Execution Copy
--------------------------------------------------------------------------------
Exhibit 99.1
AGREEMENT AND PLAN OF MERGER
by and between
XXXXXXXXXX CORPORATION
and
GRANITE STATE BANKSHARES, INC.
Dated as of November 7, 2002
--------------------------------------------------------------------------------
ARTICLE I - CERTAIN DEFINITIONS ........................................... 1
1.1 Certain Definitions ................................................ 1
ARTICLE II - THE MERGER; EFFECTS OF THE MERGER ............................ 7
2.1 The Merger ......................................................... 7
2.2 Effective Time ..................................................... 7
2.3 Effects of the Merger .............................................. 7
2.4 Closing ............................................................ 8
2.5 Tax Consequences ................................................... 8
2.6 Articles of Incorporation and Bylaws ............................... 8
2.7 Directors of the Surviving Corporation ............................. 8
2.8 Officers of the Surviving Corporation .............................. 8
ARTICLE III - MERGER CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES ...... 8
3.1 Merger Consideration ............................................... 8
3.2 Rights as Stockholders; Stock Transfers ............................ 9
3.3 Fractional Shares .................................................. 9
3.4 Dissenters' Rights ................................................. 9
3.5 Election Procedures ................................................ 10
3.6 Exchange Procedures ................................................ 12
3.7 Anti-Dilution Provisions ........................................... 14
3.8 Options ............................................................ 14
ARTICLE IV - COVENANTS RELATING TO CONDUCT OF BUSINESS .................... 15
4.1 Company Forbearances ............................................... 15
4.2 Buyer Forbearances ................................................. 18
ARTICLE V - REPRESENTATIONS AND WARRANTIES ................................ 18
5.1 Disclosure Schedules ............................................... 18
5.2 Standard ........................................................... 19
5.3 Representations and Warranties of the Company ...................... 19
5.4 Representations and Warranties of Buyer ............................ 35
ARTICLE VI - COVENANTS .................................................... 41
6.1 Reasonable Best Efforts ............................................ 41
6.2 Shareholder Approval ............................................... 42
6.3 Registration Statement ............................................. 42
6.4 Press Releases ..................................................... 43
6.5 Access; Information ................................................ 43
6.6 Acquisition Proposals .............................................. 44
6.7 Affiliate Agreements ............................................... 46
6.8 Takeover Laws ...................................................... 46
6.9 No Rights Triggered ................................................ 46
6.10Shares Listed ...................................................... 46
6.11Regulatory Applications; Filings; Consents ......................... 46
i
6.12 Indemnification; Directors' and Officers' Insurance ............ 47
6.13 Benefit Plans .................................................. 48
6.14 Notification of Certain Matters ................................ 49
6.15 Bank Merger .................................................... 49
6.16 Post-Closing Governance ........................................ 49
6.17 Confidentiality Agreement ...................................... 49
6.18 Section 16 Votes ............................................... 49
6.19 Restructuring .................................................. 49
6.20 ESOP ........................................................... 50
6.21 Split Dollar Life Insurance Policies ........................... 50
6.22 Other Actions .................................................. 50
ARTICLE VII - CONDITIONS TO CONSUMMATION OF THE MERGER .................. 50
7.1 Conditions to Each Party's Obligations to Effect the Merger .... 50
7.2 Conditions to the Obligations of Buyer ......................... 51
7.3 Conditions to the Obligations of the Company ................... 52
ARTICLE VIII - TERMINATION .............................................. 52
8.1 Termination .................................................... 52
8.2 Effect of Termination and Abandonment .......................... 54
ARTICLE IX - MISCELLANEOUS .............................................. 55
9.1 Survival ....................................................... 55
9.2 Waiver; Amendment .............................................. 55
9.3 Counterparts ................................................... 55
9.4 Governing Law .................................................. 55
9.5 Expenses ....................................................... 55
9.6 Confidentiality ................................................ 55
9.7 Notices ........................................................ 56
9.8 Understanding; No Third Party Beneficiaries .................... 56
9.9 Assignability; Binding Effect .................................. 57
9.10 Headings; Interpretation ....................................... 57
EXHIBIT A Form of Affiliate Letter Addressed to Buyer
ii
DISCLOSURE SCHEDULES
Schedule 4.1(e) Acceleration
Schedule 5.1(d) Compensation; Employment Agreements; Etc.
Schedule 5.3(b) Capitalization
Schedule 5.3(c) Subsidiaries
Schedule 5.3(l) No Brokers
Schedule 5.3(n)(i) Employee Benefits Plans
Schedule 5.3(q) Insurance
Schedule 5.3(r) Environmental Matters
Schedule 5.3(s) Taxes and Tax Returns
Schedule 5.3(s)(vi) Taxes and Tax Returns
Schedule 5.3(v) Material Agreements; Defaults
Schedule 5.3(y) Loans; Nonperforming and Classified Assets
Schedule 5.4(b) Capitalization
Schedule 5.4(c) Subsidiaries
Schedule 5.4(k) Employee Benefits Plans
Schedule 6.13(c) Benefit Plans
iii
AGREEMENT AND PLAN OF MERGER, dated as of November 7, 2002 (this
"Agreement"), by and between Xxxxxxxxxx Corporation, a Vermont corporation
("Buyer"), and Granite State Bankshares, Inc., a New Hampshire corporation ("the
Company").
RECITALS:
WHEREAS, the respective Boards of Directors of Buyer and the Company have
determined that it is in the best interests of their respective corporations,
shareholders and other constituencies, as well as the communities they serve, to
enter into this Agreement and to consummate the strategic business merger
transactions provided for herein, in which the Company will, subject to the
terms and conditions set forth herein, merge (the "Merger") with and into Buyer
such that Buyer is the surviving corporation in the Merger and continues its
corporate existence under the laws of the State of Vermont;
WHEREAS, as a condition to the willingness of Buyer to enter into this
Agreement, each of the directors and officers of the Company (the "Voting
Agreement Shareholders") have entered into a Voting Agreement, dated as of the
date hereof, with Buyer (the "Voting Agreement"), pursuant to which each Voting
Agreement Shareholder has agreed, among other things, to vote such Voting
Agreement Shareholder's shares of common stock, par value $1.00 per share, of
the Company ("Company Common Stock") in favor of the approval of this Agreement
and the transactions contemplated hereby, upon the terms and subject to the
conditions set forth in the Voting Agreement;
WHEREAS, the parties intend the Merger to qualify as a reorganization
within the meaning of Code Section 368(a); 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 - CERTAIN DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Acquisition Proposal" shall have the meaning set forth in Section 6.6(d).
"Affiliate" shall have the meaning set forth in Section 6.7(a).
"Aggregate Value" shall have the meaning set forth in Section 3.5(e).
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Bank Merger" shall have the meaning set forth in Section 6.15.
"Bank Merger Agreement" shall have the same meaning set forth in Section
6.15.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Burdensome Condition" shall have the meaning set forth in Section 7.1(b).
"Business Day" means Monday through Friday of each week, except on legal
holiday recognized as such by the U.S. Government or any day on which banking
institutions in the State of New Hampshire or the State of Vermont are
authorized or obligated to close.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
"Buyer 2001 Form 10-K" shall have the meaning set forth in Section
5.4(g)(i).
"Buyer Balance Sheet" shall have the meaning set forth in Section
5.4(g)(i).
"Buyer Board" shall have the meaning set forth in Section 5.4(e).
"Buyer Common Stock" shall have the meaning set forth in Section 3.1(a).
"Buyer Disclosure Schedule" shall have the meaning set forth in Section
5.1.
"Buyer Plans" shall have the meaning set forth in Section 5.4(k)(ii).
"Buyer SEC Documents" shall have the meaning set forth in Section
5.4(g)(i).
"Cash Consideration" shall have the meaning set forth in Section 3.1(c).
"Cash Election" shall have the meaning set forth in Section 3.5(a).
"Cash Election Shares" shall have the meaning set forth in Section 3.5(a).
"Certificate" or "Certificates" shall have the meaning set forth in Section
3.2.
"Classified Loans" shall have the meaning set forth in Section 5.3(y)(ii).
"Closing" shall have the meaning set forth in Section 2.4.
"Closing Date" shall have the meaning set forth in Section 2.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Company 2001 Form 10-K" shall have the meaning set forth in Section
5.3(g)(i).
"Company Balance Sheet" shall have the meaning set forth in Section
5.3(g)(i).
"Company Board" shall have the meaning set forth in Section 5.3(e).
"Company Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
2
"Company Compensation and Benefit Plans" shall have the meaning set forth
in Section 5.3(n)(i).
"Company Disclosure Schedule" shall have the meaning set forth in Section
5.1.
"Company Employees" shall have the meaning set forth in Section 6.13(a).
"Company Material Contract" shall have the meaning set forth in Section
5.3(v)(i).
"Company Meeting" shall have the meaning set forth in Section 6.2(a).
"Company Pension Plan" shall have the meaning set forth in Section
5.3(n)(iii).
"Company Plans" shall have the meaning set forth in Section 5.3(n)(iii).
"Company SEC Documents" shall have the meaning set forth in Section
5.3(g)(i).
"Company Stock Option" shall have the meaning set forth in Section 3.8.
"Company Stock Option Plans" shall mean the stock option plans disclosed on
Schedule 5.3(n) of the Company Disclosure Schedule.
"Confidentiality Agreement" shall mean the Confidentiality Agreement, dated
as of October 3, 2002, by and between Buyer and the Company.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosure Schedule" shall have the meaning set forth in Section 5.1.
"Dissenting Share" shall have the meaning set forth in Section 3.4.
"DOJ" shall mean the Department of Justice.
"Effective Date" shall have the meaning set forth in Section 2.2.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Election Deadline" shall have the meaning set forth in Section 3.5(b).
"Election Form" shall have the meaning set forth in Section 3.5(a).
"Election Form Record Date" shall have the meaning set forth in Section
3.5(a).
"Environment" shall have the meaning set forth in Section 5.3(r)(vii).
"EPA" shall mean the United States Environmental Protection Agency.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 5.3(n)(i).
3
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" shall have the meaning set forth in Section 3.5(a).
"Exchange Fund" shall have the meaning set forth in Section 3.6(a).
"Exchange Ratio" shall have the meaning set forth in Section 3.1(c).
"Expense Fee" shall have the meaning set forth in Section 8.2(c).
"Expenses" shall have the meaning set forth in Section 8.2(b).
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FFIEC" shall mean the Federal Financial Institutions Examination Council.
"FRB" means the Board of Governors of the Federal Reserve System or any
successor thereto.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Authority" shall mean any United States federal, state or
local governmental commission, board or other regulatory authority or agency,
including courts and other judicial bodies.
"Hazardous Material" shall have the meaning set forth in Section
5.3(r)(vii).
"IRS" means the Internal Revenue Service.
"Indemnified Parties" shall have the meaning set forth in Section 6.12(a).
"Insurance Amount" shall have the meaning set forth in Section 6.12(b).
"Liens" shall have the meaning set forth in Section 5.3(w)(i).
"Loan Property" shall have the meaning set forth in Section 5.3(r)(vii).
"Loans" shall have the meaning set forth in Section 5.3(y)(i).
"Mailing Date" shall have the meaning set forth in Section 3.5(a).
"Material Adverse Effect" shall mean with respect to Buyer or the Company,
respectively, any effect that (a) is material and adverse to the condition
(financial or otherwise), results of operations, assets, liabilities or business
or prospects of Buyer and its Subsidiaries taken as a whole, or the Company and
its Subsidiaries taken as a whole, respectively, or (b) would materially impair
the ability of Buyer or the Company, respectively, to perform its obligations
under this Agreement or otherwise materially threaten or materially impede the
4
consummation of the Merger and the other transactions contemplated by this
Agreement; provided, however, that "Material Adverse Effect" shall not be deemed
to include the impact of: (i) changes in banking laws of general applicability
or interpretations thereof by courts or governmental authorities affecting
depository institutions generally; (ii) changes resulting from expenses (such as
legal, accounting and investment bankers' fees) incurred in connection with this
Agreement or the transactions contemplated herein; and (iii) changes in economic
conditions affecting financial institutions generally, including but not limited
to, changes in the general level of market interest rates except to the extent
that such changes have, or could reasonably be expected to have on the Company
or Buyer, as the case may be, and its Subsidiaries taken as a whole, an adverse
effect that is materially greater than the adverse effect on comparable
entities.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section 3.1(c).
"Mixed Election" shall have the meaning set forth in Section 3.5(a).
"Multiemployer Plans" shall have the meaning set forth in Section
5.3(n)(iii).
"New Certificate" or "New Certificates" shall have the meaning set forth in
Section 3.6(a).
"Nasdaq" shall mean the National Association of Securities Dealers
Automated Quotation System.
"NHBCA" shall mean the New Hampshire Business Corporation Act.
"Non-Election" shall have the meaning set forth in Section 3.5(a).
"Non-Election Shares" shall have the meaning set forth in Section 3.5(a).
"NYSE" shall mean The New York Stock Exchange, Inc.
"OCC" shall mean the Office of the Comptroller of the Currency.
"Oil" shall have the meaning set forth in Section 5.3(r)(vii).
"Owned Property" shall have the meaning set forth in Section 5.3(r)(i).
"Participation Facility" shall have the meaning set forth in Section
5.3(r)(vii).
"Person" or "person" shall mean any individual, bank, corporation,
partnership, limited liability company, association, joint-stock company,
business trust or unincorporated organization.
"Plan" shall have the meaning set forth in Section 6.20.
"Proxy Statement/Prospectus" shall have the meaning set forth in Section
6.3(a).
"Registration Statement" shall have the meaning set forth in Section
6.3(a).
5
"Regulatory Authority" and "Regulatory Authorities" shall have the meaning
set forth in Section 5.3(i)(ii).
"Regulatory Approvals" shall mean (a) the approval (or waiver) of the FRB,
(b) the approval of the OCC, (c) notification to the Vermont Department of
Banking, Insurance, Securities and Healthcare Administration, (d) the approval
of the Massachusetts Board of Bank Incorporation and (e) the approval of the New
Hampshire Commissioner of Banks.
"Representatives" shall have the meaning set forth in Section 6.5(a).
"Rights" shall mean, with respect to any person, securities or obligations
convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, or any options, calls or commitments relating to,
shares of stock of such person.
"SEC" shall mean the Securities and Exchange Commission.
"Section 16" shall have the meaning set forth in Section 6.18.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Shortfall Number" shall have the meaning set forth in Section 3.5(d)(i).
"Stock Consideration" shall have the meaning set forth in Section 3.1(c).
"Stock Conversion Number" shall have the meaning set forth in Section
3.5(a).
"Stock Election" shall have the meaning set forth in Section 3.5(a).
"Stock Election Number" shall have the meaning set forth in Section 3.5(a).
"Stock Election Shares" shall have the meaning set forth in Section 3.5(a).
"Stock Value" shall have the meaning set forth in Section 3.5(e).
"Subsidiary" shall have the meaning set forth in Rule 1-02 of Regulation
S-X of the SEC.
"Subsidiaries" shall mean all of a party's Subsidiaries.
"Superior Proposal" shall have the meaning set forth in Section 6.6(d).
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Takeover Laws" shall have the meaning set forth in Section 5.3(p).
"Tax Returns" shall mean any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
6
"Taxes" shall mean (i) all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, goods and services, capital, transfer,
franchise, profits, license, withholding, payroll, employment, employer health,
excise, estimated, severance, stamp, occupation, property or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority; and (ii) any liability for the payment of amounts with
respect to payments of a type described in clause (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group, or as a result
of any obligation under any tax sharing arrangement or tax indemnity agreement.
"Treasury Stock" shall mean shares of Company Common Stock held (i) in the
Company's treasury or (ii) by the Company or any of its Subsidiaries or by Buyer
or any of its Subsidiaries, in each case other than in a fiduciary capacity
(including custodial or agency).
"USA Patriot Act" means the U.S. Patriot Act of 2001, Public Law 107-56,
and the regulations promulgated thereunder.
"VBCA" shall mean The Vermont Business Corporation Act.
"Voting Agreement" shall have the meaning set forth in the recitals to this
Agreement.
"Voting Agreement Shareholder" or "Voting Agreement Shareholders" shall
have the meaning set forth in the recitals to this Agreement.
ARTICLE II - THE MERGER; EFFECTS OF THE MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the VBCA and the NHBCA, and in reliance upon the
representations, warranties and covenants set forth herein, at the Effective
Time, the Company shall merge with and into Buyer, the separate corporate
existence of the Company shall cease and Buyer shall survive and continue its
corporate existence under the laws of the State of Vermont (Buyer, as the
surviving corporation in the Merger, being sometimes referred to herein as the
"Surviving Corporation"). The name of the Surviving Corporation shall be
Xxxxxxxxxx Corporation.
2.2 Effective Time. On the Closing Date, as promptly as practicable after
all of the conditions set forth in Article VII shall have been satisfied or, if
permissible, waived by the party entitled to the benefit of the same, Buyer and
the Company shall (a) execute and file with the Secretary of State of the State
of Vermont articles of merger in a form reasonably satisfactory to Buyer and the
Company, in accordance with the VBCA and (b) execute and file with the Secretary
of State of the State of New Hampshire articles of merger in a form reasonably
satisfactory to Buyer and the Company, in accordance with the NHBCA. The Merger
shall become effective on the date of such filings or on the date specified
therein (the "Effective Date") and at the time (the "Effective Time") of such
filings or at the time specified therein.
2.3 Effects of the Merger. At the Effective Time, the effect of the Merger
shall be as provided herein and as provided in Section 11.06 of the VBCA and
Section 293-A:11.06 of the NHBCA.
7
2.4 Closing. The transactions contemplated by this Agreement shall be
consummated at a closing (the "Closing") that will take place at the offices of
Xxxxxxx Procter LLP, Exchange Place, Boston, Massachusetts 02109 on a date to be
specified by the parties, which shall be no later than five business days after
all of the conditions to the Closing set forth in Article VII (other than
conditions to be satisfied at the Closing, which shall be satisfied or waived at
the Closing) have been satisfied or waived in accordance with the terms hereof
unless extended by mutual agreement of the parties, such day being referred to
herein as the "Closing Date."
2.5 Tax Consequences. It is intended that the Merger shall qualify as a
reorganization under Section 368(a) of the Code, and that the Agreement shall
constitute a "plan of reorganization" for purposes of Section 368 of the Code.
2.6 Articles of Incorporation and Bylaws. The articles of merger shall
provide that, at the Effective Time, the articles of incorporation of Buyer, as
in effect immediately prior to the Effective Time, shall be the articles of
incorporation of the Surviving Corporation until amended in accordance with
applicable law. The bylaws of Buyer, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation at the
Effective Time.
2.7 Directors of the Surviving Corporation. The directors of Buyer
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation immediately after the Effective Time plus the person appointed or
elected as a director pursuant to Section 6.16 hereof, each of whom shall serve
until their successors shall have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
articles of incorporation and bylaws of the Surviving Corporation.
2.8 Officers of the Surviving Corporation. The officers of Buyer
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation immediately after the Effective Time, such officers to hold office,
subject to the applicable provisions of the articles of incorporation and bylaws
of the Surviving Corporation, until their respective successors shall be duly
elected or appointed and qualified.
ARTICLE III - MERGER CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
3.1 Merger Consideration. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any action
on the part of Buyer, the Company or any shareholder of the Company:
(a) Each share of common stock, par value $1.00 per share, of Buyer ("Buyer
Common Stock") that is issued and outstanding immediately prior to the Effective
Time shall remain outstanding following the Effective Time and shall be
unchanged by the Merger.
(b) Each share of Company Common Stock held as Treasury Stock immediately
prior to the Effective Time shall be cancelled and retired at the Effective Time
without any conversion thereof, and no payment shall be made with respect
thereto.
(c) Each outstanding share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than Treasury Stock and any
Dissenting Shares) shall become and be converted into, as provided in and
subject to the
8
limitations set forth in this Agreement, the right to receive at the election of
the holder thereof as provided in Section 3.5 either: (i) $46.00 in cash (the
"Cash Consideration"); (ii) 1.64 shares (the "Exchange Ratio") of Buyer Common
Stock (the "Stock Consideration"), or (iii) a combination of Cash Consideration
and Stock Consideration, as provided in Section 3.5(a). The Cash Consideration
and Stock Consideration are sometimes referred to herein collectively as the
"Merger Consideration."
3.2 Rights as Stockholders; Stock Transfers. All shares of Company Common
Stock, when converted as provided in Section 3.1(c), shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each certificate (a "Certificate" and collectively, the
"Certificates") previously evidencing such shares shall thereafter represent
only the right to receive for each such share of Company Common Stock the Merger
Consideration and cash in lieu of fractional shares of Buyer Common Stock in
accordance with Sections 3.1(c) and 3.3. At the Effective Time, holders of
Company Common Stock shall cease to be, and shall have no rights as,
shareholders of the Company, other than the right to receive any dividend or
other distribution with respect to such Company Common Stock with a record date
occurring prior to the Effective Time and the right to receive the Merger
Consideration and cash in lieu of fractional shares of Buyer Common Stock as
provided under this Article III. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of shares of Company Common
Stock other than transfers of Company Common Stock that have occurred prior to
the Effective Time.
3.3 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Buyer Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger. Instead,
Buyer shall pay to each holder of a fractional share of Buyer Common Stock an
amount of cash (without interest) determined by multiplying the fractional share
interest to which such holder would otherwise be entitled (after aggregating all
shares of Company Common Stock delivered by such holder at the Effective Time)
by the average of the last sale prices of Buyer Common Stock, as reported on the
NYSE (as reported in The Wall Street Journal or, if not reported therein, in
another authoritative source), for the five NYSE trading days immediately
preceding the Effective Date, rounded to the nearest whole cent.
3.4 Dissenters' Rights. Notwithstanding anything in this Agreement to the
contrary, with respect to each share, if any, of Company Common Stock as to
which the holder thereof shall have properly complied with Section 293-A:13 of
the NHBCA as to dissenters' rights required to be complied with prior to the
Effective Time (each, a "Dissenting Share"), such holder shall not be entitled
to receive any consideration pursuant to Sections 3.1(c) and 3.3 hereof, but
instead shall be entitled to payment, solely from the Surviving Corporation, of
the fair value of the Dissenting Shares to the extent permitted by and in
accordance with the provisions of Section 293-A:13 of the NHBCA; provided,
however, that if any holder of Dissenting Shares fails to satisfy the
requirements of the NHBCA the shareholder is not entitled to payment for the
shares, and such holder or holders (as the case may be) shall forfeit the right
to dissent and such shares of Company Common Stock shall thereupon be deemed to
have been converted, as of the Effective Time, into and represent solely the
right to receive the Cash Consideration as provided in 3.5(a) below, and cash in
lieu of fractional shares of Buyer Common Stock payable in respect of such
shares of Company Common Stock. The Company shall give Buyer prompt notice of
any demands received by the Company for appraisal of shares of Company Common
Stock, and
9
Buyer shall have the right to participate in all Company negotiations and
proceedings with respect to such demands. The Company shall not settle, make any
payments with respect to, or offer to settle, any claim with respect to
Dissenting Shares without the written consent of Buyer.
3.5 Election Procedures.
(a) An election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to Certificates shall pass, only upon proper delivery of
such Certificates to a bank or trust company designated by Buyer and
reasonably satisfactory to the Company (the "Exchange Agent")) in such form
as the Company and Buyer shall mutually agree (the "Election Form"), shall
be mailed no later than 15 calendar days prior to the anticipated Effective
Time (the "Mailing Date") to each holder of record of Company Common Stock
as of five business days prior to the Mailing Date (the "Election Form
Record Date"). Each Election Form shall permit each holder of record of
Company Common Stock as of the Election Form Record Date (or in the case of
nominee record holders, the beneficial owner through proper instructions
and documentation) to (i) elect to receive the Cash Consideration for all
of such holder's shares (a "Cash Election"), (ii) elect to receive the
Stock Consideration for all of such holder's shares (a "Stock Election"),
(iii) elect to receive the Cash Consideration with respect to one half of
such holder's shares and the Stock Consideration with respect to one half
of such holder's shares (a "Mixed Election") or (iv) make no election with
respect to the receipt of the Cash Consideration or the Stock Consideration
(a "Non-Election"), provided, that, notwithstanding any other provision of
this Agreement, other than paragraph (e) of this Section 3.5, 50% of the
total number of shares of Company Common Stock issued and outstanding at
the Effective Time, including any Dissenting Shares but excluding any
Treasury Stock (the "Stock Conversion Number"), shall be converted into the
Stock Consideration and the remaining outstanding shares of Company Common
Stock shall be converted into the Cash Consideration. Holders of record of
shares of Company Common Stock who hold such shares as nominees, trustees
or in other representative capacities may submit multiple Election Forms,
provided, that such nominee, trustee, or other representative certifies
that each such Election Form covers all the shares of Company Common Stock
held by such nominee, trustee, or other representative for a particular
beneficial owner. Shares of Company Common Stock as to which a Cash
Election (including, pursuant to a Mixed Election) has been made are
referred to herein as "Cash Election Shares." Shares of Company Common
Stock as to which a Stock Election has been made (including, pursuant to a
Mixed Election) are referred to herein as "Stock Election Shares." Shares
of Company Common Stock as to which no election has been made (or as to
which an Election Form is not returned properly completed) are referred to
herein as "Non-Election Shares." The aggregate number of shares of Company
Common Stock with respect to which a Stock Election has been made is
referred to herein as the "Stock Election Number." Any Dissenting Shares
shall be deemed to be Cash Election Shares, and the holders thereof shall
in no event receive consideration comprised of Buyer Common Stock with
respect to such shares.
(b) To be effective, a properly completed Election Form shall be
submitted to the Exchange Agent on or before 5:00 p.m., New York City time,
on the 20th calendar day following but not including the Mailing Date (or
such other time and date as Buyer and the Company may mutually agree) (the
"Election Deadline").
10
(c) An Election Form shall be deemed properly completed only if
accompanied by one or more Certificates (or customary affidavits and
indemnification regarding the loss or destruction of such Certificates or
the guaranteed delivery of such Certificates) representing all shares of
Company Common Stock covered by such Election Form, together with duly
executed transmittal materials included with the Election Form. If a holder
of Company Common Stock either (i) does not submit a properly completed
Election Form in a timely fashion or (ii) revokes the holder's Election
Form prior to the Election Deadline, the shares of Company Common Stock
held by such holder shall be designated Non-Election Shares. Subject to the
terms of this Agreement and of the Election Form, the Exchange Agent shall
have reasonable discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard immaterial defects
in any Election Form, and any good faith decisions of the Exchange Agent
regarding such matters shall be binding and conclusive. Neither Buyer nor
the Exchange Agent shall be under any obligation to notify any Person of
any defect in an Election Form.
(d) Within five Business Days after the later to occur of the Election
Deadline or the Effective Time, Buyer shall cause the Exchange Agent to
effect the allocation among holders of Company Common Stock of rights to
receive the Cash Consideration and the Stock Consideration as follows:
(i) If the Stock Election Number exceeds the Stock Conversion
Number, then all Cash Election Shares and all Non-Election Shares
shall be converted into the right to receive the Cash Consideration,
and, subject to Section 3.3 hereof, each holder of Stock Election
Shares will be entitled to receive the Stock Consideration in respect
of that number of Stock Election Shares held by such holder equal to
the product obtained by multiplying (x) the number of Stock Election
Shares held by such holder by (y) a fraction, the numerator of which
is the Stock Conversion Number and the denominator of which is the
Stock Election Number, with the remaining number of such holder's
Stock Election Shares being converted into the right to receive the
Cash Consideration; (ii) If the Stock Election Number is less than the
Stock Conversion Number (the amount by which the Stock Conversion
Number exceeds the Stock Election Number being referred to herein as
the "Shortfall Number"), then all Stock Election Shares shall be
converted into the right to receive the Stock Consideration and the
Non-Election Shares and Cash Election Shares shall be treated in the
following manner:
(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares
shall be converted into the right to receive the Cash
Consideration and, subject to Section 3.3 hereof, each holder of
Non-Election Shares shall receive the Stock Consideration in
respect of that number of Non-Election Shares held by such holder
equal to the product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) a fraction, the
numerator of which is the Shortfall Number and the denominator of
which is the total number of Non-Election Shares, with the
remaining number of such holder's Non-Election Shares being
converted into the right to receive the Cash Consideration; or
11
(B) if the Shortfall Number exceeds the number of
Non-Election Shares, then all Non-Election Shares shall be
converted into the right to receive the Stock Consideration, and,
subject to Section 3.3 hereof, each holder of Cash Election
Shares shall receive the Stock Consideration in respect of that
number of Cash Election Shares equal to the product obtained by
multiplying (x) the number of Cash Election Shares held by such
holder by (y) a fraction, the numerator of which is the amount by
which (1) the Shortfall Number exceeds (2) the total number of
Non-Election Shares and the denominator of which is the total
number of Cash Election Shares, with the remaining number of such
holder's Cash Election Shares being converted into the right to
receive the Cash Consideration.
(e) Notwithstanding anything in this Article III to the contrary, if
the aggregate value of the Stock Consideration to be delivered as of the
Effective Time less the amount of cash paid in lieu of fractional shares of
Buyer Common Stock pursuant to Section 3.3 (the "Stock Value") is less than
40% of the sum of (i) the aggregate value of the Merger Consideration to be
delivered as of the Effective Time, plus (ii) the value of any
consideration described in Treasury Regulations Section 1.368-1(e)(1)(ii),
plus (iii) cash paid to holders of Dissenting Shares, plus (iv) the value
of any consideration paid by Buyer or any of its Subsidiaries (or any
"related person" to Buyer or any of its Subsidiaries within the meaning of
Treasury Regulations Section 1.368-1(e)(3)) to acquire shares of Company
Common Stock prior to the Effective Time (such sum, the "Aggregate Value"),
then Buyer shall reduce the number of shares of outstanding Company Common
Stock entitled to receive the Cash Consideration and correspondingly
increase the number of shares of Company Common Stock entitled to receive
the Stock Consideration by the minimum amount necessary to cause the Stock
Value to equal 40% of the Aggregate Value, provided, that in no event shall
Buyer be required to issue in the Merger (either by conversion of Company
Common Stock issued pursuant to the Merger or the exercise of rights and
warrants issued pursuant to the Merger) aggregate shares of Buyer Common
Stock in excess of 15.0% of the total number of shares of Buyer Common
Stock outstanding immediately before the Merger.
3.6 Exchange Procedures.
(a) On or before the Closing Date, for the benefit of the holders of
Certificates, (i) Buyer shall reserve for issuance a sufficient number of
shares of Buyer Common Stock and deliver, or shall cause to be delivered,
to the Exchange Agent, for exchange in accordance with this Article III,
certificates representing the shares of Buyer Common Stock issuable
pursuant to this Article III ("New Certificates") and (ii) Buyer shall
deliver, or shall cause to be delivered, to the Exchange Agent an aggregate
amount of cash sufficient to pay the aggregate amount of cash payable
pursuant to this Article III, (including the estimated amount of cash to be
paid in lieu of fractional shares of Buyer Common Stock) (such cash and New
Certificates, together with any dividends or distributions with respect
thereto (without any interest thereon), being hereinafter referred to as
the "Exchange Fund").
(b) As soon as practicable after the Effective Time, and provided,
that the Company has delivered, or caused to be delivered, to the Exchange
Agent all information which is necessary for the Exchange Agent to perform
its obligations as specified herein, the Exchange
12
Agent shall mail to each holder of record of a Certificate or Certificates
who has not previously surrendered such Certificate or Certificates with an
Election Form, a form of 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 the Merger Consideration into which the shares of Company
Common Stock represented by such Certificate or Certificates shall have
been converted pursuant to Sections 3.1 and 3.5 of this Agreement. Upon
proper surrender of a Certificate for exchange and cancellation to the
Exchange Agent, together with a properly completed letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive
in exchange therefor, as applicable, (i) a New Certificate representing
that number of shares of Buyer Common Stock (if any) to which such former
holder of Company Common Stock shall have become entitled pursuant to this
Agreement, (ii) a check representing that amount of cash (if any) to which
such former holder of Company Common Stock shall have become entitled
pursuant to this Agreement and/or (iii) a check representing the amount of
cash (if any) payable in lieu of a fractional share of Buyer Common Stock
which such former holder has the right to receive in respect of the
Certificate surrendered pursuant to this Agreement, and the Certificate so
surrendered shall forthwith be cancelled. Until surrendered as contemplated
by this Section 3.6(b), each Certificate (other than Certificates
representing Treasury Stock or Dissenting Shares) shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the Merger Consideration provided in Sections 3.1 and 3.5
and any unpaid dividends and distributions thereon as provided in paragraph
(c) of this Section 3.6. No interest shall be paid or accrued on any cash
constituting Merger Consideration (including any cash in lieu of fractional
shares) and any unpaid dividends and distributions, if any, payable to
holders of Certificates.
(c) No dividends or other distributions with a record date after the
Effective Time with respect to Buyer Common Stock shall be paid to the
holder of any unsurrendered Certificate until the holder thereof shall
surrender such Certificate in accordance with this Section 3.6. After the
surrender of a Certificate in accordance with this Section 3.6, 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 Buyer Common Stock represented by such
Certificate.
(d) The Exchange Agent and Buyer, as the case may be, shall not be
obligated to deliver cash and/or a New Certificate or New Certificates
representing shares of Buyer Common Stock to which a holder of Company
Common Stock would otherwise be entitled as a result of the Merger until
such holder surrenders the Certificate or Certificates representing the
shares of Company Common Stock for exchange as provided in this Section
3.6, or, an appropriate affidavit of loss and indemnity agreement and/or a
bond in an amount as may be required in each case by Buyer. If any New
Certificates evidencing shares of Buyer Common Stock are to be issued in a
name other than that in which the Certificate evidencing Company Common
Stock surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall
be properly endorsed or accompanied by an executed form of assignment
separate from the Certificate and otherwise in proper form for transfer,
and that the person requesting such exchange pay to the Exchange Agent any
transfer or other tax required by reason of the issuance of a New
Certificate for shares of Buyer Common Stock in any name other than that of
the registered holder of the Certificate surrendered or
13
otherwise establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not payable.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of the Company for six months after the Effective Time (as
well as any proceeds from any investment thereof) shall be delivered by the
Exchange Agent to Buyer. Any shareholders of the Company who have not
theretofore complied with Section 3.6(a) shall thereafter look only to
Buyer for the Merger Consideration deliverable in respect of each share of
Company Common Stock such shareholder holds as determined pursuant to this
Agreement, in each case without any interest thereon. If outstanding
Certificates for shares of Company Common Stock are not surrendered or the
payment for them is not claimed prior to the date on which such shares of
Buyer Common Stock or cash would otherwise escheat to or become the
property of any governmental unit or agency, the unclaimed items shall, to
the extent permitted by abandoned property and any other applicable law,
become the property of Buyer (and to the extent not in its possession shall
be delivered to it), free and clear of all claims or interest of any Person
previously entitled to such property. Neither the Exchange Agent nor any
party to this Agreement shall be liable to any holder of stock represented
by any Certificate for any consideration paid to a public official pursuant
to applicable abandoned property, escheat or similar laws. Buyer and the
Exchange Agent shall be entitled to rely upon the stock transfer books of
the Company to establish the identity of those persons entitled to receive
the Merger Consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Buyer and the Exchange
Agent shall be entitled to deposit any Merger Consideration represented
thereby in escrow with an independent third party and thereafter be
relieved with respect to any claims thereto.
(f) Buyer (through the Exchange Agent, if applicable) shall be
entitled to deduct and withhold from any amounts otherwise payable pursuant
to this Agreement to any holder of shares of Company Common Stock such
amounts as Buyer is required to deduct and withhold under applicable law.
Any amounts so withheld shall be treated for all purposes of this Agreement
as having been paid to the holder of Company Common Stock in respect of
which such deduction and withholding was made by Buyer.
3.7 Anti-Dilution Provisions. In the event Buyer or the Company changes (or
establishes a record date for changing) the number of, or provides for the
exchange of, shares of Buyer Common Stock or Company Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization, reclassification, or similar transaction with
respect to the outstanding Buyer Common Stock or Company Common Stock and the
record date therefor shall be prior to the Effective Date, the Exchange Ratio
shall be proportionately and appropriately adjusted; provided, that no such
adjustment shall be made with regard to Buyer Common Stock if Buyer issues
additional shares of Buyer Common Stock and receives consideration for such
shares in a bona fide third party transaction.
3.8 Options. Prior to and effective as of the Effective Time and subject to
the provisions of the Company Stock Option Plans, the Company shall take all
actions necessary to terminate the Company Stock Option Plans and shall provide
written notice to each holder of a then outstanding stock option to purchase
shares of Company Common Stock pursuant to the Company Stock Option Plans (each,
a "Company Stock Option") that such Company Stock
14
Option shall be, as of the date of such notice, exercisable in full in
accordance with its terms and that, if such Company Stock Option is not
exercised or otherwise terminated before the Effective Time, such holder shall
be entitled, subject to the terms of the applicable Company Stock Option Plan,
to receive in cancellation of such Company Stock Option, immediately prior to
the Effective Time, a cash payment from the Company in an amount equal to the
product of (x) the number of shares of Company Common Stock provided for in such
Company Stock Option and (y) the excess, if any, of the Cash Consideration over
the exercise price per share provided for in such Company Stock Option, which
cash payment shall be treated as compensation and shall be net of any applicable
federal or state withholding tax. The Company agrees to use its best efforts to
obtain prior to the Effective Time from each holder of a Company Stock Option a
written agreement that such holder's options will be treated as set forth in the
preceding sentence, provided, however, no such agreement need be obtained with
respect to "incentive" stock options which such holder has exercised no later
than five days prior to the Effective Time and has elected to receive in
exchange for the Buyer Common Stock received upon the exercise of such options
the Stock Consideration. The Company shall be permitted to take such actions as
may be necessary to accelerate the vesting of such incentive stock options to
permit such exercise.
ARTICLE IV - COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Company Forbearances. From the date hereof until the Effective Time,
except as set forth in the Company Disclosure Schedule or as expressly
contemplated by this Agreement, without the prior written consent of Buyer, the
Company will not, and will cause its Subsidiaries not to:
(a) Ordinary Course. Conduct its business other than in the ordinary
and usual course consistent with past practice or, fail to use reasonable
efforts to preserve intact its business organizations and assets and
maintain its rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action that would
(i) adversely affect the ability of any party to obtain any necessary
approval of any Regulatory Authority required for the transactions
contemplated hereby or (ii) adversely affect its ability to perform any of
its material obligations under this Agreement.
(b) Stock. (i) Other than pursuant to Rights or other stock options or
stock-based awards outstanding as of the date hereof and listed on the
Company Disclosure Schedule, issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of stock,
any securities (including units of beneficial ownership interest in any
partnership or limited liability company) convertible into or exchangeable
for any additional shares of stock, stock appreciation rights or any
Rights, any stock appreciation rights or any Rights or take any action
related to such issuance or sale, (ii) enter into any agreement with
respect to the foregoing, (iii) permit any additional shares of stock, any
securities (including units of beneficial ownership interest in any
partnership or limited liability company) convertible into or exchangeable
for any additional shares of stock, stock appreciation rights or any
Rights, any stock appreciation rights or any Rights to become subject to
new grants of employee stock options, stock appreciation rights, or similar
stock-based employee rights, or accelerate the vesting of any existing such
stock options, stock appreciation rights or other stock-based employee
rights, or (iv) change (or establish a record date for changing) the number
of, or provide for the exchange of, shares of its stock, any securities
(including units of beneficial ownership
15
interest in any partnership or limited liability company) convertible into
or exchangeable for any additional shares of stock, stock appreciation
rights or any Rights, any stock appreciation rights or any Rights issued
and outstanding prior to the Effective Date as a result of a stock split,
stock dividend, recapitalization, reclassification, reorganization or
similar transaction with respect to its outstanding stock or any other such
securities.
(c) Dividends, Etc. (i) Make, declare or pay any dividend on or in
respect of, or declare or make any distribution on, any shares of Company
Common Stock other than (A) regular quarterly cash dividends on Company
Common Stock in an amount not to exceed the rate payable on such Company
Common Stock as of the date hereof, and (B) dividends from wholly-owned
Subsidiaries to the Company or any wholly-owned subsidiary of the Company,
as applicable or (ii) directly or indirectly combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend any
written employment, severance or similar agreements or arrangements with
any of its directors, officers, employees or consultants, or grant any
salary or wage increase, or increase any employee benefit (including
incentive or bonus payments), except for (i) normal increases in
compensation to employees in the ordinary course of business consistent
with past practice, provided, that all such increases in the aggregate
shall not exceed 4% of the Company's current annual compensation, or in the
case of an individual, 8% of such individual's current annual compensation
or (ii) as may be required by law or (iii) to satisfy contractual
obligations existing as of the date hereof or as otherwise disclosed on
Schedules 4.1(e) and 5.3(n) of the Company Disclosure Schedule.
(e) Benefit Plans. Except as may be required by (i) applicable law,
(ii) to satisfy contractual obligations existing as of the date hereof and
disclosed on Schedule 5.3(n) of the Company Disclosure Schedule, enter
into, establish, adopt or amend any pension, retirement, stock option,
stock purchase, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement related thereto, in
respect of any director, officer or other employee of the Company or any of
its Subsidiaries, including taking any action that accelerates the vesting
or exercise of any benefits payable thereunder except as disclosed on
Schedule 4.1(e) of the Company Disclosure Schedule.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties except in the ordinary course of business consistent with past
practice and in a transaction that, together with all other such
transactions, is not material to the Company and its Subsidiaries taken as
a whole.
(g) Governing Documents. Amend its articles of incorporation or bylaws
(or equivalent documents).
(h) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice)
all or any portion of the assets, business, deposits or properties of any
other entity.
16
(i) Capital Expenditures. Make any capital expenditures other than
capital expenditures in the ordinary course of business consistent with
past practice in amounts not exceeding $100,000 individually or $500,000 in
the aggregate.
(j) Contracts. Except in the ordinary course of business consistent
with past practice or as otherwise permitted under this Section 4.1, enter
into or terminate any Company Material Contract or amend or modify in any
material respect any of its existing Company Material Contracts.
(k) Claims. Enter into any settlement or similar agreement with
respect to any action, suit, proceeding, order or investigation to which
the Company or any of its Subsidiaries is or becomes a party after the date
of this Agreement, which settlement, agreement or action involves payment
by the Company and any of its Subsidiaries of an amount which exceeds
$100,000 and/or would impose any material restriction on the business of
the Company or create precedent for claims that are reasonably likely to be
material to the Company and its Subsidiaries taken as a whole.
(l) Banking Operations. Enter into any new material line of business;
change its material lending, investment, underwriting, risk and asset
liability management and other material banking and operating policies,
except as required by applicable law, regulation or policies imposed by any
Regulatory Authority; or file any application or make any contract with
respect to branching or site location or branching or site relocation.
(m) Derivatives Contracts. Enter into any derivatives contract, except
in the ordinary course of business consistent with past practice.
(n) Indebtedness. Incur any indebtedness for borrowed money (other
than deposits, federal funds purchased, federal home loan bank advances,
and securities sold under agreements to repurchase, in each case in the
ordinary course of business consistent with past practice) or assume,
guarantee, endorse or otherwise as an accommodation become responsible for
the obligations of any other Person, other than in the ordinary course of
business consistent with past practice.
(o) Investment Securities. Acquire (other than by way of foreclosures
or acquisitions in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary
course of business consistent with past practice) (i) any debt security or
equity investment of a type or in an amount that is not permissible for a
national bank or (ii) any other debt security other than in the ordinary
course of business consistent with past practice.
(p) Loans. Make any loan, loan commitment, letter of credit or other
extension of credit other than in the ordinary course of business
consistent with past practice.
(q) Investments in Real Estate. Make any investment or commitment to
invest in real estate or in any real estate development project (other than
by way of foreclosure or acquisitions in a bona fide fiduciary capacity or
in satisfaction of a debt previously contracted in good faith, in each case
in the ordinary course of business consistent with past practice).
17
(r) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by changes in laws or regulations by GAAP.
(s) Loan Policies. Change its loan policies or procedures in effect as
of the date hereof, except as required by any Regulatory Authority.
(t) Adverse Actions. (i) Knowingly take any action that would, or
would be reasonably likely to, prevent or impede the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code; or
(ii) knowingly take any action that is intended or is reasonably likely to
result in (x) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, (y) any of the conditions to the Merger set
forth in Article VII not being satisfied, or (z) a material violation of
any provision of this Agreement, except, in each case, as may be required
by applicable law.
(u) Settlement of Claims. Settle any material claim, action or
proceeding, except after obtaining the prior written consent of Buyer.
(v) Agreements. Agree or commit to do anything prohibited by this
Section 5.1.
4.2 Buyer Forbearances. From the date hereof until the Effective Time,
except as set forth in the Buyer Disclosure Schedule or as expressly
contemplated by this Agreement, without the prior written consent of the
Company, Buyer will not, and will cause each of its Subsidiaries not to
knowingly take any action that would, or would be reasonably likely to, (i)
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code; or (ii) knowingly take any action that is
intended or is reasonably likely to result in (x) any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, (y) any of the conditions to
the Merger set forth in Article VII not being satisfied, or (z) a material
violation of any provision of this Agreement, except, in each case, as may be
required by applicable law.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
5.1 Disclosure Schedules. On or prior to the date hereof, Buyer has
delivered to the Company a schedule (the "Buyer Disclosure Schedule") and the
Company has delivered to Buyer a schedule (the "Company Disclosure Schedule and
together with the Buyer Disclosure Schedule, sometimes referred to herein as
"Disclosure Schedule") listing, among other things, items the disclosure of
which is necessary or appropriate in relation to any or all of its
representations and warranties; provided, however, that (i) no such item is
required to be set forth on a Disclosure Schedule as an exception to a
representation or warranty if its absence is not reasonably likely to result in
the related representation or warranty being deemed untrue or incorrect under
the standards established by Section 5.2, and (ii) the mere inclusion of an item
on a Disclosure Schedule shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect. For purposes
of the Disclosure Schedules, any item disclosed on any schedule therein shall be
deemed to be fully disclosed with respect to all schedules under
18
which such item may be relevant as and to the extent it is reasonably clear on
the face of such Disclosure Schedule that such item applies to such other
schedule.
5.2 Standard. No representation or warranty of the Company contained in
Section 5.3 or Buyer contained in Section 5.4 shall be deemed untrue or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, circumstance or
event unless such fact, circumstance or event, individually or taken together
with all other facts, circumstances or events inconsistent with any paragraph of
Sections 5.3 and 5.4, has had or is reasonably expected to have a Material
Adverse Effect; provided, however, that the foregoing standard shall not apply
to representations and warranties contained in subsections (b), (c), (d) and (e)
of Sections 5.3 and 5.4 and subsection (n)(viii) of Section 5.3, which shall be
deemed untrue, incorrect and breached if they are not true and correct in all
material respects.
5.3 Representations and Warranties of the Company. Subject to Sections 5.1
and 5.2 and except as disclosed on the Company Disclosure Schedule, the Company
hereby represents and warrants to Buyer:
(a) Organization, Standing and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Hampshire. The Company is duly registered as a bank holding
company under the BHCA and the regulations of the FRB thereunder. The
Company is duly qualified to do business and is in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of
its business requires it to be so qualified. The Company has in effect all
federal, state, local, and foreign governmental authorizations necessary
for it to own or lease its properties and assets and to carry on its
business as it is now being conducted.
(b) Capitalization.
(i) As of the date hereof, the authorized stock of the Company
consists solely of 12,500,000 shares of Company Common Stock, of
which, as of the date hereof, 5,190,253 shares were outstanding;
1,599,329 shares of Company Common Stock are directly or indirectly
held by the Company as treasury stock; and 7,500,000 shares of
preferred stock, par value $1.00 per share, none of which are
outstanding. In addition, as of the date hereof, there are 430,572
shares of Company Common Stock reserved for issuance upon exercise of
outstanding Company Stock Options. The outstanding shares of the
Company's capital stock are validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership
thereof, and subject to no preemptive or similar rights (and were not
issued in violation of any preemptive or similar rights). As of the
date hereof, there are no shares of the Company's capital stock
authorized and reserved for issuance, the Company does not have any
Rights issued or outstanding with respect to its capital stock, and
the Company does not have, and is not bound, by any commitment to
authorize, issue or sell any such shares or Rights, except pursuant to
this Agreement and as disclosed on Schedule 5.3(b) of the Company
Disclosure Schedule.
(ii) Except as set forth on Schedule 5.3(b) of the Company
Disclosure Schedule, there are no outstanding contractual obligations
of the Company to
19
repurchase, redeem or otherwise acquire any shares of capital stock
of, or other equity interests in, the Company or to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary of the Company.
(iii) Schedule 5.3(b) of the Company Disclosure Schedule sets
forth as of the date hereof for each Company Stock Option, the name of
the grantee, the type of grant, the status of the option grant as
qualified or non-qualified under Section 422 of the Code, the number
of shares of Company Common Stock subject to each option, the vesting
schedule of each option, the number of shares of Company Common Stock
that are currently exercisable and the exercise price per share.
(c) Subsidiaries.
(i) (A) Schedule 5.3(c) of the Company's Disclosure Schedule sets
forth a true and complete list of all of the Company's Subsidiaries,
(B) the Company owns, directly or indirectly, all of the issued and
outstanding equity securities of each Subsidiary, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to the Company) by reason of any Right or
otherwise, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to
sell or otherwise transfer any shares of its equity securities (other
than to the Company or a wholly-owned Subsidiary of it), (E) there are
no contracts, commitments, understandings, or arrangements relating to
the Company's rights to vote or to dispose of such securities and (F)
all of the equity of each such Subsidiary held by the Company are
fully paid and nonassessable, not subject to preemptive or similar
rights and are owned by the Company free and clear of any Liens.
(ii) The Company does not own (other than in a bona fide
fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, any shares of any equity
securities or similar interests of any person, or any interest in a
partnership or joint venture of any kind.
(iii) Each of the Company's Subsidiaries has been duly organized
and qualified under the laws of the jurisdiction of its organization
and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified.
(d) Corporate Power. Each of the Company and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute and deliver this Agreement and
perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(e) Corporate Authority. This Agreement and the transactions
contemplated hereby, subject to approval by the holders of a majority of
the shares of Company Common Stock entitled to vote thereon, have been
authorized by all necessary corporate action of the Company and the Board
of Directors of the Company (the "Company Board") on or prior to the date
hereof.
20
The Company has duly executed and delivered this Agreement and, assuming
the due authorization, execution and delivery by Buyer, this Agreement is a
legal, valid and binding agreement of the Company, enforceable in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general principles of equity).
(f) No Defaults. Subject to the receipt of Regulatory Approvals, and
expiration of waiting periods referred to in Section 7.2, if any, and the
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation, the Merger
and Bank Merger) by the Company do not and will not (i) constitute a breach
or violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, permit, license, credit agreement, indenture,
loan, note, bond, mortgage, reciprocal easement agreement, lease,
instrument, concession, franchise or other agreement of the Company or any
of its Subsidiaries or to which the Company or any of its Subsidiaries,
properties or assets is subject or bound, (ii) constitute a breach or
violation of, or a default under, the Company's articles of incorporation
or bylaws, or (iii) require the consent or approval of any third party or
Governmental Authority under any such law, rule, regulation, judgment,
decree, order, permit, license, credit agreement, indenture, loan, note,
bond, mortgage, reciprocal easement agreement, lease, instrument,
concession, franchise or other agreement.
(g) SEC Documents; Financial Reports; and Regulatory Reports.
(i) The Company's Annual Report on Form 10-K, as amended through
the date hereof, for the fiscal year ended December 31, 2001 (the
"Company 2001 Form 10-K"), and all other reports, registration
statements, definitive proxy statements or information statements
required to be filed by the Company or any of its Subsidiaries
subsequent to December 31, 1996 under the Securities Act, or under
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (collectively,
"Company SEC Documents"), with the SEC, and all of the Company SEC
Documents filed with the SEC, in the form filed or to be filed, (A)
complied or will comply in all respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; and each
of the balance sheets contained in or incorporated by reference into
any such Company SEC Document (including the related notes and
schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which such balance
sheet relates as of its date, and each of the statements of income and
changes in shareholders' equity and cash flows or equivalent
statements in such Company SEC Documents (including any related notes
and schedules thereto) fairly presents and will fairly present the
results of operations, changes in shareholders' equity and changes in
cash flows, as the case may be, of the entity or entities to which
such statement relates for the periods to which it relates, in each
case in accordance with GAAP consistently applied during the periods
involved, except in each case as may be noted therein, subject
21
to normal year-end audit adjustments in the case of unaudited
statements. Except for those liabilities that are fully reflected or
reserved against in the most recent consolidated balance sheet of the
Company and any of its Subsidiaries (the "Company Balance Sheet")
contained in the Company 2001 Form 10-K and, except for liabilities
reflected in Company SEC Documents filed prior to the date hereof or
incurred in the ordinary course of business consistent with past
practices or in connection with this Agreement, since December 31,
2001, neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that, either alone or where combined with all
similar liabilities, has had or could have a Material Adverse Effect
on the Company.
(ii) Since December 31, 1996, the Company has duly filed with the
FRB, the FDIC, the New Hampshire Bank Commissioner and any other
applicable Regulatory Authority, in correct form the reports required
to be filed under applicable laws and regulations and such reports
were in all respects complete and accurate in compliance with the
requirements of applicable laws and regulations. In connection with
the most recent examinations of it by the FRB, the FDIC, the New
Hampshire Bank Commissioner or any other applicable Regulatory
Authority, the Company was not required to correct or change any
action, procedure or proceeding which it believes has not been
corrected or changed as required.
(h) Articles of Incorporation; Bylaws; Corporate Records. The Company
has made available to Buyer a complete and correct copy of the articles of
incorporation and the bylaws or equivalent organizational documents, each
as amended to date, of the Company and each of its Subsidiaries. Such
articles of incorporation and bylaws are in final form and effect. The
minute books of the Company and each of its Subsidiaries contain true and
complete records of all meetings held or true and complete records of all
other corporate actions of their respective shareholders and boards of
directors (including committees of their respective boards of directors).
(i) Litigation; Regulatory Action.
(i) No litigation, claim or other proceeding before any court or
governmental agency is pending against the Company or any of its
Subsidiaries, and, to the best knowledge of the Company, no
litigation, claim or proceeding has been threatened and there are no
facts which could reasonably give rise to such litigation, claim or
other proceeding.
(ii) Neither the Company nor any of its Subsidiaries nor any of
their respective properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, any federal or
state governmental agency or authority charged with the supervision or
regulation of financial institutions or issuers of securities or
engaged in the insurance of deposits (including, without limitation,
the FRB, the FDIC, and the New Hampshire Bank Commissioner) or the
supervision or regulation of the Company or any of its Subsidiaries
(each
22
individually a "Regulatory Authority," and collectively, the
"Regulatory Authorities").
(iii) Neither the Company nor any of its Subsidiaries, has been
advised by a Regulatory Authority that it will issue, or is aware of
any facts which could give rise to the issuance by any Regulatory
Authority or is aware that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum
of understanding, commitment letter or similar submission.
(j) Compliance with Laws. Each of the Company and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
their businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
the best knowledge of the Company, no suspension or cancellation of
any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Regulatory Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of
the statutes, regulations, or ordinances which such Regulatory
Authority enforces, (B) threatening to revoke any license, franchise,
permit, or governmental authorization, (C) threatening or
contemplating revocation or limitation of, or which would have the
effect of revoking or limiting, federal deposit insurance (nor, to the
best knowledge of the Company, do any grounds for any of the foregoing
exist) or (D) failing to approve any proposed acquisition, or stating
its intention not to approve acquisitions, proposed to be effected by
the Company within a certain time period or indefinitely.
(k) Contractual Defaults. Neither the Company nor any of its
Subsidiaries is in default under any contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a
party, by which its assets, business, or operations may be bound or
affected, or under which it or its respective assets, business, or
operations receives benefits, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute
such a default.
(l) No Brokers. No action has been taken by the Company or any of its
Subsidiaries that would give rise to any valid claim against the Company
for a brokerage
23
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, except for the fees payable to
Sandler X'Xxxxx & Partners, L.P. and Xxxxx, Xxxxxxxx and Xxxxx, Inc.
disclosed on Schedule 5.3(l) of the Company Disclosure Schedule.
(m) Absence of Certain Changes or Events. Except as disclosed in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
2002, in the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002, in the Company's Proxy Statement filed with respect to its
2002 Annual Meeting of shareholders, in the Company 2001 Form 10-K, or as
otherwise expressly permitted or expressly contemplated by this Agreement,
since December 31, 2001, the Company and its Subsidiaries have not incurred
any liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise and whether due or to become due), except in the
ordinary course of their business consistent with their past practices, nor
has there been (i) any change in the business, assets, liabilities,
condition (financial or otherwise), or results of operations of the Company
or any of its Subsidiaries which has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company
or any of its Subsidiaries, and to the best knowledge of the Company, no
fact or condition exists which is reasonably likely to cause such a
Material Adverse Effect in the future, (ii) any change by the Company or
any of its Subsidiaries in its accounting methods, principles or practices,
other than changes required by applicable law or GAAP or regulatory
accounting as concurred in by the Company's independent accountants, (iii)
any entry by the Company or any of its Subsidiaries into any contract or
commitment of (A) more than $200,000 or (B) $50,000 per annum with a term
of more than one year, other than loans and loan commitments in the
ordinary course of business, (iv) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of the
Company or any of its Subsidiaries or any redemption, purchase or other
acquisition of any of its securities, other than in the ordinary course of
business consistent with past practice, (v) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or
to become payable to any directors, officers or employees of the Company or
any of its Subsidiaries, or any grant of severance or termination pay, or
any contract or arrangement entered into to make or grant any severance or
termination pay, any payment of any bonus, or the taking of any action not
in the ordinary course of business with respect to the compensation or
employment of directors, officers or employees of the Company or any of its
Subsidiaries, (vi) any material election made by the Company or any of its
Subsidiaries for federal or state income tax purposes, (vii) any material
change in the credit policies or procedures of the Company or any of its
Subsidiaries, the effect of which was or is to make any such policy or
procedure less restrictive in any respect, (viii) any material acquisition
or disposition of any assets or properties, or any contract for any such
acquisition or disposition entered into other than loans and loan
commitments, or (ix) any material lease of real or personal property
entered into, other than in connection with foreclosed property or in the
ordinary course of business consistent with past practice.
(n) Employee Benefit Plans.
(i) Schedule 5.3(n) of the Company Disclosure Schedule contains a
true and complete list of all bonus, vacation, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus,
24
stock purchase, restricted stock and stock option plans, all
employment or severance contracts, all medical, dental, disability,
health, split-dollar, and life insurance plans or arrangements, all
other employee benefit and fringe benefit plans, contracts or
arrangements and any applicable "change of control" or similar
provisions in any plan, contract or arrangement maintained by the
Company, any of its Subsidiaries or any entity which is considered one
employer with the Company under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"), for the benefit of
officers, former officers, employees, former employees, directors,
former directors, or the beneficiaries of any of the foregoing
(collectively, the "Company Compensation and Benefit Plans").
(ii) True and complete copies of the Company Compensation and
Benefit Plans (as amended to date) along with the following have been
delivered to Buyer: (A) the most recent IRS determination or approval
letter with respect to such Company Compensation and Benefit Plans
under Code Section 401(a) or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (B) the
three most recently filed IRS Forms 5500, with all applicable
schedules and accountants' opinions attached thereto; (C) the three
most recent actuarial valuation reports completed with respect to such
Company Compensation and Benefit Plans; (D) the summary plan
description for such Company Compensation and Benefit Plans, (or other
descriptions of such Company Compensation and Benefit Plans provided
to employees) and all modifications thereto; (E) any insurance policy
(including any fiduciary liability insurance policy or fidelity bond)
related to such Company Compensation and Benefit Plans; (F) any
registration statement or other filing made pursuant to any federal or
state securities law and (G) all correspondence to and from any state
or federal agency within the last three years with respect to such
Company Compensation and Benefit Plans.
(iii) Each of the Company Compensation and Benefit Plans has been
administered in accordance with the terms thereof and applicable law.
All of the Company Compensation and Benefit Plans which are "employee
benefit plans" within the meaning of Section 3(3) of ERISA, (other
than "multiemployer plans" within the meaning of Section 3(37) of
ERISA ("Multiemployer Plans")), (the "Company Plans"), to the extent
subject to ERISA, are in compliance with ERISA, the Code and all other
applicable laws and there has been no "prohibited transaction" as
defined in Section 406 of ERISA or Section 4975 of the Code. Each of
the Company Compensation and Benefit Plans which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA
("Company Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination
letter from the IRS regarding its qualification and has, in fact, been
qualified under Section 401(a) from the effective date of such Company
Pension Plan through and including the Closing. There is no pending
or, to the best knowledge of the Company, threatened litigation or
governmental audit, examination or investigation relating to any of
the Company Compensation and Benefit Plans. Each asset held under any
such Company Pension Plan may be liquidated or terminated without the
imposition of any redemption fee, surrender charge or comparable
liability. No partial
25
termination (within the meaning of Section 411(d)(3) of the Code) has
occurred with respect to any Company Pension Plan.
(iv) No liability under Title IV of ERISA has been or is expected
to be incurred by the Company with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, or the single-employer plan of any ERISA
Affiliate. None of the Company, its Subsidiaries or any ERISA
Affiliate has ever maintained a Multiemployer Plan. No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Company Pension Plan or by any ERISA
Affiliate or will be required to be filed as a result of the
transactions contemplated hereby.
(v) All contributions, premiums and payments required to be made
under the terms of any Company Compensation and Benefit Plan have been
timely made or have been accrued on the balance sheets contained in
the Company SEC Documents. Neither any Company Pension Plan nor any of
the ERISA Affiliates has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA. Neither the Company nor any of its Subsidiaries
or ERISA Affiliates has provided, or is required to provide, security
to any Company Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(vi) Under each Company Pension Plan, as of the last day of the
most recent plan year ended prior to the date hereof, the projected
benefit obligations (as determined in accordance with Financial
Accounting Standard No. 87) did not exceed the then current value of
the assets of such Plan, and, except as disclosed on Schedule 5.3(n)
of the Company Disclosure Schedule, there has been no adverse change
in the financial condition of such Plan (with respect to either assets
or benefits) since the last day of the most recent Plan year.
(vii) The Company does not have any obligations under any Company
Compensation and Benefit Plans to provide benefits, including death or
medical benefits, with respect to employees of the Company or any of
its Subsidiaries beyond their retirement or other termination of
service other than (A) coverage mandated by Part 6 of Title I of ERISA
or Section 4980B of the Code, (B) retirement or death benefits under
any Company Pension Plan, (C) disability benefits under any employee
welfare plan that have been fully provided for by insurance or
otherwise, (D) benefits in the nature of severance pay or (E) benefits
the full cost of which are borne by the former employee or such
employee's beneficiary.
(viii) Except as disclosed on Schedule 5.3(n) of the Company
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (A) result in any payment (including severance, unemployment
compensation, golden parachute or otherwise) becoming due to any
director, officer, or any employee of the
26
Company or any of its Subsidiaries under any Company Compensation and
Benefit Plans or otherwise from the Company or any ERISA Affiliate,
(B) increase any benefits otherwise payable under any Company
Compensation and Benefit Plans or (C) result in any acceleration of
the time of payment or vesting of any such benefit.
(ix) The Company Compensation and Benefit Plans may be amended,
terminated, or otherwise modified by the Company or an ERISA Affiliate
to the greatest extent permitted by applicable law, including the
elimination of any and all future benefit accruals under any Company
Compensation and Benefit Plan and no employee communications or
provision of any Company Compensation and Benefit Plan document has
failed to effectively reserve the right of the Company or its ERISA
Affiliates, to so amend, terminate or otherwise modify such Company
Compensation and Benefit Plans.
(x) For purposes of this Section 5.3(n), an entity "maintains"
Company Compensation and Benefit Plans if such entity sponsors,
contributes to, or provides benefits under or through such Company
Compensation and Benefit Plans, or has any obligation (by agreement or
under applicable law) to contribute to or provide benefits under or
through such Company Compensation and Benefit Plans, or if such
Company Compensation and Benefit Plans provide benefits to or
otherwise cover current or former employees or directors of such
entity (or their spouses, dependents, or beneficiaries).
(o) Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to, or bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is the Company or any of its Subsidiaries the subject of a proceeding
asserting that the Company or any of its Subsidiaries has committed an
unfair labor practice (within the meaning of the National Labor Relations
Act) or seeking to compel the Company or any of its Subsidiaries to bargain
with any labor organization as to wages and conditions of employment. No
work stoppage involving the Company or any of its Subsidiaries is pending,
or to the best knowledge of the Company's management, threatened. Neither
the Company nor any of its Subsidiaries is involved in, or, to the best
knowledge of the Company's management, threatened with or affected by, any
dispute, arbitration, lawsuit or administrative proceeding relating to
labor or employment matters that might reasonably be expected to interfere
in any respect with the respective business activities represented by any
labor union, and to the best knowledge of the Company's management, no
labor union is attempting to organize employees of the Company or any of
its Subsidiaries.
(p) Takeover Laws. The Company has taken all action required to be
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium,"
"business combination," "control share," "fair price" or other takeover
defense laws and regulations (collectively, "Takeover Laws"), if any, of
the State of New Hampshire.
(q) Insurance. The Company and each of its Subsidiaries is insured,
and during each of the past three calendar years has been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in
27
a similar business would, in accordance with good business practice
customarily be insured and has maintained all insurance required by
applicable laws and regulations. Schedule 5.3(q) of the Company Disclosure
Schedule lists all insurance policies maintained by the Company and each of
its Subsidiaries as of the date hereof. All of the policies and bonds
maintained by the Company or any of its Subsidiaries are in full force and
effect and all claims thereunder have been filed in a due and timely manner
and, to the best knowledge of the Company, no such claim has been denied.
(r) Environmental Matters.
(i) Except as disclosed on Schedule 5.3(r) of the Company
Disclosure Schedule, each of the Company and its Subsidiaries and each
property owned by either of them (the "Owned Property") and, to the
best knowledge of the Company, the Loan Properties (as hereinafter
defined), are, and have been, in compliance with all applicable
environmental laws and with all rules, regulations, standards and
requirements of the EPA or state and local agencies with jurisdiction
over pollution or protection of the Environment (as hereinafter
defined).
(ii) There is no suit, claim, action or proceeding pending or, to
the best knowledge of the Company, threatened, before any Governmental
Authority or other forum in which the Company or any of its
Subsidiaries, or any Owned Property has been or, with respect to
threatened proceedings, may be, named as a defendant, responsible
party or potentially responsible party (A) for alleged noncompliance
(including by any predecessor), with any environmental law, rule,
regulation, standard or requirement or (B) relating to the release
into or presence in the Environment (as hereinafter defined) of any
Hazardous Materials (as hereinafter defined) or Oil (as hereinafter
defined) at or on a site owned, leased or operated by the Company or
any of its Subsidiaries.
(iii) To the best knowledge of the Company, there is no suit,
claim, action or proceeding pending or threatened, before any
Governmental Authority or other forum in which any Loan Property has
been or, with respect to threatened proceedings, may be, named as a
defendant, responsible party or potentially responsible party (A) for
alleged noncompliance (including by any predecessor) with any
environmental law, rule, regulation, standard or requirement or (B)
relating to the release into or presence in the Environment of any
Hazardous Material or Oil whether or not occurring at or on a site
owned, leased or operated by a Loan Property.
(iv) Except as set forth on Schedule 5.3(r) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries,
nor to the best knowledge of the Company, any Loan Property, has
received any written notice regarding a matter on which a suit, claim,
action or proceeding as described in subsection (ii) or (iii) of this
Section 5.3(r) could reasonably be based. No facts or circumstances
have come to the Company's attention which have caused it to believe
that a suit, claim, action or proceeding as described in subsection
(ii) or (iii) of this Section 5.3(r) could reasonably be expected to
occur.
28
(v) During the period of (A) the Company's or any of its
Subsidiaries ownership or operation of any of their respective current
properties or (B) the Company's or any of its Subsidiaries holding of
a security interest in a Loan Property, to the best knowledge of
Company, there has been no release or presence of Hazardous Material
or Oil in, on, under or affecting such property or Loan Property. To
the best knowledge of the Company, prior to the period of (A) the
Company's or any of its Subsidiaries' ownership or operation of any of
their respective current properties or any previously owned or
operated properties, or (B) the Company's or any of its Subsidiaries'
holding of a security interest in a Loan Property, there was no
release or presence of Hazardous Material or Oil in, on, under or
affecting any such property or Loan Property.
(vi) Neither the Company nor any of its Subsidiaries is an owner
or operator of any Loan Property and there are no Participation
Facilities.
(vii) The following definitions apply for purposes of this
Section 5.3(r): (A) "Loan Property" means any property in which the
Company or any of its Subsidiaries holds a security interest, and,
where required by the context (as a result of foreclosure), said term
means the owner or operator of such property; (B) "Participation
Facility" means any facility in which the Company or any of its
Subsidiaries participates or has participated in the management and,
where required by the context, said term means the owner or operator
of such property; (C) "Hazardous Material" means any pollutant,
contaminant, or hazardous substance or hazardous material as defined
in or pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or
any other federal, state, or local environmental law, regulation or
requirement; (D) "Oil" means oil or petroleum of any kind --- or
origin or in any form, as defined in or pursuant to the Federal Clean
Water Act, 33 U.S.C. Section 1251 et seq., or any other federal,
state, or local environmental law, regulation or requirement; and (E)
"Environment" means any soil, surface waters, groundwaters, stream
sediments, surface or subsurface strata, and ambient air, and any
other environmental medium.
(s) Taxes and Tax Returns. Except as set forth on Schedule 5.3(s) of
the Company Disclosure Schedule:
(i) The Company and each of its Subsidiaries have, since December
31, 1996, timely filed in correct form all Tax Returns that were
required to be filed by either of them on or prior to the date hereof,
and have paid all Taxes owed by them (whether or not show as due on
any Tax Returns).
(ii) No assessment that has not been settled or otherwise
resolved has been made with respect to Taxes, other than such
additional Taxes as are being contested in good faith and which are
described on Schedule 5.3(s) of the Company Disclosure Schedule. The
Tax Returns of the Company and its Subsidiaries have been examined by
the IRS or other taxing authority, as applicable, for all years
through 1993 and any liability with respect thereto has been
satisfied. There are no disputes pending or written claims asserted
for Taxes
29
or assessments upon either the Company or any of its Subsidiaries, nor
has the Company or any of its Subsidiaries been requested to give, or
has given, any currently effective waivers extending the statutory
period of limitation applicable to any Tax assessment or deficiency.
Neither the Company nor any of its Subsidiaries is currently the
beneficiary of any extension of time within which to file any Tax
Return. No deficiency in Taxes or other proposed adjustment that has
not been settled or otherwise resolved has been asserted in writing by
any taxing authority against the Company or any of its Subsidiaries.
To the best knowledge of the Company, no Tax Return of Company or any
of its Subsidiaries is now under examination by any applicable taxing
authority. There are no liens for Taxes (other than current Taxes not
yet due and payable) on any of the assets of the Company or any of its
Subsidiaries.
(iii) Adequate provision has been made on the Company Balance
Sheet for all Taxes of the Company and its Subsidiaries in respect of
all periods through the date hereof. In addition, (A) proper and
accurate amounts have been withheld by each of the Company and its
Subsidiaries from its respective employees for all prior periods in
compliance in all respects with the tax withholding provisions of
applicable federal, state, county and local laws; (B) federal, state,
county and local returns which are accurate and complete in all
respects have been filed by the Companies for all periods for which
returns were due with respect to income tax withholding, Social
Security and unemployment taxes; and (C) the amounts shown on such
returns to be due and payable have been paid in full or adequate
provision therefor has been included by the Company in its
consolidated financial statements included in the Company 2001 Form
10-K, or, respect to returns filed after the date hereof, will be so
paid or provided for in the consolidated financial statements of the
Company for the period covered by such returns. Since the date of the
Company Balance Sheet, neither the Company nor any of its Subsidiaries
has incurred any liability for Taxes arising from extraordinary gains
or losses, as that term is used in GAAP, outside the ordinary course
of business consistent with past custom and practice. The Company has
made available to Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company, or any of
its Subsidiaries filed or received since December 31, 1999.
(iv) Neither the Company nor any of its Subsidiaries is a party
to or bound by any Tax indemnification, Tax allocation or Tax sharing
agreement with any person or entity or has any current or potential
contractual obligation to indemnify any other person or entity with
respect to Taxes.
(v) Neither the Company nor any of its Subsidiaries has filed or
been included in a combined, consolidated or unitary income Tax Return
(including any consolidated federal income Tax Return) other than one
of which the Company was the parent.
(vi) Except as disclosed on Schedule 5.3(s)(vi) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries
has made any payment, is obligated to make any payment, or is a party
to any agreement
30
that could obligate it to make any payment that will not be deductible
under Code Section 162(m) or Code Section 280G. Neither the Company
nor any of its Subsidiaries has filed a consent under Code section
341(f) concerning collapsible corporations.
(vii) No property of the Company or any of its Subsidiaries is
property that is or will be required to be treated as being owned by
another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code (as in effect prior to its amendment by the Tax
Reform Act of 1986) or is "tax exempt use property" within the meaning
of Section 168(h) of the Code. Neither the Company nor any of its
Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by the Company or any of its Subsidiaries,
and the IRS has not initiated or proposed any such adjustment or
change in accounting method.
(viii) None of the Company or its Subsidiaries will be required
to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any: (A) closing
agreement as described in Code section 7121 (or any corresponding or
similar provision of state, local, or foreign income Tax law) executed
on or prior to the Closing Date; (B) intercompany transactions or any
excess loss account described in Treasury Regulations under Code
section 1502 (or any corresponding or similar provision of state,
local, or foreign income Tax law); (C) installment sale or open
transaction disposition made on or prior to the Closing Date; or (D)
pre paid amount received on or prior to the Closing Date.
(ix) Neither the Company nor any of its Subsidiaries has
distributed stock of another Person, or has had its stock distributed
by another Person, in a transaction that was purported or intended to
be governed in whole or in part by Code section 355 or section 361.
(t) Intellectual Property. The Company or its Subsidiaries owns or, to
the best knowledge of the Company, possesses valid and binding licenses and
other rights to use all patents, copyrights, trade secrets, trade names,
servicemarks and trademarks used in their businesses, each without payment,
and neither the Company nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the rights of others. The
Company and its Subsidiaries, has performed all the obligations required to
be performed, and are not in default in any respect, under any contract,
agreement, arrangement or commitment relating to any of the foregoing.
(u) Tax Treatment; Accounting Treatment. As of the date hereof, the
Company is aware of no reason why the Merger will fail to qualify as a
reorganization under Section 368(a) of the Code.
(v) Material Agreements; Defaults.
(i) Except as set forth on Schedule 5.3(v) of the Company
Disclosure Schedule or the index of exhibits in the Company's Annual
Reports on Forms 10
31
K for the years ended December 31, 2001, 2000, and 1999, and except
for this Agreement and the transactions contemplated hereby, neither
the Company nor any of its Subsidiaries is a party to or is bound by
(A) any agreement, arrangement, or commitment that is material to the
financial condition, results of operations or business of the Company,
except entered into in the ordinary course of business; (B) any
written (or oral) agreement, arrangement, or commitment relating to
the employment, including without limitation, employment as a
consultant of any person or the election or retention in office or
severance of any present or former director or officer of the Company
or any of its Subsidiaries; (C) any contract, agreement, or
understanding with any labor union; (D) any agreement by and among the
Company or any of its Subsidiaries, and/or any affiliate thereof; (E)
any contract or agreement or amendment thereto that would be required
to be filed as an exhibit to a Form 10-K filed by the Company as of
the date hereof that has not been filed as an exhibit to the Company
2001 Form 10-K; (F) any agreement, arrangement, or commitment (whether
written or oral) which, upon the consummation of the transactions
contemplated by this Agreement would result in any payment (whether of
severance pay or otherwise) becoming due from the Company or any of
its Subsidiaries to any officer or employee thereof, (G) any
agreement, arrangement or commitment (whether written or oral) which
is a consulting or other agreement (including agreements entered into
in the ordinary course and data processing, software programming and
licensing contracts) not terminable on sixty (60) days or less notice
involving the payment of in excess of $100,000 per annum, individually
or $200,000 in the aggregate (H) any agreement, arrangement or
commitment (whether written or oral) which restricts the conduct of
any line of business by the Company or any of its Subsidiaries, or (I)
any agreement, arrangement or commitment (whether written or oral)
(including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of
which will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement. The Company has previously delivered
to Buyer true and complete copies of all employment, consulting and
deferred compensation agreements which are in writing and to which the
Company or any of its Subsidiaries is a party. Each contract,
arrangement, commitment or understanding of the type described in this
Section 5.3(v), whether or not set forth on Schedule 5.3(v) of the
Company Disclosure Schedule, is referred to herein as a "Company
Material Contract."
(ii) (A) To the best knowledge of the Company, each Company
Material Contract listed on Schedule 5.3(v) of the Company Disclosure
Schedule is legal, valid and binding upon the Company or its
Subsidiaries, as the case may be, and in full force and effect, (B)
the Company and each of its Subsidiaries has in all respects performed
all obligations required to be performed by it to date under each such
Company Material Contract, and (C) no event or condition exists which
constitutes or, after notice or lapse of time or both, would
constitute, a default on the part of the Company or any of its
Subsidiaries under any such Company Material Contract.
32
(w) Property and Leases.
(i) Each of the Company and each of its Subsidiaries has good and
marketable title to all the real property and all other property owned
by it and included in the Company Balance Sheet, free and clear of all
mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of
third parties of any kind (collectively, "Liens"), other than (A)
Liens that secure liabilities that are reflected in the ----- Company
Balance Sheet or incurred in the ordinary course of business after the
date of the Company Balance Sheet, (B) Liens for current taxes and
assessments not yet past due or which are being contested in good
faith, (C) inchoate mechanics' and materialmen's Liens for
construction in progress, (D) workmen's, repairmen's, warehousemen's
and carriers' Liens arising in the ordinary course of business of the
Company or any of its Subsidiaries consistent with past practice, (E)
all matters of record, Liens and other imperfections of title and
encumbrances which, either individually or in the aggregate, would not
be material, and (F) those items that secure public or statutory
obligations or any discount with, borrowing from, or obligations to
any FRB or Federal Home Loan Bank, interbank credit facilities, or any
transaction by the Company's Subsidiaries acting in a fiduciary
capacity.
(ii) Each lease of real property to which the Company or any of
its Subsidiaries is a party requiring rental payments in excess of
$500,000 during the period of the lease, and all amendments and
modifications thereto, is in full force and effect, and there exists
no default under any such lease by the Company or any of its
Subsidiaries nor, to the best knowledge of the Company, any event
which with notice or lapse of time or both would constitute a default
thereunder by the Company or any of its Subsidiaries, except for such
defaults which, individually, or in the aggregate, would not result in
the forfeiture of the use or occupancy of the property covered by such
lease.
(x) Regulatory Approvals. As of the date hereof, the Company is not
aware of any reason why the approvals of the Regulatory Authorities will
not be received.
(y) Loans; Nonperforming and Classified Assets.
(i) Each loan agreement, note or borrowing arrangement, including
without limitation portions of outstanding lines of credit and loan
commitments (collectively, "Loans"), on the Company's or any of its
Subsidiaries' books and records, was made and has been serviced in
accordance with the Company's lending standards in the ordinary course
of business; is evidenced by appropriate and sufficient documentation;
to the extent secured, has been secured by valid liens and security
interests which have been perfected; and constitutes the legal, valid
and binding obligation of the obligor named therein, enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating
to or affecting creditor's rights and to general equity principles.
The Company has previously delivered to Buyer true, accurate and
complete copies of its lending policies.
33
(ii) Schedule 5.3(y) of the Company Disclosure Schedule discloses
as of September 30, 2002: (A) any Loan under the terms of which the
obligor is sixty (60) or more days delinquent in payment of principal
or interest, or to the best knowledge of the Company, in default of
any other provision thereof; (B) each Loan which has been classified
as "other loans specially maintained," "classified," "criticized,"
"substandard," "doubtful," "credit risk assets," "watch list assets,"
"loss" or "special mention" (or words of similar import) by the
Company, its Subsidiaries or a Regulatory Authority (the "Classified
Loans"); (C) a listing of the real estate owned, acquired by
foreclosure or by deed-in-lieu thereof, including the book value
thereof; (D) each Loan with any director, executive officer or five
percent or greater shareholder of the Company, or to the best
knowledge of the Company, any person, corporation or enterprise
controlling, controlled by or under common control with any of the
foregoing. All Loans which are classified as "Insider Transactions" by
Regulation O of the FRB have been made by the Company or any of its
Subsidiaries in an arms-length manner made on substantially the same
terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and do not
involve more than normal risk of collectibility or present other
unfavorable features.
(iii) The Company shall promptly after the end of each quarter
after the date hereof and upon Closing inform Buyer of the amount of
Loans subject to each type of classification of the Classified Loans.
(z) Allowance for Loan Losses. The allowance for loan losses reflected
in the Company SEC Documents and financial statements filed therewith, as
of their respective dates, is adequate under GAAP and all regulatory
requirements applicable to financial institutions.
(aa) Trust Accounts. Neither the Company nor any of its Subsidiaries
conduct any trust business.
(bb) Derivative Transactions. Neither the Company nor any of its
Subsidiaries is engaged in transactions in or involving forwards, futures,
options on futures, swaps or similar derivative instruments except as agent
on the order and for the account of others or in connection with mortgage
loan secondary market activities in the ordinary course of business
consistent with the Company's past practices.
(cc) Repurchase Agreements. With respect to all agreements pursuant to
which the Company or any of its Subsidiaries has purchased securities
subject to an agreement to resell, if any, the Company or any of its
Subsidiaries, as the case may be, has a valid, perfected first lien or
security interest in the government securities or other collateral securing
the repurchase agreement, and, as of the date hereof, the value of such
collateral equals or exceeds the amount of the debt secured thereby.
(dd) Deposit Insurance. The Company's Subsidiary, Granite Bank, has
its deposits insured by the FDIC in accordance with the FDIA to the fullest
extent permitted by law, and each Subsidiary has paid all premiums and
assessments and filed all reports required by the FDIA. As of the date
hereof, no proceedings for the revocation or termination of such deposit
insurance are pending or, to the best knowledge of the Company, threatened.
34
(ee) CRA, Anti-money laundering and Customer Information Security.
Neither the Company nor any of its Subsidiaries is aware of, has been
advised of, nor has reason to believe that any facts or circumstances exist
which would cause the Company's Subsidiaries: (i) to be deemed not to be in
satisfactory compliance with the CRA and the regulations promulgated
thereunder, or to be assigned a rating for CRA purposes by federal or state
bank regulators of lower than "satisfactory"; or (ii) to be deemed to be
operating in violation of the federal Bank Secrecy Act, as amended and its
implementing regulations (31 CFR part 103), the USA Patriot Act, any order
issued with respect to anti-money laundering by the U.S. Treasury's Office
of Foreign Assets Control, or any other applicable anti-money laundering
statute, rule or regulation; or (iii) to be deemed not to be in
satisfactory compliance with the privacy of customer information
requirements contained in Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 and
regulations promulgated thereunder as well as the provisions of the
Information Security Program adopted by the Company's Subsidiaries pursuant
to 12 CFR Part 364. Furthermore, the Company Board has adopted and
implemented an anti-money laundering program that meets the requirements of
Section 352 of the USA Patriot Act and the regulations thereunder.
(ff) Proxy Statement; Company Information. The information relating to
the Company and its Subsidiaries to be contained in the Proxy
Statement/Prospectus as described in Section 6.3 hereof, and any other
documents filed with the SEC in connection herewith, will not, on the date
the Company Proxy Statement/ Prospectus is first mailed to shareholders of
the Company or at the time of the Company Meeting, contain any statement
which is false or misleading with respect to any material fact, or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not false or misleading at the time and in
light of the circumstances under which such statement is made. The Company
Proxy Statement/ Prospectus will comply in all respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
(gg) Deposit/Loan Agreements. The deposit and loan agreements of the
Company and its Subsidiaries comply with all applicable laws, rules and
regulations.
(hh) Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other
writing, including but not necessarily limited to the Company Disclosure
Schedule and, including without limitation, the Company SEC documents as
the same may be updated as of the date hereof, furnished to Buyer pursuant
to the provisions hereof, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein not misleading.
(ii) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock entitled to vote thereon is the
only vote of any class of capital stock of the Company required by the
NHBCA, the articles of organization of the Company or the bylaws of the
Company to approve this Agreement and approve the transactions contemplated
hereby.
5.4 Representations and Warranties of Buyer. Subject to Sections 5.1 and
5.2 and except as disclosed on the Buyer Disclosure Schedule, Buyer hereby
represents and warrants to Company:
35
(a) Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Vermont. Buyer is duly registered as a bank holding company under
the BHCA and the regulations of the FRB thereunder. Buyer is duly qualified
to do business and is in good standing in the jurisdictions where its
ownership or leasing of property or the conduct of its business requires
Buyer to be so qualified. Buyer has in effect all federal, state, local,
and foreign governmental authorizations necessary for Buyer to own or lease
its properties and assets and to carry on its business as it is now being
conducted.
(b) Capitalization. As of the date hereof, the authorized stock of
Buyer consists solely of 60,000,000 shares of Buyer Common Stock, of which,
as of the date hereof, 31,949,900 shares were outstanding; 3,798,753 shares
of Buyer Common Stock are directly or indirectly held by Buyer as treasury
stock; and 1,000,000 shares of preferred stock, par value $100.00 per
share, none of which are outstanding. The outstanding shares of Buyer's
capital stock are validly issued, fully paid and nonassessable with no
personal liability to the ownership thereof, and subject to no preemptive
rights or similar rights (and were not issued in violation of any
preemptive or similar rights). As of the date hereof, there are no shares
of Buyer's capital stock authorized and reserved for issuance, Buyer does
not have any Rights issued or outstanding with respect to its capital
stock, and Buyer does not, and is not bound by, any commitment to
authorize, issue or sell any such shares or Rights, except pursuant to this
Agreement and as disclosed on Schedule 5.4(b) of the Buyer Disclosure
Schedule.
(c) Subsidiaries.
(i) (A) Schedule 5.4(c) of the Buyer Disclosure Schedule lists
all of Buyer's Subsidiaries together with the jurisdictions of
organization of each Subsidiary, (B) except as disclosed on Schedule
5.4(c) of the Buyer Disclosure Schedule, Buyer owns, directly or
indirectly, all of the issued and outstanding equity securities of
each of Buyer's Subsidiaries, (C) no equity securities of any of its
Subsidiaries are or may become required to be issued (other than to
Buyer) by reason of any Right or otherwise, (D) there are no
contracts, commitments, understandings or arrangements by which any of
such Subsidiaries is or may be bound to sell or otherwise transfer any
shares of its equity securities (other than to Buyer or a wholly-owned
Subsidiary of it), (E) there are no contracts, commitments,
understandings, or arrangements relating to Buyer's rights to vote or
to dispose of such securities and (F) all of the equity securities of
each such Subsidiary held by Buyer or its Subsidiaries are fully paid
and nonassessable, not subject to preemptive or similar rights and are
owned by Buyer or its Subsidiaries free and clear of any Liens.
(ii) Except as disclosed on Schedule 5.4(c) of the Buyer
Disclosure Schedule, Buyer does not own (other than in a bona fide
fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, any shares of any equity
securities or similar interests of any person, or any interest in a
partnership or joint venture of any kind.
(iii) Each of Buyer's Subsidiaries has been duly organized and
qualified under the laws of the jurisdiction of its organization and
is duly qualified
36
to do business and in good standing in the jurisdiction where its
ownership or leasing of property or the conduct of its business
requires Buyer to be so qualified.
(d) Corporate Power. Each of Buyer and its Subsidiaries has the
corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Buyer
has the corporate power and authority to execute and deliver this
Agreement and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(e) Corporate Authority. This Agreement and the transactions
contemplated hereby, have been authorized by all necessary corporate
action of Buyer and the Board of Directors of Buyer ("Buyer Board") on
or prior to the date hereof. Buyer has duly executed and delivered
this Agreement and, assuming the due authorization, execution and
delivery by the Company, this Agreement is a legal, valid and binding
agreement of Buyer, enforceable in accordance with its terms (except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting
creditors' rights or by general principles of equity).
(f) No Defaults. Subject to the receipt of Regulatory Approvals,
and expiration of waiting periods referred to in Section 7.2, if any,
and the required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (including,
without limitation, the Merger and Bank Merger) by Buyer do not and
will not (i) constitute a breach or violation of, or a default under,
any law, rule or regulation or any judgment, decree, order, permit,
license, credit agreement, indenture, loan, note, bond, mortgage,
reciprocal easement agreement, lease, instrument, concession,
franchise or other agreement of Buyer or of any of its Subsidiaries or
to which Buyer or any of its Subsidiaries, properties or assets is
subject or bound, (ii) constitute a breach or violation of, or a
default under, Buyer's articles of incorporation or bylaws, or (iii)
require the consent or approval of any third party or Regulatory
Authority under any such law, rule, regulation, judgment, decree,
order, permit, license, credit agreement, indenture, loan, note, bond,
mortgage, reciprocal easement agreement, lease, instrument,
concession, franchise or other agreement.
(g) SEC Documents; Financial Reports; and Regulatory Reports.
(i) Buyer's Annual Report on Form 10-K, as amended through
the date hereof, for the fiscal year ended December 31, 2001 (the
"Buyer 2001 Form 10-K"), and all other reports, registration
statements, definitive proxy statements or information statements
required to be filed by Buyer or any of its Subsidiaries
subsequent to December 31, 1996 under the Securities Act, or
under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
(collectively, "Buyer SEC Documents"), with the SEC, and all of
Buyer SEC Documents filed with the SEC, in the form filed or to
be filed, (A) complied or will comply in all respects as to form
with the applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
37
under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any
such Buyer SEC Document (including the related notes and
schedules thereto) fairly presents and will fairly present the
financial position of the entity or entities to which such
balance sheet relates as of its date, and each of the statements
of income and changes in stockholders' equity and cash flows or
equivalent statements in such Buyer SEC Documents (including any
related notes and schedules thereto) fairly presents and will
fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may
be, of the entity or entities to which such statement relates for
the periods to which it relates, in each case in accordance with
GAAP consistently applied during the periods involved, except in
each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements. Except for
those liabilities that are fully reflected or reserved against in
the most recent consolidated balance sheet of the Buyer and its
Subsidiaries (the "Buyer Balance Sheet") contained in the Company
2001 Form 10-K and, except for liabilities reflected in Company
SEC documents filed prior to the date hereof or incurred in the
ordinary course of business consistent with past practices or in
connection with this Agreement, since December 31, 2001, neither
the Buyer nor its Subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or
otherwise) that, either alone or where combined with all similar
liabilities, has had or could have a Material Adverse Effect on
Buyer.
(ii) Since December 31, 1996, Buyer has duly filed with the
FRB, the FDIC, the Vermont Bank Commissioner and the Maine
Superintendent of Banks and any other applicable Regulatory
Authority, in correct form the reports required to be filed under
applicable laws and regulations and such reports were in all
material respects complete and accurate in compliance with the
requirements of applicable laws and regulations. In connection
with the most recent examinations of Buyer by the FRB, the FDIC,
the Vermont Bank Commissioner or any other applicable Regulatory
Authority, Buyer was not required to correct or change any
action, procedure or proceeding which it believes has not been
corrected or changed as required.
(h) Articles of Incorporation; Bylaws; Corporate Records. Buyer has
made available to the Company a complete and correct copy of the articles
of incorporation and the bylaws or equivalent organizational documents,
each as amended to date, of Buyer and each of its Subsidiaries. Such
articles of incorporation and bylaws are in final form and effect. The
minute books of Buyer and each of its Subsidiaries contain true and
complete records of all meetings held or true and complete records of all
other corporate actions of their respective shareholders and boards of
directors (including committees of their respective boards of directors).
(i) Litigation; Regulatory Action.
(i) No litigation, claim or other proceeding before any court or
governmental agency is pending against Buyer or any of its
Subsidiaries, and, to the best of its knowledge, no litigation, claim
or proceeding has been threatened
38
and there are no facts which could reasonably give rise to such
litigation, claim or other proceeding.
(ii) Neither Buyer nor any of its Subsidiaries nor any of their
respective properties is a party to or is subject to any order,
decree, agreement memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to any Regulatory
Authority (including, without limitation, the FRB, the FDIC, the
Vermont Bank Commissioner or the Maine Superintendent of Banks or the
supervision or regulation of Buyer or any of its Subsidiaries.)
(iii) Neither Buyer nor any of its Subsidiaries, has been advised
by a Regulatory Authority that it will issue, or is aware of, any
facts which could give rise to the issuance, by any Regulatory
Authority or is aware that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum
of understanding, commitment letter or similar submission.
(j) Compliance with Laws. Each of Buyer and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
their businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
the best knowledge of Buyer, no suspension or cancellation of any of
them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Regulatory Authority (A) asserting that Buyer
or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Regulatory Authority
enforces, (B) threatening to revoke any license, franchise, permit, or
governmental authorization, (C) threatening or contemplating
revocation or limitation of, or which would have the effect of
revoking or limiting, federal deposit insurance (nor, to the best
knowledge of Buyer, do any grounds for any of the foregoing exist) or
(D) failing to approve any proposed acquisition, or stating its
intention not to approve acquisitions, proposed to be effected by
Buyer within a certain time period or indefinitely.
39
(k) Employee Benefit Plans.
(i) Schedule 5.4(k) of the Buyer Disclosure Schedule contains a
true and complete list of all pension, restricted stock and stock
option plans, all medical, dental, disability, health and life
insurance plans maintained by Buyer, any of its Subsidiaries or any
ERISA Affiliate, for the benefit of employees of any of the foregoing
(collectively, the "Buyer Compensation and Benefit Plans").
(ii) Each Buyer Compensation and Benefit Plan has been
administered in accordance with the terms thereof and applicable law.
All Buyer Compensation and Benefit Plans which are "employee benefit
plans" within the meaning of Section 3(3) of ERISA, other than
Multiemployer Plans, (the "Buyer Plans"), to the extent subject to
ERISA, are in compliance with ERISA, the Code and all other applicable
laws.
(l) Tax Treatment; Accounting Treatment. As of the date hereof, Buyer
is aware of no reason why the Merger will fail to qualify as a
reorganization under Section 368(a) of the Code.
(m) Regulatory Approvals. The Regulatory Approvals are necessary to
consummate the Merger and related Bank Merger. As of the date hereof, Buyer
is not aware of any reason why the Regulatory Approvals will not be
received.
(n) Proxy Statement; Company Information. The information relating to
Buyer and its Subsidiaries to be contained in the Proxy
Statement/Prospectus as described in Section 6.3 hereof, and any other
documents filed with the SEC in connection herewith, will not, on the date
the Proxy Statement/ Prospectus is first mailed to shareholders of the
Company or at the time of the Company Meeting, contain any statement which
is false or misleading with respect to any material fact, or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein not false or misleading at the time and in
light of the circumstances under which such statement is made. The Proxy
Statement/ Prospectus will comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regulations
thereunder.
(o) Deposit Insurance. Buyer's bank Subsidiaries have their deposits
insured by the Bank Insurance Fund of the FDIC in accordance with the FDIA
to the fullest extent permitted by law, and each such Subsidiary has paid
all premiums and assessments and filed all reports required by the FDIA. As
of the date hereof, no proceedings for the revocation or termination of
such deposit insurance are pending or, to the best knowledge of Buyer,
threatened.
(p) CRA, Anti-money laundering and Customer Information Security.
Neither Buyer nor any of its Subsidiaries is aware of, has been advised of,
nor has reason to believe that any facts or circumstances exist which would
cause Buyer's Subsidiaries: (i) to be deemed not to be in satisfactory
compliance with the CRA and the regulations promulgated thereunder, or to
be assigned a rating for CRA purposes by federal or state bank regulators
of lower than "satisfactory"; or (ii) to be deemed to be operating in
violation of the federal Bank Secrecy Act, as amended and its implementing
regulations (31 CFR part 103), the USA Patriot Act, any order issued with
respect to anti-money laundering by the U.S. Treasury's Office of Foreign
Assets Control, or any other applicable anti-money laundering statute, rule
or regulation;
40
or (iii) to be deemed not to be in satisfactory compliance with the privacy
of customer information requirements contained in Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 and regulations promulgated thereunder as
well as the provisions of the Information Security Program adopted by
Buyer's Subsidiaries pursuant to 12 CFR Part 364. Furthermore, Buyer Board
has adopted and implemented an anti-money laundering program that meets the
requirements of Section 352 of the USA Patriot Act and the regulations
thereunder.
(q) Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other
writing, including but not necessarily limited to the Buyer Disclosure
Schedule and, including without limitation, the Buyer SEC Documents as the
same may be updated as of the date hereof, furnished to the Company
pursuant to the provisions hereof, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein not misleading.
ARTICLE VI - COVENANTS
6.1 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each of the
Company and Buyer agree to use its reasonable best efforts in good faith to
take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as practicable
and otherwise to enable consummation of the transactions contemplated
hereby, including effecting all filings and obtaining (and cooperating with
the other party hereto to obtain) any permit, consent, authorization, order
or approval of, or any exemption by, any Regulatory Authority and any other
third party that is required to be obtained by the Company or Buyer or any
of their respective Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement, and using reasonable
best efforts to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to consummate
the Merger and the transactions contemplated hereby, and using reasonable
best efforts to defend any litigation seeking to enjoin, prevent or delay
the consummation of the Merger and the transactions contemplated hereby or
seeking material damages, and each shall cooperate fully with the other
party hereto to that end.
(b) Each of the Company and Buyer shall promptly take, or cause its
affiliates and Subsidiaries to take, if required by or necessary to resolve
any objection of the DOJ or its staff, the FRB or its staff, the FDIC or
its staff, the OCC or its staff, any state attorney general or its staff or
any other governmental entity, in each case in order to consummate the
Merger and the transactions contemplated hereby, all steps (including
executing agreements and submitting to judicial or administrative orders)
to secure regulatory approval or government clearance (including by
avoiding or setting aside any preliminary or permanent injunction or other
order of any United States federal or state court of competent jurisdiction
or any other governmental authority), provided, however that in no event
shall Buyer be required to take any such steps that Buyer reasonably
determines would be a Burdensome Condition. Each of the Company and Buyer
represents and warrants that such party's Subsidiaries have full power and
authority to effect the transactions contemplated by this Section 6.1(b).
41
6.2 Shareholder Approval.
(a) Following the execution of this Agreement, the Company shall take,
in accordance with applicable law, applicable Nasdaq rules and its articles
of incorporation and bylaws, all action necessary to convene a meeting of
its shareholders as promptly as practicable to consider and vote upon the
approval of this Agreement and any other matter required to be approved by
the shareholders of the Company in order to consummate the Merger and the
transactions contemplated hereby (including any adjournment or
postponement, the "Company Meeting").
(b) Subject to Section 6.6 hereof, the Company shall ensure that the
Company Meeting is called, noticed, convened, held and conducted, and that
all proxies solicited by the Company in connection with the Company Meeting
are solicited in compliance with New Hampshire law, the articles of
incorporation and bylaws of the Company, and all other applicable legal
requirements.
(c) Subject to Section 6.6 hereof, (i) the Company Board shall
recommend that the Company's shareholders vote to approve this Agreement
and any other matters required to be approved by the Company's shareholders
for consummation of the Merger and the transactions contemplated hereby,
(ii) the Proxy Statement shall include a statement to the effect that the
Company Board has recommended that the Company's shareholders vote in favor
of and approve this Agreement, the Merger and any other matters required to
be approved by the Company's shareholders for consummation of the Merger
and the transactions contemplated hereby at the Company Meeting and (iii)
neither the Company Board nor any committee thereof shall (A) withdraw,
amend or modify, or publicly propose to withdraw, amend or modify, in a
manner adverse to Buyer, the recommendation of the Company Board that the
Company's shareholders vote in favor of and approve this Agreement, the
Merger and the transactions contemplated hereby, (B) other than the Merger,
approve or recommend, or propose publicly to approve or recommend an
Acquisition Proposal, or (C) other than the Merger, cause the Company or
any of its Subsidiaries to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement related to an
Acquisition Proposal.
6.3 Registration Statement.
(a) Buyer and the Company agree to cooperate in the preparation of a
registration statement on Form S-4 (the "Registration Statement") to be
filed by Buyer with the SEC in connection with the issuance of Buyer Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of the Company constituting a part thereof
(the "Proxy Statement/Prospectus") and all related documents). Each of
Buyer and the Company agree to use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after the filing thereof. Buyer also
agrees to use reasonable best efforts to obtain all necessary state
securities law or "blue sky" permits and approvals required to carry out
the transactions contemplated by this Agreement. The Company agrees to
cooperate with Buyer and Buyer's counsel and accountants in requesting and
obtaining appropriate opinions, consents and letters from its financial
advisor and independent auditor in connection with the Registration
Statement and the Proxy Statement. After the Registration Statement is
declared effective under the Securities Act,
42
the Company, at its expense, shall promptly mail the Proxy
Statement/Prospectus to its shareholders.
(b) Each of Buyer and the Company agrees, upon request, to furnish the
other party with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with the Registration
Statement, the Proxy Statement/Prospectus or any filing, notice or
application made by or on behalf of such other party or any of its
Subsidiaries to any Regulatory Authority in connection with the
transactions contemplated hereby. Each of Buyer and the Company agrees, as
to itself and its Subsidiaries, that none of the information supplied or to
be supplied by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and
each amendment or supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the Proxy
Statement/Prospectus and any amendment or supplement thereto will, at the
date of mailing to shareholders and at the time of the Company Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which such
statement is made not misleading. Each of Buyer and the Company further
agrees that if it shall become aware prior to the Effective Date of any
information that would cause any of the statements in the Proxy
Statement/Prospectus to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the
statements therein not false or misleading, it shall promptly inform the
other party thereof and shall take the necessary steps to correct the Proxy
Statement/Prospectus.
(c) Buyer will advise the Company, promptly after Buyer receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of
any stop order or the suspension of the qualification of Buyer Common Stock
for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
6.4 Press Releases. Buyer and the Company will consult with each other
before issuing any press release with respect to this Agreement and the
transactions contemplated by this Agreement and will not issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby or make any such public statements without the prior consent
of the other party, which shall not be unreasonably withheld, provided, however,
that a party may, without the prior consent of the other party (but after
consultation with the other party, to the extent practicable), issue such press
release or public statements as may upon the advice of legal counsel, be
required by applicable law or the rules and regulations of the NYSE or Nasdaq.
6.5 Access; Information.
(a) Upon reasonable notice and subject to applicable laws relating to
the exchange of information, each party shall, and shall cause its
Subsidiaries to, afford the other parties and their officers, employees,
counsel, accountants, advisors and other authorized representatives
(collectively, "Representatives"), access, during normal business hours
throughout
43
the period prior to the Effective Date, to all of its properties, books,
contracts, commitments and records (including, without limitation, work
papers of independent auditors), and to its officers, employees,
accountants, counsel or other representatives, and, during such period, it
shall, and shall cause its Subsidiaries to, furnish promptly to such other
parties and its Representatives (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of
federal or state securities laws (other than reports or documents that
Buyer or the Company, or their respective Subsidiaries, as the case may be,
are not permitted to disclose under applicable law), and (ii) all other
information concerning the business, properties and personnel of it as the
other may reasonably request. Neither Buyer nor the Company nor any of
their respective Subsidiaries shall be required to provide access to or to
disclose information where such access 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 the circumstances in which the restrictions of the preceding sentence
apply.
(b) Each party agrees that it and its Subsidiaries will not use any
information obtained pursuant to this Section 6.5 for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement and,
if this Agreement is terminated, will hold all information and documents
obtained pursuant to this paragraph in confidence (as provided in, and
subject to the provisions of, the Confidentiality Agreement, as if it were
the party receiving the confidential information as defined therein). No
investigation by the parties of the business and affairs of any other party
shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to a party's
obligation to consummate the transactions contemplated by this Agreement.
6.6 Acquisition Proposals.
(a) The Company agrees that, during the term of this Agreement, it
shall not, and shall not authorize or permit any of the Company's or any of
its Subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to solicit, initiate, encourage or
take any action to facilitate, or furnish or disclose nonpublic information
in furtherance of, any inquiries or the making of any offer or proposal
regarding, or participate in any discussions or negotiations with, or
provide any information to, any Person (other than Buyer and any of its
Subsidiaries or Representatives) concerning any Acquisition Proposal or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by this Agreement; provided, that the Company may
furnish information to, and negotiate or otherwise engage in discussions
with, any individual or entity that delivers a written proposal for an
Acquisition Proposal that was not solicited, encouraged or facilitated
after the date of this Agreement if and so long as (i) the Board of
Directors of the Company determines (A) in good faith by a majority vote,
based on the advice of its outside legal counsel, that failing to take such
action would constitute a breach of its fiduciary duties under applicable
laws and (B) that such a proposal is a Superior Proposal and (ii) prior to
furnishing any information to such individual or entity, the Company shall
enter into a confidentiality agreement that contains "standstill
provisions" that are no less restrictive than the "standstill provisions"
set forth in the paragraph captioned "Standstill" on page 2 of the
Confidentiality Agreement, and otherwise is substantially similar to the
Confidentiality Agreement. The Company immediately will cease, and shall
cause each of its Subsidiaries and its
44
Subsidiaries' representatives to cease, all existing activities,
discussions and negotiations with any individual or entity conducted
heretofore with respect to any Acquisition Proposal and request the return
of all confidential information regarding the Company or any of its
Subsidiaries provided to any such individual or entity prior to the date of
this Agreement pursuant to the terms of any confidentiality agreements or
otherwise, and the Company shall enforce and shall not waive any of the
provisions of any such confidentiality agreement.
(b) The Company Board shall be permitted to withdraw or modify in a
manner adverse to Buyer (or not to continue to make) its recommendation to
the Company's shareholders required under Section 6.2(c) and/or comply with
Rule 14e-2 under the Exchange Act with respect to an Acquisition Proposal
if, but only if, (i) in the opinion of the Company's outside counsel, such
action is required, in response to an unsolicited bona fide written
Superior Proposal, in order for the Company Board to comply with its
fiduciary duties under applicable law, (ii) the Company has given Buyer
five (5) business days' prior notice of its intention to do so and the
Company Board has considered any changes to this Agreement proposed by
Buyer, and has determined in accordance with the requirements set forth in
the definition of "Superior Proposal" that following such proposed changes
such unsolicited proposal remains a Superior Proposal and (iii) the Company
has fully and completely complied with this Section 6.6. (provided, that
the foregoing shall in no way limit or otherwise affect Buyer's right to
terminate this Agreement pursuant to Section 8.1). Any such withdrawal,
modification or change of the recommendation of the Company Board shall not
change the approval of the Company Board for purposes of causing any state
takeover statute or other state law to be inapplicable to the transactions
contemplated by this Agreement, including the Merger or the transactions
contemplated by this Agreement.
(c) From and after the execution of this Agreement, the Company shall
promptly (and in no event later than 24 hours after receipt thereof) advise
Buyer in writing of the receipt, directly or indirectly, of any inquiries,
discussions, negotiations, or proposals relating to an Acquisition Proposal
(including the specific terms thereof and the identity of the other
individual or entity or individuals or entities involved), and shall
promptly inform Buyer (in no event later than 24 hours) of any changes or
developments with respect to such Acquisition Proposal or its receipt of
any request for information from the FRB, the DOJ, or any other
governmental authority with respect to a proposed Acquisition Proposal, and
promptly furnish to Buyer a copy of any such written proposal in addition
to a copy of any information provided to or by any third party relating
thereto. In addition, the Company shall promptly advise Buyer, in writing,
if the Company Board makes any determination as to any Acquisition Proposal
as contemplated by the proviso to the first sentence of Section 6.6(a).
Nothing contained in this Section 6.6 shall prohibit the Company from, at
any time, taking and disclosing to the Company's shareholders a position
contemplated by Rule 14d-9 or Rule 14e-2 under the Exchange Act or making
any disclosure required by Rule 14a-9 under the Exchange Act so long as the
requirements set forth in this Section 6.6 are satisfied.
(d) For the purposes of this Agreement, "Superior Proposal" shall mean
a bona fide Acquisition Proposal made by a third party which was not
solicited by the Company, any Subsidiary of the Company or any
Representatives of the Company and which, in the good faith judgment of the
Company Board, taking into account, to the extent deemed appropriate by the
Company Board, the various legal, financial and regulatory aspects of the
proposal and the person making such proposal (A) if accepted, is reasonably
likely to be consummated, and (B) if
45
consummated would, based upon advice of the Company's financial advisor,
result in a transaction that is more favorable to the Company's
shareholders, from a financial point of view, than the transactions
contemplated by this Agreement. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any indication
of interest in (i) a merger, tender offer, recapitalization, or
consolidation, or any similar transaction, involving the Company or any of
its Subsidiaries, (ii) a purchase, lease or other acquisition or assumption
of all or a substantial portion of the assets or deposits of the Company or
all or substantially all of the assets or deposits of any of the
Subsidiaries of the Company, (iii) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
beneficial ownership (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the rules and regulations thereunder) of securities
representing 10% or more of the voting power of the Company or the
Subsidiaries of the Company, or (iv) any substantially similar transaction.
6.7 Affiliate Agreements.
(a) Not later than the 15th day prior to the mailing of the Proxy
Statement, the Company shall deliver to Buyer, a schedule of each Person
that, to the best of its knowledge, is or is reasonably likely to be, as of
the date of the Company Meeting, deemed to be an "affiliate" of the Company
(each, an "Affiliate") within the meaning of Rule 145 promulgated by the
SEC under the Securities Act.
(b) The Company shall use its reasonable best efforts to cause each
person who may be deemed to be an Affiliate of the Company to execute and
deliver to Buyer on or before the date of mailing of the Proxy Statement a
written agreement to comply with the requirements of Rule 145 in connection
with the sale or other transfer of Buyer Common Stock received in the
Merger, in the form attached hereto as Exhibit A.
6.8 Takeover Laws. No party shall take any action that would cause the
transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Laws, as applicable, and each party shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Laws, as now
or hereafter in effect, that purports to apply to this Agreement or the
transactions contemplated hereby.
6.9 No Rights Triggered. Each of Buyer and the Company shall take all steps
necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (a) under its
articles of incorporation or bylaws, or (b) under any material agreement to
which it or any of its Subsidiaries is a party.
6.10 Shares Listed. Buyer shall use its reasonable best efforts to list,
prior to the Effective Date, on the NYSE, the shares of Buyer Common Stock to be
issued to the holders of the Company Common Stock in the Merger.
6.11 Regulatory Applications; Filings; Consents. Buyer and the Company and
their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts (a) to
46
prepare all documentation, to effect all filings, to obtain all permits,
consents, approvals and authorizations of all third parties and Regulatory
Authorities necessary to consummate the transactions contemplated by this
Agreement, including, without limitation, any such approvals or authorizations
required by the FRB, FDIC, the OCC and the Regulatory Authorities of the states
in which Buyer, the Company and their respective Subsidiaries operate, (b) to
comply with the terms and conditions of such permits, consents, approvals and
authorizations and (c) to cause the Merger to be consummated as expeditiously as
practicable. Provided the Company has cooperated as required above, Buyer agrees
to file the requisite applications to be filed by it with the FRB, FDIC, the OCC
and the Regulatory Authorities of the States in which Buyer, the Company and
their respective Subsidiaries operate. Each of Buyer and the Company shall have
the right to review in advance, and to the extent practicable each will consult
with the other, in each case subject to applicable laws relating to the exchange
of information, with respect to, all material written information submitted to
any third party or any Regulatory Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other parties hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Regulatory Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other parties apprised of the status of material matters
relating to completion of the transactions contemplated hereby.
6.12 Indemnification; Directors' and Officers' Insurance.
(a) Buyer agrees that all rights to indemnification and all
limitations of liability existing in favor of any director or officer of
the Company or its Subsidiaries (the "Indemnified Parties") as provided in
the Company's articles of incorporation or bylaws or in the similar
governing documents of the Company's Subsidiaries as in effect as of the
date hereof (including without limitation the right to the advancement of
expenses) with respect to matters occurring on or prior to the Effective
Time shall survive the Merger and shall continue in full force and effect,
without any amendment thereto, for a period of six (6) years from the
Effective Time; provided, however, that all rights to indemnification in
respect of any Claim asserted or made within such period shall continue
until the final disposition of such Claim; provided further, however, that
nothing contained in this Section 6.12(b) shall be deemed to preclude the
liquidation, consolidation or merger of the Company or any of its
Subsidiaries, in which case all of such rights to indemnification and
limitations on liability shall be deemed to so survive and continue
notwithstanding any such liquidation, consolidation or merger and shall
constitute rights which may be asserted against Buyer. Nothing contained in
this Section 6.12(b) shall be deemed to preclude any rights to
indemnification or limitations on liability provided in the Company's
articles of incorporation or the similar governing documents of the
Company's Subsidiaries with respect to matters occurring subsequent to the
Effective Time to the extent that the provisions establishing such rights
or limitations are not otherwise amended to the contrary.
(b) Buyer shall cause the persons serving as officers and directors of
the Company immediately prior to the Effective Time to be covered for a
period of six (6) years from the Effective Time by the directors' and
officers' liability insurance policy maintained by the Company (provided,
that Buyer may substitute therefor policies of at least the same coverage
and amounts containing terms and conditions which are not less advantageous
to such directors and officers of the Company than the terms and conditions
of such existing policy) with respect to
47
acts or omissions occurring prior to the Effective Time which were
committed by such officers and directors in their capacity as such,
provided, that in no event shall Buyer be required to spend for any one
year an amount in excess of 150% of the annual premium currently paid by
the Company for such insurance (the "Insurance Amount"). In the event that
Buyer is unable to maintain or obtain the insurance called for by this
Section 6.12(b) as a result of the preceding provision, Buyer shall use its
reasonable best efforts to maintain or obtain the most advantageous
coverage as is available for that Insurance Amount.
(c) In the event Buyer or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving 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 Buyer shall assume the obligations set forth in this Section
6.12.
(d) The provisions of this Section 6.12 are intended to be for the
benefit of, and to grant third party rights to, and shall be enforceable
by, each Indemnified Party and his or her heirs and representatives.
6.13 Benefit Plans.
(a) Provision of Benefits. From and after the Effective Time, Buyer
agrees to provide the employees of the Company and any of its Subsidiaries
who remain employed after the Effective Time (collectively, the "Company
Employees") with at least the types and levels of employee benefits
(including employee contribution levels) comparable to those maintained by
Buyer for similarly situated employees of Buyer. Buyer will treat, and
cause its applicable benefit plans to treat, the service of the Company
Employees with the Company or any of its Subsidiaries as service rendered
to Buyer or any of its Subsidiaries for purposes of eligibility to
participate, vesting and for other appropriate benefits including, but not
limited to, applicability of minimum waiting periods for participation, but
not for benefit accrual under any defined benefit plan (including minimum
pension amount) attributable to any period before the Effective Time.
Without limiting the foregoing Buyer shall not treat any employee of the
Company or any of its Subsidiaries as a "new" employee for purposes of any
exclusions under any health or similar plan of Buyer for a pre-existing
medical condition, and any deductibles paid under any of the Company's or
any of its Subsidiaries' health plans shall be credited towards deductibles
under Buyer's health plans upon delivery to Buyer of appropriate
documentation. Buyer will make appropriate arrangements with its insurance
carrier(s) to ensure such result.
(b) Notwithstanding anything to the contrary contained herein, Buyer
shall have sole discretion with respect to the determination as to whether
or when to terminate, merge or continue any employee benefit plans and
programs of the Company. Nothing in this Agreement shall alter or limit
Buyer's obligations, if any, under ERISA, as amended by the Consolidated
Omnibus Budget Reconciliation Act of 1985 and/or the Health Insurance
Portability and Accountability Act of 1996 with respect to the rights of
Company Employees and their qualified beneficiaries in connection with the
group health plan maintained by the Company as of the Effective Time.
(c) At and following the Effective Time, Buyer shall honor, and the
Surviving Corporation shall continue to be obligated to perform, in
accordance with their terms, those
48
benefit obligations to, and contractual rights of, current employees of the
Company existing as of the Effective Date, as well as, and to the extent
permitted by law, those employment, severance, split-dollar and deferred
compensation plans or policies of the Company which are listed on Schedule
6.13(c) of the Company Disclosure Schedule.
(d) Notwithstanding anything else contained herein to the contrary,
nothing in this Article VI shall be construed to create any third party
beneficiary rights in any Person who is not a party to this Agreement.
6.14 Notification of Certain Matters. Each of Buyer and the Company shall
give prompt notice to the other of any fact, event or circumstance known to it
that (a) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (b) notwithstanding the standards set forth in
Section 5.2, would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein.
6.15 Bank Merger. Buyer and the Company agree to take all action necessary
and appropriate, including causing the entering into of an appropriate merger
agreement (the "Bank Merger Agreement"), to cause the Subsidiaries of the
Company to merge ("Bank Merger") with and into a Subsidiary of Buyer, as Buyer
deems advisable, in accordance with applicable laws and regulations and the
terms of the Bank Merger Agreement.
6.16 Post-Closing Governance. The Buyer shall recommend a person designated
by the Company and reasonably acceptable to Buyer to be elected to the Buyer's
Board effective as of the Effective Time and otherwise in accordance with
Buyer's articles of incorporation and bylaws.
6.17 Confidentiality Agreement. The paragraph captioned "StandStill" on
page 2 of the Confidentiality Agreement is hereby terminated in all respects and
shall not have further force and effect on or after the date hereof; provided,
that, in the event this Agreement is terminated by Buyer because the condition
to close set forth in Section 7.2(b) is not satisfied, the StandStill provisions
shall be effective as set forth in the Confidentiality Agreement following such
termination. The Confidentiality Agreement shall otherwise remain in full force
and effect after the date hereof in accordance with its terms.
6.18 Section 16 Votes. Prior to the Effective Time, each of the Company
Board and Buyer Board, or appropriate committees of non-employee directors
thereof, shall adopt (if necessary) a resolution consistent with the
interpretive guidance of the SEC so that the disposition of shares of Company
Common Stock or Company Stock Options pursuant to this Agreement by any officer
or director of the Company or of any Subsidiary of the Company who is a covered
person of the Company for purposes of Section 16 under the Exchange Act
(together with the rules and regulations promulgated thereunder, "Section 16")
shall be an exempt transaction for purposes of Section 16.
6.19 Restructuring. Notwithstanding anything to the contrary contained in
this Agreement, prior to the Effective Time, Buyer shall be entitled to revise
the structure of the Merger and the other transactions contemplated hereby,
provided, that (a) there are no material adverse accounting or federal or state
income Tax consequences to the Company and its shareholders as a result of the
modification; (b) there are no material adverse changes to the
49
benefits and other arrangements provided to or on behalf of the Company's
directors, officers, and other employees; and (c) such modification will not be
likely to delay materially or jeopardize receipt of the Regulatory Approvals or
other consents and approvals relating to the consummation of the Merger. This
Agreement and any related documents shall be separately amended in order to
reflect any such revised structure.
6.20 ESOP. The Company shall take any and all actions necessary with
respect to the Granite State Bankshares, Inc. Employee Stock Ownership Plan (the
"Plan") to reflect the effect of the transactions contemplated by this
Agreement, including without limitation the election procedures described in
Section 3.5, and shall cooperate with Buyer prior to the Closing in arranging
for appropriate investment alternatives to be offered under the Plan for cash to
be received by the Plan as a result of the consummation of the Merger. The
Company shall take such action as it reasonably deems necessary to spin off and
terminate the employee stock ownership portion of the Plan in accordance with
the terms of the Plan, the Code and any other applicable laws, including without
limitation, preparing and filing an application for a favorable determination
letter upon termination of the Plan from the IRS, provided, however the Company
shall consult with Buyer regarding such termination process and any employee
communications to be provided in connection therewith and shall incorporate such
language in such employee communication that Buyer reasonably requests in order
to ensure an orderly transition of the affected employees to Buyer. The Company
shall take such other actions prior to the Closing as may reasonably be
requested by Buyer in order to permit the prompt consolidation of the remaining
portion of the Plan with Buyer's 401(k) plan following the Closing.
6.21 Split Dollar Life Insurance Policies. The Company shall take any and
all actions necessary as requested by Buyer to terminate the split dollar
insurance arrangements existing on the date hereof and to recover the aggregate
amount of premiums paid by the Company thereunder as provided under the relevant
agreements, subject to the rights of the executives who are parties thereto.
6.22 Other Actions. Prior to Closing the Company shall take any and all
action necessary to (a) terminate the Granite Bank Trust for the Executive
Supplemental Retirement Income Agreement(s) and cause all insurance policies and
any other assets held thereunder to be transferred to and held without
limitation by the Company, (b) produce and deliver to Buyer all split dollar
life insurance policies issued by Mass Mutual and Xxxxxxxx/Lincoln and (c) file
top hat filings for the Company's nonqualified deferred compensation plans or
arrangements under the Department of Labor's delinquent filer program and pay
any penalty or filing fees in connection therewith, (d) demonstrate to the
satisfaction of Buyer that no liabilities exist in connection with the Granite
Bank Deferred Compensation Plan for Executives and (e) take all actions
necessary to cause the death benefits that may be payable under any Executive
Supplemental Retirement Income Agreement(s) to be waived by the relevant
executive.
ARTICLE VII - CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 Conditions to Each Party's Obligations to Effect the Merger. The
obligations of each of the parties to consummate the Merger is conditioned upon
the satisfaction at or prior to the Effective Time of each of the following
conditions:
50
(a) Shareholder Vote. This Agreement and the transactions contemplated
hereby shall have been approved by the requisite affirmative vote of the
shareholders of the Company present and voting at the Company Meeting.
(b) Regulatory Approvals; No Burdensome Condition. 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. None of
the Regulatory Approvals shall impose any term, condition or restriction
upon Buyer or any of its Subsidiaries that Buyer reasonably determines
would so materially adversely effect the economic or business benefits to
Buyer of the transactions contemplated by this Agreement, taken as a whole,
as to render inadvisable the consummation of the Merger (a "Burdensome
Condition").
(c) Third Party Consents. All necessary consents or approvals of all
persons (other than Regulatory Authorities) required for the consummation
of the Merger shall have been obtained and shall be in full force and
effect, unless the failure to obtain any such consent or approval is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Buyer or the Company, as the case may be.
(d) No Injunction, Etc. No order, decree or injunction of any court or
agency of competent jurisdiction shall be in effect, and no law, statute or
regulation shall have been enacted or adopted, that enjoins, prohibits or
makes illegal consummation of any of the transactions contemplated hereby;
provided, however, that each of Buyer and the Company shall have used its
reasonable best efforts to prevent any such rule, regulation, injunction,
decree or other order, and to appeal as promptly as possible any
injunction, decree or other order that may be entered, including, without
limitation, by proffering its willingness to accept an order embodying any
arrangement required to be made by such party pursuant to Section 6.1(b) of
this Agreement (and notwithstanding anything in this Section 7.1 to the
contrary, no terms, conditions or provisions of an order embodying such an
arrangement shall constitute a basis for such party asserting
nonfulfillment of the conditions contained in this Section 7.1).
(e) Tax Opinion Relating to the Merger. Buyer shall have received an
opinion from Xxxxxxx Procter LLP, and the Company shall have received an
opinion from Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., dated in each case as of
the Closing Date, substantially to the effect that, on the basis of the
facts, representations and assumptions set forth in such opinions which are
consistent with the state of facts existing at the Closing Date and which
are reasonable or customary in rendering similar opinions, the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.
(f) Effective Registration Statement. The Registration Statement shall
have become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
7.2 Conditions to the Obligations of Buyer.
(a) Representations, Warranties and Covenants of the Company. (i) Each
of the representations and warranties contained herein of the Company shall
be true and correct as of the date hereof and upon the Effective Date with
the same effect as though all such
51
representations and warranties had been made on the Effective Date, except
for any such representations and warranties made as of a specified date,
which shall be true and correct as of such date, in any case subject to the
standard set forth in Section 5.2, (ii) each and all of the agreements and
covenants of the Company to be performed and complied with pursuant to this
Agreement on or prior to the Effective Date shall have been duly performed
and complied with in all material respects, and (iii) Buyer shall have
received a certificate signed by the Chief Executive Officer or Chief
Financial Officer of the Company, dated the Effective Date, to the effect
set forth in clauses (i) and (ii) of this Section 7.2.
(b) Material Adverse Effect. There shall not have occurred with
respect to the Company any Material Adverse Effect or any event or
development that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(c) Dissenting Shares. As of immediately prior to the Effective Time,
no more than 10% of the outstanding shares of Company Common Stock shall
have taken actions to assert dissenters rights under Section 293-A:13 of
the NHBCA.
7.3 Conditions to the Obligations of the Company.
(a) Representations, Warranties and Covenants of Buyer. (i) Each of
the representations and warranties contained herein of Buyer shall be true
and correct as of the date hereof and upon the Effective Date with the same
effect as though all such representations and warranties had been made on
the Effective Date, except for any such representations and warranties made
as of a specified date, which shall be true and correct as of such date, in
any case subject to the standard set forth in Section 5.2, (ii) each and
all of the agreements and covenants of Buyer to be performed and complied
with pursuant to this Agreement on or prior to the Effective Date shall
have been duly performed and complied with in all material respects, and
(iii) the Company shall have received a certificate signed by the Chief
Executive Officer or Chief Financial Officer of Buyer, dated the Effective
Date, to the effect set forth in clauses (i) and (ii) of this Section 7.3.
(b) Material Adverse Effect. There shall not have occurred with
respect to Buyer any Material Adverse Effect or any event or development
that would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect with respect to Buyer.
(c) NYSE Listing. The shares of Buyer Common Stock issuable pursuant
to this Agreement shall have been approved for listing on the NYSE, subject
to official notice of issuance.
(d) Payment of Merger Consideration. Buyer shall have delivered the
Exchange Fund to the Exchange Agent on or before the Closing Date and the
Exchange Agent shall have provided the Company with evidence of such
delivery in a form reasonably satisfactory to the Company and its counsel.
ARTICLE VIII - TERMINATION
8.1 Termination. This Agreement may be terminated, and the Merger and the
transactions contemplated hereby may be abandoned:
52
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Buyer and the Company in a written instrument, if the
Board of Directors of each so determines by vote of a majority of the
members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Buyer or the
Company (provided, that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein), if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either: (i) a
breach by the other party of any representation or warranty contained
herein (subject to the standards set forth in Section 5.2), which breach
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach; or (ii) a material
breach by the other party of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within thirty (30)
days after the giving of written notice to the breaching party of such
breach.
(c) Delay. At any time prior to the Effective Time, by Buyer or the
Company, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Merger is not
consummated by August 31, 2003, except to the extent that the failure of
the Merger then to be consummated arises out of or results from 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) No Regulatory Approval. By Buyer or the Company, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event the approval of any Regulatory Authority
required for consummation of the Merger and the other transactions
contemplated by this Agreement shall have been denied by final
nonappealable action of such Regulatory Authority 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; provided, however, the party
seeking termination shall have complied fully with its obligations under
Section 6.1(b) of this Agreement.
(e) No Shareholder Approval. By Buyer or the Company if the approval
of the Company's shareholders 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 the Company's shareholders or at
any adjournment thereof.
(f) Recommendation Altered. By Buyer, if the Company Board shall not
have publicly recommended to the shareholders of the Company that such
shareholders vote in favor of approval of the Agreement, the Merger and the
other transactions contemplated hereby, or shall have withdrawn, modified
or changed in a manner adverse to Buyer its approval or recommendation of
this Agreement and the transactions contemplated hereby.
(g) Superior Proposal. By Buyer or Company, if the Company has
received a Superior Proposal, and in compliance with the terms of Section
6.6 of this Agreement, the Company Board has entered into an acquisition
agreement with respect to the Superior Proposal, subject to the provisions
of Section 8.2(c).
(h) Breach of No Shop. By Buyer if the Company shall have breached any
of its obligations contained in Section 6.6 in any material respect.
53
(i) Excess Issuance of Buyer Common Stock. By Buyer or the Company, in
the event that Buyer would be required if, not for the proviso set forth in
Section 3.5(e), to issue in the Merger (either by conversion of Company
Common Stock issued pursuant to the Merger or the exercise of rights and
warrants issued pursuant to the Merger) aggregate shares of Buyer Common
Stock in excess of 15% of the total number of shares of Buyer Common Stock
outstanding immediately before the Merger.
8.2 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement by either Buyer or
the Company as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect, and none of Buyer, the Company, any of
their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that Sections
6.5(b), 8.2, 9.1 and 9.5 and all other obligations of the parties intended
to be performed after the termination of this Agreement shall survive any
termination of this Agreement; provided, however, that, notwithstanding
anything to the contrary herein, neither the Buyer nor the Company shall be
relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by
the willful breach of a party hereto, such party shall be liable to the
other party for all out-of-pocket costs and expenses, including, without
limitation, the reasonable fees and expenses of lawyers, accountants and
investment bankers, incurred by such other party in connection with the
entering into of this Agreement, the carrying out of any and all acts
contemplated hereunder and pursuing the remedies provided by this Section
8.2 and otherwise hereunder ("Expenses"). The payment of Expenses is not an
exclusive remedy, but is in addition to any other rights or remedies
available to the parties hereto at law or in equity.
(c) In the event this Agreement is terminated by:
(i) Buyer pursuant to Section 8.1(f) or 8.1(h) or by Buyer or the
Company pursuant to Section 8.1(g);
(ii) Buyer pursuant to Section 8.1(e) in circumstances where the
Company Board shall not have publicly recommended to the shareholders
of the Company that such shareholders vote in favor of the approval of
this Agreement, the Merger and the other transactions contemplated
hereby or shall have withdrawn, modified or amended such
recommendation in a manner adverse to Buyer; or
(iii) by either Buyer or the Company pursuant to Section 8.1(e)
in circumstances where both (x) within eighteen (18) months of such
termination, the Company shall have entered into an agreement to
engage in or there has otherwise occurred an Acquisition Proposal with
any Person other than Buyer or any affiliate of Buyer and (y) at the
time of such termination or event giving rise to such termination, it
shall have been publicly announced that any Person (other than Buyer
or any Subsidiary of Buyer) shall have (A) made, or disclosed an
54
intention to make, a bona fide offer to engage in an Acquisition
Proposal, or (B) filed an application (or given a notice), whether in
draft or final form, under the BHCA or the Change in Bank Control Act
of 1978, for approval to engage in an Acquisition Proposal,
then the Company shall make a cash payment to Buyer in the amount of $13,000,000
(the "Expense Fee") upon such termination. Any payment required under this
Section 8.2(c) shall be payable by the Company to Buyer (by wire transfer of
immediately available funds to an account designated by Buyer) within two (2)
business days after demand by Buyer. Absent fraud or other willful misconduct or
a willful breach of the Company's obligations hereunder, upon payment of the
Expense Fee described in this Section 8.2(c), neither Company nor any of its
affiliates or Subsidiaries shall have any further liability to Buyer at law or
in equity under this Agreement.
ARTICLE IX - MISCELLANEOUS
9.1 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time or the termination
of this Agreement if this Agreement is terminated prior to the Effective Time;
provided, however, that if the Effective Time occurs, the agreements of the
parties in Sections 3.5, 3.6, 3.8, 6.12, 6.13, 6.15, 6.16, 6.17, 9.1, 9.4, 9.5,
9.6, 9.7, 9.8 and 9.9 shall survive the Effective Time, and if this Agreement is
terminated prior to the Effective Time, the agreements of the parties in
Sections 6.5(b), 8.2, 9.1, 9.2, 9.4, 9.5, 9.6, 9.7 and 9.8 shall survive such
termination.
9.2 Waiver; Amendment. Subject to compliance with applicable law, prior to
the Effective Time, any provision of this Agreement may be (a) waived by the
party intended to benefit by the provision, or (b) amended or modified at any
time, by an agreement in writing between the parties hereto approved by their
respective Boards of Directors and executed in the same manner as this
Agreement. Prior to submission of this Agreement for approval by the
shareholders of the Company, Buyer may make such amendments as are permitted by
Section 6.19 and the Company Board shall approve the supplements and amendments
specified in this sentence.
9.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.4 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Vermont, without regard to the
conflict of law principles thereof.
9.5 Expenses. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing expenses and SEC filing and registration fees shall be shared
equally between Buyer and the Company.
9.6 Confidentiality. Each of the parties hereto and their respective
agents, attorneys and accountants will maintain the confidentiality of all
information provided in connection herewith in accordance, and subject to the
limitations of, the Confidentiality Agreement.
55
9.7 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to Buyer:
Xxxxxxxxxx Corporation
Two Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With copies to:
Xxxxxxxxxx Corporation
Two Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: F. Xxxxxxx Xxxxxxxx, General Counsel
Telecopier: (000) 000-0000
Xxxxxxx Xxxxxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq. and
Xxxxxx X. Xxxxx, PC
Telecopier: (000) 000-0000
If to the Company, to:
Granite State Bankshares, Inc.
000 Xxxx Xxxxxx
Xxxxx, Xxx Xxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With copies to:
Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
9.8 Understanding; No Third Party Beneficiaries. Except for the
Confidentiality Agreement, which shall remain in effect, this Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and supersede any and all other
oral or written agreements heretofore made. Except for Section 6.12,
56
nothing in this Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
9.9 Assignability; Binding Effect. Except as provided for in Section 6.19,
prior to the Closing, this Agreement may not be assigned by Buyer with out the
written consent of the Company and no such assignment shall release Buyer of its
obligations hereunder. After the Closing, Buyer's rights and obligations
hereunder shall be freely assignable. This Agreement may not be assigned by the
Company without the prior written consent of Buyer. This Agreement shall be
binding upon and enforceable by, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns, and except as
expressly set forth herein, is not intended to confer upon any other person any
rights or remedies hereunder.
9.10 Headings; Interpretation. The headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. The word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified. Words of number may be read as singular or plural, as
required by context.
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be executed in counterparts by their duly authorized officers,
all as of the day and year first above written.
XXXXXXXXXX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Financial Officer and Treasurer
GRANITE STATE BANKSHARES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
58
