Exhibit 1
Execution Copy
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AGREEMENT AND PLAN OF MERGER
By and Between
SEACOAST FINANCIAL SERVICES CORPORATION
And
HOME PORT BANCORP, INC.
Dated as of July 20, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................1
1.01 CERTAIN DEFINITIONS......................................................1
1.02 OTHER DEFINITIONAL MATTERS...............................................4
ARTICLE II THE MERGER............................................................4
2.01 THE MERGER...............................................................4
2.02 EFFECTIVE TIME...........................................................5
2.03 EFFECT OF THE MERGER.....................................................5
2.04 CORPORATE CHARTER........................................................5
2.05 BY-LAWS..................................................................5
2.06 DIRECTORS AND OFFICERS...................................................5
2.07 TAX CONSEQUENCES.........................................................5
2.08 NANTUCKET BANK...........................................................5
ARTICLE III CONVERSION OF SECURITIES.............................................6
3.01 CONVERSION OF SECURITIES.................................................6
3.02 STOCK OPTIONS............................................................6
3.03 PAYMENT PROCEDURES.......................................................6
3.04 RETURN OF EXCHANGE FUND..................................................7
3.05 LOST OR STOLEN CERTIFICATES..............................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER..........................8
4.01 ORGANIZATION AND QUALIFICATION; SELLER'S SUBSIDIARIES....................8
4.02 CORPORATE CHARTER; BY-LAWS; CORPORATE RECORDS............................9
4.03 CAPITALIZATION...........................................................9
4.04 AUTHORITY...............................................................10
4.05 NO CONFLICT.............................................................10
4.06 CONSENTS AND APPROVALS..................................................10
4.07 COMPLIANCE..............................................................11
4.08 REPORTS.................................................................11
4.09 FINANCIAL STATEMENTS....................................................12
4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS....................................13
4.11 ABSENCE OF LITIGATION...................................................14
4.12 EMPLOYEE BENEFIT PROGRAMS...............................................14
4.13 LABOR MATTERS...........................................................17
4.14 PROPERTY AND LEASES.....................................................17
4.15 TAXES AND TAX RETURNS...................................................18
4.16 CERTAIN CONTRACTS.......................................................20
4.17 LOAN PORTFOLIO..........................................................21
4.18 INVESTMENT SECURITIES...................................................22
4.19 DERIVATIVE TRANSACTIONS.................................................22
4.20 INSURANCE...............................................................22
4.21 ENVIRONMENTAL MATTERS...................................................23
4.22 INTELLECTUAL PROPERTY...................................................24
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4.23 FIDUCIARY ACCOUNTS......................................................24
4.24 AGREEMENTS WITH BANK REGULATORS.........................................24
4.25 MATERIAL INTERESTS OF CERTAIN PERSONS...................................25
4.26 BROKERS' FEES; OPINIONS.................................................25
4.27 PROXY STATEMENT.........................................................25
4.28 SELLER INFORMATION......................................................26
4.29 STATE TAKEOVER LAWS.....................................................26
4.30 DISCLOSURE..............................................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER...........................26
5.01 CORPORATE ORGANIZATION..................................................26
5.02 AUTHORITY...............................................................26
5.03 NO CONFLICT.............................................................27
5.04 CONSENTS AND APPROVALS..................................................27
5.05 COMPLIANCE..............................................................27
5.06 FINANCIAL STATEMENTS....................................................28
5.07 ABSENCE OF LITIGATION...................................................28
5.08 AGREEMENTS WITH BANK REGULATORS.........................................28
5.09 BUYER INFORMATION.......................................................29
5.10 CAPITAL, FINANCING......................................................29
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER...............................29
6.01 COVENANTS OF THE SELLER.................................................29
6.02 CERTAIN CHANGES AND ADJUSTMENTS.........................................32
6.03 PAYMENT OF DIVIDENDS....................................................32
6.04 COVENANT OF THE BUYER...................................................33
ARTICLE VII ADDITIONAL AGREEMENTS...............................................33
7.01 REGULATORY MATTERS......................................................33
7.02 ACCESS TO INFORMATION...................................................34
7.03 STOCKHOLDER MEETING.....................................................36
7.04 LEGAL CONDITIONS TO MERGER..............................................36
7.05 NO SOLICITATION.........................................................36
7.06 EMPLOYEE BENEFIT MATTERS................................................37
7.06(A) PROVISION OF BENEFITS.............................................37
7.06(B) NEW EMPLOYMENT AGREEMENTS.........................................37
7.06(C) CONSULTANT AGREEMENT..............................................37
7.06(D) CONTINUATION OF PLANS.............................................37
7.06(E) PARACHUTE PAYMENTS................................................37
7.07 DIRECTORS' AND OFFICERS' INSURANCE......................................37
7.08 FINANCIAL AND OTHER STATEMENTS..........................................38
7.09 FURTHER ACTION..........................................................39
7.10 PUBLIC ANNOUNCEMENTS....................................................39
7.11 ADDITIONAL AGREEMENTS...................................................39
7.12 UPDATE OF DISCLOSURE SCHEDULES..........................................39
7.13 CURRENT INFORMATION.....................................................39
7.14 DIRECTORS OF SELLER'S BANK..............................................40
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7.15 VOTING AGREEMENTS.......................................................40
ARTICLE VIII CONDITIONS TO THE MERGER...........................................41
8.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.............41
8.01(A) STOCKHOLDER APPROVAL..............................................41
8.01(B) REGULATORY APPROVALS..............................................41
8.01(C) NO ORDERS, INJUNCTIONS OR RESTRAINTS; ILLEGALITY..................41
8.02 CONDITIONS TO OBLIGATIONS OF THE BUYER..................................41
8.02(A) REPRESENTATIONS AND WARRANTIES....................................41
8.02(B) AGREEMENTS AND COVENANTS..........................................42
8.02(C) CONSENTS UNDER AGREEMENTS.........................................42
8.02(D) NO BURDENSOME CONDITION...........................................42
8.02(E) INVESTMENT BANKER OPINION.........................................42
8.02(F) EMPLOYMENT AGREEMENTS.............................................42
8.02(G) CONSULTANT AGREEMENT..............................................42
8.02(H) VOTING AGREEMENTS.................................................42
8.02(I) TERMINATION OF CERTAIN EXISTING AGREEMENTS........................42
8.02(J) TAX OPINION.......................................................42
8.02(K) NO PARACHUTE PAYMENTS.............................................42
8.03 CONDITIONS TO OBLIGATIONS OF THE SELLER.................................43
8.03(A) REPRESENTATIONS AND WARRANTIES....................................43
8.03(B) AGREEMENTS AND COVENANTS..........................................43
8.03(C) INVESTMENT BANKER OPINION.........................................43
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER....................................43
9.01 TERMINATION.............................................................43
9.02 EFFECT OF TERMINATION; EXPENSES.........................................45
9.03 SELLER SPECIAL PAYMENT..................................................45
9.04 BUYER SPECIAL PAYMENT...................................................46
9.05 AMENDMENT...............................................................47
9.06 WAIVER..................................................................47
ARTICLE X GENERAL PROVISIONS....................................................47
10.01 CLOSING................................................................47
10.02 ALTERNATIVE STRUCTURE..................................................47
10.03 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.............48
10.04 NOTICES................................................................48
10.05 SEVERABILITY...........................................................49
10.06 ENTIRE AGREEMENT.......................................................49
10.07 NO THIRD PARTY BENEFICIARIES...........................................49
10.08 ASSIGNMENT.............................................................49
10.09 PARTIES IN INTEREST....................................................49
10.10 SPECIFIC PERFORMANCE...................................................50
10.11 GOVERNING LAW..........................................................50
10.12 HEADINGS...............................................................50
10.13 INTERPRETATION.........................................................50
10.14 COUNTERPARTS...........................................................50
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 20, 2000 (this
"Agreement"), by and between SEACOAST FINANCIAL SERVICES CORPORATION, a
Massachusetts corporation (the "Buyer"), and HOME PORT BANCORP, INC., a Delaware
corporation (the "Seller").
WHEREAS, the Boards of Directors of the Buyer and the Seller have each
determined that it is in the best interests of their respective companies and
their stockholders for the Seller to merge with and into the Buyer (the
"Merger"), subject to the terms and conditions set forth herein;
WHEREAS, as a condition and inducement to the Buyer to enter into, and
after the execution of, this Agreement, the Buyer and the Seller are entering
into the Stock Option Agreement (the "Stock Option Agreement"), attached hereto
as EXHIBIT 1, pursuant to which the Seller has granted an option (the "Stock
Option") to purchase shares of the "Seller Common Stock" (as defined in Section
1.01(v)) to the Buyer; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and to prescribe certain conditions
to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Buyer and Seller agree as follows:
ARTICLE I. DEFINITIONS
1.01. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(a) "AFFILIATE" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person,
including, without limitation, any partnership or joint venture in which the
person (either alone, or through or together with any subsidiary) has, directly
or indirectly, an interest of 15% or more (provided that such 15% threshold
shall be 10% for purposes of the definition of Acquisition Transaction (as set
forth in Section 1.01(b)) and for purposes of Section 9.03(a)).
(b) "ACQUISITION TRANSACTION" shall mean (i) a merger,
consolidation or similar transaction involving the Seller, the Seller's Bank or
any of Seller's Subsidiaries, (ii) the disposition, by sale, lease, exchange or
otherwise, of assets of the Seller, the Seller's Bank or any of Seller's
Subsidiaries representing 24.9% or more of the consolidated assets of the
Seller, the Seller's Bank and Seller's Subsidiaries, in a single transaction or
series of transactions, other than sales of mortgages into the secondary market
in the ordinary course of business consistent with past practice, (iii) the
issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 24.9% or more of the voting power of the Seller, the Seller's Bank
or any of Seller's Subsidiaries, (iv) any person
(other than the Buyer or any affiliate of the Buyer) shall have commenced (as
such term is defined in Rule 14d-2 under the Exchange Act) or shall have filed a
registration statement under the Securities Act, with respect to, a tender offer
or exchange offer to purchase any shares of Seller Common Stock such that, upon
consummation of such offer, such person would own or control 24.9% or more of
the then outstanding shares of Seller Common Stock, or (v) any person (other
than the Buyer or any affiliate of the Buyer) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange
Act) of, or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under the Exchange Act) shall have been formed which shall
have acquired beneficial ownership of, or the right to acquire beneficial
ownership of, 24.9% or more of the then outstanding shares of Seller Common
Stock.
(c) "BENEFICIAL OWNER" with respect to any shares of Seller
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
or person with whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares.
(d) "BUSINESS DAY" means any day on which the principal offices
of the FDIC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of Boston.
(e) "BUYER SPECIAL PAYMENT" shall have the meaning defined in
Section 9.04(a).
(f) "CONTROL" (including the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise.
(g) "CORPORATE CHARTER" shall mean a corporation's Articles of
Organization, Certificate of Incorporation, or equivalent organizational
documents.
(h) "EMPLOYMENT AGREEMENTS" shall have the meaning defined in
Section 7.06(b).
(i) "EXISTING CONSULTING AGREEMENT" shall have the meaning
defined in Section 7.06(c).
(j) "EXISTING EMPLOYMENT AGREEMENTS" shall have the meaning
defined in Section 7.06(b).
(K) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
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(l) "EXPENSES" shall have the meaning defined in Section
9.02(b).
(m) "EXPIRATION DATE" shall have the meaning defined in Section
9.01(b).
(n) "INVESTMENT BANKER" shall have the meaning defined in
Section 4.26.
(o) "KNOWLEDGE" as used herein in the context of the Seller
shall mean knowledge of any of Xxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxx Xxxxxxx or any
member of the Board of Directors of the Seller and as used herein in the context
of the Buyer shall mean knowledge of the Buyer or its subsidiaries.
(p) "MATERIAL ADVERSE EFFECT" shall have the following meanings
in this Agreement:
(i) When used in connection with the Seller, the Seller's
Bank, or any of the Seller's Subsidiaries, the term "Material Adverse
Effect" means any change or effect that is or would be materially
adverse to (i) the business, assets, liabilities, financial condition or
results of operations of the Seller, the Seller's Bank and the Seller's
Subsidiaries taken as a whole, other than any such change or effect
attributable to or resulting from (x) changes in interest rates or
general economic conditions affecting banks generally, (y) changes in
federal or state banking or tax laws or regulations affecting banks
generally or (z) changes in generally accepted or regulatory accounting
principles applicable to banks or their holding companies generally; or
(ii) the ability of the Seller, the Seller's Bank or the Seller's
Subsidiaries to consummate the transactions contemplated hereby; and
(ii) When used in connection with the Buyer or the Buyer's
Bank, the term "Material Adverse Effect" means any change or effect that
is or would be materially adverse to (i) the business, assets,
liabilities, financial condition or results of operations of the Buyer
and the Buyer's Bank taken as a whole, other than any such change or
effect attributable to or resulting from (x) changes in interest rates
or general economic conditions affecting banks generally, (y) changes in
federal or state banking or tax laws or regulations affecting banks
generally or (z) changes in generally accepted or regulatory accounting
principles applicable to banks or their holding companies generally; or
(ii) the ability of the Buyer to consummate the transactions
contemplated hereby.
(q) "PERSON" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a
"person" as defined in Section 13(d)(3) of the Exchange Act), trust, association
or entity or government, political subdivision, agency or instrumentality of a
government.
(r) "REQUISITE REGULATORY APPROVALS" shall have the meaning
defined in Section 8.01(b).
(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(t) "SECURITIES DOCUMENTS" shall mean all reports, offering
circulars, proxy statements, registration statements and all similar documents
filed, or required to be filed, pursuant to the Securities Laws.
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(u) "SECURITIES LAWS" shall mean the Securities Act; the
Exchange Act; the Investment Company Act of 1940, as amended; the Investment
Advisers Act of 1940, as amended; the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the SEC promulgated thereunder.
(v) "SELLER COMMON STOCK" means the common stock, par value $.01
per share, of the Seller.
(w) "SELLER DISCLOSURE SCHEDULE" shall have the meaning defined
in the preamble to Article IV.
(x) "SELLER FINANCIAL STATEMENTS" shall mean (i) the audited
consolidated balance sheets (including related notes and schedules, if any) of
Seller as of December 31, 1997, 1998 and 1999 and the consolidated statements of
operations, changes in stockholders' equity and cash flows (including related
notes and schedules, if any) of Seller for each of the three years ended
December 31, 1997, 1998 and 1999 as filed by Seller, in its Securities Documents
and (ii) the unaudited consolidated financial statements of the Seller, the
Seller's Bank and the Seller's Subsidiaries as of June 30, 2000 and June 30,
1999, and the related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the six month periods then ended.
(y) "SELLER'S BANK" shall have the meaning defined in Section
4.01(a).
(z) "SELLER'S SUBSIDIARIES" shall have the meaning defined in
Section 4.01(a).
(aa) "SELLER SPECIAL PAYMENT" shall have the meaning defined in
Section 9.03(a).
(bb) "SUBSIDIARY" or "SUBSIDIARIES" of the Surviving
Corporation, the Buyer, the Seller or any other person means an affiliate
controlled by such person, directly or indirectly, through one or more
intermediaries, except as otherwise defined herein.
(cc) "SURVIVING CORPORATION" shall have the meaning defined in
Section 2.01.
1.02. OTHER DEFINITIONAL MATTERS. Unless the context otherwise
requires, a term defined anywhere in this Agreement has the same meaning
throughout; all references to "the Agreement" or "this Agreement" are to this
Agreement as modified, supplemented or amended from time to time; and terms
defined in the singular shall have a comparable meaning when used in the plural,
and VICE VERSA.
ARTICLE II. THE MERGER
2.01. THE MERGER. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the "DGCL")
and the Massachusetts Business Corporation Law (the "MBCL"), at the Effective
Time (as defined in Section 2.02 hereof), the Seller shall merge with and into
the Buyer. Buyer shall be the surviving corporation (hereinafter sometimes
called the "Surviving Corporation") in the Merger, and shall continue its
corporate existence under the laws of The Commonwealth of Massachusetts. The
name of the Surviving
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Corporation shall continue to be Seacoast Financial Services Corporation. Upon
consummation of the Merger, the separate corporate existence of the Seller shall
terminate.
2.02. EFFECTIVE TIME. As promptly as practicable after all of the
conditions set forth in Article VIII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, the Buyer
and the Seller shall duly execute and file a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware
(the "Delaware Secretary"), in accordance with the DGCL, and articles of merger
(the "Articles of Merger") with the Secretary of State of The Commonwealth of
Massachusetts (the "Massachusetts Secretary"), in accordance with the MBCL. The
Merger shall become effective on the date (the "Effective Date") and at such
time (the "Effective Time") as set forth in the Certificate of Merger and the
Articles of Merger.
2.03. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided herein and in the applicable provisions of the DGCL
and the MBCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Buyer and the Seller shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Buyer and the Seller shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
2.04. CORPORATE CHARTER. Unless otherwise determined by the Buyer prior
to the Effective Time, at the Effective Time, the Corporate Charter of the Buyer
as in effect immediately prior to the Effective Time shall be the Corporate
Charter of the Surviving Corporation until thereafter further amended as
provided by law and such Corporate Charter.
2.05. BY-LAWS. Unless otherwise determined by the Buyer prior to the
Effective Time, the By-Laws of the Buyer, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Corporate Charter of the Surviving
Corporation and such By-Laws.
2.06. DIRECTORS AND OFFICERS. The directors of the Buyer immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Corporate Charter and
By-Laws of the Surviving Corporation, and the officers of the Buyer immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
2.07. TAX CONSEQUENCES. It is intended by the parties that the Merger
shall constitute a reorganization within the meaning of Section 368(a) of the
Code, and that this Agreement shall constitute a "plan of reorganization" for
the purposes of Section 368 of the Code.
2.08. NANTUCKET BANK. The Buyer confirms that it will maintain
Nantucket Bank in existence as a separate subsidiary for a period of at least
two years following the Effective Time; provided, however, that in no event
shall the foregoing prevent the Buyer from taking any action in the reasonable
best interests of the Buyer or in accordance with or based upon regulatory
considerations, safe and sound banking practices, or the fiduciary duties of the
Buyer's directors.
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ARTICLE III. CONVERSION OF SECURITIES
3.01. CONVERSION OF SECURITIES.
(a) At the Effective Time, each share of the Seller Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Seller Common Stock to be cancelled pursuant to Section 3.01(b)) shall
be converted into the right to receive cash in the amount of $37.00 (the "Merger
Consideration") pursuant to the procedures set forth in Section 3.03.
(b) At the Effective Time, all shares of Seller Common Stock
that are owned by the Seller as treasury stock and all shares of Seller Common
Stock that are owned directly or indirectly by the Buyer or the Seller or any of
their respective subsidiaries (other than shares of Seller Common Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (referred to herein as "Trust Account Shares") and other than any shares
of Seller Common Stock held by Buyer or the Seller or any of their respective
subsidiaries in respect of a debt previously contracted (referred to herein as
"DPC Shares")) shall be canceled and shall cease to exist.
(c) As a result of the Merger and without any action on the part
of the holders thereof, all shares of Seller Common Stock shall cease to be
outstanding, shall be canceled and retired and shall cease to exist and each
holder of a certificate (a "Certificate" and, collectively, the "Certificates")
representing any shares of Seller Common Stock (other than those shares of
Seller Common Stock to be canceled pursuant to Section 3.01(b)) shall thereafter
cease to have any rights with respect to such shares of Seller Common Stock,
except the right to receive, without interest, the Merger Consideration upon the
surrender of such Certificate.
3.02. STOCK OPTIONS. Prior to the Effective Time, the Seller shall, in
accordance with the terms of the Home Port Directors' Restricted Stock Option
Plan (the "Director Option Plan"), provide written notice to each holder of a
then outstanding stock option to purchase shares pursuant to the Director Option
Plan (whether or not such stock option is then vested or exercisable), that such
stock option shall be, as at the date of such notice, exercisable in full and
that such stock option will terminate at the Effective Time and that, if such
stock option is not exercised or otherwise terminated before the Effective Time,
such holder shall be entitled to receive in cancellation of such option a cash
payment from the Seller at the Closing in an amount equal to the excess of the
Merger Consideration over the per share exercise price of such stock option,
multiplied by the number of shares covered by such stock option, subject to any
required withholding of taxes. Subject to the foregoing, the Director Option
Plan and all options issued thereunder shall terminate at the Effective Time.
The Seller hereby represents and warrants to Purchaser that the maximum number
of shares subject to issuance pursuant to the exercise of stock options issued
and outstanding under the Director Option Plan is not and shall not be at or
prior to the Effective Time more than 30,000.
3.03. PAYMENT PROCEDURES.
(a) Immediately prior to the Effective Time, (i) the Buyer shall
deposit, or shall cause to be deposited, with a bank or trust company selected
by the Buyer and reasonably acceptable
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to the Seller on or prior to the Effective Time (the "Paying Agent"), for the
benefit of the holders of shares of Seller Common Stock, for exchange in
accordance with this Article III, cash in an amount equal to the total Merger
Consideration (such cash shall hereinafter be referred to as the "Exchange
Fund").
(b) As soon as practicable after the Effective Time, and in no
event later than three business days thereafter (which date shall be referred to
as the "Mailing Date"), Buyer shall cause the Paying Agent to mail to each
holder of record of a Certificate or Certificates at the Effective Time a form
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent) (the "Transmittal Form") containing
instructions for use in effecting the surrender of the Certificates. The Seller
shall have the right to approve the Transmittal Form.
(c) Each Transmittal Form shall permit the holder (or in the
case of nominee record holders, the beneficial owner through appropriate and
customary documentation and instructions) to receive the Merger Consideration
for each share of Seller Common Stock. A Transmittal Form shall be deemed
properly completed only if accompanied by one or more Certificates representing
all shares of Seller Common Stock covered by such Transmittal Form, together
with duly executed transmittal materials included with the Transmittal Form.
Neither the Buyer nor the Paying Agent shall be under any obligation to notify
any person of any defect in a Transmittal Form.
(d) Upon surrender of a Certificate for exchange and
cancellation to the Paying Agent, together with the Transmittal Form, duly
executed, the holder of such Certificates shall be entitled to receive in
exchange therefor a check representing the amount of cash which such holder has
the right to receive in respect of the Certificate surrendered pursuant to the
provisions of Article II and Article III.
(e) At and after the Effective Time, there shall be no transfers
on the stock transfer books of the Seller of the shares of Seller Common Stock
which were outstanding immediately prior to the Effective Time and if, after the
Effective Time, Certificates are presented for transfer, they shall be canceled
against delivery of the Merger Consideration as hereinabove provided.
(f) The provisions of Section 3.01 and Section 3.03 assume that
there will be 1,871,890 shares of Seller Common Stock outstanding or issuable
upon the exercise of options or warrants or otherwise, at the Effective Time. If
there is any change in this number as of the Effective Time, the provisions of
Section 3.01 and Section 3.03, including the Merger Consideration will be
appropriately adjusted.
3.04. RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund that
remains unclaimed by the former stockholders of the Seller six months after the
Effective Time shall be delivered to the Buyer. Any former stockholders of the
Seller who have not theretofore complied with this Article III shall thereafter
look only to the Buyer for payment of any consideration payable as a result of
the Merger pursuant to this Agreement, without any interest thereon. None of the
Buyer, the Seller, the Paying Agent or any other person shall be liable to any
former holder of shares of Seller Common Stock for any shares of stock or cash
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
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3.05. LOST OR STOLEN CERTIFICATES. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Buyer, the posting by such person of a bond in such
reasonable amount as the Buyer may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent or the
Buyer will issue in exchange for such lost, stolen or destroyed Certificate the
cash to which such person is entitled).
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in a specific section of the Disclosure Schedule
previously delivered by the Seller to the Buyer (the "Seller Disclosure
Schedule"), the Seller hereby represents and warrants to the Buyer as follows:
4.01. ORGANIZATION AND QUALIFICATION; SELLER'S SUBSIDIARIES.
(a) The Seller is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and a bank
holding company registered with the Board of Governors of the Federal Reserve
System (the "FRB") under the Bank Holding Company Act of 1956, as amended.
Seller is duly qualified to do business and is in good standing as a foreign
corporation in The Commonwealth of Massachusetts. Nantucket Bank is a state
chartered savings bank and wholly-owned subsidiary of the Seller (the "Seller's
Bank"), duly organized and validly existing under the laws of The Commonwealth
of Massachusetts. The deposit accounts of the Seller's Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
permitted by law and all premiums and assessments required in connection
therewith have been paid by the Seller's Bank. Each subsidiary (as defined in
Section 1.01(bb)) of the Seller (other than the Seller's Bank) (collectively,
the "Seller's Subsidiaries") is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. The Seller, the Seller's Bank and each of the
Seller's Subsidiaries each has the requisite power and authority and all
necessary governmental approvals to own, lease and operate all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business and is in good standing in each
jurisdiction where the nature of the business conducted by it or the character
or location of the properties and assets owned, leased or operated by it makes
such licensing or qualification necessary, except where the failure to have
obtained such approval or to be so licensed or qualified and be in good standing
would not, either individually or in the aggregate, have a Material Adverse
Effect.
(b) A true and complete list of all the Seller's Subsidiaries,
together with the jurisdiction of incorporation or organization of each
Subsidiary and the percentage of the outstanding capital stock or other
ownership interest by the Seller or the Seller's Bank of each Subsidiary, is set
forth in Section 4.01 of the Seller Disclosure Schedule. Except as set forth in
Section 4.01 of the Seller Disclosure Schedule, neither the Seller nor the
Seller's Bank directly or indirectly owns five percent or more of the capital
stock or other equity or similar interest in, or any interest convertible into
or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
8
4.02. CORPORATE CHARTER; BY-LAWS; CORPORATE RECORDS. The Seller has
heretofore made available to the Buyer a complete and correct copy of the
Corporate Charter and the By-Laws or equivalent organizational documents, each
as amended to date, of the Seller, the Seller's Bank and each of the Seller's
Subsidiaries. Such Corporate Charter, By-Laws and equivalent organizational
documents are in full force and effect. None of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries is in violation of any provision of its
Corporate Charter or equivalent organizational documents or of its By-Laws. The
minute books of the Seller, the Seller's Bank and each of the Seller's
Subsidiaries contain in all material respects true and correct records of all
meetings held or true and complete records of all other corporate actions taken
since January 1, 1997 of their respective stockholders and boards of directors
(including committees of their respective boards of directors).
4.03. CAPITALIZATION.
(a) The authorized capital stock of the Seller consists of
10,000,000 shares of Seller Common Stock and 2,000,000 shares of serial
Preferred Stock ("Seller Preferred Stock"), par value $.01 per share. As of the
date hereof, (i) 1,841,890 shares of Seller Common Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, (ii) 483,604 shares of Seller Common Stock
are held in the treasury of the Seller, (iii) no shares of Seller Common Stock
are held by Seller's Bank or any of the Seller's Subsidiaries, (iv) no shares of
Seller Preferred Stock have been issued or are outstanding, and (v) 366,536
shares of Seller Common Stock are reserved for future issuance pursuant to the
Stock Option Agreement. Each issued and outstanding share of capital stock of
each Subsidiary is duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Each share of capital stock of each Subsidiary owned by the
Seller or the Seller's Bank or any of the other Seller's Subsidiaries is free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Seller's, the Seller's Bank's or
such other Subsidiary's voting rights, charges and other encumbrances of any
nature whatsoever.
(b) The authorized capital stock of the Seller's Bank consists
of 1,000,000 shares of common stock, par value $1.00 per share (the "Seller's
Bank Common Stock") and 500,000 shares of serial Preferred Stock ("Seller's Bank
Preferred Stock"). As of the date hereof, (i) 100,000 shares of Seller's Bank
Common Stock are issued and outstanding, all of which are owned by the Seller
free and clear of any encumbrance or lien (except for directors' qualifying
shares, if any) and all of which are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, (ii) no shares of the Seller's Bank Common
Stock are held in the treasury of the Seller's Bank or are held by any of the
Seller's Subsidiaries, and (iii) no shares of Seller's Bank Preferred Stock have
been issued or are outstanding.
(c) Except for the Stock Option Agreement and for options to
acquire not more than 30,000 shares of Seller Common Stock pursuant to the
Director Option Plan, a schedule of which is set forth at Section 4.03 of the
Seller Disclosure Schedule, there are no outstanding subscriptions, options,
warrants, calls or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Seller, the
Seller's Bank or any of
9
the Seller's Subsidiaries or obligating the Seller, the Seller's Bank or any of
the Seller's Subsidiaries to issue or sell any shares of capital stock of, or
other equity interests in, the Seller, the Seller's Bank or any of the Seller's
Subsidiaries. There are no outstanding contractual obligations of the Seller,
the Seller's Bank or any of the Seller's Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity interests in,
the Seller, the Seller's Bank or any of the Seller's Subsidiaries or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary.
4.04. AUTHORITY. The Seller has full corporate power and authority to
execute and deliver this Agreement and, subject to the approval of the Seller's
stockholders, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by unanimous vote of the
Board of Directors of the Seller (the "Seller Board"). The Seller Board has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Seller's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of the Seller's stockholders, no other corporate proceedings on the part of
the Seller are necessary to approve this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Seller and constitutes a valid and binding
obligation of the Seller, enforceable against the Seller in accordance with its
terms.
4.05. NO CONFLICT. Neither the execution, delivery and performance of
this Agreement by the Seller, nor the consummation by the Seller of the
transactions contemplated hereby, nor compliance by the Seller with any of the
terms or provisions hereof, will (i) conflict with, violate or result in a
breach of any provision of the Corporate Charter or By-Laws of the Seller or the
articles of organization, by-laws or equivalent organizational documents of the
Seller's Bank or any of the Seller's Subsidiaries, (ii) conflict with, violate
or result in a breach of any statute, code, ordinance, rule, regulation, order,
writ, judgment, injunction or decree applicable to the Seller, the Seller's Bank
or any of the Seller's Subsidiaries, or by which any property or asset of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is bound or
affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event, which, with notice or lapse of time, or both, would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of the Seller, the Seller's
Bank or any of the Seller's Subsidiaries pursuant to any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Seller, the Seller's Bank or any of the Seller's
Subsidiaries is a party, or by which the Seller, the Seller's Bank or any of the
Seller's Subsidiaries is bound or affected, except, in the case of clause (iii)
above, for any such conflicts, violations, breaches, defaults or other
occurrences which would not, either individually or in the aggregate, have a
Material Adverse Effect.
4.06. CONSENTS AND APPROVALS. The execution, delivery and performance
of this Agreement by the Seller does not require any consent, approval,
authorization or permit of, or filing with or notification to, any court,
administrative agency or commission or other governmental or regulatory
authority or instrumentality, domestic or foreign, including, without
limitation, any Bank Regulator (each a "Governmental Entity") or with any third
party, except (i)
10
for applicable requirements, if any, of the Exchange Act, state takeover laws,
and filing and recordation of appropriate merger documents as required by the
laws of The Commonwealth of Massachusetts and the State of Delaware, (ii) for
consents and approvals of or filings, registrations or negotiations with the
FRB, the FDIC, the Massachusetts Board of Bank Incorporation (the "BBI"), and
the Massachusetts Housing Partnership Fund, (iii) the filings required by this
Agreement and (iv) where failure to obtain any such consent, approval,
authorization or permit, or to make any such filing or notification, would not
prevent or significantly delay consummation of the Merger or otherwise prevent
the Seller from performing its obligations under this Agreement, or would not,
either individually or in the aggregate, have a Material Adverse Effect. The
Seller is not aware of any reason why the approvals, consents and waivers of
Governmental Entities referred to herein and in Section 8.01(b) should not be
obtained.
4.07. COMPLIANCE. The Seller, the Seller's Bank and each of the
Seller's Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to, and have complied with and are not in conflict with, or
in default or violation of, (a) any statute, code, ordinance, law, rule,
regulation, order, writ, judgment, injunction or decree, published policies and
guidelines of any Governmental Entity, applicable to the Seller, the Seller's
Bank or any of the Seller's Subsidiaries or by which any property or asset of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries is bound or
affected or (b) any note, bond, mortgage, indenture, deed of trust, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Seller, the Seller's Bank or any of the Seller's Subsidiaries is a
party or by which the Seller, the Seller's Bank or any of the Seller's
Subsidiaries or any property or asset of the Seller, the Seller's Bank or any of
the Seller's Subsidiaries is bound or affected, except for any such
non-compliance, conflicts, defaults or violations that would not, either
individually or in the aggregate, have a Material Adverse Effect; and none of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries knows of, or
has received notice of, any material violations of any of the above. Without
limiting the generality of the foregoing, none of the Seller, the Seller's Bank
or any of the Seller's Subsidiaries has been advised of the existence of any
facts or circumstances which would cause the Seller's Bank to be deemed not to
be in satisfactory compliance with the Community Reinvestment Act of 1977, as
amended, and the regulations promulgated thereunder.
4.08. REPORTS.
(a) Since January 1, 1997, the Seller has timely filed with the
SEC and the NASD all Securities Documents required by the Securities Laws and
such Securities Documents complied in all material respects with the Securities
Laws and did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The Seller, the Seller's Bank and each of the Seller's
Subsidiaries has timely filed and made available to the Buyer true and complete
copies of all forms, reports and documents required to be filed by each of them
with all appropriate federal or state governmental or regulatory authorities
charged with the supervision of banks or bank holding companies or engaged in
the insurance of bank deposits, including without limitation, the Commissioner
of Banks of The Commonwealth of Massachusetts (the "Massachusetts
Commissioner"), the FRB, and the FDIC
11
(collectively, the "Bank Regulators") since January 1, 1997, and have paid all
fees and assessments due and payable in connection therewith. Such reports as of
their respective date of filing complied in all material respects with the
requirements of all laws, rules and regulations enforced or promulgated by such
Bank Regulators. Except for normal periodic examinations conducted by the FDIC,
the Massachusetts Commissioner or any other Bank Regulator in the regular course
of the business of the Seller, the Seller's Bank and the Seller's Subsidiaries
(the "Bank Examinations"), no Bank Regulator has initiated any proceeding or, to
the knowledge of the Seller, investigation into the business or operations of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries since December
31, 1996. The Seller, the Seller's Bank and the Seller's Subsidiaries have not
received any objection from any regulatory agency to any of their responses to
any violation, criticism or exception by any Bank Regulator with respect to any
report or statement relating to any examinations, which objection remains
unresolved.
4.09. FINANCIAL STATEMENTS.
(a) The Seller has previously made available to the Buyer, for
copying, originals of the Seller Financial Statements, which, in the case of the
audited statements, are accompanied by the audit report of KPMG LLP, independent
public accountants for the Seller. Each of the Seller Financial Statements
referred to in this Section 4.09 (including the related notes, where applicable)
fairly presents (subject, in the case of the unaudited statements, to audit
adjustments normal in nature and amount and the addition of customary notes),
and the financial statements referred to in Section 7.08 hereof each will fairly
present, the results of the consolidated operations and changes in stockholders'
equity and consolidated financial position of the Seller, the Seller's Bank and
the Seller's Subsidiaries for the respective periods or as of the respective
dates therein set forth; each of the Seller Financial Statements (including the
related notes, where applicable) has been prepared, and the financial statements
referred to in Section 7.08 hereof will be prepared, in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as indicated in the notes thereto or, in the case
of unaudited statements, as permitted by Form 10-Q under the Exchange Act. The
audits of the Seller, the Seller's Bank and the Seller's Subsidiaries have been
conducted in all material respects in accordance with generally accepted
auditing standards. Without limiting the generality of the foregoing, (x) the
allowance for possible loan losses included in the Seller Financial Statements
was, and the allowance for possible loan losses to be included in the financial
statements referred to in Section 7.08 hereof will be, determined in accordance
with GAAP and is, and will be, adequate to provide for losses relating to or
inherent in the loan and lease portfolios of the Seller, the Seller's Bank and
the Seller's Subsidiaries (including without limitation commitments to extend
credit), and (y) the Other Real Estate Owned ("OREO") included in the Seller
Financial Statements was, and the OREO included in the financial statements
referred to in Section 7.08 hereof will be, carried net of reserves at the lower
of cost or market value in accordance with GAAP or the regulations or other
requirements of the FDIC and the Massachusetts Commissioner. The books and
records of the Seller, the Seller's Bank and the Seller's Subsidiaries are true
and complete in all material respects and have been, and are being, maintained
in all material respects in accordance with applicable legal and accounting
requirements.
(b) The consolidated balance sheet of the Seller, the Seller's
Bank and the Seller's Subsidiaries as of December 31, 1999 and as of June 30,
2000, including the notes thereto, each makes adequate provision for all
material liabilities and obligations of every nature (whether accrued,
12
absolute, contingent or otherwise and whether due or to become due) of the
Seller, the Seller's Bank and the Seller's Subsidiaries as of December 31, 1999
and as of June 30, 1999, respectively, and except as and to the extent set forth
on such consolidated balance sheet, none of the Seller, the Seller's Bank or any
of the Seller's Subsidiaries has any material liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise and whether due or to
become due) which would be required to be reflected or disclosed on a balance
sheet, or in the notes thereto, prepared in accordance with GAAP.
(c) To the knowledge of the Seller, no facts or circumstances
exist which would give the Seller reason to believe that a material liability or
obligation that, in accordance with GAAP applied on a consistent basis, should
have been reflected or disclosed on such balance sheet, was not so reflected or
disclosed.
4.10. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999,
except as contemplated by this Agreement, the Seller, the Seller's Bank and the
Seller's Subsidiaries have conducted their businesses only in the ordinary
course and in manners consistent with past practice and, since December 31,
1999, except as set forth in Section 4.10 of the Seller Disclosure Schedule,
there has not been (a) either individually or in the aggregate, any Material
Adverse Effect, (b) any material damage, destruction or loss with respect to any
property or asset of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, (c) any change by the Seller, the Seller's Bank or any of the
Seller's Subsidiaries in its accounting methods, principles or practices, other
than changes required by applicable law or GAAP or regulatory accounting as
concurred in by the Seller's independent accountants, (d) any revaluation by the
Seller, the Seller's Bank or any of the Seller's Subsidiaries of any asset,
including, without limitation, any writing down of the value of inventory or
writing off of notes or accounts receivable, other than in the ordinary course
of business consistent with past practice, (e) any entry by the Seller, the
Seller's Bank or any of the Seller's Subsidiaries into any contract or
commitment (other than with respect to Loans, as hereinafter defined) of more
than $200,000, (f) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries except in the ordinary course of business in an
amount consistent with past practice or any redemption, purchase or other
acquisition of any of its securities, (g) except as would have been permitted by
Section 6.01(b)(ix) hereof, any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any directors, officers or
employees of the Seller, the Seller's Bank or any of the Seller's Subsidiaries,
or any grant of severance or termination pay, or any contract or arrangement
entered into to make or grant any severance or termination pay, any payment of
any bonus, or the taking of any other material action not in the ordinary course
of business with respect to the compensation or employment of directors,
officers or employees of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, (h) any strike, work stoppage, slowdown or other labor
disturbance, (i) any material election made by the Seller, the Seller's Bank or
any of the Seller's Subsidiaries for federal or state income tax purposes, (j)
any change in the credit policies or procedures of the Seller, the Seller's Bank
or any of the Seller's Subsidiaries, the effect of which was or is to make any
such policy or procedure materially less restrictive in any material respect,
(k) any material liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise and whether due or to become
13
due), including without limiting the generality of the foregoing, liabilities as
guarantor under any guarantees or liabilities for taxes, other than in the
ordinary course of business consistent with past practice, (l) any forgiveness
or cancellation of any indebtedness or contractual obligation other than in the
ordinary course of business consistent with past practice, (m) except with
respect to funds borrowed by the Seller, the Seller's Bank or any of the
Seller's Subsidiaries, any mortgage, pledge, lien or lease of any assets,
tangible or intangible, of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries with a value in excess of $25,000 in the aggregate (n) any
acquisition or disposition of any assets or properties having a value in excess
of $100,000, or any contract for any such acquisition or disposition entered
into, or (o) any lease of real or personal property entered into, other than in
connection with foreclosed property or in the ordinary course of business
consistent with past practice.
4.11. ABSENCE OF LITIGATION. None of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries is a party to any, and there are no pending, or
to the knowledge of the Seller, threatened legal, administrative, arbitral or
other claims, actions, proceedings or investigations of any nature, against the
Seller, the Seller's Bank or any of the Seller's Subsidiaries or any property or
asset of the Seller, the Seller's Bank or any of the Seller's Subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, which, either individually or in the
aggregate, would have a Material Adverse Effect and no facts or circumstances
have come to the Seller's attention which have caused it to believe that a
material claim, action, proceeding or investigation against or affecting the
Seller, the Seller's Bank or any of the Seller's Subsidiaries could reasonably
be expected to occur. None of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries, or any property or asset of the Seller, the Seller's Bank
or any of the Seller's Subsidiaries, is subject to any order, writ, judgment,
injunction, decree, determination or award which restricts its ability to
conduct business in any area in which it presently does business or has or could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.12. EMPLOYEE BENEFIT PROGRAMS.
(a) Section 4.12(a) of the Seller Disclosure Schedule sets forth
a list of every material Employee Program that has been maintained by the
Seller, the Seller's Bank or an Affiliate at any time during the three years
preceding this Agreement.
(b) Each Employee Program which has ever been maintained by the
Seller, the Seller's Bank or an Affiliate and which has been intended to qualify
under Section 401(a) or 501(c)(9) of the Internal Revenue Code of 1986, as
amended (the "Code"), has received a favorable determination or approval letter
from the Internal Revenue Service ("IRS") regarding its qualification under such
section and has, in fact, been qualified under the applicable section of the
Code from the effective date of such Employee Program through and including the
Closing Date (or, if earlier, the date that all of such Employee Program's
assets were distributed). No event or omission has occurred which would cause
any Employee Program to lose its qualification or otherwise fail to satisfy the
relevant requirements to provide tax-favored benefits under the applicable Code
Section (including without limitation Code Sections 105, 125, 401(a) and
501(c)(9)). Each asset held under any such Employee Program may be liquidated or
terminated without the imposition of any redemption fee, surrender charge or
comparable liability. No
14
partial termination (within the meaning of Section 411(d)(3) of the Code) has
occurred with respect to any Employee Program that is qualified under Section
401(a) of the Code.
(c) None of the Seller, the Seller's Bank or any Affiliate
knows, nor should any of them reasonably know, of any material failure of any
party to comply with any laws applicable with respect to the Employee Programs
that are currently maintained by the Seller, the Seller's Bank or any Affiliate.
With respect to any Employee Program currently maintained by the Seller, the
Seller's Bank or any Affiliate, there has been no (i) "prohibited transaction,"
as defined in Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Code Section 4975, (ii) material failure to
comply with any provision of ERISA, other applicable law, or any agreement, or
(iii) non-deductible contribution, which, in the case of any of (i), (ii), or
(iii), could subject the Seller, the Seller's Bank or any Affiliate to material
liability either directly or indirectly (including, without limitation, through
any obligation of indemnification or contribution) for any damages, penalties,
or taxes, or any other loss or expense. No litigation or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or threatened with
respect to any such Employee Program. All payments and/or contributions required
to have been made (under the provisions of any agreements or other governing
documents or applicable law) with respect to all Employee Programs ever
maintained by the Seller, the Seller's Bank or any Affiliate, for all periods
prior to the Closing Date, either have been made or have been accrued (and all
such unpaid but accrued amounts are described on Section 4.12(c) of the Seller
Disclosure Schedule).
(d) None of the Seller, the Seller's Bank nor any Affiliate has
incurred any liability under title IV of ERISA which has not been paid in full
prior to the Closing. There has been no "accumulated funding deficiency"
(whether or not waived) with respect to any Employee Program ever maintained by
the Seller, the Seller's Bank or any Affiliate and subject to Code Section 412
or ERISA Section 302. With respect to any Employee Program maintained by the
Seller, the Seller's Bank or an Affiliate and subject to title IV of ERISA,
there has been no (nor will be any as a result of the transaction contemplated
by this Agreement) (i) "reportable event," within the meaning of ERISA Section
4043, or the regulations thereunder (for which notice the notice requirement is
not waived under 29 C.F.R. Part 2615) and (ii) no event or condition which
presents a material risk of plan termination or any other event that may cause
the Seller, the Seller's Bank or any Affiliate to incur liability or have a lien
imposed on its assets under title IV of ERISA. No Employee Program maintained by
the Seller, the Seller's Bank or an Affiliate and subject to title IV of ERISA
(other than a Multiemployer Plan) has any "unfunded benefit liabilities" within
the meaning of ERISA Section 4001(a)(18), as of the Closing Date. Neither the
Seller, the Seller's Bank nor any Affiliate has ever maintained a Multiemployer
Plan. None of the Employee Programs ever maintained by the Seller, the Seller's
Bank or any Affiliate has ever provided health care or any other non-pension
benefits to any employees after their employment is terminated (other than as
required by part 6 of subtitle B of title I of ERISA) or has ever promised to
provide such post-termination benefits.
(e) With respect to each Employee Program maintained by the
Seller, the Seller's Bank or any Subsidiary within the three years preceding the
Closing Date, complete and correct copies of the following documents (if
applicable to such Employee Program) have previously been delivered to the
Buyer: (i) all documents embodying or governing such Employee Program,
15
and any funding medium for the Employee Program (including, without limitation,
trust agreements) as they may have been amended to the date hereof; (ii) the
most recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401(a) or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three most
recently filed IRS Forms 5500, with all applicable schedules and accountants'
opinions attached thereto; (iv) the three most recent actuarial valuation
reports completed with respect to such Employee Program; (v) the summary plan
description for such Employee Program (or other descriptions of such Employee
Program provided to employees) and all modifications thereto; (vi) any insurance
policy (including any fiduciary liability insurance policy or fidelity bond)
related to such Employee Program; (vii) any registration statement or other
filing made pursuant to any federal or state securities law and (viii) all
correspondence to and from any state or federal agency within the last six years
with respect to such Employee Program.
(f) Each Employee Program required to be listed on Section
4.12(a) of the Seller Disclosure Schedule may be amended, terminated, or
otherwise modified by the Seller, the Seller's Bank or the Affiliate to the
greatest extent permitted by applicable law, including the elimination of any
and all future benefit accruals under any Employee Program and no employee
communications or provision of any Employee Program document has failed to
effectively reserve the right of the Seller, the Seller's Bank or the Affiliate
to so amend, terminate or otherwise modify such Employee Program.
(g) Each Employee Program currently maintained by the Seller or the Seller's
Bank (including each non-qualified deferred compensation arrangement) is
maintained in compliance with all applicable requirements of federal and state
securities laws including (without limitation, if applicable) the requirements
that the offering of interests in such Employee Program be registered under the
Securities Act of 1933 and/or state "Blue Sky" laws.
(h) Each Employee Program currently maintained by the Seller,
the Seller's Bank or an Affiliate has complied with the applicable notification
and other applicable requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, Health Insurance Portability and Accountability Act
of 1996, the Newborns' and Mothers' Health Protection Act of 1996, the Mental
Health Parity Act of 1996, and the Women's Health and Cancer Rights Act of 1998.
(i) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited
to, multiple employer welfare arrangements (within the meaning of ERISA
Section 3(40)), plans to which more than one unaffiliated employer
contributes and employee benefit plans (such as foreign or excess
benefit plans) which are not subject to ERISA; (B) all stock option
plans, stock purchase plans, bonus or incentive award plans, severance
pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other
employee benefit plans, agreements, and arrangements (including any
informal arrangements) not described in (A) above, including without
limitation, any arrangement intended to comply with Code Section 120,
125, 127, 129 or 137; and (C) all plans or arrangements providing
compensation to employee and non-employee directors. In the case of an
Employee Program funded through a trust described in Code Section
401(a) or an
16
organization described in Code Section 501(c)(9), or any other funding
vehicle, each reference to such Employee Program shall include a
reference to such trust, organization or other vehicle.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides benefits under or through such
Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under or through
such Employee Program, or if such Employee Program provides benefits to
or otherwise covers employees of such entity (or their spouses,
dependents, or beneficiaries).
(iii) An entity is an "Affiliate" of the Seller if it would
have ever been considered a single employer with the Seller under ERISA
Section 4001(b) or part of the same "controlled group" as the Seller
for purposes of ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means an employee pension or welfare
benefit plan to which more than one unaffiliated employer contributes
and which is maintained pursuant to one or more collective bargaining
agreements.
4.13. LABOR MATTERS. No work stoppage involving the Seller, the
Seller's Bank or any of the Seller's Subsidiaries is pending or, to the
knowledge of the Seller, threatened. None of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries is involved in, or, to the knowledge of the
Seller, threatened with or affected by, any dispute, arbitration, lawsuit or
administrative proceeding relating to labor or employment matters which might
reasonably be expected to interfere in any material respect with the respective
business activities of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries. No employees of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries are represented by any labor union, and, to the knowledge
of the Seller, no labor union is attempting to organize employees of the Seller,
the Seller's Bank or any of the Seller's Subsidiaries.
4.14. PROPERTY AND LEASES.
(a) The Seller, the Seller's Bank and each of the Seller's
Subsidiaries each has good and marketable title to all the real property and all
other property owned by it and included in the consolidated balance sheet of the
Seller, the Seller's Bank and the Seller's Subsidiaries included in audited
financial statements for the period ended December 31, 1999. Each parcel of real
property, and each item of personal property, owned or leased by the Seller, the
Seller's Bank or any of the Seller's Subsidiaries (i) is owned or leased free
and clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third
parties of any kind (collectively, "Liens"), other than (A) Liens for current
taxes and assessments not yet past due or which are being contested in good
faith, (B) inchoate mechanics' and materialmen's Liens for construction in
progress, (C) workmen's, repairmen's, warehousemen's and carriers' Liens arising
in the ordinary course of business of the Seller, the Seller's Bank or such
Subsidiary consistent with past practice, (D) all matters of record, Liens and
other imperfections of title and encumbrances which, either individually or in
the aggregate, would not be material, and (E) those items that secure public or
statutory obligations or any discount with, borrowing from, or obligations to
any Federal Reserve Bank or Federal Home Loan Bank, interbank credit facilities,
or any transaction by a Subsidiary acting in a fiduciary capacity
17
(collectively, "Permitted Liens"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Seller, has any such condemnation,
expropriation or taking been proposed. None of the Seller, the Seller's Bank or
any of the Seller's Subsidiaries has received any notice of violation of any
applicable zoning regulation, ordinance or other law, order, regulation or
requirement relating to its properties.
(b) All leases of real property leased for the use or benefit of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries to which the
Seller, the Seller's Bank or any of the Seller's Subsidiaries is a party
requiring rental payments in excess of $25,000 during the period of the lease,
and all amendments and modifications thereto, are in full force and effect, and
there exists no default under any such lease by the Seller, the Seller's Bank or
any of the Seller's Subsidiaries, nor, to the knowledge of the Seller, any event
which with notice or lapse of time or both would constitute a material default
thereunder by the Seller, the Seller's Bank or any of the Seller's Subsidiaries.
4.15. TAXES AND TAX RETURNS. To the knowledge of Seller and except as
set forth in Section 4.15 of the Seller Disclosure Schedules:
(a) Each of the Seller, the Seller's Bank and the Seller's
Subsidiaries has filed all Tax Returns that it was required to file. All such
Tax Returns were correct and complete in all respects. All Taxes owed by Seller,
the Seller's Bank and the Seller's Subsidiaries (whether or not shown on any Tax
Return) have been paid. None of the Seller, the Seller's Bank or the Seller's
Subsidiaries currently is the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Seller, the Seller's Bank or the Seller's Subsidiaries do
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the
Seller, the Seller's Bank or the Seller's Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax.
(b) Each of the Seller, the Seller's Bank and the Seller's
Subsidiaries has withheld and paid all material Taxes required to have been
withheld and paid in connection with amounts paid or owing or credited to the
account of any customer, employee, independent contractor, creditor,
stockholder, or other third party.
(c) No director or officer (or employee responsible for Tax
matters) of the Seller, the Seller's Bank or the Seller's Subsidiaries expects
any authority to assess any additional material Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning any Tax
Liability of the Seller, the Seller's Bank or the Seller's Subsidiaries either
(A) claimed or raised by any authority in writing or (B) as to which any of the
directors and officers (and employees responsible for Tax matters) of the
Seller, the Seller's Bank or the Seller's Subsidiaries has knowledge based upon
personal contact with any agent of such authority. Section 4.15(c) of the Seller
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to the Seller, the Seller's Bank or the Seller's
Subsidiaries for taxable periods ending on or after December 31, 1992, indicates
those income Tax Returns that have been audited, and indicates those income Tax
Returns that currently are the subject of audit. The Seller has delivered to the
Buyer correct and complete copies of all federal income Tax Returns,
18
examination reports, and statements of deficiencies assessed against or agreed
to by the Seller, the Seller's Bank or the Seller's Subsidiaries since December
31, 1992.
(d) None of the Seller, the Seller's Bank or any Subsidiary has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(e) None of the Seller, the Seller's Bank or any Seller's
Subsidiary has filed a consent under Section 341(f) of the Code, concerning
collapsible corporations. No property of the Seller, the Seller's Bank or any
Seller's Subsidiary is property that the Seller, the Seller's Bank or any
Subsidiary is or will be required to be treated as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954 (as in effect prior to the Tax Reform Act of 1986) or is "tax-exempt use
property" within the meaning of Code Section 168(h). None of the Seller, the
Seller's Bank or any Seller's Subsidiary has been required to include in income
any adjustment pursuant to Code Section 481 by reason of a voluntary change in
accounting method initiated by the Seller, the Seller's Bank or any Seller's
Subsidiary. None of the Seller, the Seller's Bank or any Seller's Subsidiary has
made any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G or Code Section
162(m). None of the Seller, the Seller's Bank or any Seller's Subsidiary has
been a United States real property holding corporation within the meaning of
Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). None of the Seller, the Seller's Bank or any Seller's
Subsidiary is a party to any Tax allocation or sharing agreement. None of the
Seller, the Seller's Bank or any Seller's Subsidiary (A) has been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was the Seller) or (B) has any Liability for
the Taxes of any person (other than the Seller, the Seller's Bank or any
Subsidiary) under Treasury Regulations Section 1.1506-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(f) The unpaid Taxes of the Seller, the Seller's Bank and each
Subsidiary (A) did not, as of December 31, 1999, exceed by any material amount
the reserve for Tax Liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the unaudited consolidated balance sheet of Seller and its
Seller's Subsidiaries as of December 31, 1999 (rather than in any notes thereto)
and (B) do not exceed by any material amount that reserve as adjusted for the
passage of time through the Closing Date.
(g) For purposes of this Section 4.15
"Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a).
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether
19
liquidated or unliquidated, and whether due or to become due),
including any liability for Taxes.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes not
yet due and payable, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising
in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, net worth, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and includes
amounts for which the Seller, the Seller's Bank or any Subsidiary is
liable in its own right or as transferee of the assets of, or successor
to, any corporation, person, association, partnership, joint venture,
or other entity.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment
thereof.
4.16. CERTAIN CONTRACTS.
(a) Except as set forth in Section 4.16(a) of the Seller
Disclosure Schedule, none of the Seller, the Seller's Bank or any Subsidiary is
a party to or bound by any contract, arrangement, commitment or understanding
(whether written or oral): (i) with respect to the employment of any director,
officer, employee or consultant, (ii) which, upon the consummation of the
transactions contemplated by this Agreement, will result in any payment (whether
of severance pay or otherwise) becoming due from the Seller, the Seller's Bank,
or any of its Seller's Subsidiaries to any officer or employee thereof, (iii)
which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of
the SEC) to be performed after the date of this Agreement, (iv) which is a
consulting or other agreement (including agreements entered into in the ordinary
course and data processing, software programming and licensing contracts) not
terminable on 60 days or less notice involving the payment of more than $50,000
per annum, (v) which materially restricts the conduct of any line of business by
the Seller, the Seller's Bank, or any of the Seller's Subsidiaries, (vi) with or
to a labor union or guild (including any collective bargaining agreement), or
(vii) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. The Seller has previously
delivered to
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the Buyer true and complete copies of all employment, consulting and deferred
compensation agreements which are in writing and to which the Seller, the
Seller's Bank or any of the Seller's Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described in this Section,
whether or not set forth in Section 4.16(a) of the Seller Disclosure Schedule,
is referred to herein as a "Seller Contract".
(b) Except as set forth in Section 4.16(b) of the Seller
Disclosure Schedule, (i) to the knowledge of the Seller, each Seller Contract is
legal, valid and binding upon the Seller, the Seller's Bank or such Subsidiary,
as the case may be, and in full force and effect, (ii) the Seller, the Seller's
Bank and each of the Seller's Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each such
Seller Contract, and (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a material default on
the part of the Seller, the Seller's Bank or any of the Seller's Subsidiaries
under any such Seller Contract.
4.17. LOAN PORTFOLIO. Except as set forth in Section 4.17 of the Seller
Disclosure Schedule, none of the Seller, the Seller's Bank or any Subsidiary is
a party to any written or oral (a) loan agreement, note or borrowing arrangement
(including, without limitation, leases and credit enhancements) (collectively,
"Loans") as to which the obligor is, as of the date of this Agreement, over 90
days delinquent in payment of principal or interest, or (b) Loan with any
director, executive officer or, to the knowledge of the Seller, five percent
stockholder of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, or to the knowledge of the Seller, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. To the knowledge of the Seller, all of the Loans originated and held
on the date hereof and at the Effective Time by the Seller, the Seller's Bank
and the Seller's Subsidiaries, and any other Loans purchased and held currently
and at the Effective Time by the Seller, the Seller's Bank and the Seller's
Subsidiaries, were solicited, originated and exist, and will exist at the
Effective Time, in material compliance with all applicable loan policies and
procedures of the Seller, the Seller's Bank and the Seller's Subsidiaries.
Section 4.17 of the Seller Disclosure Schedule sets forth as of the date hereof,
(i) all of the Loans in original principal amount in excess of $50,000 of the
Seller, the Seller's Bank or any of the Seller's Subsidiaries that as of the
date of this Agreement are classified as "Other Loans Specially Mentioned,"
"Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Watch list" or words of similar import, together with the
principal amount of and accrued and unpaid interest on each such Loan and the
identity of the obligor thereunder, and (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the Seller, the Seller's
Bank and the Seller's Subsidiaries that as of the date of this Agreement are
classified as such, together with the aggregate principal amount of such Loans
by category, it being understood that no representation is being made that the
FDIC or the Massachusetts Commissioner would agree with the loan classifications
contained in Section 4.17 of the Seller Disclosure Schedule. The Seller shall
promptly inform the Buyer in writing of any Loan the original principal balance
of which exceeds $50,000 that becomes classified in the manner described in this
Section 4.17, or any Loan the classification of which is materially and
adversely changed at any time after the date of this Agreement. The information
(including electronic information and information contained on tapes and
computer disks) with respect to the Loans furnished to Buyer by the Seller is
true and complete in all material respects.
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4.18. INVESTMENT SECURITIES. Section 4.18 of the Seller Disclosure
Schedule sets forth the book and market value as of June 30, 2000 of the
investment securities, mortgage backed securities and securities held for sale
by the Seller, the Seller's Bank and the Seller's Subsidiaries. Section 4.18 of
the Seller Disclosure Schedule also sets forth the names of all the joint
ventures in which the Seller, the Seller's Bank or any of the Seller's
Subsidiaries has an investment (whether or not such joint ventures remain
active). Except for pledges to secure public and trust deposits, Federal Reserve
borrowings, repurchase agreements and reverse repurchase agreements entered into
in arms-length transactions pursuant to normal commercial terms and conditions
and other pledges required by law, none of the investments reflected in the
Seller Balance Sheet for the period ended December 31, 1999, and none of the
material investments made by the Seller, the Seller's Bank or any of the
Seller's Subsidiaries since December 31, 1999, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair the ability
of the entity holding such investment freely to dispose of such investment at
any time. The Seller and the Seller's Bank have (i) properly reported as such
any investment securities which are required under GAAP to be classified as
"available for sale" at the lower of cost or market, and (ii) accounted for any
decline in the market value of its marketable equity securities portfolio in
accordance with Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 12 and Staff Accounting Bulletin No. 59, including
without limitation the recognition through the Seller's consolidated statement
of operations of any unrealized loss with respect to any individual marketable
equity security as a realized loss in the accounting period in which a decline
in the market value of such security is determined to be "other than temporary."
4.19. DERIVATIVE TRANSACTIONS. None of the Seller, the Seller's Bank or
the Seller's Subsidiaries is engaged in transactions in or involving forwards,
futures, options on futures, swaps or similar off-balance sheet derivative
instruments except as agent on the order and for the account of others other
than Federal Home Loan Bank advances or in connection with mortgage loan
secondary market activities in the ordinary course of business consistent with
the Seller's Bank's past practices.
4.20. INSURANCE. The Seller has made available to the Buyer true and
complete copies of all material policies of insurance of the Seller, the
Seller's Bank and the Seller's Subsidiaries currently in effect. All of the
policies relating to insurance maintained by each of the Seller, the Seller's
Bank and the Seller's Subsidiaries with respect to its material properties and
the conduct of its business in any material respect (or any comparable policies
entered into as a replacement therefor) are in full force and effect and none of
the Seller, the Seller's Bank or the Seller's Subsidiaries has received any
notice of cancellation with respect thereto. All life insurance policies on the
lives of any of the current and former officers of the Seller or the Seller's
Bank which are maintained by the Seller or the Seller's Bank or which are
otherwise included as assets on the books of the Seller or the Seller's Bank (i)
are, or will at the Effective Time be, owned by the Seller or the Seller's Bank,
free and clear of any claims thereon by the officers or members of their
families, except with respect to the death benefits thereunder, as to which the
Seller and the Seller's Bank agree that there will not be an amendment prior to
the Effective Time without the consent of the Buyer, and (ii) are accounted for
properly as assets on the books of the Seller or the Seller's Bank, as
applicable, in accordance with GAAP in all material respects. None of the
Seller, the Seller's Bank or the Seller's Subsidiaries has any material
liability for unpaid premiums or premium adjustments not properly reflected on
the Seller's consolidated financial statements described in Section 4.09 and
Section 7.08.
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4.21. ENVIRONMENTAL MATTERS. Each of the Seller, the Seller's Bank and
the Seller's Subsidiaries and, to the knowledge of the Seller, makes the
following representations without independent investigation for the purposes of
this Agreement:
(a) The Participation Facilities and the Loan Properties (each
defined below), are, and have been, in material compliance with all applicable
environmental laws and with all rules, regulations, standards and requirements
of the United States Environmental Protection Agency (the "EPA") and of state
and local agencies with jurisdiction over pollution or protection of the
environment.
(b) There is no suit, claim, action or proceeding pending or, to
the knowledge of the Seller, threatened, before the EPA or any other
Governmental Entity or other forum in which the Seller, the Seller's Bank or any
of the Seller's Subsidiaries or any Participation Facility has been or, with
respect to threatened proceedings, may be, named as a defendant, responsible
party or potentially responsible party (i) for alleged noncompliance (including
by any predecessor), with any environmental law, rule, regulation, standard or
requirement or (ii) relating to the release into or presence in the Environment
(as defined below) of any Hazardous Materials (as defined below) or Oil (as
defined below) whether or not occurring at or on a site owned, leased or
operated by the Seller, the Seller's Bank or any of the Seller's Subsidiaries or
any Participation Facility except as have not been or are not reasonably likely
to be, either individually or in the aggregate, material.
(c) To the knowledge of the Seller, the Seller's Bank and the
Seller's Subsidiaries, there is no suit, claim, action or proceeding pending or
threatened, before the EPA or any other Governmental Entity or other forum in
which any Loan Property has been or, with respect to threatened proceedings, may
be, named as a defendant, responsible party or potentially responsible party (i)
for alleged noncompliance (including by any predecessor) with any environmental
law, rule, regulation, standard or requirement or (ii) relating to the release
into or presence in the Environment of any Hazardous Material or Oil whether or
not occurring at or on a site owned, leased or operated by a Loan Property,
except where such noncompliance or release has not been or is not reasonably
likely to be, either individually or in the aggregate, material.
(d) None of the Seller, the Seller's Bank, any of the Seller's
Subsidiaries, nor to their knowledge any Participation Facility or any Loan
Property, has received any notice regarding a matter on which a suit, claim,
action or proceeding as described in subsection (b) or (c) of this Section 4.21
could reasonably be based. No facts or circumstances have come to the Seller's
attention which have caused it to believe that a material suit, claim, action or
proceeding as described in subsection (b) or (c) of this Section 4.21 could
reasonably be expected to occur.
(e) During the period of (i) the Seller's, the Seller's Bank's
or any of the Seller's Subsidiaries' ownership or operation of any of their
respective current properties, (ii) the Seller's, the Seller's Bank's or any of
the Seller's Subsidiaries' participation in the management of any Participation
Facility, or (iii) the Seller's, the Seller's Bank's or any of the Seller's
Subsidiaries' holding of a security interest in a Loan Property, there has been
no release or presence in the Environment of Hazardous Material or Oil in, on,
under or affecting such property or, to the knowledge of the Seller, such
Participation Facility or Loan Property, except where such release or presence
is not or is not reasonably like to be, either individually or in the aggregate,
material. To the
23
knowledge of the Seller, prior to the period of (x) the Seller's, the Seller's
Bank's or any of the Seller's Subsidiaries' ownership or operation of any of
their respective current properties or any previously owned or operated
properties, (y) the Seller's, the Seller's Bank's or any of the Seller's
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Seller's, the Seller's Bank's or any of the Seller's Subsidiaries'
holding of a security interest in a Loan Property, there was no release or
presence of Hazardous Material or Oil in, on, under or affecting any such
property, Participation Facility or Loan Property, except where such release or
presence is not or is not reasonably likely to be, either individually or in the
aggregate, material.
(f) The following definitions apply for purposes of this Section
4.21: (i) "Loan Property" means any property in which the Seller, the Seller's
Bank or any of the Seller's Subsidiaries holds a security interest, and, where
required by the context, said term means the owner or operator of such property;
(ii) "Participation Facility" means any facility in which the Seller, the
Seller's Bank or any of the Seller's Subsidiaries participates or has
participated in the management and, where required by the context, said term
means the owner or operator of such property; (iii) "Hazardous Material" means
any pollutant, contaminant, or hazardous substance or hazardous material as
defined in or pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or any other
federal, state, or local environmental law, regulation, or requirement; (iv)
"Oil" means oil or petroleum of any kind or origin or in any form, as defined in
or pursuant to the Federal Clean Water Act, 33 U.S.C. Section 1251 et seq., or
any other federal, state, or local environmental law, regulation, or
requirement; and (v) "Environment" means any soil, surface waters, groundwaters,
stream sediments, surface or subsurface strata, and ambient air, and any other
environmental medium.
4.22. INTELLECTUAL PROPERTY. The Seller, the Seller's Bank and each of
the Seller's Subsidiaries owns or possesses valid and binding licenses and other
rights to use without payment of any material amount all material patents,
copyrights, trade secrets, trade names, service marks and trademarks used in its
businesses, and none of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. The Seller, the Seller's Bank and each of the
Seller's Subsidiaries have performed in all material respects all the
obligations required to be performed by them and are not in default under any
contract, agreement, arrangement or commitment relating to any of the foregoing.
4.23. FIDUCIARY ACCOUNTS. The Seller, the Seller's Bank and the
Seller's Subsidiaries each has properly administered in all material respects
all accounts for which it acts as a fiduciary, including but not limited to
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable law. The Seller, the
Seller's Bank and the Seller's Subsidiaries have maintained adequate and
complete books and records concerning all fiduciary accounts for at least seven
years prior to the date hereof or such longer period as may be required by
applicable law. None of the Seller, the Seller's Bank, the Seller's Subsidiaries
or their respective officers, directors or employees has committed any breach of
trust with respect to any fiduciary account. The accountings for each such
fiduciary account are true and correct in all material respects and accurately
reflects the assets of such fiduciary account.
4.24. AGREEMENTS WITH BANK REGULATORS. None of the Seller, the Seller's
Bank or any of the Seller's Subsidiaries is a party to any written agreement or
memorandum of understanding
24
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any Bank Regulator which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy, its
loan loss allowances or reserves, its credit policies or its management, nor has
the Seller, the Seller's Bank or any Subsidiary been informed by any Bank
Regulator that it is contemplating issuing or requesting any such order,
directive, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. None of the Seller, the
Seller's Bank or any of the Seller's Subsidiaries is a party to any agreement or
arrangement entered into in connection with the consummation of a federally
assisted acquisition of a depository institution pursuant to which the Seller,
the Seller's Bank or any of the Seller's Subsidiaries is entitled to receive
financial assistance or indemnification from any governmental agency.
4.25. MATERIAL INTERESTS OF CERTAIN PERSONS. No officer or director of
the Seller, the Seller's Bank or any of the Seller's Subsidiaries, or any
"associate" (as such term is defined in Rule 14a-1 under the Exchange Act) of
any such officer or director, has any material interest in any material contract
or property (real or personal), tangible or intangible, used in or pertaining to
the business of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries that would be required to be disclosed in a proxy statement to
stockholders under Regulation 14A of the Exchange Act.
4.26. BROKERS' FEES; OPINIONS. No broker, finder or investment banker,
other than Sandler, X'Xxxxx & Partners, L.P. (the "Investment Banker"), is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement or the Stock Option
Agreement based upon arrangements made by or on behalf of the Seller. The fee
payable to the Investment Banker in connection with the transactions
contemplated by this Agreement is as described in an engagement letter between
the Seller and the Investment Banker, a true and complete copy of which has
heretofore been furnished to the Buyer. The Seller has previously received the
opinion of the Investment Banker to the effect that, as of the date of such
opinion, the Merger Consideration to be received by the stockholders of the
Seller pursuant to the Merger is fair, from a financial point of view, to such
stockholders, and such opinion has not been amended or rescinded as of the date
of this Agreement.
4.27. PROXY STATEMENT. The information contained in the proxy statement
to be sent to the stockholders of the Seller in connection with the
Stockholders' Meeting (the "Proxy Statement") will not, on the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Seller or at the time of the Stockholders' Meeting, contain
any statement which, at such time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact, or omits
to state any material fact required to be stated therein or necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders' Meeting which shall have become false or
misleading. Notwithstanding the foregoing, the Seller makes no representation or
warranty with respect to any information to be supplied by the Buyer which is
contained in any of the foregoing documents. The Proxy Statement will comply in
all material respects as to form and content with the requirements of the
Exchange Act and the rules and regulations thereunder.
25
4.28. SELLER INFORMATION. The information supplied by the Seller or the
Seller's Bank for inclusion in the Proxy Statement will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading.
4.29. STATE TAKEOVER LAWS. The Board of Directors of the Seller has
approved the transactions contemplated by this Agreement and the Stock Option
Agreement and taken all other requisite action such that the provisions of Ch.
110F of the Massachusetts General Laws and applicable provisions of the DGCL and
the provisions of the Seller's Corporate Charter relating to special voting
requirements for certain business combinations will not apply to this Agreement
or the Stock Option Agreement or any of the transactions contemplated hereby or
thereby.
4.30. DISCLOSURE. No representation or warranty contained in this
Agreement, and no statement contained in any Schedule, certificate, list or
other writing furnished to the Buyer pursuant to the provisions hereof, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein, in light of the circumstances in which they are made, not misleading.
No information believed by the Seller to be material to the Merger and which is
necessary to make the representations and warranties herein contained, taken as
a whole, not misleading, to the knowledge of the Seller, has been withheld from,
or has not been delivered in writing to, the Buyer.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller that:
5.01. CORPORATE ORGANIZATION. The Buyer is a corporation, duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts and a bank holding company registered with the FRB
under the Bank Holding Company Act of 1956, as amended. Compass Bank is a
savings bank and wholly-owned (except for directors qualifying shares)
subsidiary of the Buyer (the "Buyer's Bank") duly organized and validly existing
under the laws of The Commonwealth of Massachusetts. The deposit accounts of the
Buyer's Bank are insured by the FDIC to the fullest extent permitted by law and
all premiums and assessments required in connection therewith have been paid by
the Buyer's Bank. The Buyer and the Buyer's Bank each has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction where the nature of the business conducted by it
or the character or location of the properties and assets owned, leased or
operated by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified and be in good standing would not, either
individually or in the aggregate, have a Material Adverse Effect.
5.02. AUTHORITY. The Buyer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of the Buyer (the "Buyer
26
Board"). This Agreement has been duly and validly executed and delivered by the
Buyer and constitutes a valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms.
5.03. NO CONFLICT. Neither the execution, delivery and performance of
this Agreement by the Buyer, nor the consummation by the Buyer of the
transactions contemplated hereby, nor compliance by the Buyer with any of the
terms or provisions hereof, will (i) conflict with, violate or result in a
breach of any provision of the Corporate Charter or By-Laws of the Buyer or the
articles of organization or by-laws of the Buyer's Bank, (ii) conflict with,
violate or result in a breach of any statute, code, ordinance, rule, regulation,
order, writ, judgment, injunction or decree applicable to the Buyer or the
Buyer's Bank, or by which any property or asset of the Buyer or the Buyer's Bank
is bound or affected, or (iii) conflict with, violate or result in a breach of
any provisions of or the loss of any benefit under, constitute a default (or an
event, which, with notice or lapse of time, or both, would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of the Buyer or the Buyer's
Bank pursuant to any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Buyer or the Buyer's
Bank is a party, or by which the Buyer or the Buyer's Bank is bound or affected,
except, in the case of clause (iii) above, for any such conflicts, violations,
breaches, defaults or other occurrences which would not, either individually or
in the aggregate, have a Material Adverse Effect.
5.04. CONSENTS AND APPROVALS. The execution, delivery and performance
of this Agreement by the Buyer does not require any consent, approval,
authorization or permit of, or filing with or notification to any Governmental
Entity or with any third party, except (i) for the applicable requirements, if
any, of the Exchange Act, state takeover laws, and filing and recordation of
appropriate merger documents as required by the laws of the Commonwealth of
Massachusetts and the State of Delaware, (ii) for consents and approvals of or
filings, registrations or negotiations with the FRB, the FDIC, the BBI, and the
Massachusetts Housing Partnership Fund, (iii) the filings required by this
Agreement and (iv) where failure to obtain any such consent, approval,
authorization or permit, or to make any such filing or notification, would not
prevent or significantly delay consummation of the Merger or otherwise prevent
the Buyer from performing its obligations under this Agreement, or would not,
either individually or in the aggregate, have a Material Adverse Effect. The
Buyer is not aware of any reason why the approvals, consents and waivers of
Governmental Entities referred to herein and in Section 8.01(b) should not be
obtained.
5.05. COMPLIANCE. The Buyer and the Buyer's Bank hold, and have at all
times within the last six years, held, all material licenses, franchises,
permits and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
conflict with, or in default or violation of, (a) any statute, code, ordinance,
law, rule, regulation, order, writ, judgment, injunction or decree, published
policies and guidelines of any Governmental Entity, applicable to the Buyer or
the Buyer's Bank or by which any property or asset of the Buyer or the Buyer's
Bank is bound or affected or (b) any note, bond, mortgage, indenture, deed of
trust, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Buyer or the Buyer's Bank is a party or by
which the Buyer
27
or the Buyer's Bank or any property or asset of the Buyer or the Buyer's Bank is
bound or affected, except for any such non-compliance, conflicts, defaults or
violations that would not, either individually or in the aggregate, have a
Material Adverse Effect; and neither the Buyer nor the Buyer's Bank knows of, or
has received notice of, any violation of any of the above. Without limiting the
generality of the foregoing, neither the Buyer nor the Buyer's Bank has been
advised of the existence of any facts or circumstances which would cause the
Buyer's Bank to be deemed not to be in satisfactory compliance with the
Community Reinvestment Act of 1977, as amended, and the regulations promulgated
thereunder.
5.06. FINANCIAL STATEMENTS. The Buyer has previously made available to
the Seller copies of (i) the consolidated balance sheets of the Buyer and its
subsidiaries as of December 31 for the fiscal years 1998 and 1999 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1997 through 1999, inclusive, as reported in the
Buyer's 1999 Annual Report on Form 10-K, and (ii) the unaudited consolidated
financial statements of the Buyer and its subsidiaries as of March 31, 2000 and
March 31, 1999 as reported on the Buyer's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000, and the related unaudited consolidated statements
of income, changes in stockholders' equity and cash flows for the three month
period then ended. The December 31, 1999 consolidated balance sheet of the Buyer
(including the related notes, where applicable) fairly presents in all material
respects the consolidated financial position of the Buyer and its subsidiaries
as of the date thereof, and the other financial statements referred to in this
Section 5.06 (including the related notes where applicable) fairly present in
all material respects, (subject, in the case of the unaudited statements, to
audit adjustments normal in nature and amount and the addition of customary
notes) in all material respects, the results of the consolidated operations and
changes in shareholders' equity and consolidated financial position of the Buyer
for the respective fiscal periods or as of the respective dates therein set
forth and each of such statements (including the related notes, where
applicable) has been prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q under the Exchange Act.
5.07. ABSENCE OF LITIGATION. Neither the Buyer nor any of its
subsidiaries is a party to any, and there are no pending, or to the knowledge of
the Buyer, threatened legal, administrative, arbitral or other claims, actions,
proceedings or investigations of any nature, against the Buyer or any of its
subsidiaries or any property or asset of the Buyer or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, which, either individually or in the
aggregate, would have a Material Adverse Effect and no facts or circumstances
have come to the Buyer's attention which have caused it to believe that a
material claim, action, proceeding or investigation against or affecting the
Buyer or any of its subsidiaries could reasonably be expected to occur. Neither
the Buyer nor its subsidiaries, or any property or asset of the Buyer or any of
its subsidiaries, is subject to any order, writ, judgment, injunction, decree,
determination or award which restricts its ability to conduct business in any
area in which it presently does business or has or could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
5.08. AGREEMENTS WITH BANK REGULATORS. Neither the Buyer nor the
Buyer's Bank is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient
28
of any extraordinary supervisory letter from, any Bank Regulator which restricts
materially the conduct of its business, or in any manner relates to its capital
adequacy, its loan loss allowances or reserves, its credit policies or its
management, nor has the Buyer or the Buyer's Bank been informed by any Bank
Regulator that it is contemplating issuing or requesting any such order,
directive, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. Neither the Buyer nor the
Buyer's Bank is a party to any agreement or arrangement entered into in
connection with the consummation of a federally assisted acquisition of a
depository institution pursuant to which the Buyer or the Buyer's Bank is
entitled to receive financial assistance or indemnification from any
governmental agency.
5.09. BUYER INFORMATION. The information supplied by the Buyer or the
Buyer's Bank for inclusion in the Proxy Statement (or any amendments or
supplements thereto) will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
5.10. CAPITAL, FINANCING. On the date hereof, the Buyer is, at a
minimum, "adequately capitalized," as such term is defined in the rules and
regulations promulgated by the FRB and the FDIC, as the case may be. The Buyer
will have available to it sources of capital and financing sufficient to fulfill
its cash obligations hereunder.
ARTICLE VI. CONDUCT OF BUSINESS PENDING THE MERGER
6.01. COVENANTS OF THE SELLER.
(a) The Seller covenants and agrees that, except as contemplated
by this Agreement, between the date of this Agreement and the Effective Time,
unless the Buyer shall otherwise agree in writing, the business of the Seller,
the Seller's Bank and the Seller's Subsidiaries shall be conducted only in, and
the Seller, the Seller's Bank and the Seller's Subsidiaries shall not take any
action except in, the usual, regular and ordinary course of business and in a
manner consistent with prudent banking practice and generally to conduct their
business in substantially the same way as heretofore conducted, and without
limiting the foregoing, to continue to operate in the same geographic markets
serving the same market segments and without significant increase in the rate of
growth of the Seller's, the Seller's Bank's or the Seller's Subsidiaries' loan
portfolio. The Seller shall use its reasonable best efforts to preserve
substantially intact the business organization of the Seller, the Seller's Bank
and the Seller's Subsidiaries, to keep available the present services of the
officers, employees and consultants of the Seller, the Seller's Bank and the
Seller's Subsidiaries and to preserve the current relationships and goodwill of
the Seller, the Seller's Bank and the Seller's Subsidiaries with customers,
suppliers and other persons with which the Seller, the Seller's Bank or any of
the Seller's Subsidiaries have business relationships, including without
limitation, implementing a deposit retention program in furtherance thereof.
(b) By way of amplification and not limitation of clause (a)
above, except as contemplated by this Agreement and the Stock Option Agreement,
the Seller shall not, nor shall the Seller permit the Seller's Bank or any of
the Seller's Subsidiaries, between the date of this Agreement and the Effective
Time, directly or indirectly to do, or publicly announce an intention
29
to do, any of the following without the prior written consent of the Buyer
through its representative, its Chief Executive Officer (which consent shall not
be unreasonably withheld):
(i) amend or otherwise change its Corporate Charter or By-laws
or equivalent organizational documents;
(ii) issue, deliver, sell, pledge, dispose of, grant,
encumber, or authorize the issuance, delivery, sale, pledge,
disposition, grant or encumbrance of, any shares of capital stock of
any class of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest, of the Seller, the Seller's Bank or any of
the Seller's Subsidiaries, or enter into any agreement with respect to
any of the foregoing;
(iii) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, except upon the exercise or fulfillment of rights or
options issued or existing pursuant to employee benefit plans, programs
or arrangements, all to the extent outstanding and in existence on the
date of this Agreement;
(iv) repurchase, redeem or otherwise acquire any shares of the
capital stock of the Seller, the Seller's Bank or any of the Seller's
Subsidiaries, or any securities convertible into or exercisable for any
shares of the capital stock of the Seller, the Seller's Bank or any of
the Seller's Subsidiaries;
(v) enter into any new line of business or materially expand
the business currently conducted by the Seller, the Seller's Bank and
the Seller's Subsidiaries or file any application to relocate or
terminate the operations of any banking office of the Seller's Bank;
(vi) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
partnership, other business organization or any division thereof or any
material amount of assets;
(vii) except for advances from the Federal Home Loan Bank in
an amount not to exceed $90 million outstanding at any one time, incur
any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any individual, corporation or
other entity, or make any loan or advance, other than in the ordinary
course of business consistent with past practice;
(viii) authorize any single capital expenditure which is in
excess of $25,000 or capital expenditures which are, in the aggregate,
in excess of $50,000 for the Seller, the Seller's Bank and the Seller's
Subsidiaries taken as a whole, except for written contractual
commitments entered into prior to the date of this Agreement as
disclosed in the Seller Disclosure Schedule;
30
(ix) (A) except as required by applicable law, (x) adopt,
amend, renew or terminate any plan or any agreement, arrangement, plan
or policy between the Seller, the Seller's Bank or any of the Seller's
Subsidiaries and one or more of its current or former directors,
officers or employees, or (y) increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan or agreement as in effect as of the
date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares); or (B) enter into, modify or
renew any employment, severance or other agreement with any director,
officer or employee of the Seller, the Seller's Bank or any of the
Seller's Subsidiaries, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement providing for any benefit
to any director, officer or employee;
(x) take any action with respect to accounting methods,
principles or practices, other than changes required by applicable law
or GAAP or regulatory accounting as concurred in by the Seller's
independent accountants;
(xi) make any tax election or settle or compromise any
federal, state, local or foreign tax liability;
(xii) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice;
(xiii) make any new or additional equity investment or
commitment to make such an investment in real estate or in any real
estate development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt
restructurings in the ordinary course of business consistent with past
practice;
(xiv) sell any securities in its investment portfolio, except
in the ordinary course of business, or engage in transactions in or
involving forwards, futures, options on futures, swaps or similar
derivative instruments;
(xv) sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of
its material assets, properties or other rights or agreements or
purchase or sell any loans in bulk;
(xvi) take any action that is intended or reasonably can be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect, or any of the conditions to the consummation of the Merger and
the other transactions contemplated by this Agreement set forth in
Article VIII not being satisfied in any material respect, or in any
material violation of any provision of this Agreement or the Stock
Option Agreement, except, in every case, as may be required by
applicable law;
31
(xvii) commit any act or omission which constitutes a material
breach or default by the Seller, the Seller's Bank or any of the
Seller's Subsidiaries under any Regulatory Agreement or under any
material contract or material license to which any of them is a party
or by which any of them or their respective properties is bound;
(xviii) foreclose upon or take a deed or title to any
commercial real estate without first conducting a Phase I environmental
assessment of the property or foreclose upon any commercial real estate
if such environmental assessment indicates the presence of Hazardous
Material in amounts which, if such foreclosure were to occur, would be
material;
(xix) enter into or renew, amend or terminate, or give notice
of a proposed renewal, amendment or termination of or make any
commitment with respect to, (A) any contract, agreement or lease for
office space, operations space or branch space to which the Seller, the
Seller's Bank or any of the Seller's Subsidiaries is a party or by
which the Seller, the Seller's Bank or any of the Seller's Subsidiaries
or its respective properties is bound; (B) any lease, contract or
agreement other than in the ordinary course of business consistent with
past practice including renewals of leases to existing tenants of the
Seller, the Seller's Bank or any Subsidiary; (C) regardless of whether
consistent with past practices, any lease, contract, agreement or
commitment, other than Loans, involving an aggregate payment by or to
the Seller, the Seller's Bank or any of the Seller's Subsidiaries of
more than $50,000 or requiring performance by the Seller, the Seller's
Bank or any of the Seller's Subsidiaries of any obligations at any time
more than one year after the time of execution;
(xx) change in any material respect its loan policies or
procedures, except as required by regulatory authorities; or
(xxi) agree to do any of the foregoing.
6.02. CERTAIN CHANGES AND ADJUSTMENTS. Prior to the Closing (as defined
in Section 10.01 hereof), the Buyer and the Seller shall consult and cooperate
with each other concerning the Seller's Bank's loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) to reflect Buyer's plans with respect to the conduct of the Seller's
Bank's business following the Merger; provided, however, that the Seller and the
Seller's Bank shall not be obligated to take any action pursuant to this Section
which is inconsistent with GAAP and unless and until the Buyer acknowledges, and
the Seller and the Seller's Bank are satisfied, that all conditions to Seller's
obligation to consummate the Merger have been satisfied. No action taken by the
Seller or the Seller's Bank pursuant to this Section or the consequences
resulting therefrom shall be deemed to be a breach of any representation,
warranty, agreement or covenant herein or constitute a Material Adverse Effect.
6.03. PAYMENT OF DIVIDENDS. During the period from the date of this
Agreement and continuing through December 31, 2000, the Seller shall not make
any distribution (by way of dividend or otherwise) with respect to its capital
stock. During the period from January 1, 2000 through the Effective Time, the
Seller shall not make any distribution (by way of dividend or otherwise) with
respect to its capital stock except for the declaration and payment of regular
quarterly dividends in February and May, each in the amount of $0.25 per share
of Common
32
Stock. The Seller represents that during calendar year 2000 the only
distributions it has made or declared with respect to its capital stock are two
regular dividends, each in the amount of $0.25 per share of Common Stock.
6.04. COVENANT OF THE BUYER. During the period from the date of this
Agreement and continuing until the Effective Time, the Buyer shall not, and
shall not permit any of its subsidiaries to, take any action that is intended or
which reasonably can be expected to result in any of its representations and
warranties set forth in this Agreement being untrue in any material respect, or
in any of the conditions to the Merger or other transactions contemplated in
this Agreement as set forth in Article VIII not being satisfied in any material
respect, or in a material violation of any provision of this Agreement or the
Stock Option Agreement, except, in every case, as may be required by applicable
law.
ARTICLE VII. ADDITIONAL AGREEMENTS
7.01. REGULATORY MATTERS.
(a) The Seller shall promptly prepare and file with the SEC the
Proxy Statement. The Seller shall make the draft Proxy Statement available to
the Buyer for review promptly after preparation thereof, and shall respond to
all of the Buyer's comments and suggestions for revisions to such Proxy
Statement. Promptly after completion of the Proxy Statement, the Seller shall
mail the Proxy Statement to its shareholders.
(b) The parties hereto shall cooperate with each other and use
their reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). The Seller and the Buyer
shall have the right to review in advance, and to the extent practicable each
will consult with the other on, in each case subject to applicable laws relating
to the exchange of information, all the information relating to the Seller or
the Buyer, as the case may be, and any of their respective subsidiaries, which
appear in any filing made with or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein. Each of the Buyer and the Seller represents and warrants to
the other that it is not aware of any reason why the approvals, consents and
waivers of Governmental Entities referred to herein and in Section 4.06 and
Section 5.04 should not be obtained.
(c) The Buyer and the Seller shall, upon request, furnish each
other with all information concerning themselves, their respective subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy
33
Statement or any other statement, filing, notice or application made by or on
behalf of the Buyer, the Seller or any of their respective subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated hereby.
(d) The Buyer and the Seller shall promptly furnish each other
with copies of written communications received by the Buyer or the Seller, as
the case may be, or any of their respective subsidiaries from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
7.02. ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, the Seller shall, and shall cause the
Seller's Bank and each of the Seller's Subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the Buyer, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, the Seller shall, and shall cause the Seller's Bank and the Seller's
Subsidiaries to, make available to the Buyer all other information concerning
its business, properties and personnel as the Buyer may reasonably request
(other than information which the Seller is not permitted to disclose under
applicable law). Neither the Seller nor the Seller's Bank nor any of the
Seller's Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of the Seller's, the Seller's Bank's or the Seller's Subsidiaries'
customers, jeopardize the attorney-client privilege of the institution in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(b) Without limiting the generality of the foregoing, the Seller
shall cooperate with the Buyer in compiling the following with respect to each
of the Seller, the Seller's Bank and each Subsidiary (or, in the case of clause
(B) below, with respect to the Seller's Bank and each Subsidiary) as of the most
recent practicable date (as well as on an estimated pro forma basis as of the
Effective Date giving effect to the consummation of the transactions
contemplated hereby): (A) the basis of the Seller, the Seller's Bank and each
Subsidiary in its assets; (B) the basis of the stockholder(s) of the Seller's
Bank and each Subsidiary in its stock, or the amount of any excess loss account
(as defined in Treasury Regulations Section 1.1502-19); (C) the amount of any
net operating loss, net capital loss, unused investment or other credit, unused
foreign tax, or excess charitable contribution allocable to the Seller, the
Seller's Bank and any Subsidiary; and (D) the amount of any deferred gain or
loss allocable to the Seller, the Seller's Bank or any Subsidiary arising out of
any deferred intercompany transaction (as defined in Treasury Regulations
Section 1.1502-13).
(c) All information furnished by the Seller to the Buyer or its
representatives pursuant hereto shall be treated as the sole property of the
Seller and, if the Merger shall not occur, the Buyer and its representatives
shall return to the Seller or destroy all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. The Buyer shall, and shall use
its reasonable efforts to cause its
34
representatives to, keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
continue from the date the proposed Merger is abandoned and shall not apply to
(i) any information which (x) was already in the Buyer's possession prior to the
disclosure thereof by the Seller; (y) was then generally known to the public; or
(z) was disclosed to the Buyer by a third party not bound by an obligation of
confidentiality or (ii) disclosures made as required by law. It is further
agreed that, if in the absence of a protective order or the receipt of a waiver
hereunder the Buyer is nonetheless, in the opinion of its counsel, compelled to
disclose information concerning the Seller to any tribunal or governmental body
or agency or else stand liable for contempt or suffer other censure or penalty,
the Buyer may disclose such information to such tribunal or governmental body or
agency without liability hereunder.
(d) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Buyer shall, and shall cause the
Buyer's Bank and its subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the Seller and the Seller's
Bank, access, during normal business hours during the period prior to the
Effective Time, to such information regarding the Buyer and its subsidiaries as
shall be reasonably necessary for the Seller to fulfill its obligations pursuant
to this Agreement to prepare the Proxy Statement or which may be reasonably
necessary for the Seller to confirm that the representations and warranties of
the Buyer contained herein are true and correct and that the covenants of the
Buyer contained herein have been performed in all material respects. Neither the
Buyer nor any of its subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of the Buyer's customers, jeopardize the attorney-client privilege of
the institution in possession or control of such information or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(e) All information furnished by the Buyer to the Seller or its
representatives pursuant hereto shall be treated as the sole property of the
Buyer and, if the Merger shall not occur, the Seller and its representatives
shall return to the Buyer or destroy all of such written information and all
documents, notes, summaries or other materials containing, reflecting or
referring to, or derived from, such information. The Seller shall, and shall use
its reasonable efforts to cause its representatives to, keep confidential all
such information, and shall not directly or indirectly use such information for
any competitive or other commercial purpose. The obligation to keep such
information confidential shall continue from the date the proposed Merger is
abandoned and shall not apply to (i) any information which (x) was already in
the Seller's possession prior to the disclosure thereof by the Buyer; (y) was
then generally known to the public; or (z) was disclosed to the Seller by a
third party not bound by an obligation of confidentiality or (ii) disclosures
made as required by law. It is further agreed that, if in the absence of a
protective order or the receipt of a waiver hereunder the Seller is nonetheless,
in the opinion of its counsel, compelled to disclose information concerning the
Buyer to any tribunal or governmental body or agency or else stand liable for
contempt or suffer other censure or penalty, the Seller may disclose such
information to such tribunal or governmental body or agency without liability
hereunder.
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(f) No investigation by any of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein or any condition to the obligations of the parties hereto.
7.03. STOCKHOLDER MEETING. The Seller shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its stockholders to be
held as soon as is reasonably practicable for the purpose of voting upon the
approval of this Agreement. The Seller will, through its Board of Directors,
recommend to its stockholders approval of this Agreement and the transactions
contemplated hereby and such other matters as may be submitted to its
stockholders in connection with this Agreement; provided, however, that nothing
contained in this Section 7.03 shall prohibit the Seller's Board of Directors
from failing to call such a meeting, adjourning such a meeting or failing to
make such recommendation or modifying or withdrawing its recommendation, if such
Board shall have concluded in good faith with the advice of counsel that such
action is required to prevent such Board from breaching its fiduciary duties to
the stockholders of the Seller.
7.04. LEGAL CONDITIONS TO MERGER. Each of the Buyer and the Seller
shall, and shall cause each of its subsidiaries to, use its reasonable best
efforts (a) to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party or its subsidiaries with respect to the Merger and, subject to the
conditions set forth in Article VIII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Seller or the Buyer or any of their respective
subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement.
7.05. NO SOLICITATION. The Seller shall not and shall cause the
Seller's Bank and the Seller's Subsidiaries to not, directly or indirectly,
through any officer, director, agent or otherwise, solicit or initiate the
submission of any proposal or offer from any person relating to any acquisition
or purchase of all or (other than in the ordinary course of business) any
material portion of the assets of, or any equity interest in, the Seller, the
Seller's Bank or the Seller's Subsidiaries or any business combination with the
Seller, the Seller's Bank or the Seller's Subsidiaries or, except to the extent
determined by the Seller Board, with the advice of its independent counsel, to
be required by fiduciary obligations under applicable law, participate in any
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate, any effort or attempt by any other person to do or seek any of the
foregoing. The Seller immediately shall cease and cause to be terminated and
shall cause the Seller's Bank and the Seller's Subsidiaries to cease and cause
to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Seller shall
notify the Buyer and cause the Seller's Bank or the Seller's Subsidiaries to
notify the Buyer promptly if any such proposal or offer, or any inquiry or
contact with any person with respect thereto, is made and shall, in any such
notice to the Buyer, indicate in reasonable detail the terms and conditions of
such proposal, offer, inquiry or contact. The Seller agrees and shall cause the
Seller's Bank and the Seller's Subsidiaries not to release any third party from,
or waive any provision of, any confidentiality or standstill agreement to which
the Seller, the Seller's Bank or the Seller's Subsidiaries is a party.
36
7.06. EMPLOYEE BENEFIT MATTERS.
(a) PROVISION OF BENEFITS. As soon as practicable after the
Effective Time, the Buyer agrees to provide the employees of the Seller's Bank
with types and levels of employee benefits that, in the aggregate, are
substantially equivalent to those maintained by the Seller for similarly
situated employees.
(b) NEW EMPLOYMENT AGREEMENTS. The Buyer has prepared employment
agreements (commencing as of the Effective Date) to be entered into between
Seller's Bank and each of Xxxxxxx X. Xxxxxxxx, Xxxxxx X. Neath, Xxxx X. Xxxxxxx
and Xxxxx X. Xxxxxx V in the form attached hereto as EXHIBIT 7.06(B) (the
"Employment Agreements"). As of the date of this Agreement the Seller's Bank and
the following individuals have entered into Employment Agreements: Messrs
Xxxxxxxx, Xxxxxxx and Xxxxxx. The Seller agrees to cause the Seller's Bank to
cause the existing employment agreements ("Existing Employment Agreements")
between each of the four foregoing individuals and the Seller's Bank to be
terminated by mutual consent and without cost or expense to the Seller's Bank or
any party to this Agreement immediately prior to the Effective Time.
(c) CONSULTANT AGREEMENT. As of the date of this Agreement, the
Seller has caused the consulting agreement dated as of May 1, 1998 between the
Seller and Xxxx Xxxxx ("Existing Consulting Agreement") to be terminated (such
termination to be effective as of the Effective Date) by mutual consent and has
agreed to make a lump sum payment to Xx. Xxxxx on the Effective Date in an
amount that would not result in the payment of an "excess parachute payment"
within the meaning of Section 280G of the Code. Not later than fifteen days
after the date of this Agreement Buyer and Xx. Xxxxx will enter into a mutually
acceptable three-year agreement (commencing as of the Effective Date) pursuant
to which Xx. Xxxxx would serve as a consultant with respect to Nantucket Bank
("Consultant Agreement"). Once agreed upon, the Consultant Agreement will be
attached hereto as EXHIBIT 7.06(C).
(d) CONTINUATION OF PLANS. Notwithstanding anything to the
contrary contained herein, the Buyer shall have sole discretion with respect to
the determination as to whether or when to terminate, merge or continue any
employee benefit plans and programs of the Seller, the Seller's Bank or any of
the Seller's Subsidiaries; PROVIDED, HOWEVER, that the Buyer shall continue to
maintain such plans (other than stock based or incentive plans or stock funds in
retirement plans) until the Seller Employees are permitted to participate in the
Buyer's or its Affiliates' plans. As of the date of this Agreement such Buyer
plans provide for employee benefits in the aggregate no less beneficial than
those made available by the Seller.
(e) PARACHUTE PAYMENTS. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall the Seller or any of the Seller's
Subsidiaries take any action or make any payments that would result, either
individually or in the aggregate, in the payment of an "excess parachute
payment" within the meaning of Section 280G of the Code or that would result,
either individually or in the aggregate, in payments that would be nondeductible
pursuant to Section 162(m) of the Code.
7.07. DIRECTORS' AND OFFICERS' INSURANCE.
37
(a) The Buyer shall use its reasonable best efforts to maintain
in effect for six years from the Effective Time, if available, the current
directors' and officers' liability insurance policy maintained by the Seller
(provided that the Buyer may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall the Buyer be required to expend
pursuant to this Section 7.07(a) more than the amount equal to 150% of the
current annual amount expended by the Seller to maintain or procure insurance
coverage pursuant hereto. In connection with the foregoing, the Seller agrees to
provide such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
(b) The Buyer agrees to indemnify current and former directors
or officers of the Seller to the same extent that such directors or officers are
entitled to indemnification as of the date of this Agreement under the Seller's
Corporate Charter and/or By-laws to the full extent permitted under applicable
law for a period of six years from the Effective Time, provided that in the
event that any claim is asserted or made by such current or former director or
officer within such six year period, the right to indemnification in respect of
such claim shall continue until the disposition of such claim. The provisions of
this Section 7.07 are specifically for the benefit of those present and former
directors and officers entitled to indemnification as of the date of this
Agreement under the Seller's By-Laws.
(c) In the event that the Buyer or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving bank or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Buyer shall assume the obligations set forth in
this Section 7.07.
7.08. FINANCIAL AND OTHER STATEMENTS. Notwithstanding anything to the
contrary in Section 7.02, during the term of this Agreement, the Seller shall
provide to the Buyer the following documents and information:
(a) As soon as reasonably available, but in no event more than
45 days after the end of each fiscal quarter ending after the date of this
Agreement, the Seller will deliver to the Buyer the Seller Bank's quarterly Call
Report as filed with the appropriate Bank Regulator. As soon as reasonably
available, but in no event more than 90 days after the end of each fiscal year
ending after the date of this Agreement, the Seller will deliver to the Buyer
the Seller Bank's consolidated and audited financial statements for the fiscal
year then ended.
(b) Promptly upon receipt thereof, the Seller will furnish to
the Buyer copies of all internal control reports submitted to the Seller or the
Seller's Bank by independent auditors in connection with each annual, interim or
special audit of the books of the Seller or the Seller's Bank made by such
auditors.
(c) As soon as practicable, the Seller and the Seller's Bank
will furnish to the Buyer copies of all such financial statements and reports as
they shall send to their stockholder(s), the SEC, the Massachusetts
Commissioner, the FDIC, the FRB, or any other regulatory authority, to
38
the extent any such reports furnished to any such regulatory authority are not
confidential and except as legally prohibited under applicable laws and
regulations, and all press releases.
(d) With reasonable promptness, the Seller and the Seller's Bank
will furnish to the Buyer such additional financial data as the Buyer may
reasonably request.
7.09. FURTHER ACTION. The Buyer and the Seller each shall, and shall
cause their subsidiaries to, use reasonable best efforts (a) to take, or cause
to be taken, all actions necessary, proper or advisable to comply promptly with
all legal requirements which may be imposed on such party or its subsidiaries
with respect to the Merger and, subject to the conditions set forth in Article
VIII hereof, to consummate the transactions contemplated by this Agreement and
(b) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by the Seller
or the Buyer or any of their respective subsidiaries in connection with the
Merger and any of the other transactions contemplated by this Agreement.
7.10. PUBLIC ANNOUNCEMENTS. Except as otherwise required by law or the
rules of NASDAQ, so long as this Agreement is in effect, neither the Buyer nor
the Seller shall, or shall they permit any of their subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the transactions
contemplated by this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld.
7.11. ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective subsidiaries shall take all such necessary action
as may be reasonably requested by the Buyer.
7.12. UPDATE OF DISCLOSURE SCHEDULES. From time to time prior to the
Effective Time, the Seller will promptly supplement or amend the Seller
Disclosure Schedule 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 the Seller Disclosure Schedule or which is necessary to correct any
information in the Seller Disclosure Schedule which has been rendered inaccurate
thereby. No supplement or amendment to the Seller Disclosure Schedule shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Section 8.02(a) hereof or the compliance by the Seller with the
covenants set forth in Article VI and Article VII hereof.
7.13. CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the
Effective Time, the Seller will cause one or more of its designated
representatives (i) to confer on a regular and frequent basis (at least monthly)
with representatives of Buyer to report on (x) the general status of the ongoing
operations of the Seller and the Seller's Bank, (y) the status of, and the
action proposed to be taken with respect to, those Loans held by the Seller or
the Seller's Bank which, either individually or in combination with one or more
other Loans to the same borrower thereunder,
39
have an aggregate original principal amount of $250,000 or more and are
classified or non- performing assets, and (z) the status of, and the action
proposed to be taken with respect to, foreclosed property and other real estate
owned by the Seller or the Seller's Bank, and (ii) to cooperate and communicate
with respect to the manner in which the business of the Seller and the Seller's
Bank is conducted, including but not limited to, the disposition of certain
assets after the Effective Time, the type and mix of products and services,
personnel matters, branches, the granting of credit, and problem loan
management, reserve adequacy, securities investments and accounting. During the
period from the date of this Agreement to the Effective Time, the Seller and the
Seller's Bank shall provide the Buyer with sufficient information to review new
extensions of credit, renewals and restructurings having an original principal
amount of $200,000 and information detailing overall asset quality. The Seller
shall also ensure that the Seller's Bank allows the Buyer to designate one of
its officers to attend the Seller's Bank credit committee meetings and be a
non-voting attendee thereof.
(b) The Seller and the Seller's Bank will promptly notify the
Buyer of any material change in the normal course of business or in the
operation of the properties of the Seller or the Seller's Bank and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of litigation involving them and will keep the Buyer reasonably informed of such
events.
(c) To the extent not covered by paragraphs (a) and (b) above,
the Seller and the Seller's Bank shall give prompt notice to the Buyer, and the
Buyer shall give prompt notice to the Seller, of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
reasonably likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, and (ii) any
failure of the Seller, the Seller's Bank or the Buyer, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, that the delivery of
any notice pursuant to this paragraph (c) shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
7.14. DIRECTORS OF SELLER'S BANK. As sole stockholder of Seller's Bank
immediately following the Effective Time, the Buyer agrees to ensure that the
Directors of the Seller's Bank immediately prior to the Effective Time shall be
the Directors of the Seller's Bank for a period of one year (or until their term
of office expires, whichever is later) following the Effective Time; PROVIDED,
HOWEVER, that immediately following the Effective Time, the number of members of
the Board of Directors of the Seller's Bank shall be expanded by up to three
members and the vacancies so created shall immediately thereafter be filled by a
person or persons designated by the Buyer. The Seller and the Buyer agree to
cause the Seller's Bank to hold regular meetings of its Board of Directors not
more than one time per month. Loan Committee meetings, which shall not be
considered meetings of the Board of Directors, may be held as frequently as the
Seller's Bank deems appropriate.
7.15. VOTING AGREEMENTS. The Seller agrees to cause each of its
directors and officers to execute and deliver (individually, and to the extent
applicable in their respective capacities as trustee) concurrently with the
execution of this Agreement a voting agreement in the form of EXHIBIT 7.15
hereto.
40
ARTICLE VIII. CONDITIONS TO THE MERGER
8.01. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative vote
of the stockholders of the Seller to the extent required by Delaware Law and the
Corporate Charter of the Seller;
(b) REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of all Governmental Entities required to consummate
the Merger shall have been obtained and remain in full force and effect, and all
waiting periods relating to such approvals, authorizations and consents shall
have expired or been terminated (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(c) NO ORDERS, INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order,
injunction or decree (whether temporary, preliminary or permanent) issued by
federal or state governmental authority or other agency or commission or federal
or state court of competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect and no proceeding
initiated by any governmental entity seeking an Injunction shall be pending. No
statute, rule, regulation, order, injunction or decree (whether temporary,
preliminary or permanent) shall have been enacted, entered, promulgated or
enforced by any federal or state governmental authority or other agency or
commission or federal or state court of competent jurisdiction, which prohibits,
restricts or makes illegal the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
8.02. CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of the
Buyer to effect the Merger is also subject to the satisfaction or waiver by the
Buyer at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Seller in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or warranty
that is not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement, as applicable, and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Effective Time, it being understood that such representations and warranties
shall be deemed to be true and correct in all material respects unless the
failure or failures of such representations and warranties to be so true and
correct represent, either individually or in the aggregate, a Material Adverse
Effect on the Seller, provided, however, that for purposes of determining
satisfaction of this condition, no effect shall be given to an exception in such
representations and warranties relating to materiality, a Material Adverse
Effect or the knowledge of the Seller. The Buyer shall have received a
certificate to such effect signed by the Chief Executive Officer and the Chief
Financial Officer of the Seller dated as of the Effective Date.
41
(b) AGREEMENTS AND COVENANTS. The Seller shall have performed in
all material respects all obligations and complied in all material respects with
all agreements or covenants of the Seller to be performed or complied with by it
at or prior to the Effective Date under this Agreement, and the Buyer shall have
received a certificate to such effect signed by the Chief Executive Officer and
Chief Financial Officer of the Seller dated as of the Effective Date.
(c) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver
of each person (other than Requisite Regulatory Approvals contemplated in
Section 7.01(c)) whose consent or approval shall be required in order to permit
the succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Seller or any of its Seller's Subsidiaries
under any loan or credit agreement, note mortgage, indenture, lease, license or
other agreement or instrument shall have been obtained, and none of such
permits, consents, waivers, clearances, approvals and authorizations shall
contain any term or condition which would materially impair the value of the
Seller to the Buyer.
(d) NO BURDENSOME CONDITION. The Seller and the Seller's
Subsidiaries shall have resolved all violations, criticisms or exceptions by any
Bank Regulator with respect to any Bank Examination; and none of the Requisite
Regulatory Approvals shall impose any term, condition or restriction upon the
Buyer, the Seller, the Surviving Corporation, or any of their respective
subsidiaries that the Buyer reasonably determines would materially impair the
value of the Seller to the Buyer or be materially burdensome (a "Burdensome
Condition").
(e) INVESTMENT BANKER OPINION. The Buyer shall have received a
copy of the opinion of the Seller's Investment Banker, dated as of the date of
this Agreement, that the Merger Consideration to be received by the stockholders
of the Seller pursuant to the Merger is fair to such shareholders from a
financial point of view.
(f) EMPLOYMENT AGREEMENTS. The Employment Agreements shall have
been executed and delivered by the stipulated parties thereto and be in full
force and effect.
(g) CONSULTANT AGREEMENT. The Consultant Agreement shall have
been executed and delivered by the stipulated parties thereto and be in full
force and effect.
(h) VOTING AGREEMENTS. The Voting Agreements shall have been
executed and delivered by the stipulated parties thereto and be in full force
and effect.
(i) TERMINATION OF CERTAIN EXISTING AGREEMENTS. The Existing
Employment Agreements shall each have been terminated without cost to Seller's
Bank or any party to this Agreement, and the Existing Consulting Agreement shall
have been terminated in consideration of the payment described in Section
7.06(c).
(j) TAX OPINION. The Buyer shall have received the opinion of
Xxxxx, Xxxx & Xxxxx LLP, dated as of the Effective Date, that the Merger
constitutes a tax-free reorganization described in section 368(a)(1) of the
Code.
(k) NO PARACHUTE PAYMENTS. Neither Seller or any of the Seller's
Subsidiaries shall have taken any action or made any payments that would result,
either individually or in the aggregate, in the payment of an "excess parachute
payment" within the meaning of Section 280G
42
of the Code or that would result, either individually or in the aggregate, in
payments that would be nondeductible pursuant to Section 162(m) of the Code.
8.03. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the
Seller to effect the Merger are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Buyer in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or warranty
that is not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement, as applicable, and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Effective Date, it being understood that such representations and warranties
shall be deemed to be true and correct in all material respects unless the
failure or failures of such representations and warranties to be so true and
correct represent, either individually or in the aggregate, a Material Adverse
Effect on the Seller, provided, however, that for purposes of determining
satisfaction of this condition, no effect shall be given to an exception in such
representations and warranties relating to materiality, a Material Adverse
Effect or the knowledge of the Seller. The Seller shall have received a
certificate signed by the Chief Executive Officer and Chief Financial Officer of
the Buyer to such effect dated as of the Effective Date.
(b) AGREEMENTS AND COVENANTS. The Buyer shall have performed in
all material respects all obligations and complied in all material respects with
all of the respective agreements or covenants to be performed or complied by
such party under this Agreement and the Seller shall have received a certificate
signed by the Chief Executive Officer and Chief Financial Officer of the Buyer
to such effect dated as of the Effective Date.
(c) INVESTMENT BANKER OPINION. The Seller shall have received
the opinion of the Seller's Investment Bankers, dated as of the date of this
Agreement, that the Merger Consideration to be received by the stockholders of
the Seller pursuant to the Merger is fair to such shareholders from a financial
point of view.
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER
9.01. TERMINATION. This Agreement may be terminated and the Merger and
the other transactions contemplated by this Agreement may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of this Agreement and the transactions contemplated in this Agreement
by the stockholders of the Seller:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Buyer and the Seller;
(b) by either the Buyer or the Seller if (i) the Effective Time
shall not have occurred on or before March 31, 2001 or such later date as the
parties may have agreed upon in writing (the "Expiration Date"); PROVIDED,
HOWEVER, that the right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date;
43
(c) by either the Buyer or the Seller (i) ninety days after the
date on which any request or application for a regulatory approval required to
consummate the Merger shall have been denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such requisite
regulatory approval, unless within the ninety day period following such denial
or withdrawal a petition for rehearing or an amended application has been filed
with such Governmental Entity; provided, however, that no party shall have the
right to terminate this Agreement pursuant to this Section 9.01(c) (i) if such
denial or request or recommendation for withdrawal shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein or (ii) if any court of
competent jurisdiction or other governmental authority shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(d) by either the Buyer or the Seller (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach by its nature cannot be
cured prior to the Effective Time or within thirty business days following
receipt by the breaching party of written notice of such breach from the other
party hereto (for purposes of this Section 9.01(d) a material breach shall be
deemed to be a breach which has, either individually or in the aggregate, a
Material Adverse Effect on the party making such representations or warranties
or on the business, operations, financial condition, property or assets of the
combined enterprise or which materially adversely affects consummation of the
Merger and the other transactions contemplated hereby, PROVIDED, HOWEVER, that
no effect shall be given to any qualification relating to materiality, a
Material Adverse Effect or knowledge in such representations and warranties);
(e) by either the Buyer or the Seller (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty business days following receipt by the breaching party of written
notice of such breach from the other party hereto (for purposes of this Section
9.01(e) a material breach shall be deemed to be a failure which has, either
individually or in the aggregate, a Material Adverse Effect on the party so
failing or on the business, operations, financial condition, property or assets
of the combined enterprise or which materially and adversely affects
consummation of the Merger and the other transactions contemplated hereby,
PROVIDED, HOWEVER, that no effect shall be given to any qualification relating
to materiality in any such covenant);
(f) by either the Buyer or the Seller (PROVIDED, that if the
terminating party is the Seller, the Seller shall not be in material breach of
any of its obligations under Section 7.03) if any approval of the stockholders
of the Seller required for the consummation of the Merger shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of stockholders or at any adjournment or postponement thereof, or by the
Buyer, if such meeting of stockholders shall not have been held or shall have
been canceled prior to the Expiration Date; or
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(g) by the Buyer, if the Seller Board shall not have publicly
recommended to the stockholders of the Seller that such stockholders vote in
favor of the approval of this Agreement, the Merger and the other transactions
contemplated hereby or shall have withdrawn or modified such recommendation in a
manner adverse to the Buyer.
9.02. EFFECT OF TERMINATION; EXPENSES.
(a) In the event of the termination of this Agreement pursuant
to Section 9.01, this Agreement shall forthwith become void (except as set forth
in Section 10.03), and there shall be no liability on the part of any party
hereto, except (i) each party shall remain liable in any action at law or
otherwise for any liabilities or damages arising out of its gross negligence or
willful breach of any provision of this Agreement, (ii) as otherwise provided in
this Section 9.02, and (iii) as provided in Section 9.03 and Section 9.04.
(b) If this Agreement is terminated as a result of any breach of
a representation, warranty, covenant or other agreement which is caused by the
gross negligence or willful breach of a party hereto, such party shall be liable
to the other party for all out-of-pocket costs and expenses (but in no event in
an amount in excess of $500,000), including, without limitation, the reasonable
fees and expenses of lawyers, accountants and investment bankers, incurred by
such other party in connection with the entering into of this Agreement and the
carrying out of any and all acts contemplated hereunder ("Expenses"). The
payment of Expenses is not an exclusive remedy, but is in addition to any other
rights or remedies available to the parties hereto at law or in equity.
(c) Except as otherwise provided in this Section 9.02 or in
Section 9.03 or Section 9.04, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby and thereby shall be
paid by the party incurring such expenses, whether or not any of the
transactions contemplated by this Agreement is consummated.
9.03. SELLER SPECIAL PAYMENT.
(a) PAYMENT AMOUNT. As a condition of the Buyer's willingness,
and in order to induce the Buyer, to enter into this Agreement and to reimburse
the Buyer for incurring the damages, costs and expenses related to entering into
this Agreement and consummating the transactions contemplated by this Agreement,
the Seller will make a cash payment to the Buyer, as liquidated damages and in
lieu of any other rights or remedies under this Agreement, in the amount of
$3,500,000 (the "Seller Special Payment") if and only if:
(i) (x) the Buyer or the Seller has terminated this Agreement
pursuant to Section 9.01(f), or (y) the Buyer has terminated this
Agreement pursuant to Section 9.01(g), AND the events described in
clause (A) or (B), below, shall have taken place:
(A) within twelve months of any such termination or other
event specified in (i) above, (a) the Seller or the Seller's Bank shall
have entered into an agreement to engage in an Acquisition Transaction
(as defined in Section 1.01(b)) with any person other than the Buyer or
any affiliate of the Buyer or (b) the Seller Board or any committee
thereof shall have authorized, approved, recommended, publicly proposed
or failed to publicly oppose an Acquisition Transaction or recommended
that stockholders of the
45
Seller authorize, approve or accept any Acquisition Transaction with
any person other than the Buyer or any affiliate of the Buyer, or
(B) at the time of such termination or event giving rise to
such termination, it shall have been publicly announced that any person
(other than the Buyer or any affiliate of the Buyer) shall have (a)
made, or disclosed an intention to make, a BONA FIDE offer to engage in
an Acquisition Transaction, or (b) filed an application (or given a
notice), whether in draft or final form, under the BHC Act or the
Change in Bank Control Act of 1978, for approval to engage in an
Acquisition Transaction; or
(ii) the Buyer has terminated this Agreement pursuant to
Section 9.01(d) or Section 9.01(e) AND the breach of the
representation, warranty, covenant or agreement under Section 9.01(d)
or Section 9.01(e) was caused by the willful conduct or gross
negligence of the Seller.
(b) PAYMENT REQUIRED. Any payment required under this Section
9.03 will be (i) payable by the Seller to the Buyer (by wire transfer of
immediately available funds to an account designated by the Buyer) within five
business days after demand by the Buyer and (ii) net of any other payments made
by the Seller to the Buyer pursuant to the provisions of Section 9.02(b). In the
event of a termination under circumstances that would trigger a payment under
this Section 9.03, any standstill provisions contained in the Confidentiality
Agreement shall terminate.
(c) EXCLUSIVITY OF REMEDY. Notwithstanding anything to the
contrary set forth in this Agreement, if the Seller pays or causes to be paid to
the Buyer the Seller Special Payment, neither the Seller nor any affiliate will
have any further obligations or liabilities to the Buyer or the Buyer Bank or
any other person with respect to this Agreement or the transactions contemplated
by this Agreement, it being understood, HOWEVER, that payment of the Seller
Special Payment shall not have any effect on the respective rights and
obligations of the parties pursuant to the Stock Option Agreement.
9.04. BUYER SPECIAL PAYMENT.
(a) PAYMENT AMOUNT. As a condition of the Seller's willingness
to, and in order to induce the Seller to, enter into this Agreement, and to
reimburse the Seller for incurring the damages, costs and expenses related to
entering into this Agreement and consummating the transactions contemplated by
this Agreement, the Buyer hereby agrees to pay to the Seller, as liquidated
damages and in lieu of any other rights or remedies under this Agreement, a cash
payment in the amount of $3,500,000 (the "Buyer Special Payment") if and only if
the Seller has terminated this Agreement in accordance with Section 9.01(d) or
Section 9.01(e) and the breach of the representation, warranty, covenant or
agreement under Section 9.01(d) or Section 9.01(e) was caused by the willful
conduct or gross negligence of the Buyer.
(b) PAYMENTS REQUIRED. Any payment required to be made under
this Section 9.04 shall be (i) paid by the Buyer to the Seller by wire transfer
of immediately available funds to an account designated by the Seller within
five business days after demand by the Seller and (ii) net
46
of any other payments made by the Buyer to the Seller pursuant to the provisions
of Section 9.02(b).
(c) EXCLUSIVITY OF REMEDY. Notwithstanding anything to the
contrary set forth in this Agreement, if the Buyer pays or causes to be paid to
the Seller the Buyer Special Payment, neither the Buyer nor any affiliate will
have any further obligations or liabilities to the Seller or the Seller Bank or
any other person with respect to this Agreement or the transactions contemplated
by this Agreement, it being understood, HOWEVER, that payment of the Buyer
Special Payment shall not have any effect on the respective rights and
obligations of the parties pursuant to the Stock Option Agreement.
9.05. AMENDMENT. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after the approval and
adoption of this Agreement and the transactions contemplated hereby, no
amendment may be made which would reduce the amount or change the type of
consideration into which each share of Seller Common Stock shall be converted
upon consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
9.06. WAIVER. At any time prior to the Effective Time, any party hereto
may (i) extend the time for the performance of any obligation or other act of
any other party hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein; provided, however, that after the approval and adoption of this
Agreement and the approval of the transactions contemplated hereby by the
stockholders of the Seller there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which would reduce the amount or change the form of the consideration into which
each Share shall be converted upon consummation of the Merger delivered to the
Seller's stockholders hereunder other than as contemplated by this Agreement.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound thereby, but such extension
or waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
ARTICLE X GENERAL PROVISION
10.01. CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 9:00 a.m. on a date
to be specified by the parties, within ten business days after the satisfaction
or waiver (subject to applicable law) of the latest to occur of the conditions
set forth in Section 8.01 (the "Closing Date"), at the offices of Xxxxx, Xxxx &
Xxxxx LLP, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, unless another
time, date or place is agreed to in writing by the parties hereto.
10.02. ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, the Buyer shall be
entitled to revise the structure of the Merger and the other transactions
contemplated hereby and thereby, provided that (i) there
47
are no material adverse federal or state income tax consequences to the Seller
and its stockholders as a result of the modification; (ii) the consideration to
be paid to the holders of shares of Seller Common Stock under this Agreement is
not thereby changed in kind or reduced in amount; (iii) there are no material
adverse changes to the benefits and other arrangements provided to or on behalf
of the Seller's directors, officers and other employees; and (iv) such
modification will not be likely to delay materially or jeopardize receipt of any
required regulatory approvals or other consents and approvals relating to the
consummation of the Merger. This Agreement and any related documents shall be
appropriately amended in order to reflect any such revised structure.
10.03. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be, except that the agreements set forth in Article II and
Article III and Sections 7.06, Section 7.07 and Section 7.14 shall survive the
Effective Time indefinitely and those set forth in Sections 7.02(c) and in
Section 7.02(e), Article IX and Article X hereof shall survive termination
indefinitely.
10.04. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 10.04):
if to the Buyer:
Seacoast Financial Services Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
President and Chief Executive Officer
with a copy to:
Xxxxx Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
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if to the Seller:
Home Port Bancorp, Inc.
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
President and Chief Executive Officer
with a copy to:
Xxxxxx Xxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
10.05. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
10.06. ENTIRE AGREEMENT. This Agreement (including the Disclosure
Schedules and Exhibits) and the Stock Option Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof except
for the Confidentiality Agreement.
10.07. NO THIRD PARTY BENEFICIARIES. This Agreement, together with the
other documents and instruments referred to herein and therein, between Buyer
and Seller is not intended to confer any rights or remedies upon any person
other than the parties hereto.
10.08. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
10.09. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement
(other than Section 7.06), express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
49
10.10. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any state or federal court sitting in the City of
Boston.
10.12. HEADINGS. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.13. INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits, Annexes or Schedules, such reference shall be to a
Section of or Exhibit, Annex or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The phrases "the date of this Agreement,"
"the date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to be July 20, 2000.
10.14. COUNTERPARTS. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
* * * * *
50
IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement
to be executed as a sealed instrument as of the date first written above by
their respective officers thereunto duly authorized.
HOME PORT BANCORP, INC.
By: /S/ XXXX X. XXXXX
--------------------------------------
Title:President and Chief Executive
Officer
Attest:
By: /S/ XXXXXX X. XXXXX
-----------------------
Secretary
By: /S/ XXXX X. XXXXXXX
--------------------------------------
Title:Chief Financial Officer and
Treasurer
SEACOAST FINANCIAL SERVICES
CORPORATION
By: /S/ XXXXX X. XXXXXXXXX
--------------------------------------
Title:President and Chief Executive
Officer
Attest:
By: /S/ J. XXXXX XXXXXXX
------------------------
Clerk
By: /S/ XXXXXXX X. XXXXXXXXXX, XX.
--------------------------------------
Title:Chief Financial Officer and
Treasurer
51
