
withdrawn.
(e) Listing. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing on the Nasdaq.
(f) Tax Opinion. Each of Parent and the Company shall have received
the written opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, in form and substance reasonably
satisfactory to both the Company and Parent, dated as of the Effective Date,
substantially to the effect that, on the basis of the facts, representations
and assumptions set forth in such opinion which are consistent with the state
of facts existing at the Effective Time, the Merger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code. In rendering such opinion, such counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel. In the event that each of Parent and the Company
shall not have received such written opinion from ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, as
provided above, then in such case this condition to closing will be deemed
satisfied if each of Parent and the Company shall have received the foregoing
written opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP subject to the foregoing requirements as
to form and substance.
7.02. Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Closing Date of each of the following
conditions:
(a) Representations and Warranties. 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
Page 41
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 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 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) Opinion of Counsel. The Company shall have received an opinion
dated the Effective Date of ▇▇▇▇▇▇▇ & ▇▇▇▇, LLP, counsel to Parent, in
substantially the form attached as Exhibit 7.02(c), which is attached hereto
and made a part hereof.
(d) Other Actions. Parent shall have furnished the Company with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 7.01 and 7.02 as
the Company may reasonably request.
7.03. Conditions to Obligation of Parent. The obligation of Parent
to consummate the Merger is also subject to the fulfillment or written waiver
by Parent prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. 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 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.
(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 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) Shareholder Agreements. Shareholder Agreements, substantially in
the form attached as Annex A hereto, shall have been executed and delivered by
each director who is also an officer of the Company in connection with the
Company's execution and delivery of this Agreement.
(d) Dissenting Shares. Dissenting Shares shall not represent 10% or
more of the outstanding Company Common Stock.
(e) Opinion of Counsel. Parent shall have received an opinion dated
the Effective Date of ▇▇▇▇▇▇ ▇▇▇▇▇▇, counsel to the Company, in substantially
the form attached as Exhibit 7.03(e), which is attached hereto and made a part
hereof.
(f) Other Actions. The Company shall have furnished Parent with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 7.01 and 7.03 as Parent may
reasonably request, and as may be reasonably required to assist Parent and its
executives in meeting its obligations under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 with
respect to reporting the Transactions.
Page 42
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 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; or (ii) a breach by Parent or the
Company, as the case may be, of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party or parties of such breach,
which breach (whether under (i) or (ii)) would be reasonably expected,
individually or in the aggregate with other breaches, to result in a Material
Adverse Effect with respect to Parent or the Company, as the case may be.
(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 May 31, 2005, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the knowing action
or inaction of (i) the party seeking to terminate pursuant to this Section
8.01(c) or (ii) any of the Shareholders (if the Company is the party seeking to
terminate), which action or inaction is in violation of its obligations under
this Agreement or, in the case of the Shareholders, his, her or its obligations
under the relevant Shareholder Agreement.
(d) No Regulatory Approval. By the Company or Parent, if its Board
of Directors so determines by a vote of a majority of the members of its entire
Board, in the event the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or an application therefor shall have been permanently
withdrawn at the request of a Governmental Authority.
(e) No Shareholder Approval. By either Parent or the Company if any
approval of the shareholders of the Company or Parent contemplated by Section
7.01(a) this Agreement shall not have been obtained by reason of the failure to
obtain the required vote at the Company Meeting or Parent Meeting, as the case
may be.
(f) Failure to Recommend. At any time prior to the Company Meeting,
by Parent if (i) the Company shall have breached Section 6.08, (ii) 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, or (iii) the Company
shall have materially breached its obligations under Section 6.02 by failing to
call, give notice of, convene and hold the Company Meeting in accordance with
Section 6.02.
(g) Superior Proposal. At any time prior to the Company Meeting, by
the Company in order to concurrently enter into an acquisition agreement or
similar agreement (each, an "Acquisition Agreement") with respect to a Superior
Proposal which has been received and considered by the Company and the Company
Board in compliance with Section 6.08 hereof, provided, however, that this
Agreement may be terminated by the Company pursuant to this Section 8.01(g)
Page 43
only after the fifth Business Day following the Company's provision of written
notice to Parent advising Parent that the Company Board is prepared to accept a
Superior Proposal, and only if, during such five-Business Day period, if Parent
so elects in its sole discretion, the Company and its advisors shall have
negotiated in good faith with Parent to make such adjustments in the terms and
conditions of this Agreement as would enable Parent and the Company to proceed
with the Transactions on such adjusted terms.
8.02. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the abandonment of
the Merger 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 this Section 8.02 and 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.
(b) The Company shall pay Parent the sum of $1,500,000 (the "Termination
Fee") if this Agreement is terminated as follows:
(i) if this Agreement is terminated by Parent pursuant to Section
8.01(f) or by the Company pursuant to Section 8.01(g), in either of which case
payment shall be made to Parent concurrently with the termination of this
Agreement; or
(ii) if (x) this Agreement is terminated by (A) Parent pursuant to
Section 8.01(b) or (B) by either Parent or the Company pursuant to Section
8.01(e) as a result of the failure to obtain the required vote at the Company
Meeting contemplated by Section 7.01(a) this Agreement and in the case of any
termination pursuant to clause (A) or (B) an Acquisition Proposal shall have
been publicly announced or otherwise communicated or made known to the Company
Board (or any Person shall have publicly announced, communicated or made known
an intention, whether or not conditional, to make an Acquisition Proposal) at
any time after the date of this Agreement and prior to the taking of the vote
of the shareholders of the Company contemplated by this Agreement at the
Company Meeting, in the case of clause (B), or the date of termination, in the
case of clause (A), and
(y) within 18 months after such termination the Company or a Subsidiary of the
Company enters into an agreement with respect to an Acquisition Proposal or
consummates a transaction which is the subject of an Acquisition Proposal, then
the Company shall pay to Parent the Termination Fee on the date of execution of
such agreement or consummation of a transaction which is the subject of an
Acquisition Proposal, provided that if the date of execution of such agreement
is after 12 months but within 18 months after such termination of this
Agreement, the Termination Fee shall be payable by the Company to Parent only
upon consummation of a transaction which is the subject of an Acquisition
Proposal, regardless whether such consummation occurs within 18 months after
termination of this Agreement.
Any amount that becomes payable pursuant to this Section 8.02(b) shall be paid
by wire transfer of immediately available funds to an account designated by
Parent.
(c) The Company and Parent agree that the agreement contained in
paragraph (b) of this Section 8.02 is an integral part of the transactions
contemplated by this Agreement, that without such agreement Parent would not
have entered into this Agreement and that such amounts do not constitute a
penalty or liquidated damages in the event of a breach of this Agreement by the
Company. If the Company fails to pay Parent the amounts due under paragraph (b)
above within the time periods specified therein, the Company shall pay the
costs and expenses (including reasonable legal fees and expenses) incurred by
Parent in connection with any action in which Parent prevails, including the
filing of any lawsuit, taken to collect payment of such amounts, together with
Page 44
interest on the amount of any such unpaid amounts at the prime lending rate
prevailing during such period as published in The Wall Street Journal, as it
may vary, calculated on a daily basis from the date such amounts were required
to be paid until the date of actual payment.
Page 45
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) or the termination of this Agreement
if this Agreement is terminated prior to the Effective Time (other than
Sections 6.06(c), 8.02 and, excepting Section 9.12 hereof, this Article IX,
which shall survive any such termination). 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.
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,
including fees and expenses of its own financial consultants, accountants and
counsel and, in the case of Parent, the registration fee to be paid to the SEC
in connection with the Registration Statement, except that expenses of printing
the Proxy Statement shall be shared equally between the Company and Parent, and
provided further that nothing contained herein shall limit either party's
rights to recover any liabilities or damages arising out of the other party's
willful breach of any provision of this Agreement.
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: If to Parent to:
FNB Bankshares First National Lincoln Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
President and CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP Verrill & ▇▇▇▇, LLP
One Monument Square ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Page 46
9.07. Entire Understanding; No Third Party Beneficiaries. This
Agreement and the Shareholder Agreements represent the entire understanding of
the parties hereto and thereto with reference to the Transactions, and this
Agreement and the Shareholder Agreements supersede any and all other oral or
written agreements heretofore made. Except for the Indemnified Parties' right
to enforce Parent's obligation under Section 6.11, which are expressly intended
to be for the irrevocable benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives, nothing in this
Agreement, expressed or implied, is intended to confer upon any Person, other
than the parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
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 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." Whenever the words "as of the date hereof" are used in
this Agreement, they shall be deemed to mean the day and year first above
written (August 25 , 2004).
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 Merger Consideration to be paid to the holders
of Company Common Stock is not thereby changed in kind or reduced in amount as
a result of such modification, (ii) such modification will not adversely affect
the tax treatment of the Company's shareholders as a result of receiving the
Merger Consideration and (iii) such modification will not materially delay or
jeopardize receipt of any required approvals of Governmental Authorities.
Page 47
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.
FIRST NATIONAL LINCOLN CORPORATION
By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
___________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President & CEO
FNB BANKSHARES
By:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
________________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & CEO
Page 48
ANNEX A
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement"), dated as of______________, 2004
by and between , a shareholder ("Shareholder") of FNB
BANKSHARES, a Maine corporation (the "Company"), and FIRST NATIONAL LINCOLN
CORPORATION , a Maine corporation ("Parent"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
WHEREAS, Parent and the Company have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which
the Company will merge with and into Parent on the terms and conditions set
forth therein (the "Merger") and, in connection therewith, outstanding shares
of Company Common Stock will be converted into shares of Parent Common Stock
and/or cash in the manner set forth therein; and
WHEREAS, Shareholder holds of record the shares of Company Common Stock
identified on Annex I hereto (such shares being referred to as the "Shares");
and
WHEREAS, in order to induce Parent to enter into the Merger 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 agrees that at any meeting
of the shareholders of the Company, or in connection with any written consent
of the shareholders of the Company, Shareholder shall:
(i) appear at each such meeting or otherwise cause the Shares to be
counted as present thereat for purposes of calculating a quorum; and
(ii) vote (or cause to be voted), in person or by proxy, or deliver a
written consent (or cause a consent to be delivered) covering, all _______
Shares, (x) in favor of adoption and approval of the Merger Agreement and the
Merger; (y) against any action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement
of the Company contained in the Merger Agreement or of Shareholder contained in
this Agreement; and (z) against any Acquisition Proposal or any other action,
agreement or transaction that is intended, or could reasonably be expected, to
materially impede, interfere or be inconsistent with, delay, postpone,
discourage or materially and adversely affect consummation of the Merger or
this Agreement.
2. No Transfers Prior to the Company Meeting (as defined in the
Merger Agreement), Shareholder agrees not to, directly or indirectly, sell
transfer, pledge, assign or otherwise dispose of, or enter into any contract
option, commitment or other arrangement or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of, any of the Shares
if such sale, transfer, pledge, assignment or disposition could occur prior to
the Company Meeting. In the case of any transfer by operation of law, this
Agreement shall be binding upon and inure to the transferee(s). Any transfer or
other disposition in violation of the terms of this Section 2 shall be null and
void.
3. Representations and Warranties of Shareholder. Shareholder
represents and warrants to and agrees with Parent as follows:
A. Capacity. Shareholder has all requisite capacity and authority to
enter into and perform his, her or its obligations under this Agreement.
Page 49
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 I 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.
5. Term of Agreement; Termination.
A. The term of this Agreement shall commence on the date hereof.
B. This Agreement shall terminate upon the date, if any, of termination
of the Merger Agreement in accordance with its terms. Upon such termination, no
party shall have any further obligations or liabilities hereunder; provided,
however, such termination shall not relieve any party from liability for any
willful breach of this Agreement prior to such termination.
C. If the Merger Agreement is not terminated in accordance with its
terms, this Agreement (except for the provisions of Sections 3 and 8, 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 willful 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
Page 50
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):
If to Parent:
First National Lincoln Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President and CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Verrill & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Shareholder:
________________________________________
________________________________________
________________________________________
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.
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.
Page 51
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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
FIRST NATIONAL LINCOLN CORP.
By:________________________________________
Name:
Title:
[SHAREHOLDER]
________________________________________(Signature)
ANNEX I
Shareholder Agreement
Shares of Company
Common Stock
Owned
of Record
________________________________________
Page 52
Exhibit 3.08
Rollover Options
-----------------------------------------------------------------------------
Number of
Shares
Subject to
Name Exercise Price Expiration Date Option
-----------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $8.93 7/30/2011 3,675
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $8.93 7/30/2011 2,250
▇▇▇▇ ▇. ▇▇▇▇▇ $8.93 7/30/2011 14,205
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $8.93 7/30/2011 6,500
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ $8.93 7/30/2011 5,000
▇▇▇▇▇▇ ▇. ▇▇▇ $8.93 7/30/2011 9,000
-----------------------------------------------------------------------------
TOTAL 40,630
=============================================================================
Exhibit 7.02(c)
[Form of Verrill & ▇▇▇▇, LLP Opinion]
______________, 200__
FNB Bankshares
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention ▇▇▇▇ ▇. ▇▇▇▇▇
Re: Agreement and Plan of Merger dated as of August __, 2004
Ladies and Gentlemen:
We have represented First National Lincoln Corporation, a Maine corporation
("FNLC"), in connection with the execution and delivery of an Agreement and
Plan of Merger by and between FNB Bankshares, a Maine corporation ("FNB"), and
FNLC dated as of August ___, 2004 with respect to the merger of FNB with and
into FNLC (the "Agreement"). This opinion is provided to you at the request of
FNLC pursuant to Section 7.02(c) of the Agreement.
We have reviewed the Agreement and examined originals or copies of such records
of FNLC, certificates of officers of FNLC and public officials, and other
documents that we have deemed relevant and necessary as a basis for this
opinion. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals of such documents.
As to questions of fact material to this opinion, we have relied without
independent verification upon representations contained in certificates of
officers of FNLC and public officials. For purposes of this opinion, we have
also assumed the accuracy and completeness of all representations of FNB set
forth in the Agreement or in certificates or other instruments delivered to
FNLC at the closing of the transactions contemplated in the Agreement.
Based on the foregoing, and subject to the qualifications set forth below, we
are of the opinion that:
1. FNLC is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maine.
2. The authorized capital stock of FNLC consists of 18,000,000 shares of
Common Stock, $0.01 par value per share. We are advised by FNLC's transfer
agent that _____ shares of the Common Stock of FNLC were issued and outstanding
at the close of business on ___________, 200__.
3. The Agreement has been duly authorized, executed, and delivered on
behalf of FNLC.
4. The Agreement constitutes the legal, valid, and binding obligation of
FNLC, enforceable against FNLC in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws affecting the rights and remedies of creditors
generally, and general principles of equity, whether applied by a court of law
or equity
6. The merger of FNB with and into FNLC will become effective, in
accordance with the terms of the Articles of Merger executed by FNLC and FNB,
as of ______ p.m. on the date upon which the Articles of Merger are filed with
the Maine Secretary of State.
7. Neither the execution and delivery by FNLC of, nor the performance by
FNLC of its obligations under, the Agreement will constitute a violation by
FNLC of, or any breach or default by FNLC under, its Articles of Incorporation
or bylaws, the Articles of Organization and bylaws of FNLC's subsidiary, The
First National Bank of Damariscotta (the "Bank") or any judgment, writ, order
or decree, specific to FNLC or the Bank, of any court or other governmental
authority of which we have knowledge.
We express no opinion herein concerning any matter involving choices or
conflicts of law; or concerning the enforceability of any waiver of rights;
exculpatory clause, indemnification against misconduct by an indemnitee or
related person, or any provision purporting to supersede equitable principles
of contract construction; or any matters involving tax or securities laws.
We are members of the Bar of the State of Maine and we are not expressing an
opinion as to any matter relating to the laws of any jurisdiction other than
the laws of the State of Maine.
As used herein, the term "knowledge" means the actual knowledge of those
attorneys of this firm who have been principally involved in representing FNLC
in connection with the transactions contemplated in the Agreement.
This opinion is intended for use by you in connection with the transactions
contemplated in the Agreement and, except as set forth below, is not to be
relied upon by any other person or in any other context. The contents of this
opinion are not to be quoted or otherwise disclosed to third parties, in whole
or in part, without our prior written consent. Subject to such limitations,
you may furnish a copy of this opinion to your counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇.
Very truly yours,
VERRILL & ▇▇▇▇, LLP
Exhibit 7.03(e)
[Form of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP Opinion]
______________, 200__
First National Lincoln Corporation
[Address]
Re: Agreement and Plan of Merger dated as of August __, 2004
Ladies and Gentlemen:
We have represented FNB Bankshares, a Maine corporation ("FNB"), in connection
with the execution and delivery of an Agreement and Plan of Merger by and
between First National Lincoln Corporation, a Maine corporation ("FNLC"), and
FNB dated as of August ___, 2004with respect to the merger of FNB with and into
FNLC (the "Agreement"). This opinion is provided to you at the request of FNB
pursuant to Section 7.03(E) of the Agreement.
We have reviewed the Agreement and examined originals or copies of such records
of FNB, certificates of officers of FNB and public officials, and other
documents that we have deemed relevant and necessary as a basis for this
opinion. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to originals of documents submitted to us as copies, and the
authenticity of the originals of such documents.
As to questions of fact material to this opinion, we have relied without
independent verification upon representations contained in certificates of
officers of FNB and public officials. For purposes of this opinion, we have
also assumed the accuracy and completeness of all representations of FNB set
forth in the Agreement or in certificates or other instruments delivered to FNB
at the closing of the transactions contemplated in the Agreement.
Based on the foregoing, and subject to the qualifications set forth below, we
are of the opinion that:
1. FNB is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maine.
2. The authorized capital stock of FNB consists of 2,000,000 shares of
Common Stock. We are advised by FNB's transfer agent that _____ shares of the
Common Stock of FNB were issued and outstanding at the close of business on
___________, 200__.
3. The Agreement has been duly authorized, executed, and delivered on
behalf of FNB.
4. The Agreement constitutes the legal, valid, and binding obligation of
FNB, enforceable against FNB in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws affecting the rights and remedies of creditors
generally, and general principles of equity, whether applied by a court of law
or equity
6. The merger of FNB with and into FNLC will become effective, in
accordance with the terms of the Articles of Merger executed by FNB and FNLC,
as of ______ p.m. on the date upon which the Articles of Merger are filed with
the Maine Secretary of State.
7. Neither the execution and delivery by FNB of, nor the performance by FNB
of its obligations under, the Agreement will constitute a violation by FNB of,
or any breach or default by FNB under, its Articles of Incorporation or bylaws,
the Articles of Organization and bylaws of FNB's subsidiary, The First National
Bank of Bar Harbor (the "Bank") or any judgment, writ, order or decree,
specific to FNB or the Bank, of any court or other governmental authority of
which we have knowledge.
We express no opinion herein concerning any matter involving choices or
conflicts of law; or concerning the enforceability of any waiver of rights;
exculpatory clause, indemnification against misconduct by an indemnitee or
related person, or any provision purporting to supersede equitable principles
of contract construction; or any matters involving tax or securities laws.
We are members of the Bar of the State of Maine and we are not expressing an
opinion as to any matter relating to the laws of any jurisdiction other than
the laws of the State of Maine.
As used herein, the term "knowledge" means the actual knowledge of those
attorneys of this firm who have been principally involved in representing FNB
in connection with the transactions contemplated in the Agreement.
This opinion is intended for use by you in connection with the transactions
contemplated in the Agreement and, except as set forth below, is not to be
relied upon by any other person or in any other context. The contents of this
opinion are not to be quoted or otherwise disclosed to third parties, in whole
or in part, without our prior written consent. Subject to such limitations,
you may furnish a copy of this opinion to your counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP