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AGREEMENT AND PLAN OF MERGER
between
BANK OF BOSTON CORPORATION,
BOSTON MERGER CORP.
and
BAYBANKS, INC.
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Dated as of December 12, 1995
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 12, 1995, by and
among Bank of Boston Corporation, a Massachusetts corporation ("Parent"),
Boston Merger Corp., a newly incorporated Massachusetts corporation and a
wholly owned subsidiary of Parent ("Merger Sub") and BayBanks, Inc., a
Massachusetts corporation ("Subject Company").
WHEREAS, the Boards of Directors of Parent and Subject Company have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the business combination transaction provided
for herein in which Merger Sub will, subject to the terms and conditions set
forth herein, merge (the "Merger") with and into Subject Company, with Subject
Company becoming a wholly owned subsidiary of Parent, as the surviving
corporation in the Merger; and
WHEREAS, as a condition to, and after the execution of, this Agreement,
Parent and Subject Company are entering into a Parent Stock Option Agreement
(the "Parent Option Agreement") attached hereto as Exhibit A; and
WHEREAS, as a condition to, and after the execution of, this Agreement,
Parent and Subject Company are entering into a Subject Company Stock Option
Agreement (the "Subject Company Option Agreement"; and together with the Parent
Option Agreement, the "Option Agreements") attached hereto as Exhibit B; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to
be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Massachusetts Business Corporation Law (the
"MBCL"), at the Effective Time (as defined in Section 1.2 hereof), Merger Sub
shall merge with and into Subject Company. Subject Company shall be the
surviving corporation (hereinafter sometimes called the
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"Surviving Corporation") in the Merger, and shall continue its corporate
existence under the laws of the Commonwealth of Massachusetts. Upon
consummation of the Merger, the separate corporate existence of Merger Sub
shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in
the articles of merger (the "Articles of Merger") which shall be submitted for
filing to the Secretary of the Commonwealth pursuant to Section 78(d) of the
MBCL on the Closing Date (as defined in Section 9.1 hereof). The term
"Effective Time" shall be the date and time when the Merger becomes effective,
as set forth in the Articles of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 80 of the MBCL.
1.4 Conversion of Subject Company Common Stock. At the Effective
Time, subject to Section 2.2(e) hereof, by virtue of the Merger and without any
action on the part of Parent, Subject Company or the holder of any of the
shares of Subject Company Common Stock (as defined below):
(a) Each share of the common stock, par value $2.00 per share, of
Subject Company (the "Subject Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than shares of Subject Company
Common Stock held (x) in Subject Company's treasury or (y) directly or
indirectly by Parent or Subject Company or any of their respective Subsidiaries
(as defined below) (except for Trust Account Shares and DPC shares, as such
terms are defined below)) shall be converted into the right to receive 2.2
shares (the "Common Exchange Ratio") of the common stock, par value $2.25 per
share, of Parent ("Parent Common Stock").
(b) All of the shares of Subject Company Common Stock converted into
Parent Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist as of the
Effective Time, and each certificate (each a "Common Certificate") previously
representing any such shares of Subject Company Common Stock shall thereafter
represent the right to receive (i) a certificate representing the number of
whole shares of Parent Common Stock and (ii) cash in lieu of fractional shares
into which the shares of Subject Company Common Stock represented by such
Common Certificate have been converted pursuant to this Section 1.4 and Section
2.2(e) hereof. Common Certificates previously representing shares of Subject
Company Common Stock shall be exchanged for certificates representing whole
shares of Parent Common Stock and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such Common Certificates in
accordance with
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Section 2.2 hereof, without any interest thereon. If prior to the Effective
Time the outstanding shares of Parent Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares
or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in Parent's capitalization, then an appropriate and
proportionate adjustment shall be made to the Common Exchange Ratio.
(c) At the Effective Time, all shares of Subject Company Common Stock
that are owned by Subject Company as treasury stock and all shares of Subject
Company Common Stock that are owned directly or indirectly by Parent or Subject
Company or any of their respective Subsidiaries (other than shares of Subject
Company 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, including all shares held by the Subject
Company's Savings, Profit Sharing and Employee Stock Ownership Plan (any such
shares, and shares of Parent Common Stock which are similarly held, whether
held directly or indirectly by Parent or Subject Company, as the case may be,
being referred to herein as "Trust Account Shares") and other than any shares
of Subject Company Common Stock held by Parent or Subject Company or any of
their respective Subsidiaries in respect of a debt previously contracted (any
such shares of Subject Company Common Stock, and shares of Parent Common Stock
which are similarly held, whether held directly or indirectly by Parent or
Subject Company or any of their respective Subsidiaries, being referred to
herein as "DPC Shares")) shall be cancelled and shall cease to exist and no
stock of Parent or other consideration shall be delivered in exchange therefor.
All shares of Parent Common Stock that are owned by Subject Company or any of
its Subsidiaries (other than Trust Account Shares and DPC Shares) shall become
treasury stock of Parent.
(d) Notwithstanding anything in this Agreement to the contrary, shares
of Subject Company Common Stock which are outstanding immediately prior to the
Effective Time, the holders of which shall have delivered to Subject Company a
written demand for appraisal of such shares in the manner provided in the
applicable provisions of the MBCL ("Dissenting Shares"), shall not be converted
into the right to receive, or be exchangeable for, the shares of Parent Common
Stock otherwise issuable in exchange for such shares of Subject Company Common
Stock pursuant to this Section 1.4 but, instead, the holders thereof shall be
entitled to payment of the appraised value of such Dissenting Shares in
accordance with the provisions of the MBCL; PROVIDED, HOWEVER, that (i) if any
holder of Dissenting Shares shall subsequently deliver
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a written withdrawal of his demand for appraisal of such shares or (ii) if any
holder fails to establish his entitlement to appraisal rights as provided in
Sections 86 through 98 of the MBCL, such holder or holders (as the case may be)
shall forfeit the right to appraisal of such shares of Subject Company Common
Stock and each of such shares shall thereupon be deemed to have been converted
into the right to receive, and to have become exchangeable for, as of the
Effective Time, the shares of Parent Common Stock otherwise issuable in
exchange for such shares of Subject Company Common Stock pursuant to this
Section 1.4, without any interest thereon.
1.5 Merger Sub Common Stock. At and after the Effective Time, each
share of common stock, par value $0.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall become and be
converted into one share of common stock of the Surviving Corporation.
1.6 Options. (a) At the Effective Time, each option granted by
Subject Company to purchase shares of Subject Company Common Stock which is
outstanding and unexercised immediately prior thereto shall cease to represent
a right to acquire shares of Subject Company Common Stock and shall be
converted automatically into an option to purchase shares of Parent Common
Stock in an amount and at an exercise price determined as provided below (and
otherwise, to the extent not inconsistent with the foregoing, subject to the
terms of the Subject Company Stock Option Plans (as defined in Section 3.2(a))
as set forth in Section 3.11 of the Subject Company Disclosure Schedule):
(1) The number of shares of Parent Common Stock to be subject
to the new option shall be equal to the product of the number of shares
of Subject Company Common Stock subject to the original option and the
Common Exchange Ratio, provided that any fractional shares of Parent
Common Stock resulting from such multiplication shall be rounded down
to the nearest share; and
(2) The exercise price per share of Parent Common Stock under
the new option shall be equal to the exercise price per share of
Subject Company Common Stock under the original option, divided by the
Common Exchange Ratio, provided that such exercise price shall be
rounded up to the nearest cent.
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The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) shall be and is intended to be effected
in a manner which is consistent with Section 424(a) of the Code. The duration
and other terms of the new option shall be the same as the original option,
except that all references to Subject Company shall be deemed to be references
to Parent.
1.7 Articles of Organization. At the Effective Time, the Articles of
Organization of Merger Sub, as in effect at the Effective Time, shall be by
amendment the Articles of Organization of the Surviving Corporation. The name
of the Surviving Corporation shall be the name of the Merger Sub immediately
prior to the Effective Time and its purposes and authorized capital stock shall
be those of Merger Sub as set forth in its Articles of Organization as in
effect immediately prior to the Effective Time.
1.8 Bylaws. At the Effective Time, the Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.9 Tax Consequences. It is intended that the Merger shall constitute
a reorganization within the meaning of Section 368(a) of the Code, and that
this Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
1.10 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation from and after the Effective Time,
subject to the rights of Parent as the sole stockholder, each to hold office in
accordance with the Articles of Organization and Bylaws of the Surviving
Corporation. The officers of the Subject Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation from and
after the Effective Time each to hold office in accordance with the Articles of
Organization and Bylaws of the Surviving Corporation.
1.11 Board of Directors of Parent. From and after the Effective Time,
the Board of Directors of Parent shall be expanded by four members and Xx.
Xxxxxxx and three additional members of the Board of Directors of Subject
Company shall be appointed as directors of Parent. Xx. Xxxxxxx shall serve as
Chairman of Parent and Xx. Xxxxxxx shall serve as Chief Executive Officer and
President of Parent from and after the Effective Time. The representatives,
other than Xx. Xxxxxxx,
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selected by Subject Company to serve as directors of Parent shall be divided
equally among the three classes of directors of Parent and Xx. Xxxxxxx shall be
appointed to the class of directors whose term comes up for reelection in 1999.
The representatives selected by the Subject Company to serve as directors of
Parent from and after the Effective Time shall be appointed to such committees
of the Board of Directors of Parent as Messrs. Xxxxxxx and Xxxxxxx shall
mutually determine at or prior to the Effective Time.
1.12 Subsidiary Bank Mergers. Parent and Subject Company shall take
such actions as they determine to be mutually desirable to effectuate a merger
of the subsidiary banks of Parent and Subject Company, either immediately
before, concurrently with or following the Effective Time with the objective of
establishing one national bank subsidiary for each state in New England in
which the parties currently have bank subsidiaries and/or a multi-state
national bank subsidiary. The name or names of the bank subsidiaries of Parent
in New England from and after the Effective Time shall be changed to be as
follows: (i) the name of the bank subsidiary located in Massachusetts shall be
changed to BayBank of Boston, N.A.; and (ii) the name of the bank subsidiaries
located in other states shall be changed to BayBank of [state name], N.A. To
the extent there is more than one bank subsidiary in any state, the name of
each bank in such state shall include the phrase "BayBank of Boston" if the
state is Massachusetts and "BayBank of [state name]" with respect to any other
state. To the extent that a multi-state national bank subsidiary is
established, such subsidiary bank shall be named BayBank of Boston, N.A., to
the extent the bank includes the Massachusetts branches of Parent. It is
understood that Parent will continue to use the tradename Bank of Boston for
its national relationship business and international activities.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the Effective
Time, Parent shall deposit, or shall cause to be deposited, with a bank or
trust company selected by Parent and reasonably acceptable to Subject Company
(which may be a Subsidiary of Parent) (the "Exchange Agent"), for the benefit
of the holders of Certificates, for exchange in accordance with this Article
II, certificates representing the shares of Parent Common Stock and the cash in
lieu of any fractional shares (such cash and certificates for shares of Parent
Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the
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"Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant to
Section 2.2(a) in exchange for outstanding shares of Subject Company Common
Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event later than five business days thereafter, the
Exchange Agent shall mail to each holder of record of a Certificate or
Certificates 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 Exchange Agent) and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of Parent Common Stock and the cash in
lieu of fractional shares, if any, into which the shares of Subject Company
Common Stock represented by such Certificate or Certificates shall have been
converted pursuant to this Agreement. Upon proper surrender of a Certificate
for exchange and cancellation to the Exchange Agent, together with such
properly completed letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor, as applicable,
(i) a certificate representing that number of whole shares of Parent Common
Stock to which such holder of Subject Company Common Stock shall have become
entitled pursuant to the provisions of Article I hereof, and (ii) a check
representing the amount of cash in lieu of fractional shares, if any, which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued
on the cash in lieu of fractional shares and unpaid dividends and
distributions, if any, payable to holders of Certificates. Notwithstanding
anything to the contrary contained herein, no certificate representing Parent
Common Stock or cash in lieu of a fractional share interest shall be delivered
to a person who is an Affiliate (as defined in Section 6.5) of Subject Company
unless such Affiliate has theretofore executed and delivered to Parent the
agreement referred to in Section 6.5.
(b) No dividends or other distributions declared after the Effective
Time with respect to Parent Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article II. After the surrender of a
Certificate in accordance with this Article II, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares
of Parent Common Stock represented by such Certificate.
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(c) If any certificate representing shares of Parent Common Stock is
to be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by reason of
the issuance of a certificate representing shares of Parent Common Stock in any
name other than that of the registered holder of the Certificate surrendered,
or required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Subject Company of the shares of Subject Company Common Stock
which were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of Parent Common Stock as provided in this
Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Subject Company. In lieu of the issuance of any such fractional share, Parent
shall pay to each former stockholder of Subject Company who otherwise would be
entitled to receive such fractional share an amount in cash determined by
multiplying (i) the average of the closing-sale prices of Parent Common Stock
on the New York Stock Exchange as reported by The Wall Street Journal for the
five trading days immediately preceding the date of the Effective Time by (ii)
the fraction of a share of Parent Common Stock to which such holder would
otherwise be entitled to receive pursuant to Section 1.4 hereto.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Subject Company for twelve months after the Effective Time
shall be paid to Parent. Any stockholders of Subject Company who have not
theretofore complied with this Article II shall thereafter look only to Parent
for payment of the shares of Parent Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on the Parent Common
Stock deliverable in respect of each share of Subject Company Common Stock such
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stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon. Notwithstanding the foregoing, none of Parent,
Subject Company, the Exchange Agent or any other person shall be liable to any
former holder of shares of Subject Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(g) 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 Parent,
the posting by such person of a bond in such amount as Parent may determine is
reasonably necessary as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and cash in lieu of fractional shares deliverable in respect thereof pursuant
to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent as follows:
3.1 Corporate Organization. (a) Subject Company is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Subject Company has the corporate power and
authority to own or lease 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 in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect (as
defined below) on Subject Company. As used in this Agreement, the term
"Material Adverse Effect" means, with respect to Parent, Subject Company or the
Surviving Corporation, as the case may be, a material adverse effect on the
business, results of operations or financial condition of such party and its
Subsidiaries taken as a whole. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any bank, corporation,
partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.
Subject Company is duly registered as a bank holding company under the Bank
Holding
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Company Act of 1956, as amended (the "BHC Act") and as a savings and loan
holding company under the Home Owners' Loan Act ("HOLA"). The Articles of
Organization and Bylaws of Subject Company, copies of which have previously
been made available to Parent, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Each Subject Company Subsidiary is (i) duly organized and validly
existing as a bank, corporation or partnership under the laws of its
jurisdiction of organization, (ii) is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Subject Company, and (iii) has all requisite
corporate power and authority to own or lease its properties and assets and to
carry on its business as now conducted.
(c) The minute books of Subject Company accurately reflect in all
material respects all corporate actions held or taken since January 1, 1993 of
its stockholders and Board of Directors (including committees of the Board of
Directors of Subject Company).
3.2 Capitalization. (a) The authorized capital stock of Subject
Company consists of 50,000,000 shares of Subject Company Common Stock and
1,000,000 shares of preferred stock, $10 par value. At the close of business
on November 30, 1995 there were 19,633,771 shares of Subject Company Common
Stock outstanding and no shares of Subject Company Preferred Stock outstanding,
and 2,899 shares of Subject Company Common Stock held in Subject Company's
treasury. On November 30, 1995, no shares of Subject Company Common Stock or
Subject Company Preferred Stock were reserved for issuance, except that (i)
1,403,503 shares of Subject Company Common Stock were reserved for issuance
pursuant to Subject Company's 1994 Restricted Stock Plan, 1990 Stock Plan for
Directors, and Savings, Profit Sharing and Employee Stock Ownership Plan, (ii)
722,523 shares of Subject Company Common Stock were reserved for issuance upon
the exercise of stock options pursuant to the 1978 Stock Option Plan, the 1988
Stock Option Plan, and the NFS Financial Corp. Stock Option Plan (collectively,
the "Subject Company Stock Option Plans"), (iii) 200,000 shares of Subject
Company Series A Junior Participating Preferred Stock were reserved for
issuance upon exercise of the rights (the "Subject Company Rights") distributed
to holders of Subject Company Common Stock pursuant to the Shareholder Rights
Agreement, dated as of December 23, 1988, between Subject Company and The First
National Bank of Boston, as Rights Agent (the "Subject Company Shareholder
Rights Agreement"), and (iv) the shares of Subject
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Company Common Stock issuable pursuant to the Subject Company Option Agreement.
All of the issued and outstanding shares of Subject Company Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except as set forth in
Section 3.2(a) of the disclosure schedule of Subject Company delivered to
Parent concurrently herewith (the "Subject Company Disclosure Schedule") and
except for the Subject Company Shareholder Rights Agreement and the Subject
Company Option Agreement, Subject Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Subject
Company Common Stock or Subject Company Preferred Stock or any other equity
securities of Subject Company or any securities representing the right to
purchase or otherwise receive any shares of Subject Company Common Stock or
Subject Company Preferred Stock. Subject Company has previously provided
Parent with a list of the option holders, the date of each option to purchase
Subject Company Common Stock granted, the number of shares subject to each such
option, the expiration date of each such option, and the price at which each
such option may be exercised under an applicable Subject Company Stock Option
Plan. Except as set forth in Section 3.2(a) of the Subject Company Disclosure
Schedule, since November 30, 1995, Subject Company has not issued any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than pursuant to the exercise of employee
stock options granted prior to such date and as disclosed in Section 3.2(a) of
the Subject Company Disclosure Schedule, pursuant to the Subject Company Option
Agreement and pursuant to the Subject Company Shareholder Rights Agreement.
(b) Except as set forth in Section 3.2(b) of the Subject Company
Disclosure Schedule, Subject Company owns, directly or indirectly, all of the
issued and outstanding shares of capital stock of each of the Subject Company
Subsidiaries, free and clear of any liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as set forth in
Section 3.2(b) of the Subject Company Disclosure Schedule, no Subject Company
Subsidiary has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
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Subsidiary. Assuming compliance by Parent with Section 1.6 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which Subject
Company or any of its Subsidiaries will be bound calling for the purchase or
issuance of any shares of the capital stock of Subject Company or any of its
Subsidiaries.
3.3 Authority; No Violation. (a) Subject Company 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 Subject Company. The Board of
Directors of Subject Company has directed that this Agreement and the
transactions contemplated hereby be submitted to Subject Company's stockholders
for approval at a meeting of such stockholders and, except for the adoption of
this Agreement by the affirmative vote of the holders of two-thirds of the
outstanding shares of Subject Company Common Stock, no other corporate
proceedings on the part of Subject Company are necessary to approve this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Subject Company
and (assuming due authorization, execution and delivery by Parent) constitutes
a valid and binding obligation of Subject Company, enforceable against Subject
Company in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Except as set forth in Section 3.3(b) of the Subject Company
Disclosure Schedule, neither the execution and delivery of this Agreement by
Subject Company nor the consummation by Subject Company of the transactions
contemplated hereby, nor compliance by Subject Company with any of the terms or
provisions hereof, will (i) violate any provision of the Articles of
Organization or Bylaws of Subject Company or (ii) assuming that the consents
and approvals referred to in Section 3.4 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Subject Company or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision 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, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or
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other encumbrance upon any of the respective properties or assets of Subject
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Subject Company or
any of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have or be reasonably likely to have
a Material Adverse Effect on Subject Company.
3.4 Consents and Approvals. Except for (i) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the filing of applications with the Office of
the Thrift Supervision (the "OTS") under HOLA and approval of such
applications, (iii) the filing of any requisite applications with the Office of
the Comptroller of the Currency (the "OCC"), (iv) the filing of any required
applications or notices with any state agencies and approval of such
applications and notices (the "State Approvals"), (v) the filing with the SEC
of a joint proxy statement in definitive form relating to the meetings of
Parent's and Subject Company's stockholders to be held in connection with this
Agreement and the transactions contemplated hereby (the "Joint Proxy
Statement") and the registration statement on Form S-4 (the "S-4") in which the
Proxy Statement will be included as a prospectus, (vi) the filing of the
Articles of Merger pursuant to the MBCL, (vii) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Parent Common
Stock pursuant to this Agreement, (viii) such filings as may be required in
connection with a change of control of entities subject to the Investment
Company Act of 1940, (ix) the approval of this Agreement by the requisite vote
of the stockholders of Parent and Subject Company, and (x) the consents and
approvals set forth in Section 3.4 of the Subject Company Disclosure Schedule,
no consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with (A) the execution and delivery by Subject Company
of this Agreement and (B) the consummation by Subject Company of the Merger
and the other transactions contemplated hereby.
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3.5 Reports. Subject Company and each of its Subsidiaries have timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 1993 with (i) the Federal Reserve Board, (ii) the OTS,
(iii) any state or foreign regulatory authority (each a "State Regulator"),
(iv) the OCC and (v) any other self-regulatory organization ("SRO")
(collectively "Regulatory Agencies"), and all other material reports and
statements required to be filed by them since January 1, 1993, including,
without limitation, any report or statement required to be filed pursuant to
the laws, rules or regulations of the United States, any state or foreign
governmental or regulatory body, the Federal Reserve Board, the FDIC, the OCC,
the OTS, any State Regulator or any SRO, and have paid all fees and assessments
due and payable in connection therewith. Except for normal examinations
conducted by a Regulatory Agency in the regular course of the business of
Subject Company and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Subject Company, investigation into the
business or operations of Subject Company or any of its Subsidiaries since
January 1, 1994. There is no material unresolved violation, criticism, or
exception by any Regulatory Agency with respect to any report or statement
relating to any examinations of Subject Company or any of its Subsidiaries.
3.6 Financial Statements. Subject Company has previously delivered to
Parent copies of (a) the consolidated balance sheets of Subject Company and its
Subsidiaries as of December 31, for the fiscal years 1993 and 1994, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1992 through 1994, inclusive, as reported in
Subject Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 filed with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in each case accompanied by the audit report of
KPMG Peat Marwick LLP, independent public accountants with respect to Subject
Company, and (b) the unaudited consolidated balance sheet of Subject Company
and its Subsidiaries as of September 30, 1994 and September 30, 1995 and the
related unaudited consolidated statements of income, cash flows and changes in
stockholders' equity for the nine month periods then ended as reported in
Subject Company's Quarterly Report on Form 10-Q for the period ended September
30, 1995 filed with the SEC under the Exchange Act. The December 31, 1994
consolidated balance sheet of Subject Company (including the related notes,
where applicable) fairly presents the consolidated financial position of
Subject Company and its Subsidiaries as of the date thereof, and the other
financial statements referred to
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16
in this Section 3.6 (including the related notes, where applicable) fairly
present (subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
position of Subject Company and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and each of
such statements (including the related notes, where applicable) has been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of
Subject Company and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal
and accounting requirements and reflect only actual transactions.
3.7 Broker's Fees. Except as set forth in Section 3.7 of the Subject
Company Disclosure Schedule, neither Subject Company nor any Subject Company
Subsidiary nor any of their respective officers or directors has employed any
broker or finder or incurred any liability for any broker's fees, commissions
or finder's fees in connection with any of the transactions contemplated by
this Agreement or the Option Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Subject Company Reports (as defined below) filed prior to the date
hereof, since December 31, 1994, (i) neither Subject Company nor any of its
Subsidiaries has incurred any material liability, except in the ordinary course
of their business consistent with their past practices, and (ii) no event has
occurred which has had, individually or in the aggregate, a Material Adverse
Effect on Subject Company.
(b) Except as publicly disclosed in Subject Company Reports filed
prior to the date hereof, and except as set forth in Section 3.8(b) of the
Subject Company Disclosure Schedule, since December 31, 1994, Subject Company
and its Subsidiaries have carried on their respective businesses in the
ordinary and usual course consistent with their past practices.
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(c) Except as set forth in Section 3.8(c) of the Subject Company
Disclosure Schedule, since December 31, 1994, neither Subject Company nor any
of its Subsidiaries has (i) except for normal increases in the ordinary course
of business consistent with past practice or except as required by applicable
law, increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of December 31, 1994, granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than customary year-end
bonuses for fiscal 1994 or 1995 or (ii) suffered any strike, work stoppage,
slow-down, or other labor disturbance.
3.9 Legal Proceedings. (a) Neither Subject Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Subject Company's knowledge, threatened, material legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against Subject Company or any of its Subsidiaries
or challenging the validity or propriety of the transactions contemplated by
this Agreement or the Subject Company Option Agreement as to which there is a
reasonable probability of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, have a Material Adverse
Effect on Subject Company.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Subject Company, any of its Subsidiaries or the assets
of Subject Company or any of its Subsidiaries which has had, or might
reasonably be expected to have, a Material Adverse Effect on Subject Company.
3.10 Taxes and Tax Returns. (a) Each of Subject Company and its
Subsidiaries has duly filed all material Federal, state and, to the best of
Subject Company's knowledge, material local information returns and tax returns
required to be filed by it on or prior to the date hereof and has duly paid or
made provisions for the payment of all material Taxes (as defined below) and
other material governmental charges which have been incurred or are due or
claimed to be due from it by Federal, state, county or local taxing authorities
on or prior to the date of this Agreement (including, without limitation, if
and to the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than Taxes or other charges (1) which are not yet delinquent or are being
contested in good faith and as to which adequate provision for payment has been
made and (2)
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18
have not been finally determined. Except as set forth on Section 3.10 of the
Subject Company Disclosure Schedule, the income tax returns of Subject Company
and its Subsidiaries have been examined by the Internal Revenue Service (the
"IRS") and any liability with respect thereto has been satisfied for all years
to and including 1990, and no material deficiencies were asserted as a result
of such examination or all such deficiencies were satisfied, except where the
failure to do so would not have a Material Adverse Effect on Subject Company.
In addition, (i) proper and accurate amounts have been withheld by Subject
Company and its Subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable Federal, state and local laws, except where failure to do so would
not have a Material Adverse Effect on Subject Company, (ii) Federal, state,
county and local returns which are accurate and complete in all material
respects have been filed by Subject Company and its Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes, except where failure to do so would not
have a Material Adverse Effect on Subject Company, (iii) the amounts shown on
such Federal, state, local or county returns to be due and payable have been
paid in full or adequate provision therefor has been included by Subject
Company in its consolidated financial statements, except where failure to do so
would not have a Material Adverse Effect on Subject Company and (iv) there are
no Tax liens upon any property or assets of the Subject Company or its
Subsidiaries except liens for current taxes not yet due.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, county, local, and foreign income, excise, gross receipts, ad
valorem, profits, gains, property, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangibles, franchise, and other taxes,
charges, levies or like assessments together with all penalties and additions
to tax and interest thereon.
(c) Except as set forth in Section 3.10(c) of the Subject Company
Disclosure Schedule, any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of Subject
Company or any of its affiliates who is a "Disqualified Individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Subject Company Benefit Plan currently in effect would not be characterized
as an "excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code) that would be likely to have a Material Adverse Effect on Subject
Company.
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19
(d) No disallowance of a deduction under Section 162(m) of the Code
for employee remuneration of any amount paid or payable by Subject Company or
any Subsidiary of Subject Company under any contract, plan, program,
arrangement or understanding would be reasonably likely to have a Material
Adverse Effect on Subject Company.
3.11 Employees. (a) Section 3.11(a) of the Subject Company
Disclosure Schedule sets forth a true and complete list of each material
employee benefit plan, arrangement or agreement that is maintained as of the
date of this Agreement (the "Plans") by Subject Company or any of its
Subsidiaries or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), all of which together with Subject Company would be deemed
a "single employer" within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Subject Company has heretofore delivered to Parent true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) the actuarial report for such Plan (if applicable) for each
of the last two years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Plan.
(c) Except as set forth in Section 3.11(c) of the Subject Company
Disclosure Schedule, (i) each of the Plans has been operated and administered
in all material respects in compliance with applicable laws, including but not
limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified or
may be amended to preserve its qualification, (iii) with respect to each Plan
which is subject to Title IV of ERISA, the present value of accrued benefits
under such Plan, based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by such Plan's actuary with
respect to such Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Plan allocable to such accrued benefits,
(iv) no Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former employees
of Subject Company, its Subsidiaries or any ERISA Affiliate beyond their
retirement or other termination of service, other than (w) coverage mandated by
applicable law, (x) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Subject Company,
its Subsidiaries or the ERISA Affiliates or (z) benefits the full cost of which
is borne by the current or former employee (or his beneficiary), (v) no
liability under
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Title IV of ERISA has been incurred by Subject Company, its Subsidiaries or
any ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to Subject Company, its Subsidiaries or
any ERISA Affiliate of incurring a material liability thereunder, (vi) no Plan
is a "multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by Subject Company or
its Subsidiaries as of the Effective Time with respect to each Plan in respect
of current or prior plan years have been paid or accrued in accordance with
generally accepted accounting practices and Section 412 of the Code, (viii)
neither Subject Company, its Subsidiaries nor any ERISA Affiliate has engaged
in a transaction with respect to a Plan in connection with which Subject
Company, its Subsidiaries or any ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix) to
the best knowledge of Subject Company there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto.
(d) Except as set forth in Section 3.11(d) of the Subject Company
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of Subject Company or any of its affiliates from Subject Company
or any of its affiliates under any Subject Company Benefit Plan or otherwise,
(ii) materially increase any benefits otherwise payable under any Subject
Company Benefit Plan or (iii) result in any acceleration of the time of payment
or vesting of any such benefits to any material extent.
3.12 SEC Reports. Subject Company has previously made available to
Parent an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1993 by Subject Company with the SEC pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act (the "Subject Company
Reports") and prior to the date hereof and (b) communication mailed by Subject
Company to its stockholders since January 1, 1993 and prior to the date hereof,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except
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that information as of a later date shall be deemed to modify information as of
an earlier date. Subject Company has timely filed all Subject Company Reports
and other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Subject Company Reports
complied in all material respects with the published rules and regulations of
the SEC with respect thereto.
3.13 Compliance with Applicable Law. Except as disclosed in Section
3.13 of the Subject Company Disclosure Schedule, Subject Company and each of
its Subsidiaries hold, and have at all times 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 default in any material respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of any Governmental
Entity relating to Subject Company or any of its Subsidiaries, except where the
failure to hold such license, franchise, permit or authorization or such
noncompliance or default would not, individually or in the aggregate, have a
Material Adverse Effect on Subject Company, and neither Subject Company nor any
of its Subsidiaries knows of, or has received notice of, any material
violations of any of the above.
3.14 Certain Contracts. (a) Except as set forth in Section 3.14(a)
of the Subject Company Disclosure Schedule, neither Subject Company nor any of
its Subsidiaries 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 directors or executive officers of Subject Company (ii)
which, upon the consummation of the transactions contemplated by this Agreement
will (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming due from
Parent, Subject Company, the Surviving Corporation, or any of their respective
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 that has not been filed or
incorporated by reference in the Subject Company Reports, (iv) which materially
restricts the conduct of any line of business by Subject Company, (v) with or
to a labor union or guild (including any collective bargaining agreement), or
(vi) (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. Subject Company has
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previously delivered to Parent true and correct copies of all employment,
consulting and deferred compensation agreements relating to any director or
executive officer of Subject Company which are in writing and to which Subject
Company or any of its Subsidiaries is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section 3.14(a),
whether or not set forth in Section 3.14(a) of the Subject Company Disclosure
Schedule, is referred to herein as a "Subject Company Contract", and neither
Subject Company nor any of its Subsidiaries knows of, or has received notice
of, any violation of the above by any of the other parties thereto which,
individually or in the aggregate, would have a Material Adverse Effect on
Subject Company.
(b) (i) Each Subject Company Contract is valid and binding and in full
force and effect, (ii) Subject Company and each of its Subsidiaries has in all
material respects performed all obligations required to be performed by it to
date under each Subject Company Contract, except where such noncompliance,
individually or in the aggregate, would not have a Material Adverse Effect on
Subject Company, 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 Subject Company or any of its Subsidiaries under any such Subject
Company Contract, except where such default, individually or in the aggregate,
would not have a Material Adverse Effect on Subject Company.
3.15 Agreements with Regulatory Agencies. Except as set forth in
Section 3.15 of the Subject Company Disclosure Schedule, neither Subject
Company nor any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is 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, or has adopted any
board resolutions at the request of (each, whether or not set forth in Section
3.15 of the Subject Company Disclosure Schedule, a "Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that currently restricts the
conduct of its business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has Subject Company or
any of its Subsidiaries been advised by any Regulatory Agency or other
Governmental Entity that it is currently considering issuing or requesting any
Regulatory Agreement.
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3.16 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the December 31, 1994 consolidated
balance sheet of Subject Company and for liabilities incurred in the ordinary
course of business consistent with past practice, since December 31, 1994,
neither Subject Company nor any of its Subsidiaries has incurred any liability
of any nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) that, either alone or when combined with all
similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on Subject Company.
3.17 State Takeover Laws. The Board of Directors of Subject Company
has approved the transactions contemplated by this Agreement and the Option
Agreements such that the provisions of Ch. 110F of the Massachusetts General
Laws and the provisions of the Subject Company's Articles of Organization
relating to special voting requirements for certain business combinations will
not apply to this Agreement or the Option Agreements or any of the transactions
contemplated hereby or thereby.
3.18 Rights Agreement. Subject Company has taken all necessary action
so that the entering into of this Agreement and the Option Agreements, the
Merger, the acquisition of shares pursuant to the Option Agreements and the
other transactions contemplated hereby and thereby do not and will not result
in the grant of any rights to any person under the Subject Company Rights
Agreement or enable or require the Subject Company Rights to be exercised,
distributed or triggered.
3.19 Pooling of Interests. As of the date of this Agreement, Subject
Company has no reason to believe that the Merger will not qualify as a pooling
of interests for accounting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT
Parent hereby represents and warrants to Subject Company as follows:
4.1 Corporate Organization. (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Parent has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business
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as it is now being conducted, and is duly licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to be
so licensed or qualified would not have a Material Adverse Effect on Parent.
Parent is duly registered as a bank holding company under the BHC Act. The
Articles of Organization and Bylaws of Parent, copies of which have previously
been made available to Subject Company, are true, complete and correct copies
of such documents as in effect as of the date of this Agreement.
(b) Each Parent Subsidiary is (i) duly organized and validly existing
as a bank, corporation or partnership under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a Material
Adverse Effect on Parent, and (iii) has all requisite corporate power and
authority to own or lease its properties and assets and to carry on its
business as now conducted.
(c) The minute books of Parent accurately reflect in all material
respects all corporate actions held or taken since January 1, 1993 of its
stockholders and Board of Directors (including committees of the Board of
Directors of Parent).
4.2 Capitalization. (a) The authorized capital stock of Parent
consists of (i) 200,000,000 shares of Parent Common Stock, of which as of
November 30, 1995, 112,566,642 shares were issued and outstanding and none of
which were held in treasury, (ii) 10,000,000 shares of Preferred Stock, without
par value ("Parent Preferred Stock"), of which as of November 30, 1995, (A)
3,393,977 Shares of Adjustable Rate Cumulative Preferred Stock and 1,200,000
shares of Fixed Rate Cumulative Preferred Stock were issued and outstanding
(represented by 120,000 depository shares) and (B) 200,000 shares were
designated and no shares were issued as outstanding of the Junior Participating
Preferred Stock, Series D, designated pursuant to the Rights Agreement dated as
of June 28, 1990 between Parent and The First National Bank of Boston, as
Rights Agent (the "Parent Rights Agreement"). All of the issued and
outstanding shares of Parent Common Stock and Parent Preferred Stock have been
duly authorized and validly issued and are fully paid, nonassessable and free
of preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as set forth in Section
4.2(a) of the disclosure schedule of Parent delivered to Subject Company
concurrently herewith (the
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"Parent Disclosure Schedule"), and except for the Parent Rights Agreement and
the Parent Option Agreement, Parent does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of Parent
Common Stock or Parent Preferred Stock or any other equity securities of Parent
or any securities representing the right to purchase or otherwise receive any
shares of Parent Common Stock or Parent Preferred Stock. As of November 30,
1995, 3,630,281 shares of Parent Common Stock were reserved for issuance
pursuant to outstanding warrants, rights, options and the employee benefit
plans set forth in Section 4.11(a) of the Parent Disclosure Schedule and no
shares of Parent Preferred Stock were reserved for issuance. Except as set
forth in Schedule 4.2 of the Parent Disclosure Schedule, since November 30,
1995, Parent has not issued or agreed to issue any shares of its capital stock
or any securities convertible into or exercisable for any shares of its capital
stock, other than pursuant to the exercise of employee stock options granted
prior to such date and as disclosed in Section 4.2(a) of the Parent Disclosure
Schedule and pursuant to the Parent Company Option Agreement. The shares of
Parent Capital Stock to be issued pursuant to the Merger will be duly
authorized and validly issued and, at the Effective Time, all such shares will
be fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent Disclosure
Schedule, Parent owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Parent Subsidiaries, free
and clear of any liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. Except as set forth in Section
4.2(b) of the Parent Disclosure Schedule, no Parent Subsidiary has or is bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of capital stock or any other equity security of such Subsidiary or any
securities representing the right to purchase or otherwise receive any shares
of capital stock or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Parent 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 Parent.
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The Board of Directors of Parent has directed that this Agreement and the
transactions contemplated hereby be submitted to Parent's stockholders for
approval at a meeting of such stockholders and except for the adoption of this
Agreement by the affirmative vote of the holders of a majority of the shares of
Parent Common Stock present and voting at the meeting of stockholders of Parent
at which the Merger is voted upon as required under the rules and regulations
of the NYSE, no other corporate proceedings on the part of Parent are necessary
to approve this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and (assuming due authorization, execution and delivery by Subject
Company) constitutes a valid and binding obligation of Parent, enforceable
against Parent in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) Except as set forth in Section 4.3(b) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement by Parent, nor
the consummation by Parent of the transactions contemplated hereby, nor
compliance by Parent with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Organization or Bylaws of Parent or
(ii) assuming that the consents and approvals referred to in Section 4.4 are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision 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, result in the termination of
or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
Parent or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Parent or any of
its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches or defaults which either
individually or in the aggregate will not have or be reasonably likely to have
a Material Adverse Effect on Parent.
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4.4 Consents and Approvals. Except for (i) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act
and approval of such applications and notices, (ii) the filing of applications
with the OTS under HOLA and approval of such applications, (iii) the filing of
any requisite applications with the OCC, (iv) the filing of the State
Approvals, (v) the filing with the SEC of the Joint Proxy Statement and the
S-4, (vi) the filing of the Articles of Merger pursuant to the MBCL, (vii) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of the shares of Parent Common Stock pursuant to this Agreement, (viii) such
filings and approvals as may be required in connection with a change of control
of entities subject to the Investment Company Act of 1940, and (ix) the
approval of this Agreement by the requisite vote of the stockholders of Parent
and Subject Company, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in
connection with (A) the execution and delivery by Parent of this Agreement and
(B) the consummation by Parent of the Merger and the other transactions
contemplated hereby.
4.5 Reports. Parent and each of its Subsidiaries have timely filed
all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 1993 with the Regulatory Agencies, and all other material
reports and statements required to be filed by them since January 1, 1993,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, any state or
foreign governmental or regulatory body, the Federal Reserve Board, the FDIC,
the OCC, the OTS, any State Regulator or any SRO, and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of Parent and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Parent, investigation into the business
or operations of Parent or any of its Subsidiaries since January 1, 1994.
There is no material unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating to any
examinations of Parent or any of its Subsidiaries.
4.6 Financial Statements. Parent has previously delivered to Subject
Company copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries as of December 31, for the fiscal years 1993 and 1994, and the
related consolidated statements of income, changes in
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stockholders' equity and cash flows for the fiscal years 1992 through 1994,
inclusive, as reported in Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of Coopers & Xxxxxxx LLP, independent
public accountants with respect to Parent, and (b) the unaudited consolidated
balance sheet of Parent and its Subsidiaries as of September 30, 1994 and
September 30, 1995 and the related unaudited consolidated statements of income,
cash flows and changes in stockholders' equity for the nine month periods then
ended as reported in Parent's Quarterly Report on Form 10-Q for the period
ended September 30, 1995 filed with the SEC under the Exchange Act. The
December 31, 1994 consolidated balance sheet of Parent (including the related
notes, where applicable) fairly presents the consolidated financial position of
Parent and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 4.6 (including the related notes, where
applicable) fairly present (subject, in the case of the unaudited statements,
to recurring audit adjustments normal in nature and amount), the results of the
consolidated operations and changes in stockholders' equity and consolidated
financial position of Parent and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto; 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 in each case as indicated in such statements or in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q.
The books and records of Parent and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.
4.7 Broker's Fees. Except as set forth in Section 4.7 of the Parent
Disclosure Schedule, neither Parent nor any Parent Subsidiary nor any of their
respective officers or directors has employed any broker or finder or incurred
any liability for any broker's fees, commissions or finder's fees in connection
with any of the transactions contemplated by this Agreement or the Option
Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Parent Reports (as defined below) filed prior to the date hereof,
since December 31, 1994, (i) neither Parent nor any of its Subsidiaries has
incurred any material liability, except in the ordinary course of their
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business consistent with their past practices, and (ii) no event has occurred
which has had, individually or in the aggregate, a Material Adverse Effect on
Parent.
(b) Except as publicly disclosed in Parent Reports filed prior to the
date hereof, and except as set forth in Section 4.8(b) of the Parent Disclosure
Schedule, since December 31, 1994, Parent and its Subsidiaries have carried on
their respective businesses in the ordinary and usual course consistent with
their past practices.
(c) Except as set forth in Section 4.8(c) of the Parent Disclosure
Schedule, since December 31, 1994, neither Parent nor any of its Subsidiaries
has (i) except for normal increases in the ordinary course of business
consistent with past practice or except as required by applicable law,
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of December 31, 1994, granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus other than customary year-end bonuses for
fiscal 1994 or 1995 or (ii) suffered any strike, work stoppage, slow-down, or
other labor disturbance.
4.9 Legal Proceedings. (a) Neither Parent nor any of its Subsidiaries
is a party to any and there are no pending or, to the best of Parent's
knowledge, threatened, material legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of
any nature against Parent or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or the
Parent Option Agreement as to which there is a reasonable probability of an
adverse determination and which, if adversely determined, would, individually
or in the aggregate, have a Material Adverse Effect on Parent.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of
Parent or any of its Subsidiaries which has had, or might reasonably be
expected to have, a Material Adverse Effect on Parent or the Surviving
Corporation.
4.10 Taxes and Tax Returns. (a) Each of Parent and its Subsidiaries has
duly filed all material Federal, state and, to the best of Parent's knowledge,
material local information returns and tax returns required to be filed by it
on or prior to the date hereof and has duly paid or made provisions for the
payment of all material Taxes (as defined below) and other
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material governmental charges which have been incurred or are due or claimed to
be due from it by Federal, state, county or local taxing authorities on or
prior to the date of this Agreement (including, without limitation, if and to
the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than Taxes or other charges (1) which are not yet delinquent or are being
contested in good faith and as to which adequate provision for payment has been
made and (2) have not been finally determined. Except as set forth on Section
4.10 of the Parent Company Disclosure Statement, the income tax returns of
Parent and its Subsidiaries have been examined by the Internal Revenue Service
(the "IRS") and any liability with respect thereto has been satisfied for all
years to and including 1990, and no material deficiencies were asserted as a
result of such examination or all such deficiencies were satisfied, except
where the failure to do so would not have a Material Adverse Effect on Parent.
In addition, (i) proper and accurate amounts have been withheld by Parent and
its Subsidiaries from their employees for all prior periods in compliance in
all material respects with the tax withholding provisions of applicable
Federal, state and local laws, except where failure to do so would not have a
Material Adverse Effect on Parent, (ii) Federal, state, county and local
returns which are accurate and complete in all material respects have been
filed by Parent and its Subsidiaries for all periods for which returns were due
with respect to income tax withholding, Social Security and unemployment taxes,
except where failure to do so would not have a Material Adverse Effect on
Parent, (iii) the amounts shown on such Federal, state, local or county returns
to be due and payable have been paid in full or adequate provision therefor has
been included by Parent in its consolidated financial statements, except where
failure to do so would not have a Material Adverse Effect on Parent and (iv)
there are no Tax liens upon any property or assets of the Parent or its
Subsidiaries except liens for current taxes not yet due.
(b) Any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of Parent or any of its
affiliates who is a "Disqualified Individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Parent Benefit Plan
currently in effect would not be characterized as an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code) that would be
likely to have a Material Adverse Effect on Parent.
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(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Parent or any Subsidiary
of Subject Company under any contract, plan, program, arrangement or
understanding would be reasonably likely to have a Material Adverse Effect on
Parent.
4.11 Employees. (a) Section 4.11(a) of the Parent Disclosure Schedule
sets forth a true and complete list of each material employee benefit plan,
arrangement or agreement that is maintained as of the date of this Agreement
(the "Parent Plans") by Parent, any of its Subsidiaries or by any trade or
business; whether or not incorporated (a "Parent ERISA Affiliate"), all of
which together with Parent would be deemed a "single employer" within the
meaning of Section 4001 of ERISA.
(b) Parent has heretofore delivered to Subject Company true and complete
copies of each of the Parent Plans and all related documents, including but not
limited to (i) the actuarial report for such Parent Plan (if applicable) for
each of the last two years, and (ii) the most recent determination letter from
the Internal Revenue Service (if applicable) for such Parent Plan.
(c) Except as set forth in Section 4.11(c) of the Parent Disclosure
Schedule, (i) each of the Parent Plans has been operated and administered in
all material respects in compliance with applicable laws, including but not
limited to ERISA and the Code, (ii) each of the Parent Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified or
may be amended to preserve its qualification, (iii) with respect to each Parent
Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Parent Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such Parent
Plan's actuary with respect to such Parent Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Parent Plan
allocable to such accrued benefits, (iv) no Parent Plan provides benefits,
including without limitation death or medical benefits (whether or not
insured), with respect to current or former employees of Parent, its
Subsidiaries or any Parent ERISA Affiliate beyond their retirement or other
termination of service, other than (w) coverage mandated by applicable law, (x)
death benefits or retirement benefits under any "employee pension plan," as
that term is defined in Section 3(2) of ERISA, (y) deferred compensation
benefits accrued as liabilities on the books of Parent, its Subsidiaries or the
Parent ERISA Affiliates or (z) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), (v) no liability under
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Title IV of ERISA has been incurred by Parent, its Subsidiaries or any Parent
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to Parent, its Subsidiaries or any Parent ERISA
Affiliate of incurring a material liability thereunder, (vi) no Parent Plan is
a "multiemployer pension plan", as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by Parent or its
Subsidiaries as of the Effective Time with respect to each Parent Plan in
respect of current or prior plan years have been paid or accrued in accordance
with generally accepted accounting practices and Section 412 of the Code,
(viii) neither Parent, its Subsidiaries nor any Parent ERISA Affiliate has
engaged in a transaction with respect to a Parent Plan in connection with which
Parent, its Subsidiaries or any Parent ERISA Affiliate could be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code,
and (ix) to the best knowledge of Parent there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Parent Plans or any trusts related thereto.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of Parent or any of its affiliates from Parent or any of its
affiliates under any Parent Benefit Plan or otherwise, (ii) materially increase
any benefits otherwise payable under any Parent Benefit Plan or (iii) result in
any acceleration of the time of payment or vesting of any such benefits to any
material extent.
4.12 SEC Reports. Parent has previously made available to Subject
Company an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since January
1, 1993 by Parent with the SEC pursuant to the Securities Act or the Exchange
Act (the "Parent Reports") and prior to the date hereof and (b) communication
mailed by Parent to its stockholders since January 1, 1993 and prior to the
date hereof, and no such registration statement, prospectus, report, schedule,
proxy statement or communication contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Parent has timely filed all Parent Reports and other documents required to be
filed by
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it under the Securities Act and the Exchange Act, and, as of their respective
dates, all Parent Reports complied in all material respects with the published
rules and regulations of the SEC with respect thereto.
4.13 Compliance with Applicable Law. Except as disclosed in Section 4.13
of the Parent Disclosure Schedule, Parent and each of its Subsidiaries hold,
and have at all times 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 default in any
material respect under any, applicable law, statute, order, rule, regulation,
policy and/or guideline of any Governmental Entity relating to Parent or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default would not,
individually or in the aggregate, have a Material Adverse Effect on Parent, and
neither Parent nor any of its Subsidiaries knows of, or has received notice of,
any material violations of any of the above.
4.14 Certain Contracts. (a) Except as set forth in Section 4.14(a) of
the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries 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 directors
or executive officers of Parent (ii) which, upon the consummation of the
transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (whether of
severance pay or otherwise) becoming due from Parent, Subject Company, the
Surviving Corporation, or any of their respective 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 that has not been filed or incorporated by reference in the Parent
Reports, (iv) which materially restricts the conduct of any line of business by
Parent, (v) with or to a labor union or guild (including any collective
bargaining agreement) or (vi) (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. Parent has previously delivered to Subject Company true correct
copies of all employment, consulting and deferred compensation agreements
relating to any director or executive officer of Parent which are in writing
and to which Parent or any of its
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Subsidiaries is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.14(a), whether or not set
forth in Section 4.14(a) of the Parent Disclosure Schedule, is referred to
herein as a "Parent Contract", and neither Parent nor any of its Subsidiaries
knows of, or has received notice of, any violation of the above by any of the
other parties thereto which, individually or in the aggregate, would have a
Material Adverse Effect on Parent.
(b) (i) Each Parent Contract is valid and binding and in full force and
effect, (ii) Parent and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
Parent Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on Parent, 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 Parent or any of
its Subsidiaries under any such Parent Contract, except where such default,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent.
4.15 Agreements with Regulatory Agencies. Except as set forth in Section
4.15 of the Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is 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, or has adopted any board
resolutions at the request of (each, whether or not set forth in Section 4.15
of the Parent Disclosure Schedule, a "Parent Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that currently restricts the
conduct of its business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has Parent or any of
its Subsidiaries been advised by any Regulatory Agency or other Governmental
Entity that it is currently considering issuing or requesting any Regulatory
Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the December 31, 1994 consolidated
balance sheet of Parent and for liabilities incurred in the ordinary course of
business consistent with past practice, since December 31, 1994, neither Parent
nor any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to
become due) that, either alone or when combined with all similar
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liabilities, has had, or could reasonably be expected to have, a Material
Adverse Effect on Parent.
4.17 State Takeover Laws. The Board of Directors of Parent has approved
the transactions contemplated by this Agreement and the Option Agreements such
that the provisions of Ch. 110F of the Massachusetts General Laws will not
apply to this Agreement or the Option Agreements or any of the transactions
contemplated hereby or thereby.
4.18 Rights Agreement. Parent has taken all necessary action so that the
entering into of this Agreement and the Option Agreements, the Merger, the
acquisition of shares pursuant to the Option Agreements and the other
transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any person under the Parent Rights Agreement or enable
or require the Parent Rights to be exercised, distributed or triggered.
4.19 Pooling of Interests. As of the date of this Agreement, Parent has
no reason to believe that the Merger will not qualify as a pooling of interests
for accounting purposes.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the period
from the date of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement or the Option Agreements, each of
Parent and Subject Company shall, and shall cause each of their respective
Subsidiaries to, (i) conduct its business in the usual, regular and ordinary
course consistent with past practice, (ii) use reasonable best efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees and (iii) take no action which would materially adversely affect
or materially delay the ability of either Parent or Subject Company to obtain
any necessary approvals of any Regulatory Agency or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or the Option Agreements.
5.2 Subject Company Forbearances. During the period from the date of
this Agreement to the Effective Time, except as set forth in Section 5.2 of the
Subject Company Disclosure Schedule and, except as expressly contemplated or
permitted by this Agreement or the Option Agreements, Subject Company shall
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not, and Subject Company shall not permit any of its Subsidiaries to, without
the prior written consent of Parent:
(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance short-term indebtedness and
indebtedness of Subject Company or any of its Subsidiaries to Subject
Company or any of its Subsidiaries; it being understood and agreed that
incurrence of indebtedness in the ordinary course of business shall
include, without limitation, the creation of deposit liabilities,
purchases of federal funds, sales of certificates of deposit and entering
into repurchase agreements), assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other
individual, corporation or other entity, or make any loan or advance;
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock (except for regular
quarterly cash dividends at a rate not in excess of $0.60 per share of
Subject Company Common Stock and except for dividends paid by any of the
wholly owned Subsidiaries of Subject Company to Subject Company or any of
its wholly owned Subsidiaries); or issue or sell any additional shares of
capital stock except pursuant to (A) the exercise of stock options or
warrants outstanding as of the date of this Agreement, (B) the Subject
Company Option Agreement, or (C) the Subject Company Shareholder Rights
Agreement;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other entity
other than a direct or indirect wholly owned Subsidiary, or cancel,
release or assign any indebtedness to any such person or any claims held
by any such person, except in the ordinary course of business consistent
with past practice or pursuant to contracts or agreements in force at the
date of this Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by
purchase of stock or
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securities, contributions to capital, property transfers, or purchase of
any property or assets of any other individual, corporation or other
entity other than a wholly owned Subsidiary thereof;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases or
contracts, other than renewals of contracts and leases without material
adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits of
any of its employees or pay any pension or retirement allowance not
required by any existing plan or agreement to any such employees or become
a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than in the
ordinary course of business consistent with past practice or accelerate
the vesting of any stock options or other stock-based compensation;
(g) solicit, encourage or authorize any individual, corporation or
other entity to solicit from any third party any inquiries or proposals
relating to the disposition of its business or assets, or the acquisition
of its voting securities, or the merger of it or any of its Subsidiaries
with any corporation or other entity other than as provided by this
Agreement (and Subject Company shall promptly notify Parent of all of the
relevant details relating to all inquiries and proposals which it may
receive relating to any of such matters);
(h) settle any claim, action or proceeding, except in the ordinary
course of business consistent with past practice;
(i) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of Subject
Company to exercise its rights under the Parent Option Agreement;
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(j) amend its Articles of Organization or its Bylaws; or
(k) other than in prior consultation with the other party to this
Agreement, restructure or materially change its investment securities
portfolio or its gap position, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or reported;
(l) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VII not being satisfied or in a violation of any
provision of this Agreement, except, in every case, as may be required by
applicable law; or
(m) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
5.3 Parent Forbearances. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or permitted
by this Agreement or the Parent Option Agreement, Parent shall not, and shall
not permit any of its Subsidiaries to, without the prior written consent of
Subject Company:
(a) reclassify any of its capital stock or make, declare, or pay any
dividend or make any other distribution on, any shares of its capital
stock or any securities or obligations, convertible into or exchangeable
for any shares of its capital stock (except for regular quarterly cash
dividends on the Parent Common Stock at a rate not in excess of such rate
as Parent from time to time adopts as its regular quarterly dividend rate,
ordinary quarterly or semiannual cash dividends on the Parent Preferred
Stock at the rates set forth in the Parent Articles of Organization and
except for dividends paid by any of its wholly owned Subsidiaries or any
of their wholly owned Subsidiaries);
(b) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; provided,
however, that nothing contained herein shall limit the ability of Parent
to exercise its rights under the Subject Company Option Agreement;
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(c) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions of the Merger set
forth in Article VII of this Agreement not being satisfied or in a
violation of any provision of this Agreement;
(d) take any action that would materially adversely affect or
materially delay its ability to obtain any necessary approvals of any
Regulatory Agency or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and
agreements under this Agreement or the Parent Option Agreement;
(e) amend its Articles of Organization except with respect to the
establishment of one or more series of preferred stock or to increase its
capital stock to up to 400,000,000 shares of Parent Common Stock and
change the par value of the Parent Common Stock; or
(f) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Parent and Subject Company shall promptly
prepare and file with the SEC the Joint Proxy Statement and Parent shall
promptly prepare and file with the SEC the S-4, in which the Joint Proxy
Statement will be included as a prospectus. Each of Parent and Subject Company
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and Parent and
Subject Company shall thereafter mail the Joint Proxy Statement to their
respective stockholders. Parent shall also use all reasonable efforts to
obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement, and
Subject Company shall furnish all information concerning Subject Company and
the holders of Subject Company Common Stock as may be reasonably requested in
connection with any such action.
(b) The parties hereto shall cooperate with each other and use their best
efforts to promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable
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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), and to comply with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities.
Parent and Subject Company shall have the right to review in advance, and to
the extent practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to Subject Company or Parent, 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.
(c) Parent and Subject Company shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Joint Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Parent,
Subject Company or any of their respective Subsidiaries to any Governmental
Entity in connection with the Merger and the other transactions contemplated by
this Agreement.
(d) Parent and Subject Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Parent and
Subject Company shall, and shall cause each of their respective Subsidiaries
to, afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours during
the period prior to the Effective Time,
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41
to all its properties, books, contracts, commitments and records and, during
such period, each of Parent and Subject Company shall, and shall cause their
respective Subsidiaries to, make available to the other party (i) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal
securities laws or Federal or state banking laws, savings and loan or savings
association laws (other than reports or documents which Parent or Subject
Company, as the case may be, is not permitted to disclose under applicable law)
and (ii) all other information concerning its business, properties and
personnel as such party may reasonably request. Neither Parent nor Subject
Company nor any of their respective Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of Parent's or Subject Company's, as the case
may be, 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) Each of Parent and Subject Company shall hold all information
furnished by the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the extent required
by, and in accordance with, the provisions of the confidentiality agreement,
dated December 5, 1995 between Parent and Subject Company (the "Confidentiality
Agreement").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other
set forth herein.
6.3 Stockholders' Approvals. Each of Parent and Subject Company shall
call a meeting of its stockholders (which may be its 1996 Annual Meeting) to be
held as soon as practicable for the purpose of voting upon the requisite
stockholder approvals required in connection with this Agreement and the
Merger, and each shall use its best efforts to cause such meetings to occur on
the same date. The Boards of Directors of Parent and Subject Company shall
recommend such approval to their respective stockholders.
6.4 Legal Conditions to Merger. Each of Parent and Subject Company
shall, and shall cause its Subsidiaries to, use their best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with
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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
VII 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 Subject
Company or Parent or any of their respective Subsidiaries in connection with
the Merger and the other transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results. (a) Each of
Parent and Subject Company shall use its best efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes of Rule
145 under the Securities Act and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of such party to deliver to the
other party hereto, as soon as practicable after the date of this Agreement,
and prior to the date of the stockholders meetings called by Parent and Subject
Company to approve this Agreement, a written agreement, in the form of Exhibit
6.5(a) hereto (in the case of affiliates of Subject Company) or Exhibit 6.5(b)
hereto (in the case of affiliates of Parent).
(b) Parent shall use its best efforts to publish no later than ninety
(90) days after the end of the first month after the Effective Time in which
there are at least thirty (30) days of post-Merger combined operations (which
month may be the month in which the Effective Time occurs), combined sales and
net income figures as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Parent shall use its best efforts to cause
the shares of Parent Common Stock to be issued in the Merger to be approved for
listing on the New York Stock Exchange, Inc. (the "NYSE"), subject to official
notice of issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) From and after the Effective Time and
through the last day of the calendar year in which the Effective Time occurs,
and subject to applicable law, Parent shall continue Subject Company's Plans as
in effect at the Effective Time. From and after such date, and subject to
applicable law, Parent shall provide to the employees of Parent and its
Subsidiaries who formerly were employees of Subject Company and its
Subsidiaries employee benefits, including but not limited to pension plans,
thrift plans, management incentive plans, group life plans, accidental death
and dismemberment plans, travel accident plans, medical and hospitalization
plans and long term
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disability plans, substantially the same as those provided to similarly
situated employees of Parent and its Subsidiaries. From and after the
Effective Time, employees of Parent or its Subsidiaries who were employees of
the Subject Company and its Subsidiaries immediately prior to the Effective
Time shall receive full credit for all purposes under such plans, including,
without limitation, for purposes of determining participation levels in a cash
balance, retiree medical or similar plan, but not for the accrual of benefits,
for their years of service prior to the Effective Time with the Subject Company
or any of its Subsidiaries (and any predecessors thereto) and all preexisting
conditions to which any such employees are subject shall be waived under the
welfare plans of Parent and its Subsidiaries.
(b) Parent agrees to honor in accordance with their terms (i) all Plans
and (ii) all contracts, arrangements, commitments, or understandings described
in Section 3.14(a)(i) disclosed on the Subject Company Disclosure Schedule and
(iii) all benefits vested thereunder as of the Effective Time; provided,
however, that nothing in this sentence shall be interpreted as preventing
Parent from amending, modifying or terminating any Plans, contracts,
arrangements, commitments or understandings, in accordance with their terms.
Notwithstanding the foregoing, Parent agrees to recognize compensation paid by
Parent or its Affiliates on and after the Effective Time in determining
benefits attributable to Subject Company's defined benefit retirement plan, and
any excess or supplemental retirement plan as in effect at the Effective Time.
(c) The provisions of this Section 6.7 respecting Parent's agreement (i)
to grant service credits as provided in Section 6.7(a) and (ii) to honor the
contracts, arrangements, commitments and understandings referred to Section
6.7(b)(ii) are intended to be for the benefit of and enforceable by the persons
referred to therein or the parties to these agreements, respectively, and their
heirs and representatives.
6.8 Indemnification; Directors' and Officers' Insurance. (a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of Subject Company or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party based in whole or in part
on, or arising in whole or in part out of, or pertaining to (i) the fact that
he is or was a director, officer or employee of Subject Company, any of the
Subject Company Subsidiaries or
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44
any of their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or thereby, whether
in any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the Effective Time,
Parent shall indemnify and hold harmless, as and to the fullest extent
permitted by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted of arising before or after the Effective Time), the Indemnified
Parties may retain counsel reasonably satisfactory to them after consultation
with Parent; provided, however, that (1) Parent shall have the right to assume
the defense thereof and upon such assumption Parent shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other expenses
subsequently incurred by any Indemnified Party in connection with the defense
thereof, except that if Parent elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified Parties that there
are issues which raise conflicts of interest between Parent and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory to
them after consultation with Parent, and Parent shall pay the reasonable fees
and expenses of such counsel for the Indemnified Parties, (2) Parent shall be
obligated pursuant to this paragraph to pay for only one firm of counsel for
all Indemnified Parties, (3) Parent shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld) and (4) Parent shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.8, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify Parent
thereof, provided that the failure to so notify shall not affect the
obligations of Parent under this Section 6.8 except to the extent such failure
to notify materially prejudices Parent. Parent's obligations under this
Section 6.8 continue in full force and effect for a period of six (6) years
from the
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Effective Time; provided, however, that all rights to indemnification
in respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Parent shall use its best efforts to cause the persons serving as
officers and directors of Subject Company immediately prior to the Effective
Time to be covered for a period of four (4) years from the Effective Time by
the directors' and officers' liability insurance policy maintained by Subject
Company (provided that Parent may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and directors
in their capacity as such; provided, however, that in no event shall Parent be
required to expend more than 200% of the current amount expended by Subject
Company (the "Insurance Amount") per year of coverage to maintain or procure
insurance coverage pursuant hereto and further provided that if Parent is
unable to maintain or obtain the insurance called for by this Section 6.8(b),
Parent shall use its best efforts to obtain as much comparable insurance as
available for the Insurance Amount.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs
and representatives, and nothing herein shall affect any indemnification rights
that any Indemnified Party and his or her heirs and representatives may have
under the charter or bylaws of the Subject Company or any of its Subsidiaries,
any contract or applicable law.
6.9 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 (including, without limitation, any merger between a Subsidiary of
Parent and a Subsidiary of Subject Company) 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
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46
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, and at the sole expense of, Parent.
6.10 Advice of Changes. Parent and Subject Company shall promptly advise
the other party of any change or event having a Material Adverse Effect on it
or which it believes would or would be reasonably likely to cause or constitute
a material breach of any of its representations, warranties or covenants
contained herein.
6.11 Dividends. After the date of this Agreement, each of Parent and
Subject Company shall coordinate with the other the declaration of any
dividends in respect of Parent Common Stock and Subject Company Common Stock
and the record dates and payment dates relating thereto, it being the intention
of the parties hereto that holders of Parent Common Stock or Subject Company
Common Stock shall not receive two dividends, or fail to receive one dividend,
for any single calendar quarter with respect to their shares of Parent Common
Stock and/or Subject Company Common Stock and any shares of Parent Common Stock
any such holder receives in exchange therefor in the Merger.
6.12 Gains Taxes. Subject Company and its Subsidiaries shall pay all
state or local taxes, if any (collectively, the "Gains Taxes"), attributable to
the transfer of the beneficial ownership of Subject Company's and its
Subsidiaries' real properties, and any penalties or interest with respect
thereto, payable in connection with the consummation of the Merger. Subject
Company and its Subsidiaries shall cooperate with Parent in the filing of any
returns with respect to the Gain Taxes, including supplying in a timely manner
a complete list of all real property interests held by Subject Company and its
Subsidiaries and any information with respect to such properties that is
reasonably necessary to complete such returns. The portion of the
consideration allocable to the real properties of Subject Company and its
Subsidiaries shall be determined by Parent in its reasonable discretion. The
shareholders of Subject Company shall be deemed to be bound by the allocation
established pursuant to this Section 6.12 in the preparation of any return with
respect to the Gains Taxes. Furthermore, Parent will not supply cash or other
property to Subject Company and its Subsidiaries for purposes of replacing cash
used by such companies to pay the Gains Taxes.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation 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 respective
requisite affirmative votes of the holders of Subject Company Common Stock
and Parent Common Stock entitled to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock which shall be
issued to the stockholders of Subject Company upon consummation of the
Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained
and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities
Act and no stop order suspending the effectiveness of the S-4 shall have
been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency 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. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated
or enforced by any Governmental Entity which prohibits, restricts or makes
illegal consummation of the Merger.
(f) Federal Tax Opinion. Parent shall have received an opinion of
Xxxxxxx, Xxxx & Xxxxx, counsel to Parent, and Subject Company shall have
received an opinion of Xxxxxx & Dodge, counsel to Subject Company, in form
and substance reasonably satisfactory to Parent and
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Subject Company, dated as of the Effective Time, substantially to the
effect that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts
existing at the Effective Time, the Merger will be treated for Federal
income tax purposes as part of one or more reorganizations within the
meaning of Section 368 of the Code and that accordingly:
(i) No gain or loss will be recognized by Parent or
Subject Company as a result of the Merger;
(ii) No gain or loss will be recognized by the stockholders
of Subject Company who exchange their Subject Company Common Stock
solely for Parent Common Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest in
Parent Common Stock); and
(iii) The tax basis of the Parent Common Stock received by
stockholders who exchange all of their Subject Company Common Stock
solely for Parent Common Stock in the Merger will be the same as the
tax basis of the Subject Company Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
In rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of Parent, Subject
Company and others.
(g) Pooling of Interests. Parent and Subject Company shall each
have received a letter from Coopers & Xxxxxxx LLC addressed to Subject
Company and Parent, to the effect that the Merger will qualify for
"pooling of interests" accounting treatment.
7.2 Conditions to Obligations of Parent. The obligation of Parent to
effect the Merger is also subject to the satisfaction or waiver by Parent at or
prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Subject Company set forth in Sections 3.2, 3.3(a), 3.6,
3.15, 3.17 and 3.18 of the Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on or as of the Closing Date and (ii)
the representations and warranties of Subject Company set
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forth in this Agreement other than those specifically enumerated in clause
(i) hereof shall be true and correct in all material respects as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; PROVIDED, HOWEVER, that for purposes
of determining the satisfaction of the condition contained in this clause
(ii), no effect shall be given to any exception in such representations
relating to materiality or a Material Adverse Effect, and PROVIDED,
FURTHER, HOWEVER, that, for purposes of this clause (ii), 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, individually or
in the aggregate, represent a Material Adverse Effect upon the Subject
Company. Parent shall have received a certificate signed on behalf of
Subject Company by the Chief Executive Officer and the Chief Financial
Officer of Subject Company to the foregoing effect.
(b) Performance of Obligations of Subject Company. Subject Company
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of Subject
Company by the Chief Executive Officer and the Chief Financial Officer of
Subject Company to such effect.
(c) Subject Company Rights Agreement. The rights issued pursuant to
the Subject Company Rights Agreement shall not have become nonredeemable,
exercisable, distributed or triggered pursuant to the terms of such
agreement.
7.3 Conditions to Obligations of Subject Company. The obligation of
Subject Company to effect the Merger is also subject to the satisfaction or
waiver by Subject Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent set forth in Sections 4.2, 4.3(a), 4.6, 4.15, 4.17
and 4.18 of the Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made on or as of the Closing Date and (ii) the
representations and warranties of Parent set forth in this Agreement other
than those specifically enumerated in clause (i)
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hereof shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; PROVIDED, HOWEVER, that for purposes
of determining the satisfaction of the condition contained in this clause
(ii), no effect shall be given to any exception in such representations
relating to materiality or a Material Adverse Effect, and PROVIDED,
FURTHER, HOWEVER, that, for purposes of this clause (ii), 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, individually or
in the aggregate, represent a Material Adverse Effect upon Parent.
Subject Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Subject Company shall have received a certificate signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent to such effect.
(c) Parent Rights Agreement. The rights issued pursuant to the
Parent Rights Agreement shall not have become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of such agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the stockholders of Subject Company or Parent:
(a) by mutual consent of Parent and Subject Company in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either the Board of Directors of Parent or the Board of
Directors of Subject Company if any Governmental Entity which must grant a
Requisite Regulatory Approval has denied approval of the Merger and
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51
such denial has become final and nonappealable or any Governmental Entity
of competent jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
(c) by either the Board of Directors of Parent or the Board of
Directors of Subject Company if the Merger shall not have been consummated
on or before December 31, 1996, unless the failure of the Closing to occur
by such date 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;
(d) by either the Board of Directors of Parent or the Board of
Directors of Subject Company (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 or any of the representations or
warranties set forth in this Agreement on the part of the other party,
which breach is not cured within forty-five (45) days following written
notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; PROVIDED, HOWEVER, that
neither party shall have the right to terminate this Agreement pursuant to
Section 8.1(d) unless the breach of representation or warranty, together
with all such other breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated hereby
under Section 7.2(a) (in the case of a breach of representation or
warranty by the Subject Company) or Section 7.3(a) (in the case of a
breach of a representation or warranty by Parent).
(e) by either Parent or the Subject Company if any approval of the
stockholders of Parent or the Subject Company 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
(f) by Subject Company if there shall have occurred, since the date
of this Agreement, a Significant Decline (as defined below) in the Average
Closing Price (as defined below) of the Parent Common Stock as compared to
the price of $47.50 (the "Conversion Price"). The "Average Closing Price"
of the Parent Common Stock shall mean the average of the closing price of
the Parent Common Stock as reported on the NYSE for the 20 consecutive
trading days ending on the date the Federal Reserve Board issues an order
approving the Merger or, if
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the Federal Reserve Board gives notice that its approval is not required,
the later of (x) the date of such notice or (y) the date the Office of the
Comptroller of the Currency issues its approval of the merger of the
parties' principal national bank subsidiaries as contemplated by Section
1.12 (the "Final Calculation Period"). A "Significant Decline" shall be
deemed to have occurred if (i) the Average Closing Price of the Parent
Common Stock is less than 75% of the Conversion Price and (ii) the number
obtained by dividing the Average Closing Price of the Parent Common Stock
by the Conversion Price is less than the number obtained by dividing the
average of the closing prices of the Xxxxxx Xxxxxxx 35-Bank Regional Peer
Group during the Final Calculation Period by the average of the closing
prices of the Xxxxxx Xxxxxxx 35-Bank Regional Bank Peer Group for the 20
consecutive trading days ending on December 8, 1995 and subtracting .25
from the quotient.
8.2 Effect of Termination. In the event of termination of this Agreement
by either Parent or Subject Company as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of Parent, Subject
Company, any of their respective Subsidiaries or any of the officers or
directors or any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
(i) Sections 6.2(b), 8.2, 9.2 and 9.3, shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Subject Company shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of Subject
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by Subject Company's stockholders, there may not
be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Subject Company stockholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or
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authorized by their respective Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by Subject Company's stockholders,
there may not be, without further approval of such stockholders, any extension
or waiver of this Agreement or any portion thereof which reduces the amount or
changes the form of the consideration to be delivered to the Subject Company
stockholders hereunder other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party, 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 IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on a date
to be specified by the parties, which shall be no later than two business days
after the satisfaction or waiver (subject to applicable law) of the latest to
occur of the conditions set forth in Article VII hereof (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement, in
any instrument delivered pursuant to this Agreement or in the Confidentiality
Agreement (other than pursuant to the Option Agreements, which shall terminate
in accordance with its terms) shall survive the Effective Time, except for
those covenants and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense, provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by Parent
and Subject Company.
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9.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent, to:
Bank of Boston Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
Executive Director Mergers
and Acquisitions
with copies to:
Bank of Boston Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
General Counsel
Xxxxxxx, Xxxx & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx Xxxxxxx, Esq. and
Xxxx X. Xxxxxx, Esq.
and
Xxxxxxx Xxxx, Slate,
Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxx Xxxxx, Esq.
and
(b) if to Subject Company, to:
BayBanks, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
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55
with a copy to:
Xxxxxx & Dodge
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxx, Esq.
and
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
9.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and 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". No provision of this Agreement shall be construed to require
Subject Company, Parent or any of their respective Subsidiaries or affiliates
to take any action which would violate any applicable law, rule or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreement.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to any applicable conflicts of law.
9.9 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to
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56
the extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable law or the
rules of the NYSE or the National Association of Securities Dealers, Inc. (in
which case a party shall consult in advance with the other party), neither
Parent nor Subject Company shall, or shall permit any of its 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.
9.11 Assignment. Neither this Agreement nor any of the rights, interests
or obligations 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. Except as otherwise specifically provided
in Section 6.7 and Section 6.8 hereof, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
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57
IN WITNESS WHEREOF, Parent, Merger Sub and Subject Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
BANK OF BOSTON CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-----------------------
Xxxxx X. Xxxxxxx
Executive Director
BOSTON MERGER CORP.
By: /s/ Xxxxx X. Xxxxxxx and
----------------------
Xxxxx X. Xxxxxxx
President
By: /s/ Xxxxxxx X. Parent
-----------------------
Xxxxxxx X. Parent
Treasurer
BAYBANKS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-----------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Chairman of the Board and President
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------
Xxxxxxx X. Xxxxxx
Treasurer
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EXHIBIT A
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated December 12, 1995, between Bank of
Boston Corporation, a Massachusetts corporation ("Issuer"), and BayBanks, Inc.,
a Massachusetts corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 22,400,761 fully paid and nonassessable shares of Issuer's Common Stock, par
value $2.25 per share ("Common Stock"), at a price of $47.50 per share (the
"Option Price"); provided further that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9% of the
Issuer's issued and outstanding shares of Common Stock. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to
the Option shall be increased so that, after such issuance, it equals 19.9% of
the number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer or Grantee to breach any provision of the Merger Agreement.
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2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of
this Section 2) within 90 days following such Subsequent Triggering Event. Each
of the following shall be an Exercise Termination Event: (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of twelve months
after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is nonvolitional) (provided that if
an Initial Triggering Event continues or occurs beyond such termination and
prior to the passage of such twelve-month period, the Exercise Termination
Event shall be twelve months from the expiration of the Last Triggering Event
but in no event more than 18 months after such termination). The "Last
Triggering Event" shall mean the last Initial Triggering Event to expire. The
term "Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the rules and regulations thereunder)
other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction or shall have failed to publicly oppose an Acquisition
Transaction. For purposes of this Agreement, "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in Rule 1-02
of Regulation S-X promulgated by the
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Securities and Exchange Commission (the "SEC") of Issuer, (x)
a purchase, lease or other acquisition of all or a substantial portion
of the assets of Issuer or any Significant Subsidiary of Issuer, (y) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of Issuer or any Significant Subsidiary
of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any (i) merger, consolidation or
similar transaction involving Issuer or any Significant Subsidiary in
which the voting securities of Issuer outstanding immediately prior
thereto continue to represent (by either remaining outstanding or being
converted into the voting securities of the surviving entity of any
such transaction) at least 65% of the combined voting power of the
voting securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction, or (ii) any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries, be
deemed to be an Acquisition Transaction, provided any such transaction
is not entered into in violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or the Board of Directors of
Issuer shall have publicly withdrawn or modified, or publicly announced
its interest to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Option Agreement having the meaning assigned thereto in Section
13(d) of the 1934 Act, and the rules and regulations thereunder);
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(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or written communication that is or becomes the
subject of public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Merger
Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement and (y) shall not have been cured prior to the Notice
Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice
with the Federal Reserve Board, or other federal or state bank
regulatory authority, whether in draft or final form, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall
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expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions to
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in
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compliance with the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. [Section] 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
of this Agreement at the principal
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office of Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms and
subject to the same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its
own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a shelf registration statement under the 1933
Act covering the resale of this Option and any shares issued pursuant to this
Option and the issuance of any shares issuable pursuant to this Option to the
extent then permitted under the rules, regulations or policies of the SEC and,
to the extent not so permitted, the resale of such shares issuable pursuant to
this Option. The Issuer shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
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Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of
Common Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Issuer in
the aggregate; and provided further, however, that if such reduction occurs,
then the Issuer shall file a registration statement for the balance as promptly
as practical and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any such Holder
in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for the Issuer. Upon receiving any request under this Section 6
from any Holder, Issuer agrees to send a copy thereof to any other person known
to Issuer to be entitled to registration rights under this Section 6, in each
case by promptly mailing the same, postage prepaid, to the address of record of
the persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Grantee as a result of any assignment or division
of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event
(as defined below), (i) following a request of the Holder, delivered prior to
an Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of
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shares for which this Option may then be exercised and (ii) at the request of
the owner of Option Shares from time to time (the "Owner"), delivered within 90
days of such occurrence (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
the market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of (i) the price per share
of Common Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing price for
shares of Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this Option or the
Owner gives notice of the required repurchase of Option Shares, as the case may
be, or (iv) in the event of a sale of all or a substantial portion of Issuer's
assets, the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price,
the value of consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as the case
may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to
the Owner the Option Share Repurchase Price therefor or the portion thereof
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/ or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
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Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
such repurchase), the Holder or Owner may revoke its notice of repurchase of
the Option or the Option Shares either in whole or to the extent of the pro-
hibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to the Owner a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed
to have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the proviso to Section 2 (b) (i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event shall
constitute a Repurchase Event unless a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise Termination
Event unless no Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries,
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to merge into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then outstanding shares
of Common Stock shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property or the then
outstanding shares of Common Stock shall after such merger represent less than
50% of the outstanding voting shares and voting share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; PROVIDED
that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued
by the person merging into Issuer or by any company which controls or
is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of
the
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Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised plus (y) Grantee's Out-of-Pocket Expenses (to the
extent not previously reimbursed), and at the request of the owner (the
"Substitute Share Owner") of shares of Substitute Common Stock (the "Substitute
Shares"), the Substitute Option Issuer shall repurchase the Substitute Shares
at a price (the "Substitute Share Repurchase Price") equal to (x) the Highest
Closing Price multiplied by the number of Substitute Shares so
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designated plus (y) Grantee's Out-of-Pocket Expenses (to the extent not
previously reimbursed). The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within the
six-month period immediately preceding the date the Substitute Option Holder
gives notice of the required repurchase of the Substitute Option or the Sub-
stitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within five business days after the surrender of the Substitute Option and/or
certificates representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver or cause
to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
shall immediately so notify the Substitute Option Holder and/or the Substitute
Share Owner and thereafter deliver or cause to be delivered, from time to time,
to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at
any time after delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer shall use its
best efforts to receive all required regulatory and legal approvals as promptly
as practicable in
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order to accomplish such repurchase), the Substitute Option Holder or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2,
6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16 (b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum
number of shares of Common
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Stock at any time and from time to time issuable hereunder, and
all such shares, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required
redeeming all of the Rights or amending or terminating the Rights
Agreement) so that the entering into of this Option Agreement, the
acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the
grant of any rights to any person under the Rights Agreement or enable
or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities
Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application
by Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right
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to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
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00. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
BANK OF BOSTON CORPORATION
By:
-------------------------------
BAYBANKS, INC.
By:
-------------------------------
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EXHIBIT B
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated December 12, 1995, between BayBanks,
Inc., a Massachusetts corporation ("Issuer"), and Bank of Boston Corporation, a
Massachusetts corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 3,907,120 fully paid and nonassessable shares of Issuer's Common Stock, par
value $2.00 per share ("Common Stock"), at a price of $83.75 per share (the
"Option Price"); provided further that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9% of the
Issuer's issued and outstanding shares of Common Stock. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement), the number of shares of Common Stock subject to
the Option shall be increased so that, after such issuance, it equals 19.9% of
the number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing
contained in this Section 1(b) or elsewhere in this Agreement shall be deemed
to authorize Issuer or Grantee to breach any provision of the Merger Agreement.
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2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such ex- ercise (as provided in subsection (e) of
this Section 2) within 90 days following such Subsequent Triggering Event. Each
of the following shall be an Exercise Termination Event: (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional); or (iii) the passage of twelve months
after termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination is non-volitional) (provided that if
an Initial Triggering Event continues or occurs beyond such termination and
prior to the passage of such twelve-month period, the Exercise Termination
Event shall be twelve months from the expiration of the Last Triggering Event
but in no event more than 18 months after such termination). The "Last
Triggering Event" shall mean the last Initial Triggering Event to expire. The
term "Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the rules and regulations thereunder)
other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction or shall have failed to publicly oppose an Acquisition
Transaction. For purposes of this Agreement, "Acquisition Transaction"
shall mean (w) a merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as defined in Rule 1-02
of Regulation S-X promulgated by the
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Securities and Exchange Commission (the "SEC")) of Issuer, (x)
a purchase, lease or other acquisition of all or a substantial portion
of the assets of Issuer or any Significant Subsidiary of Issuer, (y) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of Issuer or any Significant Subsidiary
of Issuer, or (z) any substantially similar transaction; provided,
however, that in no event shall any (i) merger, consolidation or
similar transaction involving Issuer or any Significant Subsidiary in
which the voting securities of Issuer outstanding immediately prior
thereto continue to represent (by either remaining outstanding or being
converted into the voting securities of the surviving entity of any
such transaction) at least 65% of the combined voting power of the
voting securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction, or (ii) any merger, consolidation, purchase or
similar transaction involving only the Issuer and one or more of its
Subsidiaries or involving only any two or more of such Subsidiaries, be
deemed to be an Acquisition Transaction, provided any such transaction
is not entered into in violation of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, to engage in an Acquisition Transaction with any person other
than Grantee or a Grantee Subsidiary, or the Board of Directors of
Issuer shall have publicly withdrawn or modified, or publicly announced
its interest to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary
course of its business shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Option Agreement having the meaning assigned thereto in Section
13(d) of the 1934 Act, and the rules and regulations thereunder);
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(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its stockholders by
public announcement or written communication that is or becomes the
subject of public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Merger
Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement and (y) shall not have been cured prior to the Notice
Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice
with the Federal Reserve Board, or other federal or state bank
regulatory authority, whether in draft or final form, for approval to
engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial ownership of
20% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall
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expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have
been obtained and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions to
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in
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compliance with the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. [Section] 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to the Federal
Reserve Board or to any state regulatory authority is necessary before the
Option may be exercised, cooperating fully with the Holder in preparing such
applications or notices and providing such information to the Federal Reserve
Board or such state regulatory authority as they may require) in order to permit
the Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant hereto; and (iv) promptly to take all action
provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
of this Agreement at the principal
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office of Issuer, for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms and
subject to the same conditions as are set forth herein, in the aggregate the
same number of shares of Common Stock purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, subdivisions, conversions,
exchanges of shares, distributions on or in respect of the Common Stock that
would be prohibited under the terms of the Merger Agreement, or the like, the
type and number of shares of Common Stock purchasable upon exercise hereof and
the Option Price shall be appropriately adjusted in such manner as shall fully
preserve the economic benefits provided hereunder and proper provision shall be
made in any agreement governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within 90 days of such Subsequent Triggering Event (whether on its
own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a shelf registration statement under the 1933
Act covering the resale of this Option and any shares issued pursuant to this
Option and the issuance of any shares issuable pursuant to this Option to the
extent then permitted under the rules, regulations or policies of the SEC and,
to the extent not so permitted, the resale of such shares issuable pursuant to
this Option. The Issuer shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
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Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The foregoing notwithstanding, if, at the time of any request by Grantee for
registration of the Option or Option Shares as provided above, Issuer is in
registration with respect to an underwritten public offering of shares of
Common Stock, and if in the good faith judgment of the managing underwriter or
managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Issuer in
the aggregate; and provided further, however, that if such reduction occurs,
then the Issuer shall file a registration statement for the balance as promptly
as practical and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If requested by any such Holder
in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for the Issuer. Upon receiving any request under this Section 6
from any Holder, Issuer agrees to send a copy thereof to any other person known
to Issuer to be entitled to registration rights under this Section 6, in each
case by promptly mailing the same, postage prepaid, to the address of record of
the persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall Issuer be obligated to effect more
than two registrations pursuant to this Section 6 by reason of the fact that
there shall be more than one Grantee as a result of any assignment or division
of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal to
the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of
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shares for which this Option may then be exercised and (ii) at the request of
the owner of Option Shares from time to time (the "Owner"), delivered within 90
days of such occurrence (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
the market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of (i) the price per share
of Common Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing price for
shares of Common Stock within the six-month period immediately preceding the
date the Holder gives notice of the required repurchase of this Option or the
Owner gives notice of the required repurchase of Option Shares, as the case may
be, or (iv) in the event of a sale of all or a substantial portion of Issuer's
assets, the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by the Holder or the Owner, as the
case may be, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price,
the value of consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as the case
may be, and reasonably acceptable to the Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. Within the latter to occur of (x) five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer shall deliver
or cause to be delivered to the Holder the Option Repurchase Price and/or to
the Owner the Option Share Repurchase Price therefor or the portion thereof
that Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
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Xxxxxx Xxxxx Xxxxxxxxxx Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 7
is prohibited under applicable law or regulation from delivering to the Holder
and/or the Owner, as appropriate, the Option Repurchase Price and the Option
Share Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals and
to file any required notices as promptly as practicable in order to accomplish
such repurchase), the Holder or Owner may revoke its notice of repurchase of
the Option or the Option Shares either in whole or to the extent of the pro-
hibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of
which is the Option Repurchase Price, or (B) to the Owner a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be deemed
to have occurred (i) upon the consummation of any merger, consolidation or
similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the proviso to Section 2 (b) (i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50% or more of the then
outstanding shares of Common Stock, provided that no such event shall
constitute a Repurchase Event unless a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise Termination
Event unless no Subsequent Triggering Event shall have occurred prior to the
occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or one of its Subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its Subsidiaries,
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to merge into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then outstanding shares
of Common Stock shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property or the then
outstanding shares of Common Stock shall after such merger represent less than
50% of the outstanding voting shares and voting share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued
by the person merging into Issuer or by any company which controls or
is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of
the
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Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then exercisable and
the denominator of which shall be the number of shares of Substitute Common
Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than
19.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to Holder equal to the excess of (i)
the value of the Substitute Option without giving effect to the limitation in
this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to (x) the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied
by the number of shares of Substitute Common Stock for which the Substitute
Option may then be exercised plus (y) Grantee's Out-of-Pocket Expenses (to the
extent not previously reimbursed), and at the request of the owner (the
"Substitute Share Owner") of shares of Substitute Common Stock (the "Substitute
Shares"), the Substitute Option Issuer shall repurchase the Substitute Shares
at a price (the "Substitute Share Repurchase Price") equal to (x) the Highest
Closing Price multiplied by the number of Substitute Shares so
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designated plus (y) Grantee's Out-of-Pocket Expenses (to the extent not
previously reimbursed). The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within the
six-month period immediately preceding the date the Substitute Option Holder
gives notice of the required repurchase of the Substitute Option or the Sub-
stitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement) and
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within five business days after the surrender of the Substitute Option and/or
certificates representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver or cause
to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
shall immediately so notify the Substitute Option Holder and/or the Substitute
Share Owner and thereafter deliver or cause to be delivered, from time to time,
to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at
any time after delivery of a notice of repurchase pursuant to subsection (b) of
this Section 9 prohibited under applicable law or regulation from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as appropriate,
the Substitute Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer shall use its
best efforts to receive all required regulatory and legal approvals as promptly
as practicable in
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order to accomplish such repurchase), the Substitute Option Holder or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Option Shares it is then so prohibited
from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2,
6, 7 and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16 (b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum
number of shares of Common
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Stock at any time and from time to time issuable hereunder, and
all such shares, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including if required
redeeming all of the Rights or amending or terminating the Rights
Agreement) so that the entering into of this Option Agreement, the
acquisition of shares of Common Stock hereunder and the other
transactions contemplated hereby do not and will not result in the
grant of any rights to any person under the Rights Agreement or enable
or require the Rights to be exercised, distributed or triggered.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities
Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application
by Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right
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to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the New York Stock Exchange upon
official notice of issuance and applying to the Federal Reserve Board under the
BHCA for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
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00. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
BAYBANKS, INC.
By:
-------------------------------
BANK OF BOSTON CORPORATION
By:
-------------------------------
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EXHIBIT 6.5(A) - FORM OF AFFILIATE LETTER ADDRESSED TO PARENT
Bank of Boston Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of BayBanks, Inc., a Massachusetts corporation ("Subject Company"),
as the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d)
of Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission. I have
been further advised that pursuant to the terms of the Agreement and Plan of
Merger dated as of December 12, 1995 (the "Merger Agreement"), between Bank of
Boston Corporation, a Massachusetts corporation ("Parent"), Boston Merger
Corp., a wholly owned subsidiary of Parent and a Massachusetts corporation
("Merger Sub"), and Subject Company, Merger Sub will be merged with and into
Subject Company (the "Merger"), and that as a result of the Merger, I may
receive shares of Parent Common Stock (as defined in the Merger Agreement) in
exchange for shares of Subject Company Common Stock (as defined in the Merger
Agreement), owned by me.
I represent, warrant and covenant to Parent that in the event I receive
any Parent Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Parent Common Stock in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and
discussed its requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Parent Common Stock
to the extent I believed necessary, with my counsel or counsel for
Subject Company.
C. I have been advised that the issuance of Parent Common
Stock to me pursuant to the Merger has been reg- istered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, since at the time the Merger is
or was submitted for a vote of the stockholders of Parent, I may be
deemed to be or to have been an affiliate of Subject Company and the
distribution by me of the Parent Common Stock will not have been
registered under the Act, and that I may not sell,
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transfer or otherwise dispose of Parent Common Stock issued to
me in the Merger unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with the volume and other limitations
of Rule 145 promulgated by the Commission under the Act, or (iii) in
the opinion of counsel reasonably acceptable to Parent, such sale,
transfer or other disposition is otherwise exempt from registration
under the Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of the Parent Common Stock by
me or on my behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
E. I also understand that stop transfer instructions will be
given to Parent's transfer agents with respect to the Parent Common
Stock and that there will be placed on the certificates for the Parent
Common Stock issued to me, or any substitutions therefor, a legend
stating in substance:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies and may only be sold
or otherwise transferred in compliance with the requirements of
Rule 145 or pursuant to a registration statement under said act
or an exemption from such registration."
F. I also understand that unless the transfer by me of my
Parent Common Stock has been registered under the Act or is a sale made
in conformity with the provisions of Rule 145, Parent reserves the
right to put the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with,
any distribution thereof within the meaning of Securities Act
of 1933 and may not be sold, pledged or otherwise transferred
except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to Parent a copy of a
letter from the staff of the Commission, or an opinion of counsel in form and
substance
-2-
94
reasonably satisfactory to Parent, to the effect that such legend is not
required for purposes of the Act.
I further represent to and covenant with Parent that from the date that
is 30 days prior to the Effective Time (as defined in the Merger Agreement) I
will not sell, transfer or otherwise dispose of, or reduce the risk of
ownership with respect to, shares of Subject Company Common Stock held by me
and that I will not sell, transfer or otherwise dispose of, or reduce the risk
of ownership with respect to, any shares of Parent Common Stock received by me
in the Merger or other shares of Parent Common Stock until after such time as
results covering at least 30 days of combined operations of Parent and Subject
Company have been published by Parent, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a report
to the Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the results of at least 30 days of combined
operations; PROVIDED, HOWEVER, that this paragraph shall not prevent me from
selling, transferring or disposing of such number of shares of Subject Company
Common Stock or Parent Common Stock as will not, in the reasonable judgment of
accountants to Parent, interfere with or prevent the Merger being accounted for
as a "pooling of interests", taking into account the nature, extent and timing
of such sale, transfer or disposition and of similar sales, transfers or
dispositions by all other affiliates of Subject Company and all affiliates of
Parent.
I understand that pursuant to the Merger Agreement, no certificate for
Parent Common Stock shall be delivered to me in exchange for certificates
representing Subject Company Common Stock until I have executed and delivered
this agreement.
Very truly yours,
by
-----------------------------------
Name:
Accepted this day of
----
, 199__, by
Bank of Boston Corporation
by
--------------------------
Name:
Title:
- 3 -
95
EXHIBIT 6.5(B) - FORM OF AFFILIATE LETTER ADDRESSED TO SUBJECT COMPANY
BayBanks, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Bank of Boston Corporation, a Massachusetts corporation
("Parent"), as the term "affiliate" is used in and for purposes of Accounting
Series Releases 130 and 135, as amended, of the Securities and Exchange
Commission (the "Commission"). I have been further advised that pursuant to
the terms of the Agreement and Plan of Merger dated as of December 12, 1995
(the "Merger Agreement"), between Parent, Boston Merger Corp., a wholly owned
subsidiary of Parent and a Massachusetts corporation ("Merger Sub"), and
BayBanks, Inc., a Massachusetts corporation ("Subject Company"), Merger Sub
will be merged with and into Subject Company (the "Merger").
I represent to and covenant with Subject Company that I will not sell,
transfer or otherwise dispose of, or reduce the risk of ownership with respect
to, shares of Parent Common Stock (as defined in the Merger Agreement) held by
me from the date that is 30 days prior to the Effective Time (as defined in the
Agreement) until after such time as results covering at least 30 days of
combined operations of Parent and Subject Company have been published by
Parent, in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10-K,
10-Q, or 8-K, or any other public filing or announcement which includes the
results of at least 30 days of combined operations; PROVIDED, HOWEVER, that
this paragraph shall not prevent me from selling, transferring or disposing of
such number of shares of Subject Company Common Stock or Parent Common Stock as
will not, in the reasonable judgment of accountants to Parent, interfere with
or prevent the Merger being accounted for as a "pooling of interests", taking
into account the nature, extent and timing of such sale, transfer or
disposition and of similar sales, transfers or dispositions by all other
affiliates of Subject Company and all affiliates of Parent.
Very truly yours,
by
----------------------------------
Name:
96
Accepted this day of
----
, 199 , by
--
BayBanks, Inc.
by
-------------------------------
Name:
Title:
- 2 -
97
Reg. S-K Item 601(b)(2) - List of identifying schedules
omitted. The registrant undertakes
to furnish supplementally a copy of
any omitted schedule to the
Commission upon request.
Subject Company Schedules
-------------------------
3.2 Capitalization
3.3 Authority; No Violation
3.4 Consents and Approvals
3.7 Broker's Fees
3.8 Absence of Certain Changes or Events
3.10 Taxes and Tax Returns
3.11 Employees
3.13 Compliance with Applicable Law
3.14 Certain Contracts
3.15 Agreements with Regulatory Agencies
5.2 Subject Company Forebearances
6.4 Legal Conditions to Merger
Parent Schedules
----------------
4.2(a) Capitalization
4.2(b) Subsidiaries
4.3(b) Authority; No Violations
4.7 Broker's Fees
4.8(b) Transactions Outside the Ordinary Course Not
Yet Disclosed on Parent Reports
4.8(c) Employee Matters Outside of Ordinary Course
4.10 Taxes and Tax Returns
4.11(a) Employee Benefit Plans
4.11(c) ERISA Matters
4.13 Material Non-Compliance with Law
4.14(a) Material Contracts
4.15 Agreements with Regulatory Agencies
6.4 Legal Conditions to Merger
