EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BETWEEN
COMMUNITY BANKSHARES, INC.
AND
CENTERPOINT BANK
AUGUST 29, 1995
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1 The Merger......................................................... 1
1.2 Effective Time..................................................... 1
1.3 Charter and By-laws................................................ 1
1.4 Directors of Surviving Bank and Buyer.............................. 1
1.5 Officers of Surviving Bank......................................... 2
1.6 Additional Actions................................................. 2
1.7 Option to Purchase Seller Common Stock............................. 2
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Seller Common Stock.................................. 2
Procedures for Exchange of Seller Common Stock for Merger
2.2 Consideration...................................................... 3
(a) Buyer to Make Shares Available.................................. 3
(b) Exchange of Certificates........................................ 3
(c) Rights of Certificate Holders after the Effective Time.......... 3
(d) Fractional Shares............................................... 3
(e) Surrender by Persons Other than Record Holders.................. 4
(f) Closing of Transfer Books....................................... 4
(g) Return of Exchange Fund......................................... 4
2.3 Buyer Sub Common Stock............................................. 4
2.4 Dissenters' Rights................................................. 4
2.5 Stock Options...................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Corporate Organization............................................. 5
3.2 Capitalization..................................................... 6
3.3 Authority.......................................................... 6
3.4 No Violation....................................................... 7
3.5 Consents and Approvals............................................. 7
3.6 Regulatory Approval................................................ 7
3.7 Financial Statements............................................... 7
3.8 Reports............................................................ 8
3.9 Undisclosed Liabilities............................................ 8
3.10 Absence of Certain Changes or Events............................... 9
3.11 Legal Proceedings.................................................. 9
3.12 Taxes and Tax Returns.............................................. 10
3.13 Properties......................................................... 11
3.14 Certain Contracts.................................................. 11
3.15 Certain Defaults................................................... 12
3.16 Insurance.......................................................... 12
3.17 Employee Benefit Plans............................................. 12
3.18 Compliance with Applicable Law; Regulatory Examinations............ 13
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3.19 Regulatory Agreements................................................ 13
3.20 Broker's Fees........................................................ 13
3.21 Fairness Opinion..................................................... 13
3.22 Seller Information................................................... 13
3.23 Environmental Issues................................................. 14
3.24 Investment Securities................................................ 14
3.25 Derivative Transactions.............................................. 15
3.26 Intellectual Property................................................ 15
3.27 Reserves for Possible Loan Losses.................................... 15
3.28 Loans................................................................ 15
3.29 Transactions with Interested Persons................................. 16
3.30 Capital.............................................................. 16
3.31 Disclosure........................................................... 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Corporate Organization............................................... 17
4.2 Capitalization....................................................... 17
4.3 Authority............................................................ 18
4.4 No Violation......................................................... 18
4.5 Consents and Approvals............................................... 18
4.6 Regulatory Approval.................................................. 18
4.7 Financial Statements................................................. 18
4.8 Reports.............................................................. 18
4.9 Undisclosed Liabilities.............................................. 19
4.10 Absence of Certain Changes or Events................................. 19
4.11 Legal Proceedings.................................................... 20
4.12 Taxes and Tax Returns................................................ 20
4.13 Certain Contracts.................................................... 21
4.14 Certain Defaults..................................................... 21
4.15 Compliance with Applicable Law; Regulatory Examinations.............. 21
4.16 Fairness Opinion..................................................... 21
4.17 Buyer Information.................................................... 22
4.18 Environmental Issues................................................. 22
4.19 Disclosure........................................................... 22
4.20 Capital.............................................................. 22
4.21 Regulatory Agreements................................................ 22
ARTICLE V
COVENANTS OF SELLER
5.1 Conduct of Business.................................................. 23
(a) Affirmative Covenants............................................. 23
(b) Negative Covenants................................................ 23
5.2 No Solicitation...................................................... 25
5.3 Current Information.................................................. 25
5.4 Access to Properties and Records..................................... 25
5.5 Financial and Other Statements....................................... 25
5.6 Approval of Seller's Stockholders.................................... 26
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5.7 Disclosure Supplements............................................... 26
5.8 Failure to Fulfill Conditions........................................ 26
5.9 Consents and Approvals of Third Parties.............................. 26
5.10 All Reasonable Efforts............................................... 26
ARTICLE VI
COVENANTS OF BUYER
6.1 Conduct of Business.................................................. 26
6.2 Current Information.................................................. 26
6.3 Access to Properties and Records..................................... 27
6.4 Financial and Other Statements....................................... 27
6.5 Consents and Approvals of Third Parties.............................. 27
6.6 All Reasonable Efforts............................................... 27
6.7 Failure to Fulfill Conditions........................................ 27
6.8 Disclosure Supplements............................................... 27
6.9 Financial and Other Statements....................................... 27
6.10 Employee Benefits.................................................... 28
6.11 Deposit of Exchange Fund with Exchange Agent......................... 28
6.12 Directors and Officers Indemnification and Insurance................. 28
6.13 Buyer Sub............................................................ 28
6.14 Approval of Buyer's Stockholders..................................... 29
ARTICLE VII
REGULATORY AND OTHER MATTERS
7.1 Proxy Statement-Prospectus........................................... 29
7.2 Regulatory Approvals................................................. 29
7.3 Affiliates; Publication of Combined Financial Results................ 30
7.4 Agreement to Vote in Favor of Merger................................. 30
ARTICLE VIII
CLOSING CONDITIONS
8.1 Conditions to Each Party's Obligations under this Agreement.......... 30
(a) Stockholder Approval.............................................. 30
(b) Injunctions; Illegality........................................... 30
(c) Regulatory Approvals.............................................. 30
(d) Effectiveness of Registration Statement........................... 31
(e) Tax Rulings or Opinions........................................... 31
8.2 Conditions to the Obligations of Buyer under this Agreement.......... 31
(a) Representations and Warranties.................................... 31
(b) Material Adverse Change........................................... 31
(c) Non-Performing Assets............................................. 32
(d) Minimum Increase in Net Worth..................................... 32
(e) Agreements and Covenants.......................................... 32
(f) Permits, Authorizations, Etc...................................... 32
(g) Legal Opinion..................................................... 32
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(h) Pooling of Interests.............................................. 32
(i) Dissenting Seller Shareholders.................................... 42
(j) Accountants' Letter............................................... 32
(k) Fairness Opinion.................................................. 33
8.3 Conditions to the Obligations of Seller under this Agreement........ 33
(a) Representations and Warranties.................................... 33
(b) Material Adverse Change........................................... 33
(c) Agreements and Covenants.......................................... 34
(d) Permits, Authorizations, Etc...................................... 34
(e) Legal Opinion..................................................... 34
(f) Fairness Opinion.................................................. 34
ARTICLE IX
THE CLOSING
9.1 Time and Place...................................................... 34
9.2 Deliveries at the Closing........................................... 34
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination......................................................... 34
10.2 Effect of Termination............................................... 35
10.3 Expenses............................................................ 35
10.4 Amendment, Extension and Waiver..................................... 35
ARTICLE XI
CERTAIN DEFINITIONS
11.1 Certain Definitions................................................. 36
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality..................................................... 37
12.2 Public Announcements................................................ 37
12.3 Survival............................................................ 37
12.4 Notices............................................................. 37
12.5 Parties in Interest................................................. 38
12.6 Rights of Employment................................................ 38
12.7 Complete Agreement.................................................. 38
12.8 Counterparts........................................................ 38
12.9 Severability........................................................ 38
12.10 Governing Law....................................................... 38
12.11 Headings............................................................ 39
1.7 EXHIBIT STOCK OPTION AGREEMENT...................................... 41
7.3 EXHIBIT AFFILIATE AGREEMENT......................................... 50
7.4 EXHIBIT VOTING AGREEMENT............................................ 55
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INDEX OF DEFINED TERMS
Affiliate................................................................ 36
Agreement................................................................ 1
Average Closing Price.................................................... 36
Bank Regulator........................................................... 7
BTCI..................................................................... 7
Buyer.................................................................... 1
Buyer Audited Financial Statements....................................... 19
Buyer Common Shares...................................................... 17
Buyer Common Stock....................................................... 2
Buyer Financial Statements............................................... 19
Buyer Interim Financial Statements....................................... 19
Buyer Preferred Shares................................................... 17
Buyer Reports............................................................ 19
Buyer Special Meeting.................................................... 29
Buyer Stock Option Plans................................................. 17
Buyer Sub................................................................ 1
Buyer's Book Value Per Share............................................. 36
Call Reports............................................................. 8
Certificate.............................................................. 2
Closing.................................................................. 1
Closing Date............................................................. 1
Closing Price............................................................ 36
Dissenting Shares........................................................ 4
Effective Time........................................................... 1
Environment.............................................................. 36
Environmental Laws....................................................... 36
EPA...................................................................... 14, 22
ERISA Plans.............................................................. 12
Exchange Act............................................................. 6
Exchange Agent........................................................... 3
Exchange Fund............................................................ 3
Exchange Ratio........................................................... 2
Expenses................................................................. 35
FDIC..................................................................... 7
Federal Reserve.......................................................... 7
GAAP..................................................................... 7
Governmental Entity...................................................... 7
Hazardous Substances..................................................... 36
HSR Act.................................................................. 7
Injunction............................................................... 30
Interested Person........................................................ 16
Last Closing Price....................................................... 4
Leases................................................................... 11
Loan Property............................................................ 37
Loans.................................................................... 15
MBD...................................................................... 21
Merger................................................................... 1
Merger Consideration..................................................... 2
Mortgage................................................................. 15
New Hampshire Commissioner............................................... 1
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NHRSA....................................................................... 4
Participation Facility...................................................... 37
Pension Plan................................................................ 12
Person...................................................................... 37
Proxy Statement-Prospectus.................................................. 29
Record Holder............................................................... 3
Registration Statement...................................................... 29
Schedules................................................................... 5
SEC......................................................................... 19
Secretary of State.......................................................... 1
Securities Act.............................................................. 5
Seller...................................................................... 1
Seller Audited Financial Statements......................................... 7
Seller Common Stock......................................................... 2
Seller Financial Statements................................................. 8
Seller Interim Financial Statements......................................... 8
Seller Net Worth............................................................ 32
Seller Option............................................................... 5
Seller Preferred Shares..................................................... 6
Seller Stock Option Plan.................................................... 5
Seller Subsidiaries......................................................... 5
Special Meeting............................................................. 26
Stock Exchange.............................................................. 37
Stock Option Agreement...................................................... 2
Subsidiaries................................................................ 37
Subsidiary.................................................................. 37
Surviving Bank.............................................................. 1
Termination Date............................................................ 35
Trading Day................................................................. 37
Welfare Plan................................................................ 12
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of August 29, 1995 (this
"Agreement"), by and between COMMUNITY BANKSHARES, INC., a New Hampshire
corporation ("Buyer"), and CENTERPOINT BANK, a New Hampshire-chartered trust
company ("Seller"). (Certain capitalized terms used herein shall have the
meanings defined in Section 11.1 hereof.)
Whereas, Buyer intends to cause to be organized an interim bank that will be
a wholly-owned direct subsidiary of Buyer ("Buyer Sub") and thereafter to
cause Buyer Sub to become a party to this Agreement; and
Whereas, the respective Boards of Directors of Buyer and Seller have
approved the acquisition of Seller by Buyer pursuant to the merger of Buyer
Sub with Seller (the "Merger").
Now, Therefore, in consideration of the mutual covenants, representations,
warranties and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
The Merger
1.1 The Merger. As promptly as practicable following the satisfaction or
waiver of the conditions to the parties' respective obligations hereunder, at
the Effective Time (as defined in Section 1.2 hereof), Buyer shall form the
Buyer Sub in accordance with New Hampshire law, and Buyer Sub shall be merged
with and into Seller. Seller shall be the surviving bank of the Merger (the
"Surviving Bank"). At the Effective Time, the separate existence of Seller
shall cease and all of the rights, privileges, powers, franchises, properties,
assets, liabilities and obligations of Seller shall be vested in and assumed
by Surviving Bank.
1.2 Effective Time. The Merger shall be effected by the filing of a Contract
for Union, certified by the New Hampshire Commissioner of Banks ("New
Hampshire Commissioner"), with the Secretary of State of New Hampshire (the
"Secretary of State") in accordance with New Hampshire law. The Merger shall
become effective on the day of the closing ("Closing Date") provided for in
Article IX hereof (the "Closing"). The term "Effective Time" shall mean the
time on the Closing Date when the Merger becomes effective, as set forth in
the Contract for Union.
1.3 Charter and By-laws. The Charter and By-laws of Surviving Bank shall be
the Charter and By-laws of Seller as in effect immediately prior to the
Effective Time, until thereafter amended as provided therein and by applicable
law.
1.4 Directors of Surviving Bank and Buyer. (a) The directors of Seller
immediately prior to the Effective Time shall be the initial directors of
Surviving Bank, each to hold office in accordance with the Charter and By-Laws
of Surviving Bank. Buyer intends to elect up to two additional directors to
serve on the Board of Surviving Bank.
(b) At or immediately after the Effective Time the Board of Directors of
Buyer shall elect three of Seller's current directors to serve on the Board of
Directors of Buyer. Such nominees shall be designated, prior to the Effective
Time, as follows: one of the nominees shall be the current President and CEO
of Seller; the second nominee shall be designated by said President and CEO;
and the third nominee shall be selected by Buyer from a list of two or three
potential nominees provided by Seller to Buyer. Said nominees shall be subject
to the reasonable approval of Buyer's Board of Directors.
(c) Prior to or at the Effective Time the Board of Directors of Buyer's
existing banking subsidiary shall elect one of Seller's current outside
directors (designated by the Board of Directors of Seller prior to the
Effective
Time) to serve on the Board of Directors of such bank. Said nominee shall be
subject to the reasonable approval of such subsidiary's Board of Directors.
1.5 Officers of Surviving Bank. The officers of Seller immediately prior to
the Effective Time shall be the initial officers of Surviving Bank, in each
case until their respective successors are duly elected or appointed and
qualified.
1.6 Additional Actions. If, at any time after the Effective Time, Surviving
Bank shall consider or be advised that any further assignments or assurances
in law or any other acts are necessary or desirable (a) to vest, perfect or
confirm, of record or otherwise, in Surviving Bank, title to and possession of
any property or right of Seller acquired or to be acquired by reason of, or as
a result of, the Merger, or (b) otherwise to carry out the purposes of this
Agreement, Seller and its proper officers and directors shall be deemed to
have granted to Surviving Bank an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments and assurances in law and to do all
acts necessary or proper to vest, perfect or confirm title to and possession
of such property or rights in Surviving Bank and otherwise to carry out the
purposes of this Agreement; and the proper officers and directors of Surviving
Bank are fully authorized in the name of Seller or otherwise to take any and
all such action.
1.7 Option to Purchase Seller Common Stock. As part of the Merger and as a
condition to entering into this Agreement, Buyer and Seller have entered into
a Stock Option Agreement on the date hereof (the "Stock Option Agreement") in
the form attached hereto as Exhibit 1.7, giving Buyer the right to purchase
165,920 shares of Seller Common Stock, which shares would upon issuance equal
19.9% of the then-issued and outstanding Seller Common Stock (including shares
issuable pursuant to the Seller Stock Option Plan (as defined below).
ARTICLE II
Conversion of Shares
2.1 Conversion of Seller Common Stock. (a) At the Effective Time, each share
of the common stock, par value $1.00 per share, of Seller (the "Seller Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than Dissenting Shares (as such term is defined in Section 2.4 hereof) and
other than Seller Common Stock then owned by Seller, any Seller subsidiary,
Buyer, or any Buyer subsidiary (in each case other than in a fiduciary
capacity or as a result of debts previously contracted)) shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into and exchangeable for 1.073 shares (the "Exchange Ratio") of the
common stock, par value $1.00 per share of Buyer ("Buyer Common Stock"). The
consideration to be received for each share of Seller Common Stock is referred
to herein as the "Merger Consideration".
(b) All of the Seller Common Stock converted into Buyer Common Stock
pursuant to this Section 2.1 shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each certificate
(each a "Certificate") previously representing any such Seller Common Stock
shall thereafter represent the right to receive (i) the number of whole shares
of Buyer Common Stock and (ii) cash in lieu of fractional shares into which
the Seller Common Stock represented by such Certificate have been converted
pursuant to this Section 2.1 and Section 2.2 hereof. Certificates previously
representing Seller Common Stock shall be exchanged for certificates
representing whole shares of Buyer Common Stock and cash in lieu of fractional
shares issued in consideration therefor upon the surrender of such
Certificates in accordance with Section 2.2 hereof, without any interest
thereon. If prior to the Effective Time Buyer should split or combine its
common stock or other convertible securities, or pay a dividend or other
distribution in such common stock or other convertible securities, then the
Exchange Ratio shall be appropriately adjusted to reflect such split,
combination, dividend or distribution. All Seller Common Stock owned by
Seller, any Seller subsidiary, Buyer, or any Buyer subsidiary (in each case
other than in a fiduciary capacity or as a result of debts previously
contracted) shall, at the Effective Time, cease to exist, and the certificates
for such shares shall, as promptly as practicable thereafter, be cancelled
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and no payments shall be made in consideration therefor. All shares of Buyer
Common Stock that are owned by Seller or any of the Seller Subsidiaries (in
each case other than in a fiduciary capacity or as a result of debts
previously contracted) shall become treasury stock of Buyer.
2.2 Procedures for Exchange of Seller Common Stock for Merger Consideration.
(a) Buyer to Make Shares Available. Buyer shall take all steps necessary on
and as of the Effective Time to deliver to the Exchange Agent (as hereinafter
defined), for the benefit of the holders of Certificates, for exchange in
accordance with this Section 2.2, certificates representing shares of Buyer
Common Stock and the cash in lieu of fractional shares to be paid pursuant to
Section 2.2(d) (such cash and certificates for shares of Buyer Common Stock,
together with any dividends or distributions with respect thereto being
hereinafter referred to as the "Exchange Fund") to be issued and paid in
exchange for outstanding Seller Common Stock in accordance with this
Agreement. The Exchange Agent shall be such banking institution or corporate
trust company reasonably satisfactory to Buyer as Seller shall appoint to act
as exchange agent hereunder. The Exchange Agent shall act as agent on behalf
of record holders (individually, a "Record Holder") of Seller Common Stock at
the Effective Time, other than Seller, any Seller Subsidiary, Buyer, or any
Buyer subsidiary (in each case other than in a fiduciary capacity or as a
result of debts previously contracted), or any Person holding Dissenting
Shares.
(b) Exchange of Certificates. Within three business days after the Effective
Time, Buyer shall take all steps necessary to cause the Exchange Agent to mail
to each Record Holder of a Certificate or Certificates, a form letter of
transmittal for return to the Exchange Agent and instructions for use in
effecting the surrender of the Certificates for certificates representing the
Buyer Common Stock and the cash in lieu of fractional shares into which the
Seller Common Stock represented by such Certificates shall have been converted
as a result of the Merger. The form letter (which shall be subject to the
reasonable approval of Seller) 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. Upon surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor (x) a certificate for the number of whole
shares of Buyer Common Stock to which such holder of Seller Common Stock shall
have become entitled pursuant to the provisions of this Article II and (y) a
check representing the amount of cash in lieu of the fractional shares, if
any, which such holder has the right to receive in respect of Certificates
surrendered pursuant to the provisions of this Article II, and the
Certificates so surrendered shall forthwith be cancelled. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed and, if required by Buyer, the posting by such person of a
bond in such amount as Buyer may direct as indemnity against any claim that
may be made against it with respect to such certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed certificate the
Merger Consideration deliverable in respect thereof pursuant to Section 2.1
hereof.
(c) Rights of Certificate Holders after the Effective Time. The holder of a
Certificate that prior to the Merger represented issued and outstanding Seller
Common Stock shall have no rights, after the Effective Time, with respect to
such Seller Common Stock except to surrender the Certificate in exchange for
the Merger Consideration as provided in this Agreement or to perfect the
rights of appraisal as a holder of Dissenting Shares that such holder may have
pursuant to the applicable provisions of New Hampshire law. No dividends or
distributions shall be payable with respect to any Certificate until such
Certificate shall have been exchanged for certificates representing shares of
Buyer Common Stock; at the time of such exchange, the holder of the
Certificate shall be entitled to receive the payment of all dividends, if any,
that have been declared and paid with respect to the shares of Buyer Common
Stock represented by such Certificate between the Closing Date and the date of
such exchange.
(d) Fractional Shares. Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Buyer
Common Stock shall be issued upon the surrender for exchange of Certificates,
no dividend or distribution with respect to Buyer Common Stock shall be
payable on or with respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any
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other rights of a stockholder of Buyer. In lieu of the issuance of any such
fractional share, Buyer shall pay to each former holder of Seller Common Stock
who otherwise would be entitled to receive a fractional share of Buyer Common
Stock, an amount in cash determined by multiplying (i) the average closing
sale price of Buyer Common Stock on the Stock Exchange as reported by The Wall
Street Journal for the five trading days immediately preceding the date of the
Effective Time (the "Last Closing Price") by (ii) the fraction of a share of
Buyer Common Stock which such holder would otherwise be entitled to receive
pursuant to Section 2.2(b) hereof. No interest will be paid on the cash which
the holders of such fractional shares shall be entitled to receive upon such
delivery.
(e) Surrender by Persons Other than Record Holders. If the Person
surrendering a Certificate and signing the accompanying letter of transmittal
is not the Record Holder thereof, then it shall be a condition of the payment
of the Merger Consideration that such Certificate is properly endorsed to such
Person or is accompanied by appropriate stock powers, in either case signed
exactly as the name of the Record Holder appears on such Certificate, and is
otherwise in proper form for transfer, or is accompanied by appropriate
evidence of the authority of the Person surrendering such Certificate and
signing the letter of transmittal to do so on behalf of the Record Holder and
that the person requesting such exchange shall pay to the Exchange Agent in
advance any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered, or
required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(f) Closing of Transfer Books. From and after the Effective Time, there
shall be no transfers on the stock transfer books of Seller of the Seller
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be exchanged for the
Merger Consideration and cancelled as provided in this Article II.
(g) Return of Exchange Fund. At any time following the 12 month period after
the Effective Time, Buyer shall be entitled to require the Exchange Agent to
deliver to it any portions of the Exchange Fund which had been made available
to the Exchange Agent and not disbursed to holders of Certificates (including,
without limitation, all interest and other income received by the Exchange
Agent in respect of all funds made available to it), and thereafter such
holders shall be entitled to look to Buyer (subject to abandoned property,
escheat and other similar laws) only as general creditors thereof with respect
to any Merger Consideration that may be payable upon due surrender of the
Certificates held by them. Notwithstanding the foregoing, neither Buyer nor
the Exchange Agent shall be liable to any holder of a Certificate for any
Merger Consideration delivered in respect of such Certificate to a public
official pursuant to any abandoned property, escheat or other similar law.
2.3 Buyer Sub Common Stock. Each share of common stock of Buyer Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into one (1) share of common stock of the Surviving Bank at the Effective Time
and shall be held by Buyer.
2.4 Dissenters' Rights. (a) Notwithstanding anything in this Agreement to
the contrary and unless otherwise provided by applicable law, Seller Common
Stock which is issued and outstanding immediately prior to the Effective Time
and which is owned by stockholders who, pursuant to applicable law, have
properly perfected their right to dissent and demand payment within the
meaning of New Hampshire Revised Statutes Annotated (the "NHRSA") 293-A:13.01
et seq. (the "Dissenting Shares") shall not be converted into the right to
receive, or be exchangeable for, the Merger Consideration, unless and until
such stockholders shall have failed to perfect or shall have effectively
withdrawn or lost their right to dissent and demand payment under applicable
law. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right to dissent, the Seller Common Stock of such
holder shall thereupon be deemed to have been converted into and be
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration pursuant to Section 2.1 hereof. Holders of Seller Common Stock
who become entitled pursuant to the provisions of the NHRSA to payment for
their shares of Seller Common Stock under the provisions thereof shall receive
payment from the Surviving Bank and such shares of Seller Common Stock shall
be cancelled.
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(b) Seller shall give Buyer (i) prompt notice of any demands for payment of
shares received by Seller, withdrawals of such demands, and any other
instruments served in connection with such demands pursuant to the NHRSA and
received by Seller and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for payment for shares under the NHRSA
consistent with the obligations of Seller thereunder. Seller shall not, except
with the prior written consent of Buyer, (x) make any payment with respect to
any demands for payment for shares, (y) offer to settle or settle any such
demands or (z) waive any failure to timely deliver a written demand for
payment for shares in accordance with the NHRSA.
2.5 Stock Options. (a) At the Effective Time, each then outstanding stock
option to purchase Seller Common Stock ("Seller Option") pursuant to the
Seller's 1989 Stock Option Plan (the "Seller Stock Option Plan") (it being
understood that the aggregate number shares of Seller Common Stock subject to
purchase pursuant to the exercise of such Seller Options is not and shall not
be more than 77,500), whether vested or unvested, will be assumed by Buyer.
Each Seller Option so assumed by Buyer under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in the Seller
Stock Option Plan immediately prior to the Effective Time, except that (i)
such Seller Option shall be exercisable (when vested) for that number of whole
shares of Buyer Common Stock equal to the product of the number of shares of
Seller Common Stock covered by the Seller Option multiplied by the Exchange
Ratio, provided that any fractional share of Buyer Common Stock resulting from
such multiplication shall be rounded down to the nearest share; and (ii) the
exercise price per share of Buyer Common Stock shall be equal to the exercise
price per share of Seller Common Stock of such Seller Option, divided by the
Exchange Ratio, provided that such exercise price shall be rounded up to the
nearest cent.
(b) After the Effective Time, Buyer shall issue to each holder of an
outstanding Seller Option a document evidencing the foregoing assumption of
such Seller Option by Buyer.
(c) It is the intention of the parties that the Seller Options assumed by
Buyer qualify following the Effective Time as incentive stock options as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") to the extent that the Seller Options qualified as incentive stock
options immediately prior to the Effective Time.
(d) Buyer shall not issue or pay for any fractional share otherwise issuable
upon exercise of a Seller Option. Prior to the Effective Time, Buyer shall
reserve for issuance (and, if not previously registered pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), register) the
number of shares of Buyer Common Stock necessary to satisfy Buyer's
obligations with respect to the issuance of Buyer Common Stock pursuant to the
exercise of Seller Options.
(e) The provisions of this Section 2.5 are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each holder of a Seller
Option and his or her heirs and representatives.
ARTICLE III
Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer as follows:
3.1 Corporate Organization. (a) Seller is a trust company duly organized and
validly existing and in good standing under the laws of New Hampshire and in
good standing with the New Hampshire Commissioner. The deposit accounts of
Seller which are of an insurable type are insured by the Bank Insurance Fund
of the FDIC to the extent permitted by the FDIC. The subsidiaries listed in
Schedule 3.1 constitute all of Seller's subsidiaries (the "Seller
Subsidiaries"). Except as set forth in Schedule 3.1 of the Seller Disclosure
Schedules (the "Schedules"), each of the Seller Subsidiaries is a corporation,
in each case duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each of Seller and the Seller
Subsidiaries has the power and authority to own or lease all of its properties
and assets and to conduct its business as it is
5
now being conducted, and, except as set forth in Schedule 3.1, is duly
licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a material adverse
effect on Seller and the Seller Subsidiaries.
(b) Seller has previously made available to Buyer for inspection true and
complete copies as amended to date of the (i) Charter and By-laws of Seller
and each of the Seller Subsidiaries, and (ii) all records in the possession of
Seller of all meetings and other corporate action taken by the stockholders,
Board of Directors and committees thereof, of Seller and each of the Seller
Subsidiaries. The minute books of Seller and each of the Seller Subsidiaries
contain records, which are complete and accurate in all material respects, of
incorporators, shareholders, directors, committees and stockholders, as the
case may be, and all meetings and actions reflected therein have been duly and
validly held or taken.
(c) Neither Seller nor any of the Seller Subsidiaries owns, controls or
holds with the power to vote, directly or indirectly of record, beneficially
or otherwise, any capital stock or any equity or ownership interest in any
corporation, partnership, association, joint venture or other entity, other
than not more than five percent of any equity security registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and other
than shares of the Federal Home Loan Bank of Boston or as otherwise disclosed
on Schedule 3.1 hereto and except, in the case of Seller, for the Seller
Subsidiaries.
3.2 Capitalization. (a) The authorized capital stock of Seller consists
solely of 3,000,000 shares of Seller Common Stock and 250,000 shares of
preferred stock, $1.00 par value ("Seller Preferred Shares"). There are
590,349 shares of Seller Common Stock issued and outstanding, no shares of
Seller Common Stock held in its treasury and no Seller Preferred Shares issued
and outstanding or held in its treasury. All issued and outstanding shares of
Seller Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable, and free of preemptive rights, with no personal liability
attaching to the ownership thereof. All issued and outstanding shares of each
of the Seller Subsidiaries have been duly authorized and validly issued and
are fully paid, nonassessable, and free of preemptive rights, with no personal
liability attaching to the ownership thereof. All issued and outstanding
shares or interests of each of the Seller Subsidiaries are owned by Seller
free and clear of any security interest, pledge, lien, claim or other
encumbrance or restriction on transfer.
(b) Except for the options to acquire not more than 77,500 shares of Seller
Common Stock pursuant to stock options outstanding as of the date hereof under
the Seller Stock Option Plan, and except for the Seller Common Stock subject
to the Stock Option Agreement with Buyer, neither Seller nor any of the Seller
Subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
transfer, purchase or issuance of, or representing the right to purchase,
subscribe for or otherwise receive, any shares of its capital stock or any
securities convertible into or representing the right to receive, purchase or
subscribe for any such shares of Seller, or shares of any of the Seller
Subsidiaries. The names of the optionees, the date of grant of each option to
purchase Seller Common Stock, the number of shares subject to each such
option, the expiration date of each such option, and the price at which each
such option may be exercised under the Seller Stock Option Plan are set forth
on Schedule 3.2. Except as set forth on Schedule 3.2, there are no agreements
or understandings with respect to the voting of any such shares or which
restrict the transfer of such shares to which Seller is a party, nor does
Seller have knowledge of any such agreements or understandings to which Seller
is not a party with respect to the voting of any such shares or which restrict
the transfer of such shares. The Seller Common Stock is listed on the NASDAQ
Bulletin Board.
3.3 Authority. Seller has full corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Stock Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
approved by Seller's Board of Directors. The Board of Directors of Seller has
directed that this Agreement and the transactions contemplated hereby be
submitted to Seller's stockholders for approval at a meeting of such
stockholders and has
6
recommended approval of this Agreement by Seller's stockholders. Except for
the adoption of this Agreement by such stockholders, no other corporate
proceedings on the part of Seller are necessary to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement. Each of this
Agreement and the Stock Option Agreement has been duly and validly executed
and delivered by Seller, constitutes a valid and binding obligation of Seller,
and is enforceable against Seller in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the rights and remedies of creditors generally and (ii) general principles of
equity, regardless of whether enforcement is sought in proceedings in equity
or at law.
3.4 No Violation. Neither the execution and delivery of this Agreement or
the Stock Option Agreement by Seller, nor the consummation by Seller of the
transactions contemplated hereby or thereby, nor the compliance by Seller with
any of the terms or provisions hereof or thereof, does or will
(a) violate any provision of the Charter or By-laws of Seller or any of
the Seller Subsidiaries,
(b) assuming that the consents and approvals referred to in Section 3.5
hereof are duly obtained, violate any statute, code, ordinance, permit,
authorization, registration, rule, regulation, judgment, order, writ,
decree or injunction applicable to Seller or any of the Seller
Subsidiaries, or any of their respective properties, securities or assets;
(c) assuming that the consents and approvals referred to in Section 3.5
hereof are duly obtained and except as set forth on Schedule 3.4 hereto,
violate, conflict with, result in a breach of any provisions of, constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, or a right of
termination or cancellation under, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the respective properties or assets of Seller
or any of the Seller Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, debenture, mortgage, indenture, deed of
trust, license, lease, contract, agreement or other instrument or
obligation to which Seller or any of the Seller Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound
or affected.
3.5 Consents and Approvals. The execution, delivery and performance of this
Agreement or the Stock Option Agreement by Seller does not require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency or commission or other governmental or
regulatory authority or instrumentality (each a "Governmental Entity"),
domestic or foreign, including, without limitation, any bank regulator, except
(i) for applicable requirements, if any, of the Exchange Act, state takeover
laws, the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and filing and recordation of appropriate merger
documents as required by New Hampshire law, and (ii) for consents and
approvals of or filings or registrations with the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), the Federal Deposit Insurance
Corporation (the "FDIC"), the New Hampshire Commissioner, and the New
Hampshire Board of Trust Company Incorporation (the "BTCI") (each of the
foregoing, a "Bank Regulator").
3.6 Regulatory Approval. Seller is not aware of any reason why the
conditions set forth in Section 8.1(c) hereof would not be satisfied without
significant delay.
3.7 Financial Statements. (a) The consolidated balance sheets of Seller as
of December 31, 1994 and 1993, and the related consolidated statements of
operations, changes in stockholders' equity, cash flows and changes in
financial position for the years ended December 31, 1994, 1993 and 1992,
certified by Ernst & Young LLP, in the form delivered to Buyer prior to
execution and delivery of this Agreement (all of the above being collectively
referred to as the "Seller Audited Financial Statements"), have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP") (except as may be indicated in the footnotes thereto
and except as required or permitted by SFAS 109 and 115) and present fairly in
all material respects the consolidated financial position of and results of
operations of Seller at the dates, and for the periods, stated therein.
7
(b) The consolidated balance sheets of Seller as of June 30, 1995 and 1994,
and the related consolidated statements of income, and changes in
stockholders' equity for the six months ended June 30, 1995 and 1994 in the
form delivered to Buyer prior to execution and delivery of this Agreement
(hereinafter referred to collectively as the "Seller Interim Financial
Statements") present fairly, and the financial statements referred to in
Section 5.5 hereof will present fairly, in all material respects the
consolidated financial position and results of operations of Seller for the
periods indicated thereon and have been, and the financial statements referred
to in Section 5.5 hereof will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except for the
omission of notes to the Seller Interim Financial Statements and year-end
adjustments to interim results, which adjustments will not be material)
applied on a consistent basis (except as required or permitted by SFAS 109 and
115) with all prior periods and throughout the periods indicated.
(c) Seller has provided to Buyer true and complete copies of all quarterly
and annual Consolidated Reports of Condition and Income ("Call Reports") as
filed with the FDIC since December 31, 1992 through and including July 30,
1995. Such Call Reports were prepared in accordance with the FDIC's
instructions and fairly present the information purported to be shown therein.
Each Call Report filed with the FDIC with respect to any period subsequent to
June 30, 1995 will be prepared in accordance with the FDIC's instructions and
will fairly present the information purported to be shown therein.
(d) The books and records of Seller have been, and are being, maintained in
accordance with applicable legal and accounting requirements, reflect only
actual transactions and reflect all of its assets, liabilities and accruals
and all of its items of income and expense in accordance with generally
accepted accounting principles and auditing standards.
(e) The Seller Audited Financial Statements and the Seller Interim Financial
Statements are herein referred to together as the "Seller Financial
Statements."
3.8 Reports. Since January 1, 1991, Seller has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with the FDIC, the New
Hampshire Commissioner, and any applicable state securities or banking
authorities. Seller has made available to Buyer true and complete copies of
(i) each final registration statement, prospectus or offering circular which
Seller has used in connection with the sale of its capital stock within the
past five years, (ii) each proxy statement distributed by Seller to its
stockholders within the past five years, and (iii) each other report filed
during the past five years by Seller or any of the Seller Subsidiaries with
the New Hampshire Commissioner, the FDIC or any other securities or bank
regulatory agency (collectively, the "Seller Reports"). Except as set forth in
Schedule 3.8, none of the Seller Reports referred to in (i) or (ii) above
contained as of its date any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that information as of a later date shall be
deemed to modify information as of an earlier date. None of the Seller Reports
is required to be amended or supplemented, other than any amendment or
supplement relating to the transactions contemplated hereby. As of their
respective dates, the Seller Reports complied in all material respects with
all the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed.
3.9 Undisclosed Liabilities. Except to the extent reflected or disclosed in
the Seller Audited Financial Statements or in Schedule 3.9, neither Seller nor
any Seller Subsidiary had at the date of the most recent consolidated balance
sheet included in the Seller Audited Financial Statements, and neither Seller
nor any Seller Subsidiary presently has, any material undisclosed liabilities
or obligations of any kind, whether accrued, unaccrued, asserted or
unasserted, contingent or otherwise, and there is no existing situation or set
of circumstances which could reasonably be expected to result in such a
liability, except for liabilities which would not, either individually or in
the aggregate, have a material adverse effect on the business, operations, or
financial condition of Seller or any Seller Subsidiaries.
8
3.10 Absence of Certain Changes or Events. Except as set forth on Schedule
3.10 hereto, since December 31, 1994, there has not been:
(a) Any material adverse change in the business, operations, results of
operations, properties, assets, liabilities, securities, capitalization or
condition (financial or otherwise) of Seller or any Seller Subsidiaries,
and to the best of Seller's knowledge, no fact or condition exists which
will cause such a material adverse change in the future, including without
limitation any material loss of deposits or material decline in the value
of the assets held in the portfolios of Seller or any of the Seller
Subsidiaries;
(b) Any loss or damage (whether or not covered by insurance) which
individually or in the aggregate affects or impairs in a material respect
the ability of Seller or any Seller Subsidiaries to conduct their
businesses and operate their properties;
(c) except in the ordinary course of business consistent with past
practice with respect to actions that occurred prior to the date hereof,
any increase in the compensation payable or to become payable to any of the
non-officer employees of Seller or any of the Seller Subsidiaries or any
bonus payment or arrangement made to or with any of them;
(d) any increase in the compensation payable or to become payable to any
of the officers or directors of Seller or any of the Seller Subsidiaries or
any bonus payment or arrangement made to or with any of them;
(e) any employment contract, severance contract, bonus, pension,
retirement, incentive or similar arrangement or plan instituted, agreed to
or amended by Seller or any of the Seller Subsidiaries;
(f) Any agreement, contract or commitment entered into or agreed to be
entered into except for those in the ordinary course of business (none of
which, individually or in the aggregate, materially adversely affects the
business, operations, results of operations, properties, assets,
liabilities, securities, capitalization or condition (financial or
otherwise) of Seller or any Seller Subsidiaries);
(g) Any change in any of the accounting or tax methods or practices of
Seller or any of the Seller Subsidiaries (other than changes that are
required by applicable law or generally accepted accounting principles) or
any change in the value at which assets are carried on the consolidated or
unconsolidated balance sheets of Seller or any of the Seller Subsidiaries
(other than changes that are reflected in their respective profit and loss
statements);
(h) Any mortgage or pledge of any assets or properties of Seller or any
of the Seller Subsidiaries, or any indebtedness incurred by any of them,
other than pledges to secure Federal Home Loan Bank borrowings or
repurchase agreements made in the ordinary course of business; or
(i) Any notice or indication of the intention of any person or entity to
terminate any material agreement with Seller or any of the Seller
Subsidiaries or any notice or indication from any material depositor,
customer or supplier of Seller or any of the Seller Subsidiaries of any
intention to cease doing business with, materially change the price or
other terms on which business is transacted with or materially reduce the
business transacted with Seller or any of the Seller Subsidiaries.
Except as set forth on Schedule 3.10 hereto, since December 31, 1994, each
of Seller and the Seller Subsidiaries has conducted their respective
businesses only in the ordinary course and consistent with prior and prudent
banking and business practice.
3.11 Legal Proceedings. Except as set forth on Schedule 3.11 hereto:
(a) Neither Seller nor any of the Seller Subsidiaries is a party to any,
and there are no pending or, to the best of Seller's knowledge, threatened,
material legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature by or against Seller
or any of the Seller Subsidiaries, or challenging the validity or propriety
of the transactions contemplated by this Agreement or the Stock Option
Agreement, and there is no reasonable basis for any such proceeding, claim,
action or governmental investigation against Seller or any of the Seller
Subsidiaries.
9
(b) Neither Seller nor any of the Seller Subsidiaries is a party to or
subject to any order, judgment or decree materially affecting its business,
operations, results of operations, properties, assets, liabilities,
securities, capitalization or condition (financial or otherwise) or its
ability to consummate the transactions contemplated hereby or by the Stock
Option Agreement.
(c) Since January 1, 1992, neither Seller nor any of the Seller
Subsidiaries has suffered any loss in excess of $1,000 in any one instance
caused by defalcation, embezzlement or other employee malfeasance or by
payments made or accepted in violation of any law or regulation, and to the
best knowledge of Seller, there are no facts, circumstances or conditions
which would indicate or suggest that any such loss may be impending.
(d) Schedule 3.11 lists, as of the date of this Agreement, all pending
litigation involving any claim against Seller or any Seller Subsidiary,
whether directly or by counterclaim, involving a "lender liability" cause
of action.
3.12 Taxes and Tax Returns. (a) Except as set forth in Schedule 3.12, each
of Seller and the Seller Subsidiaries has (i) duly filed in correct form all
federal, state and local information returns and tax returns required to be
filed by it (all such returns being accurate and complete in all material
respects) and (ii) duly paid or made provisions for the payment of all taxes
and other governmental charges (other than taxes and charges which in the
aggregate are immaterial) that have been incurred or that are due or claimed
to be due from it by federal, state or local taxing authorities (including,
without limitation, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls). Seller and
the Seller Subsidiaries file consolidated federal income tax returns.
(b) The amounts set up as reserves on Seller's consolidated balance sheet
included in the Seller Audited Financial Statements for the payment of all
unpaid federal, state and local taxes (including any interest or penalties
thereon), whether or not disputed or accrued, through the fiscal year ended
December 31, 1994 or for any year or period ending prior thereto, and for
which Seller or any of the Seller Subsidiaries may be liable (in its own right
or as transferee of the assets of, or successor to, any corporation, person,
association, partnership, joint venture or other entity), are adequate under
generally accepted accounting principles and auditing standards and are
sufficient to cover all such taxes of a material amount due. The federal
income tax returns of Seller and the Seller Subsidiaries have never been
audited by the Internal Revenue Service.
(c) The amounts set up as reserves on Seller's consolidated balance sheet
included in the Seller Interim Financial Statements for the payment of
federal, state and local taxes (including any interest or penalties thereon),
whether or not disputed or accrued, for the six months ended June 30, 1995,
are adequate under generally accepted accounting principles and auditing
standards and are sufficient to cover all taxes of a material amount expected
to be due for such six month period.
(d) Except as set forth in Schedule 3.12, Seller has received no notice of
any disputes pending, or claims asserted for, federal or state taxes or
assessments or local taxes or assessments upon Seller or any of the Seller
Subsidiaries, nor has Seller or any of the Seller Subsidiaries been requested
to give or given any currently effective waivers extending the statutory
period of limitation applicable to any federal or state income tax return for
any period.
(e) Neither Seller nor any of the Seller Subsidiaries has agreed to or is
required to make any adjustments under Section 481(a) of the Code. No consent
has been filed pursuant to Section 341(f) of the Code with respect to Seller
or any of the Seller Subsidiaries.
(f) Proper and accurate amounts have been withheld by Seller and the Seller
Subsidiaries from their employees, based on information furnished by those
employees, for all prior periods in compliance in all material respects with
the tax withholding provisions of applicable federal, state and local laws.
Federal, state and local returns which are accurate and complete in all
material respects have been filed by Seller and the Seller Subsidiaries for
all periods for which returns were due with respect to income tax withholding,
Social Security
10
and unemployment taxes. The amounts shown on such returns to be due and
payable have been paid in full or adequate provision therefor has been
included by Seller and the Seller Subsidiaries in the consolidated financial
statements included in the Seller Audited Financial Statements.
3.13 Properties. (a) Except (i) as may be reflected in the Seller Financial
Statements, (ii) for any lien for current taxes not yet delinquent, (iii) for
pledges to secure deposits, (iv) for liens on real estate acquired by
foreclosure or substantively repossessed, and (v) for such other liens,
security interests, claims, charges, options or other encumbrances and
imperfections of title as do not materially adversely affect the value of
personal or real property reflected in the Seller Financial Statements or
acquired since the date of such statements and which do not materially
interfere with or impair the present and continued use of such property,
Seller and the Seller Subsidiaries have good title, free and clear of any
liens, claims, charges, options or other encumbrances, to all of the personal
and real property reflected in the consolidated balance sheets of Seller
included in the Seller Financial Statements and all personal and real property
acquired since such date, except such personal and real property as has been
disposed of in the ordinary course of business.
(b) Neither Seller nor any of the Seller Subsidiaries has received any
notice of violation of any applicable zoning or environmental regulation,
ordinance or other law, order, regulation or requirement relating to its
operations or its properties and there is no such violation of a material
nature. All buildings and structures used by Seller and any of the Seller
Subsidiaries conform in all material respects with all applicable ordinances,
codes and regulations.
(c) Schedule 3.13 contains a true and complete list and a brief description
(including carrying value) of all real properties, including properties
acquired by foreclosure or deed in lieu thereof, owned by Seller or any Seller
Subsidiary.
(d) Schedule 3.13 contains a true and complete list of all material leases
pursuant to which Seller or any of the Seller Subsidiaries leases any real or
personal property, either as lessee or as lessor (the "Leases"). Each of the
Leases is valid and binding on Seller and each such Seller Subsidiary, as the
case may be, and, to the best of Seller's knowledge, is valid and binding on
and enforceable against all other respective parties to such leases in
accordance with their respective terms. There are not under such leases any
existing breaches, defaults, events of default, or events which with notice
and/or lapse of time would constitute a breach, default or event of default,
nor has Seller or any of the Seller Subsidiaries received notice of, or made a
claim with respect to, any breach or default. Seller and each of the Seller
Subsidiaries enjoy quiet and peaceful possession of all such leased properties
occupied by them as lessee.
3.14 Certain Contracts. As of the date of this Agreement, except as set
forth in Schedule 3.14 hereto, neither Seller nor any of the Seller
Subsidiaries is a party to, is bound by, owns properties subject to, or
receives benefits under:
(a) any agreement, arrangement or understanding (whether written or oral)
(1) not made in the ordinary course of business that is or may
reasonably be expected to be material to the financial condition,
business or results of operations of Seller and the Seller
Subsidiaries, taken as a whole,
(2) relating to the borrowing of money by Seller or any Seller
Subsidiary or the guarantee by Seller or any Seller Subsidiary of any
such obligation (other than instruments relating to transactions
entered into in the ordinary course of the banking business of Seller
or in the ordinary course of business of any Seller Subsidiary),
(3) which cannot be terminated at will relating to the employment of
a consultant or the employment, election or retention of any present or
former director, officer or employee,
(4) with a labor union,
11
(5) (other than any agreement (x) with a banking customer entered
into by Seller in the ordinary course of business under which Seller
provides banking services to such banking customer or (y) relating to
the sale of mortgage loans, including forward commitments) that
involves a payment or series of payments of more than $100,000 from or
to Seller or any Seller Subsidiary,
(6) pursuant to which the consummation of the transactions
contemplated by this Agreement or the Stock Option Agreement would
(either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) becoming
due from Seller or any of the Seller Subsidiaries to any officer,
director or employee thereof or to any other person or entity,
(7) which has an unexpired term as of the date of this Agreement of
one year or more (other than agreements that are cancelable by Seller
or the Seller Subsidiaries with no further obligation upon 30 days
notice or less),
(8) which limits the freedom of Seller or any of the Seller
Subsidiaries to compete in any line of business or with any person,
(9) pursuant to which Seller or any of the Seller Subsidiaries may be
required to sell assets to, to transfer funds to (other than in the
ordinary course of business), to make an investment in, or to guarantee
the debt of, any entity, or
(b) any power of attorney that remains outstanding.
3.15 Certain Defaults. Except as set forth in Schedule 3.15 hereto, neither
Seller nor any Seller Subsidiary, nor, to the knowledge of Seller, any other
party thereto, is in default in any material respect under any material lease,
contract, mortgage, promissory note, deed of trust, loan or other commitment
or arrangement pursuant to which Seller or any Seller Subsidiary has borrowed
funds or is otherwise the obligor.
3.16 Insurance. Seller has made available to Buyer correct and complete
copies of all material policies of insurance of Seller and the Seller
Subsidiaries currently in effect. Neither Seller nor any of the Seller
Subsidiaries has any liability for unpaid premiums or premium adjustments not
properly reflected on the Seller Interim Financial Statements. Except as set
forth on Schedule 3.16 hereto, neither Seller nor any Seller Subsidiary has
received any notice of termination of any such insurance coverage or material
increase in the premiums therefor or has any reason to believe that any such
insurance coverage will be terminated or the premiums therefor materially
increased.
3.17 Employee Benefit Plans. (a) Except as described on Schedule 3.17
hereto, neither Seller nor any of the Seller Subsidiaries has any obligation,
contingent or otherwise, under any employment, consulting, retirement or
severance agreement which would require Seller or any Seller Subsidiary to
make payments exceeding $100,000 for any employee or former employee.
(b) Schedule 3.17 hereto sets forth a complete list of all ERISA Plans (as
defined below). Except as set forth in Schedule 3.17, neither Seller nor any
Seller Subsidiary maintains or contributes to any "multi-employer plan" as
that term is defined at Section 4001(a)(3) of ERISA, and neither Seller nor
any Seller Subsidiary has incurred any material liability under Section 4062,
4063 or 4201 of ERISA. To the knowledge of Seller, each pension plan, as
defined at Section 3(2) of ERISA, maintained by Seller or any Seller
Subsidiary (each, a "Pension Plan") which is intended to be qualified under
Section 401(a) of the Code is so qualified. Except as set forth in Schedule
3.17 hereto, to the knowledge of Seller, since January 1, 1991, (i) each
welfare plan, as defined at Section 3(1) of ERISA, maintained by Seller or a
Seller Subsidiary (each, a "Welfare Plan"), and each Pension Plan (the Pension
Plans and Welfare Plans being hereinafter referred to as "ERISA Plans"), has
been administered substantially in accordance with the terms of such plan and
the provisions of ERISA, (ii) nothing has been done or omitted to be done with
respect to any ERISA Plan that would result in any material liability on the
part of Seller or any Seller Subsidiary, including the loss of any material
tax deduction, under ERISA or the Code, (iii) no "reportable event" as defined
at Section 4043 of ERISA, other than any such event for which the thirty-day
notice period has been waived, has occurred with respect to any Pension Plan
subject to
12
Title IV of ERISA, and (iv) except for continuation of health coverage to the
extent required under Section 4980B of the Code, there are no unfunded
obligations under any ERISA Plan providing benefits after termination of
employment.
(c) Schedule 3.17 hereto sets forth a complete list of all employment,
consulting, retirement and severance agreements with individuals and all
material incentive, bonus, fringe benefit and other employee benefit
arrangements of Seller and the Seller Subsidiaries, covering employees or
former employees of Seller and the Seller Subsidiaries.
(d) Seller has made available to Buyer copies of all ERISA Plans, copies of
all agreements and arrangements referred to in (c) above that have been
reduced to writing, and a written summary of the material terms of all such
agreements or arrangements that have not been reduced to writing.
3.18 Compliance with Applicable Law; Regulatory Examinations. (a) Seller and
each of the Seller Subsidiaries holds, and has at all times held, all
licenses, franchises, permits, approvals, consents, qualifications and
authorizations material for the lawful conduct of its business under and
pursuant to, and has complied with, and is not in material default under, any
applicable law, statute, order, rule, regulation, policy, ordinance, reporting
or filing requirement and/or guideline of any federal, state or local
governmental authority relating to Seller or any of the Seller Subsidiaries,
except as set forth on Schedule 3.18 hereto, and neither Seller or any of the
Seller Subsidiaries has knowledge of any violation of any of the above.
(b) Except for normal examinations conducted by a regulatory agency in the
regular course of the business of Seller and the Seller Subsidiaries, no
regulatory agency has initiated any proceeding or, to the best knowledge of
Seller, investigation into the business or operations of Seller or any of the
Seller Subsidiaries since prior to December 31, 1991. Seller has not received
any objection from any regulatory agency to Seller's response to any
violation, criticism or exception with respect to any report or statement
relating to any examinations of Seller or any of the Seller Subsidiaries.
(c) Except as set forth on Schedule 3.18 hereto, neither Seller nor any
Seller Subsidiary will be required to divest any assets currently held by it
or discontinue any activity currently conducted as a result of the Federal
Deposit Insurance Corporation Improvement Act of 1991, any regulations
promulgated thereunder, or otherwise.
3.19 Regulatory Agreements. On the date hereof, neither Seller nor any
Seller Subsidiary is a party to any assistance agreement, supervisory
agreement, memorandum of understanding, consent order, cease and desist order,
or condition of any regulatory order or decree with or by the FDIC, the
Federal Reserve, the New Hampshire Commissioner or any other financial
services regulatory agency that relates to the conduct of the business of
Seller or any Seller Subsidiary, nor has Seller or any of the Seller
Subsidiaries been advised by any such regulatory agency or other governmental
entity that it is considering issuing or requesting any such agreement, order
or decree.
3.20 Broker's Fees. Neither Seller, any Seller Subsidiary, nor any of its
officers or directors has employed any broker, finder or investment advisor,
or incurred any liability for any broker's fees, commissions, finder's fees or
investment advisory fees in connection with any of the transactions
contemplated by this Agreement or the Stock Option Agreement.
3.21 Fairness Opinion. Seller has engaged, and will pay a fee or commission,
to HAS Associates ("HAS") to render an opinion to Seller and its stockholders
as to the fairness to Seller and its stockholders, from a financial point of
view, of the Merger Consideration. HAS has advised the Board of Directors of
Seller that it considers such consideration to be fair and will provide a
written opinion as to fairness at or prior to the date on which the Proxy
Statement-Prospectus is mailed to stockholders.
3.22 Seller Information. The information relating to Seller and the Seller
Subsidiaries to be contained in the Proxy Statement-Prospectus (as defined in
Section 7.1) and any application to any Bank Regulator, or any
13
other statement or application filed with any other governmental body in
connection with the Merger and the other transactions contemplated by this
Agreement, will not contain as of the date of such Proxy Statement-Prospectus
and as of the date of the Special Meeting (defined in Section 5.6) any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, Seller makes and
will make no representation or warranty with respect to any information
supplied by Buyer which is contained in any of the foregoing documents. The
Proxy Statement-Prospectus (except for such portions thereof that relate only
to Buyer and its subsidiaries) will comply in all material respects with any
applicable provisions of the Exchange Act and the rules and regulations
thereunder.
3.23 Environmental Issues. Except as set forth on Schedule 3.23 hereto:
(a) Each of Seller and, to Seller's knowledge, the Participation
Facilities and the Loan Properties (each as hereinafter defined) are, and
have been, in material compliance with all applicable environmental laws
and with all rules, regulations, standards and requirements of the United
States Environmental Protection Agency (the "EPA") and of state and local
agencies with jurisdiction over pollution or protection of the environment.
(b) There is no suit, claim, action or proceeding pending or, to the
knowledge of Seller threatened, before any Governmental Entity or other
forum in which Seller or, to Seller's knowledge, any Participation Facility
has been or, with respect to threatened proceedings, may be, named as a
defendant (i) for alleged noncompliance (including by any predecessor),
with any environmental law, rule, regulation, standard or requirement or
(ii) relating to the release into or presence in the Environment (as
hereinafter defined) of any Hazardous Substance (as hereinafter defined)
whether or not occurring at or on a site owned, leased or operated by
Seller or any Participation Facility.
(c) To Seller's knowledge, there is no suit, claim, action or proceeding
pending or threatened, before any Governmental Entity or other forum in
which any Loan Property has been or, with respect to threatened
proceedings, may be, named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any environmental law, rule,
regulation, standard or requirement or (ii) relating to the release into or
presence in the Environment of any Hazardous Substance whether or not
occurring at or on a site owned, leased or operated by a Loan Property.
(d) Seller does not have knowledge of any facts or circumstances which
would provide a reasonable basis for any suit, claim, action or proceeding
as described in subsection (b) or (c) of this Section 3.23.
(e) During the period of Seller's ownership or operation of any of its
current properties or any previously owned or operated properties, there
has been no release or presence of Hazardous Substance in, on, under or
affecting such property (except for the presence of small quantities of
consumer products such as cleaning solvents and paints). To Seller's
knowledge, during the period of (i) Seller's participation in the
management of any Participation Facility, or (ii) Seller's holding of a
security interest in a Loan Property, there has been no release or presence
of Hazardous Substance in, on, under or affecting such Participation
Facility or Loan Property. To the knowledge of Seller, prior to the period
of (x) Seller's ownership or operation of any of its respective current
properties or any previously owned or operated properties, (y) Seller's
holding of a security interest in a Loan Property, there was no release or
presence of Hazardous Substance in, on, under or affecting any such
property, Participation Facility or Loan Property.
3.24 Investment Securities. None of the investments reflected in the
consolidated balance sheet for the period ended December 31, 1994 contained in
the Seller Audited Financial Statements and none of the investments made by
Seller since December 31, 1994 is subject to any restriction (contractual,
statutory or otherwise) that would materially impair the ability of the entity
holding such investment freely to dispose of such investment at any time.
Seller has (a) properly reported as such any investment securities which are
required under GAAP to be classified as "available for sale" or as held in a
"trading account", and accounted for such securities at fair value, and (b)
accounted for any decline in the market value of its securities portfolio in
accordance with Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 115,
14
including without limitation the recognition through Seller's consolidated
statement of income of any unrealized loss with respect to any individual
security as a realized loss in the accounting period in which a decline in the
market value of such security is determined to be "other than temporary."
3.25 Derivative Transactions. Except as set forth on Schedule 3.25 neither
Seller nor any Seller Subsidiary has engaged in transactions in or involving
forwards, options, futures, options on futures, swaps, structured notes or
securities defined as "high risk" by the Federal Financial Institutions
Examination Council.
3.26 Intellectual Property. Each of Seller and the Seller Subsidiaries owns
or possesses valid and binding licenses and other rights to use all material
patents, copyrights, trade secrets, trade names, service-marks and trademarks
used in its businesses, each without payment, and neither Seller nor any
Seller Subsidiary has received any notice of conflict with respect thereto
that asserts the rights of others. Seller and the Seller Subsidiaries have
performed in all material respects all the obligations required to be
performed by them and are not in default in any material respect under any
contract, agreement, arrangement or commitment relating to any of the
foregoing.
3.27 Reserves for Possible Loan Losses. The reserves for possible loan
losses shown on consolidated financial statements included in the Seller
Audited Financial Statements, increased by provisions made and reduced by
charges taken after such date, are, in the reasonable judgment of Seller based
upon the status of its loan portfolio and general economic conditions as of
the date of this Agreement, adequate to provide for possible losses on loans
outstanding at and as of the date of this Agreement. Subject to such reserve
for possible loan losses, the aggregate principal amount of loans contained in
the loan portfolios of Seller and the Seller Subsidiaries at July 31, 1995,
increased by loans made and reduced by principal payments made after such
date, can reasonably be expected to be collected in the ordinary course of
Seller's operations. The reserves for possible loan losses to be shown on
Seller's consolidated balance sheet included in any Call Report filed with the
FDIC or any Report sent to Seller's stockholders with respect to any period
subsequent to the year ended December 31, 1994 are or will be adequate under
generally accepted accounting principles at and as of the date of each such
balance sheet.
3.28 Loans. Except as set forth on Schedule 3.28 hereto,
(a) All loans reflected as assets in Seller's consolidated balance sheet
included in the Seller Audited Financial Statements or made or acquired by
Seller or any of the Seller Subsidiaries since December 31, 1994 ("Loans")
are binding obligations of the respective obligors named therein and no
material amount thereof is subject to any defenses which have been or, to
the best knowledge of Seller, may be asserted against Seller or any of the
Seller Subsidiaries. Seller has entered into no agreement which would
result in a waiver or negation of any rights or remedies available against
the borrower or guarantor, if any, on any such Loan.
(b) All of the real estate mortgage Loans reflected as assets on Seller's
consolidated balance sheet included in the Seller Audited Financial
Statements or made or acquired by Seller or any of the Seller Subsidiaries
since December 31, 1994, were validly and legally made, constitute valid
and binding agreements of the borrower enforceable in accordance with their
terms, are secured by properly perfected, valid liens having the priority
indicated by their terms on the properties described therein. All of such
mortgage Loans are saleable in the ordinary course of Seller's or any of
the Seller Subsidiaries' business (which, in the case of commercial
mortgage Loans, shall mean saleable to a knowledgeable purchaser
experienced in evaluating such types of obligations). Seller has not
entered into any agreement which will result in a future waiver or negation
of any material rights or remedies presently available against the borrower
or guarantor, if any, on any such Loan. Each mortgage securing a Loan (a
"Mortgage") has been and is evidenced by documentation of the types
customarily employed by Seller, which are consistent in all material
respects with federal and state banking practices and prudent banking
standards, and complete copies thereof have been maintained by Seller in
accordance with such standards and practices. Except with respect to
participation loans described on Schedule 3.28 hereto, Seller and the
Seller Subsidiaries own and hold the entire interest in all Mortgages free
and clear of all liens, claims, equities, options, security
15
interests, charges, encumbrances or restrictions of any kind or nature, and
no person has any interest therein. With respect to any FHA Mortgage, VA
Mortgage, SBA-guaranteed Loan or other insured or guaranteed instrument,
the FHA insurance, VA guaranty, SBA guaranty and other insurance or
guarantees are in full force and effect and neither Seller nor any of the
Seller Subsidiaries has received any notice of any matter pending or
threatened which would adversely affect such insurance or guarantee and to
the best knowledge of Seller, there are no facts or circumstances which
would provide a basis for any such matter in the future.
(c) Except as disclosed on Schedule 3.28, all Loans were originated in
compliance with, and comply in all material respects with, all applicable
laws, rules and regulations, including, but not limited to applicable usury
statutes, the Truth in Lending Act, the Equal Credit Opportunity Act, the
Real Estate Settlement Procedures Act, and other applicable consumer
protection statutes and the regulations thereunder.
(d) Seller has furnished to Buyer a true, correct and complete copy of
its loan delinquency report as of July 31, 1995 which report includes all
Loans for which the payment of any installment of principal or interest has
not been made within 30 days after such installment was due.
(e) All Loans purchased or originated by Seller or any of the Seller
Subsidiaries and subsequently sold have been sold without recourse to
Seller or any of the Seller Subsidiaries and without any liability under
any yield maintenance or similar obligation.
(f) Schedule 3.28 hereto sets forth (x) all of the Loans presently held
by Seller that prior to the date of this Agreement have been classified
(whether by any bank examiner or internally) as "Other Loans Specially
Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss,"
"Classified," "Criticized," "Credit Risk Assets," "Concerned Loans," "Watch
List" or words of similar import, together with the principal amount of and
accrued and unpaid interest on each such Loan and the identity of the
borrower thereunder, and (y) by category of Loan (i.e., commercial,
consumer, etc.), all of the other Loans presently held by Seller that prior
to the date of this Agreement were classified as such, together with the
aggregate principal amount of and accrued and unpaid interest on such Loans
by category.
3.29 Transactions with Interested Persons. Except as set forth in Schedule
3.29, neither Seller nor any of the Seller Subsidiaries has any outstanding
loan, deposit or other relationship or other transaction with any officer,
director or stockholder of Seller or any of the Seller Subsidiaries or any
affiliates of any such officer, Director or 5% stockholder (individually, an
"Interested Person"), other than deposit or loan transactions in the ordinary
course of business on terms substantially the same as those prevailing at the
time for comparable transactions with other, unaffiliated persons, and which
did not and do not involve any unusual risk (including of non-collectibility)
or other features unfavorable to Seller or any of the Seller Subsidiaries.
Schedule 3.29 contains a full description of all outstanding loans by Seller
or any of the Seller Subsidiaries to an Interested Person which, individually
or in the aggregate, have current outstanding balances of $50,000 or more
(including in the outstanding balance all amounts which Seller or any of the
Seller Subsidiaries is obligated to advance). All deposit relationships of
Seller or any of the Seller Subsidiaries with an Interested Person with
aggregate balances in excess of $50,000 are fully described on Schedule 3.29.
Except as set forth on Schedule 3.29, neither Seller nor any of the Seller
Subsidiaries has entered into any contractual or other business relationship
with any Interested Person.
3.30 Capital. At June 30, 1995, (a) Seller's Tier 1 risk-based capital ratio
and total risk-based capital ratios were each in excess of applicable limits,
and (b) its leverage ratio was 7.84%, such ratios having been calculated in
accordance with the guidelines of the FDIC on a fully phased-in basis.
3.31 Disclosure. All material facts relating to the business, operations,
results of operations, properties, securities, assets, liabilities and
condition (financial or otherwise) of Seller or the Seller Subsidiaries have
been disclosed to Buyer in this Agreement and the Schedules furnished hereto.
No representation or warranty contained in this Agreement or the Stock Option
Agreement, and no such statement contained in any Schedule, certificate, list
or letter furnished to Buyer pursuant to the provisions hereof or thereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein not
misleading.
16
ARTICLE IV
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
4.1 Corporate Organization. (a) Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of New Hampshire. The
subsidiaries listed on Schedule 4.1 constitute all of Buyer's subsidiaries
(the "Buyer Subsidiaries"). Each of the Buyer Subsidiaries is a bank or a
corporation, in each case duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. The deposit
accounts of Buyer's banking subsidiary which are of an insurable type are
insured by the Bank Insurance Fund of the FDIC to the extent permitted by the
FDIC. Each of Buyer and the Buyer Subsidiaries has the power and authority to
own or lease all of its properties and assets and to conduct its business as
it is now being conducted, and is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing
would not have a material adverse effect on Buyer and the Buyer Subsidiaries.
Buyer is registered as a bank holding company with the Federal Reserve under
the Bank Holding Company Act of 1956, as amended.
(b) Buyer has previously made available to Seller for inspection true and
complete copies as amended to date of the (i) Charter and By-laws of Buyer and
each of the Buyer Subsidiaries, and (ii) all records in the possession of
Buyer of all meetings and other corporate action taken by the stockholders,
Board of Directors and committees thereof, of Buyer and each of the Buyer
Subsidiaries. The minute books of Buyer and each of the Buyer Subsidiaries
contain records, which are complete and accurate in all material respects, of
incorporators, shareholders, directors, committees and stockholders, as the
case may be, and all meetings and actions reflected therein have been duly and
validly held or taken within the past ten years.
(c) Neither Buyer nor any of the Buyer Subsidiaries owns, controls or holds
with the power to vote, directly or indirectly of record, beneficially or
otherwise, any capital stock or any equity or ownership interest in any
material corporation, partnership, association, joint venture or other entity,
other than not more than five percent of any equity security registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
other than shares of the Federal Home Loan Bank of Boston and except for
shares of stock of the Buyer Subsidiaries.
4.2 Capitalization. (a) The authorized capital stock of Buyer consists
solely of 3,000,000 shares of common stock, $1.00 par value ("Buyer Common
Shares") and 1,000,000 shares of preferred stock, $1.00 par value ("Buyer
Preferred Shares"). As of June 30, 1995, there were 1,735,222 Buyer Common
Shares issued and outstanding, 11,810 Buyer Common Shares held in its
treasury, and no Buyer Preferred Shares issued and outstanding. All issued and
outstanding Buyer Common Shares have been duly authorized and validly issued
and are fully paid, nonassessable, and free of preemptive rights, with no
personal liability attaching to the ownership thereof. The shares of Buyer
Common Stock to be issued pursuant to the Merger will be duly authorized and
validly issued and (at the Effective Time) will be fully paid, nonassessable,
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. All issued and outstanding shares or interests of each of
the Buyer Subsidiaries are owned by Buyer free and clear of any security
interest, pledge, lien, claim or other encumbrance or restriction on transfer.
(b) Except for the options to acquire not more than 97,577 Buyer Common
Shares pursuant to stock options under its 1985, 1988, and 1992 Stock Option
Plan (the "Buyer Stock Option Plans"), Buyer is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the transfer, purchase or issuance of, or representing
the right to purchase, subscribe for or otherwise receive, any shares of its
capital stock or any securities convertible into or representing the right to
receive, purchase or subscribe for any such shares of Buyer. There are no
agreements or understandings with respect to the voting of
17
any such shares or which restrict the transfer of such shares to which Buyer
is a party, nor does Buyer have knowledge of any such agreements or
understandings to which Buyer is not a party with respect to the voting of any
such shares or which restrict the transfer of such shares. Buyer Common Shares
are listed on the Stock Exchange.
4.3 Authority. Buyer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by
Buyer's Board of Directors. The Board of Directors of Buyer has directed that
this Agreement and the transactions contemplated hereby be submitted to
Buyer's stockholders for approval at a meeting of such stockholders and has
recommended approval of this Agreement by Buyer's stockholders. Except for the
adoption of this Agreement by such stockholders, no other corporate
proceedings on the part of Buyer are necessary to consummate the transactions
contemplated by this Agreement. This Agreement has been duly and validly
executed and delivered by Buyer, constitutes a valid and binding obligation of
Buyer, and is enforceable against Buyer in accordance with its terms, subject
to (i) bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights and remedies of creditors generally and (ii) general
principles of equity, regardless of whether enforcement is sought in
proceedings in equity or at law.
4.4 No Violation. Neither the execution and delivery of this Agreement by
Buyer, nor the consummation by Buyer of the transactions contemplated hereby,
nor the compliance by Buyer with any of the terms or provisions hereof, does
or will
(a) violate any provision of the Charter or By-laws of Buyer,
(b) assuming that the consents and approvals referred to in Section 4.5
hereof are duly obtained, violate any statute, code, ordinance, permit,
authorization, registration, rule, regulation, judgment, order, writ,
decree or injunction applicable to Buyer or any of the Buyer Subsidiaries
or any of their respective properties, securities or assets, or
(c) assuming that the consents and approvals referred to in Section 4.5
hereof are duly obtained and except as set forth on Schedule 4.4 hereto,
violate, conflict with, result in a breach of any provisions of, constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by,
or result in the creation of any lien, pledge, security interest, charge or
other encumbrance upon any of the respective properties or assets of Buyer
or any of the Buyer Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, debenture, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Buyer or any of the Buyer Subsidiaries is a party, or by which they or any
of their respective properties or assets may be bound or affected.
4.5 Consents and Approvals. The execution, delivery and performance of this
Agreement by Buyer does not require any consent, approval, authorization or
permit of, or filing with or notification to, any court, administrative agency
or commission or other governmental or regulatory authority or
instrumentality, domestic or foreign, including, without limitation, any bank
regulator, except (i) for applicable requirements, if any, of the Exchange Act
or the laws of certain states under which a "blue sky" filing or consent may
be required, state takeover laws, the pre-merger notification requirements of
the HSR Act, and filing and recordation of appropriate merger documents as
required by New Hampshire law, and (ii) for consents and approvals of or
filings or registrations with Bank Regulators.
4.6 Regulatory Approval. Buyer is not aware of any reason why the conditions
set forth in Section 8.1(c) hereof would not be satisfied without significant
delay.
4.7 Financial Statements. (a) The consolidated balance sheets of Buyer as of
June 30, 1994 and 1993, and the related consolidated statements of operations,
changes in stockholders' equity, cash flows and changes in financial position
for the years ended June 30, 1994, 1993 and 1992, certified by KPMG Peat
Marwick LLP, in the form delivered to Seller prior to execution and delivery
of this Agreement (all of the above being collectively
18
referred to as the "Buyer Audited Financial Statements"), have been prepared
in accordance with GAAP applied on a consistent basis (except as may be
indicated in the footnotes thereto and except as required or permitted by SFAS
109 and 115) and present fairly in all material respects the consolidated
financial position of and results of operations of Buyer at the dates, and for
the periods, stated therein.
(b) The consolidated balance sheets of Buyer as of March 31, 1995 and 1994,
and the related consolidated statements of income for the nine months ended
March 31, 1995 and 1994 in the form delivered to Seller prior to execution and
delivery of this Agreement (hereinafter referred to collectively as the "Buyer
Interim Financial Statements") present fairly in all material respects the
consolidated financial position and results of operations of Buyer at the
dates and for the periods indicated thereon and are prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except for the omission of notes to the Buyer Interim Financial Statements
and year-end adjustments to interim results, which adjustments will not be
material) applied on a consistent basis (except as required or permitted by
SFAS 109 and 115) with all prior periods and throughout the periods indicated.
(c) The books and records of Buyer have been, and are being, maintained in
accordance with applicable legal and accounting requirements, reflect only
actual transactions and reflect all of its assets, liabilities and accruals
and all of its items of income and expense in accordance with generally
accepted accounting principles and auditing standards.
(d) The Buyer Audited Financial Statements and the Buyer Interim Financial
Statements are herein referred to together as the "Buyer Financial
Statements."
4.8 Reports. Since January 1, 1991, Buyer and the Buyer Subsidiaries have
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that were required to be filed with
(i) the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act or the Exchange Act, (ii) the New Hampshire Commissioner, (iii)
the FDIC, (iv) the Federal Reserve, and (v) any applicable state securities or
banking authorities (all such reports and statements are collectively referred
to herein as the (the "Buyer Reports"). Buyer has made available to Seller
true and complete copies of all Buyer Reports and all reports and
communications mailed by Buyer to its shareholders since January 1, 1993. As
of their respective dates, no such Buyer Report filed with the SEC contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date shall be deemed to
modify information as of an earlier date. As of their respective dates, the
Buyer Reports complied in all material respects with all the statutes, rules
and regulations enforced or promulgated by the regulatory authority with which
they were filed.
4.9 Undisclosed Liabilities. Except to the extent reflected or disclosed in
the Buyer Audited Financial Statements or in Schedule 4.9, neither Buyer nor
any Buyer Subsidiary had at the date of the most recent consolidated balance
sheet included in the Buyer Audited Financial Statements, and neither Buyer
nor any Buyer Subsidiary presently has, any material undisclosed liabilities
or obligations of any kind, whether accrued, unaccrued, asserted or
unasserted, contingent or otherwise, and there is no existing situation or set
of circumstances which could reasonably be expected to result in such a
liability, except for liabilities which would not, either individually or in
the aggregate, have a material adverse effect on the business, operations, or
financial condition of Buyer or any Buyer Subsidiaries.
4.10 Absence of Certain Changes or Events. Except as set forth on Schedule
4.10 hereto, since December 31, 1994, there has not been:
(a) Any material adverse change in the business, operations, results of
operations, properties, assets, liabilities, securities, capitalization or
condition (financial or otherwise) of Buyer or any Buyer Subsidiaries, and
to the best of Buyer's knowledge, no fact or condition exists which will
cause such a material adverse change in the future, including without
limitation any material loss of deposits or material decline in the value
of the assets held in the portfolios of Buyer or any of the Buyer
Subsidiaries;
19
(b) Any loss or damage (whether or not covered by insurance) which
individually or in the aggregate affects or impairs in a material respect
the ability of Buyer or any Buyer Subsidiaries to conduct their businesses
and operate their properties;
(c) Any agreement, contract or commitment entered into or agreed to be
entered into except for those in the ordinary course of business (none of
which, individually or in the aggregate, materially adversely affects the
business, operations, results of operations, properties, assets,
liabilities, securities, capitalization or condition (financial or
otherwise) of Buyer or any Buyer Subsidiaries); or
(d) Any change in any of the accounting methods or practices of Buyer or
any of the Buyer Subsidiaries (other than changes that are required by
applicable law or generally accepted accounting principles) or any change
in the value at which assets are carried on the consolidated or
unconsolidated balance sheets of Buyer or any of the Buyer Subsidiaries
(other than changes that are reflected in their respective profit and loss
statements).
(e) Any notice or indication of the intention of any person or entity to
terminate any material agreement with Buyer or any of the Buyer
Subsidiaries or any notice or indication from any material depositor,
customer or supplier of Buyer or any of the Buyer Subsidiaries of any
intention to cease doing business with, materially change the price or
other terms on which business is transacted with or materially reduce the
business transacted with Buyer or any of the Buyer Subsidiaries.
4.11 Legal Proceedings. Except as set forth on Schedule 4.11 hereto:
(a) Neither Buyer nor any of the Buyer Subsidiaries is a party to any,
and there are no pending or, to the best of Buyer's knowledge, threatened,
material legal, administrative, arbitral or other proceedings, claims,
actions or governmental investigations of any nature by or against Buyer or
any of the Buyer Subsidiaries, or challenging the validity or propriety of
the transactions contemplated by this Agreement, and there is no reasonable
basis for any such proceeding, claim, action or governmental investigation
against Buyer or any of the Buyer Subsidiaries.
(b) Neither Buyer nor any of the Buyer Subsidiaries is a party to or
subject to any order, judgment or decree affecting its business,
operations, results of operations, properties, assets, liabilities,
securities, capitalization or condition (financial or otherwise) or its
ability to consummate the transactions contemplated hereby.
(c) Since January 1, 1992, neither Buyer nor any of the Buyer
Subsidiaries has suffered any loss in excess of $25,000 in any one instance
caused by defalcation, embezzlement or other employee malfeasance or by
payments made or accepted in violation of any law or regulation, and to the
best knowledge of Buyer, there are no facts, circumstances or conditions
which would indicate or suggest that any such loss may be impending.
4.12 Taxes and Tax Returns. (a) Except as set forth in Schedule 4.12, each
of Buyer and the Buyer Subsidiaries has (i) duly filed in correct form all
federal, state and local information returns and tax returns required to be
filed by it (all such returns being accurate and complete in all material
respects) and (ii) duly paid or made provisions for the payment of all taxes
and other governmental charges (other than taxes and charges which in the
aggregate are immaterial) that have been incurred or that are due or claimed
to be due from it by federal, state or local taxing authorities (including,
without limitation, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls). Buyer and
the Buyer Subsidiaries file consolidated federal income tax returns.
(b) The amounts set up as reserves on Buyer's consolidated balance sheet
included in the Buyer Audited Financial Statements for the payment of all
unpaid federal, state and local taxes (including any interest or penalties
thereon), whether or not disputed or accrued, through the fiscal year ended
June 30, 1994 or for any year or period ending prior thereto, and for which
Buyer or any of the Buyer Subsidiaries may be liable (in its own right or as
transferee of the assets of, or successor to, any corporation, person,
association, partnership, joint venture or other entity), are adequate under
generally accepted accounting principles and auditing standards and
20
are sufficient to cover all such taxes of a material amount due. The federal
income tax returns of Buyer and the Buyer Subsidiaries have been audited by
the Internal Revenue Service through June 30, 1991.
(c) Except as set forth in Schedule 4.12, Buyer has received no notice of
any disputes pending, or claims asserted for, federal or state taxes or
assessments or local taxes or assessments upon Buyer or any of the Buyer
Subsidiaries, nor has Buyer or any of the Buyer Subsidiaries been requested to
give or given any currently effective waivers extending the statutory period
of limitation applicable to any federal or state income tax return for any
period.
(d) Except as set forth in Schedule 4.12, neither Buyer nor any of the Buyer
Subsidiaries has agreed to or is required to make any adjustments under
Section 481(a) of the Code. No consent has been filed pursuant to Section
341(f) of the Code with respect to Buyer or any of the Buyer Subsidiaries.
(e) Proper and accurate amounts have been withheld by Buyer and the Buyer
Subsidiaries from their employees, based on information furnished by those
employees, for all prior periods in compliance in all material respects with
the tax withholding provisions of applicable federal, state and local laws.
Federal, state and local returns which are accurate and complete in all
material respects have been filed by Buyer and the Buyer Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes. The amounts shown on such returns to
be due and payable have been paid in full or adequate provision therefor has
been included by Buyer and the Buyer Subsidiaries in the consolidated
financial statements included in the Buyer Audited Financial Statements.
4.13 Certain Contracts. Buyer has filed with the SEC all material contracts
required to be filed pursuant to Item 601 of the SEC's Regulation S-K.
4.14 Certain Defaults. Neither Buyer nor any Buyer Subsidiary, nor, to the
knowledge of Buyer, any other party thereto, is in default in any material
respect under any material lease, contract, mortgage, promissory note, deed of
trust, loan or other commitment or arrangement pursuant to which Buyer or any
Buyer Subsidiary has borrowed funds or is otherwise the obligor.
4.15 Compliance with Applicable Law; Regulatory Examinations. (a) Buyer and
each of the Buyer Subsidiaries holds, and has at all times held, all licenses,
franchises, permits, approvals, consents, qualifications and authorizations
material for the lawful conduct of its business under and pursuant to, and has
complied with, and is not in material default under, any applicable law,
statute, order, rule, regulation, policy, ordinance, reporting or filing
requirement and/or guideline of any federal, state or local governmental
authority relating to Buyer or any of the Buyer Subsidiaries, and neither
Buyer or any of the Buyer Subsidiaries has knowledge of any material violation
of any of the above.
(b) Except for normal examinations conducted by a regulatory agency in the
regular course of the business of Buyer and the Buyer Subsidiaries, no
regulatory agency has initiated any proceeding or, to the best knowledge of
Buyer, investigation into the business or operations of Buyer or any of the
Buyer Subsidiaries since prior to December 31, 1991. Buyer has not received
any objection from any regulatory agency to Buyer's response to any violation,
criticism or exception with respect to any report or statement relating to any
examinations of Buyer or any of the Buyer Subsidiaries.
(c) Neither Buyer nor any Buyer Subsidiary will be required to divest any
assets currently held by it or discontinue any activity currently conducted as
a result of the Federal Deposit Insurance Corporation Improvement Act of 1991,
any regulations promulgated thereunder, or otherwise.
4.16 Fairness Opinion. Buyer has engaged, and will pay a fee or commission,
to XxXxxxxxx, Xxxx & Xxxxxx, Inc. ("MBD") to render an opinion to Buyer and
its stockholders as to the fairness to Buyer and its stockholders, from a
financial point of view, of the Merger Consideration. MBD has advised the
Board of Directors of Buyer that it considers such consideration to be fair
and will provide a written opinion as to fairness at or prior to the date on
which the Proxy Statement-Prospectus is mailed to stockholders.
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4.17 Buyer Information. The information relating to Buyer and the Buyer
Subsidiaries to be contained in the Proxy Statement-Prospectus (as
contemplated by Section 7.1) and any application to any Bank Regulator, or any
other statement or application filed with any governmental body in connection
with the Merger and the other transactions contemplated by this Agreement will
not contain as of the date of such Proxy Statement-Prospectus or filing any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, Buyer makes and will
make no representation or warranty with respect to any information supplied by
Seller which is contained in any of the foregoing documents. The Proxy
Statement-Prospectus (except for such portions thereof that relate only to
Seller and its subsidiaries) will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
4.18 Environmental Issues. Except as set forth on Schedule 4.18,
(a) Buyer has no knowledge of any circumstance which might reasonably be
expected to result in any material liability arising out of violations of
Environmental Laws.
(b) With respect to properties owned, operated and leased by Buyer, Buyer
is, and has been, in material compliance with all applicable environmental
laws and with all rules, regulations, standards and requirements of the EPA
and of state and local agencies with jurisdiction over pollution or
protection of the environment.
(c) Buyer has received no notice of any suit, claim, action or proceeding
pending or threatened, before any Governmental Entity or other forum in
which Buyer, or any property owned, leased or operated by Buyer, has been
or, with respect to threatened proceedings, may be, named as a defendant
(i) for alleged noncompliance (including by any predecessor) with any
environmental law, rule, regulation, standard or requirement or (ii)
relating to the release into or presence in the Environment of any
Hazardous Substance whether or not occurring at or on a site owned, leased
or operated by Buyer.
4.19 Disclosure. All material facts relating to the business, operations,
results of operations, properties, securities, assets, liabilities and
condition (financial or otherwise) of Buyer or the Buyer Subsidiaries have
been disclosed to Seller either in this Agreement and the Schedules furnished
hereto or are set forth in the Buyer Reports filed with the SEC. No
representation or warranty contained in this Agreement, and no such statement
contained in any Schedule, certificate, list or letter furnished to Seller
pursuant to the provisions hereof or thereof, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make
the statements herein or therein not misleading.
4.20 Capital. At June 30, 1995, (a) Buyer's Tier 1 risk-based capital ratio
and total risk-based capital ratios were each in excess of applicable limits,
and (b) its leverage ratio was 7.07%, such ratios having been calculated in
accordance with the guidelines of the Federal Reserve applicable to bank
holding companies on a fully phased-in basis.
4.21 Regulatory Agreements. On the date hereof, neither Buyer nor any of its
subsidiaries is a party to any assistance agreement, supervisory agreement,
memorandum of understanding, consent order, cease and desist order, or
condition of any regulatory order or decree with or by the FDIC, the Federal
Reserve, the New Hampshire Bank Commissioner, or other financial services
regulatory agency that restricts Buyer's ability to perform its obligations
hereunder, nor has Buyer or any of its subsidiaries been advised by any such
regulatory agency or other governmental entity that it is considering issuing
or requesting any such agreement, order or decree.
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ARTICLE V
Covenants of Seller
5.1 Conduct of Business.
(a) Affirmative Covenants. During the period from the date of this
Agreement to the Effective Time, except with the written consent of Buyer,
Seller will
(1) operate its business, and cause each of the Seller Subsidiaries
to operate its business, only in the usual, regular and ordinary course
of business and consistent with prior and prudent business and banking
practice;
(2) use reasonable efforts to preserve intact its business
organization and assets and maintain its rights and franchises; and
(3) use its best efforts to (x) preserve its business and that of the
Seller Subsidiaries intact, (y) keep available to itself and to Buyer
the present services of the employees of Seller and the Seller
Subsidiaries, and (z) preserve for itself and to Buyer the goodwill of
the customers of Seller and the Seller Subsidiaries and others with
whom business relationships exist.
(b) Negative Covenants. Seller agrees that, from the date of this
Agreement to the Effective Time, except as otherwise specifically permitted
or required by this Agreement, or described on Schedule 5.1(b), or
consented to by Buyer in writing, Seller will not, and will cause each of
the Seller Subsidiaries not to do any of the following (it being understood
that each of Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxxxx shall be authorized to
consent on behalf of Buyer, and Buyer's consent shall be deemed to have
been given if Buyer shall not have responded to Seller's written request
for such consent within two business days (not counting Saturdays, Sundays
or legal holidays) after receipt thereof):
(1) change or waive any provision of its Charter or By-laws;
(2) change the number of shares of its authorized or issued capital
stock (except for the issuance of Seller Common Stock pursuant to the
exercise of outstanding stock options under the Seller Stock Option
Plan, as contemplated by Section 3.2(b) hereof);
(3) issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating
to the authorized or issued capital stock of Seller or any of the
Seller Subsidiaries, or any securities convertible into shares of such
stock;
(4) split, combine or reclassify any shares of its capital stock;
(5) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of the capital stock of Seller except for a $.075 per share
semiannual dividend (with declaration, record and payment dates that
are consistent with past practice) and for dividends paid by a Seller
Subsidiary to Seller;
(6) purchase, redeem, retire or otherwise acquire, or hypothecate,
pledge or otherwise encumber, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any
shares of its capital stock;
(7) enter into, amend in any material respect or terminate any
contract or agreement (including without limitation any settlement
agreement with respect to litigation) that is or may reasonably be
expected to have a material adverse effect on Seller and the Seller
Subsidiaries, taken as a whole, except in the ordinary course of
business consistent with past practice;
(8) except in the ordinary course of business and consistent with
Seller's past practice with respect to amount, nature, and terms and
conditions, incur any material liabilities or material obligations,
whether directly or by way of guaranty, including any obligation for
borrowed money whether or not evidenced by a note, repurchase
agreement, bond, debenture or similar instrument, or acquire any
equity, debt, or other investment securities;
(9) make any capital expenditures other than in the ordinary course
of business or as necessary to maintain existing assets in good repair;
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(10) agree to make any loan other than in accordance with Seller's
loan and credit policies and Seller's customary terms, conditions and
standards, and in accordance with applicable law and consistent with
prudent banking practices; agree to make any loan, commitment to extend
credit or advance which increases any currently outstanding obligation
of any borrower or creates or would create any new obligation of any
new borrower, which would result in aggregate obligations of such
borrower to Seller, direct or indirect, primary or secondary, absolute
or contingent (including obligations if commitments are honored) in
excess of $400,000;
(11) grant any bonus or increase in rates of compensation to its
employees, except general increases to non-officer employees as a class
in accordance with past practice; grant any bonus or increase in rates
of compensation to its directors or officers; adopt or amend in any
material respect or terminate any employee benefit plan, pension plan
or incentive plan except as required by law, or permit the vesting of
any material amount of benefits under any such plan other than pursuant
to the provisions thereof as in effect on the date of this Agreement;
or enter into any employment, bonus, severance or similar agreements or
arrangements with any directors or officers;
(12) make application for the opening or closing of any, or open or
close any, branches or automated banking facility;
(13) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project,
other than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in the ordinary
course of business consistent with customary banking practices;
(14) merge into, consolidate with, affiliate with, or be purchased or
acquired by, any other Person, or permit any other to be merged,
consolidated or affiliated with it or be purchased or acquired by it,
or, except to realize upon collateral in the ordinary course of its
business, acquire a significant portion of the assets of any other
Person, or sell a significant portion of its assets;
(15) make any material change in its accounting or tax methods or
practices, except changes as may be required by generally accepted
accounting principles or by regulatory requirements;
(16) take or cause to be taken any action which would disqualify the
Merger as a "pooling of interests" for accounting purposes or a tax
free reorganization under Section 368 of the Code;
(17) take any action which would (i) materially adversely affect the
ability of Buyer or Seller to obtain any necessary approvals of
governmental authorities required for the transactions contemplated
hereby or materially increase the period of time necessary to obtain
such approvals, or (ii) materially adversely affect its ability to
perform its covenants and agreements under this Agreement;
(18) take any action that would result in the representations and
warranties of Seller contained in this Agreement not being true and
correct on the date of this Agreement or at any future date on or prior
to the Closing Date;
(19) sell, assign, transfer, pledge, or otherwise dispose of or
encumber any portfolio securities designated as "held to maturity" or
any other assets of Seller or any of the Seller Subsidiaries except (A)
sales of federal funds, sales of loans in the secondary market, or
sales of securities designated as "held for sale" or "available for
sale", made without recourse in the ordinary course of business and
consistent with past practices, or (B) sales of property owned through
foreclosure or deed in lieu of foreclosure, in accordance with
applicable law and consistent with prudent banking practices; or take
any action which would have an adverse effect on the value of any such
asset;
(20) accept any deposit from any new depositor (A) exceeding $500,000
from any one depositor or group of related depositors, or (B) with a
term in excess of five years, (C) with interest rates exceeding then-
current market rates, or (D) placed by a broker or solicited from a
depositor outside of Seller's market area;
(21) foreclose upon or take a deed or title to any commercial real
estate without first conducting a Phase I environmental assessment of
the property, or foreclose upon or take a deed or title to any
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commercial real estate if such environmental assessment indicates the
presence of Hazardous Substance in amounts which, if such foreclosure
were to occur, might involve a cost of remediation in excess of $2,000;
or
(22) permit Seller's regulatory leverage capital ratio to be less
than 6.5%; or
(23) agree to do any of the foregoing.
5.2 No Solicitation. Neither Seller nor any of its directors, officers,
employees, representatives or agents or other Persons controlled by Seller
shall, and Seller shall use its best efforts to cause its stockholders not to,
directly or indirectly, negotiate, authorize, recommend, propose, solicit or
announce an intention to authorize, recommend or propose, or enter into, any
offer, agreement in principle, agreement, understanding or commitment, written
or oral, with or from any third party, which relates to the acquisition of
Seller by such third party or which is otherwise inconsistent with the
obligations arising under this Agreement. Seller will promptly communicate to
Buyer the terms of any proposal or offer or any inquiry or request for
information which it may receive in respect of any such transaction and the
identity of the party making such proposal or inquiry, which it may receive
with respect to any such transaction.
5.3 Current Information. During the period from the date of this Agreement
to the Effective Time, Seller will cause one or more of its representatives to
confer with representatives of Buyer and report the general status of its
ongoing operations at such times as Buyer may reasonably request. Prior to the
Effective Time one or more representatives of Seller shall confer with
representatives of Buyer to review Buyer's financial statements and shall, if
requested by Seller, make such adjustments in connection with the Closing as
Buyer shall deem appropriate or desirable. Seller will promptly notify Buyer
of any material change in the normal course of its business or in the
operation of its properties and, to the extent permitted by applicable law, of
any governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the
threat of material litigation involving Seller. Seller will also provide Buyer
such information with respect to such events as Buyer may reasonably request
from time to time.
5.4 Access to Properties and Records. Seller shall permit Buyer reasonable
access to its properties and those of the Seller Subsidiaries, and shall
disclose and make available to Buyer during normal business hours all of its
books, papers and records relating to the assets, stock ownership, properties,
operations, obligations and liabilities, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and stockholders' meetings, organizational documents, by-laws,
material contracts and agreements, filings with any regulatory authority,
litigation files, plans affecting employees, and any other business activities
or prospects in which Buyer may have a reasonable interest; provided, however,
that Seller shall not be required to take any action that would provide access
to or to disclose information where such access or disclosure would (i) be
legally prohibited, or (ii) violate or prejudice the rights or business
interests or confidences of any customer or other person or (iii) would result
in the waiver by Seller of the privilege protecting communications between it
and any of its counsel.
5.5 Financial and Other Statements. (a) Promptly upon receipt thereof,
Seller will furnish to Buyer copies of each annual, interim or special audit
of the books of Seller and the Seller Subsidiaries made by its independent
accountants and copies of all internal control reports submitted to Seller by
such accountants in connection with each annual, interim or special audit of
the books of Seller and the Seller Subsidiaries made by such accountants.
(b) As soon as practicable, Seller will furnish to Buyer copies of all such
financial statements and reports as it shall send to its stockholders, the
FDIC, the New Hampshire Commissioner or any other regulatory authority, except
as legally prohibited thereby.
(c) Seller will advise Buyer promptly of Seller's receipt of any examination
report of any federal or state regulatory or examination authority with
respect to the condition or activities of Seller or any of the Seller
Subsidiaries. If requested by Buyer, Seller will use its best efforts to
obtain authority to make available to Buyer confidential examination reports
of federal or state regulatory or examination authorities with respect to the
condition or activities of Seller or any of the Seller Subsidiaries.
25
(d) With reasonable promptness, Seller will furnish to Buyer such additional
financial data as Buyer may reasonably request, including without limitation,
detailed monthly financial statements and loan reports.
5.6 Approval of Seller's Stockholders. Seller will take all reasonable steps
necessary to duly call, give notice of, solicit proxies for, convene and hold
a special meeting (the "Special Meeting") of its stockholders as soon as
practicable for the purpose of approving this Agreement and the transactions
contemplated hereby. The date of the Special Meeting shall occur as soon as
practicable following the effectiveness of the Registration Statement on Form
S-4 (as more fully described in Section 7.1) filed with the SEC. The Board of
Directors of Seller will recommend to Seller's stockholders the approval of
this Agreement and the transactions contemplated hereby and will use all
reasonable efforts to obtain, as promptly as practicable, the necessary
approvals by Seller's stockholders of this Agreement and the transactions
contemplated hereby.
5.7 Disclosure Supplements. From time to time prior to the Effective Time,
Seller will promptly supplement or amend the Schedules delivered in connection
herewith pursuant to Article III with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would
have been required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which has been rendered
inaccurate thereby. No supplement or amendment to such Schedules shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Article VIII or the compliance by Seller with the covenants set forth
in Section 5.1 hereof.
5.8 Failure to Fulfill Conditions. In the event that Seller determines that
a condition to its obligation to complete the Merger cannot be fulfilled and
that it will not waive that condition, it will promptly notify Buyer.
5.9 Consents and Approvals of Third Parties. Seller shall use all reasonable
efforts to obtain as soon as practicable all consents and approvals of any
other Persons necessary or desirable for the consummation of the transactions
contemplated by this Agreement and the Stock Option Agreement.
5.10 All Reasonable Efforts. Subject to the terms and conditions herein
provided, Seller agrees to use all reasonable efforts to take, or cause to be
taken, all corporate or other action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Stock Option Agreement.
ARTICLE VI
Covenants of Buyer
6.1 Conduct of Business. During the period from the date of this Agreement
to the Effective Time, except with the written consent of Seller, Buyer will
take no action which would (i) materially adversely affect the ability of
Buyer or Seller to obtain any necessary approvals of governmental authorities
required for the transactions contemplated hereby or materially increase the
period of time necessary to obtain such approvals, or (ii) materially
adversely affect its ability to perform its covenants and agreements under
this Agreement, or (iii) disqualify the Merger as a "pooling of interests" for
accounting purposes or a tax free reorganization under Section 368 of the
Code, or (iv) result in the representations and warranties of Buyer contained
in this Agreement not being true and correct on the date of this Agreement or
at any future date on or prior to the Closing Date.
6.2 Current Information. During the period from the date of this Agreement
to the Effective Time, Buyer will cause one or more of its representatives to
confer with representatives of Seller and report the general status of its
ongoing operations at such times as Seller may reasonably request. Buyer will
promptly notify Seller of any material change in the normal course of its
business or in the operation of its properties and, to the extent permitted by
applicable law, of any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated), or the
institution or the threat of material litigation involving Buyer. Buyer will
also provide Seller such information with respect to such events as Seller may
reasonably request from time to time.
26
6.3 Access to Properties and Records. Buyer shall permit Seller reasonable
access during normal business hours to its properties and those of the Buyer
Subsidiaries, and shall disclose and make available to Seller the following
materials to the extent that Buyer has a reasonable interest in information
contained therein: its books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and stockholders' meetings, organizational
documents, by-laws, material contracts and agreements, filings with any
regulatory authority, litigation files, plans affecting employees, and any
other business activities or prospects in which Seller may have a reasonable
interest; provided, however, that Buyer shall not be required to take any
action that would provide access to or to disclose information where such
access or disclosure would (i) be legally prohibited, or (ii) violate or
prejudice the rights or business interests or confidences of any customer or
other person or (iii) would result in the waiver by Buyer of the privilege
protecting communications between it and any of its counsel.
6.4 Financial and Other Statements. (a) Promptly upon receipt thereof, Buyer
will furnish to Seller copies of each annual, interim or special audit of the
books of Buyer and the Buyer Subsidiaries made by its independent accountants
and copies of all internal control reports submitted to Buyer by such
accountants in connection with each annual, interim or special audit of the
books of Buyer and the Buyer Subsidiaries made by such accountants.
(b) As soon as practicable, Buyer will furnish to Seller copies of all such
financial statements and reports as it shall send to its stockholders, the
FDIC, the New Hampshire Commissioner or any other regulatory authority, except
as legally prohibited thereby.
(c) Buyer will advise Seller promptly of Buyer's receipt of any examination
report of any federal or state regulatory or examination authority with
respect to the condition or activities of Buyer or any of the Buyer
Subsidiaries. If requested by Seller, Buyer will use its best efforts to
obtain authority to make available to Seller confidential examination reports
of federal or state regulatory or examination authorities with respect to the
condition or activities of Buyer or any of the Buyer Subsidiaries.
(d) With reasonable promptness, Buyer will furnish to Seller such additional
financial data as Seller may reasonably request.
6.5 Consents and Approvals of Third Parties. Buyer shall use all reasonable
efforts to obtain as soon as practicable all consents and approvals of any
other Persons necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
6.6 All Reasonable Efforts. Subject to the terms and conditions herein
provided, Buyer agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement.
6.7 Failure to Fulfill Conditions. In the event that Buyer determines that a
condition to its obligation to complete the Merger cannot be fulfilled and
that it will not waive that condition, it will promptly notify Seller.
6.8 Disclosure Supplements. From time to time prior to the Effective Time,
Buyer will promptly supplement or amend the Schedules delivered in connection
herewith pursuant to Article IV with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would
have been required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which has been rendered
inaccurate thereby. No supplement or amendment to such Schedules shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Article VIII or the compliance by Buyer with the covenants set forth
in Section 6.1 hereof.
6.9 Financial and Other Statements. Promptly upon receipt thereof, Buyer
will furnish to Seller copies of each annual, interim or special audit of the
books of Buyer and the Buyer Subsidiaries made by its independent
27
accountants. As soon as practicable after the filing thereof, Buyer will
furnish to Seller copies of each Quarterly Report on Form 10-Q and each Annual
Report on Form 10-K or other periodic report which it files with the SEC under
the Exchange Act.
6.10 Employee Benefits. After the Effective Time, Buyer shall provide for
those Persons who were employees of Seller immediately prior to the Effective
Time and who remain employees of Surviving Bank after the Effective Time,
employee benefits no less favorable overall than those available to employees
of Buyer, subject to the terms and conditions under which those employee
benefits are made available to employees of Buyer, provided that for purposes
of determining eligibility for vesting of such employee benefits and for
determining the amount of benefits payable under defined benefit pension
plans, service with Seller by Persons who were employees thereof at the
Effective Time shall be treated as service with an "employer" to the same
extent as if such Persons had been employees of Buyer during the period such
Persons were employed by Seller.
6.11 Deposit of Exchange Fund with Exchange Agent. On the Closing Date,
immediately prior to the Effective Time, Buyer shall take such actions as may
be necessary to permit the Exchange Agent to issue the Buyer Common Stock to
be delivered in exchange for Certificates and shall deposit with the Exchange
Agent cash in an amount sufficient to satisfy all of Buyer's other obligations
with respect to deposit of the Exchange Fund.
6.12 Directors and Officers Indemnification and Insurance. All rights to
indemnification and all limitations of liability existing in favor of the
directors and officers of Seller as provided in Seller's Charter and By-laws
as in effect as of the date hereof with respect to claims or liabilities
arising from facts or events existing or occurring 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. Buyer shall maintain in effect for three years from the
Effective Time, if available, the current directors' and officers' liability
insurance policy maintained by Seller (provided, that Buyer may substitute
therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring prior to the Effective Time; provided, however, that in no event
shall Buyer be required to expend pursuant to this Section 6.12 more than an
aggregate amount of $45,000 for such insurance. The provisions of this Section
6.12 are expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each director, officer and employee covered hereby and his or
her heirs and representatives.
6.13 Buyer Sub. Prior to the Effective Time, Buyer will take any and all
necessary action to cause (i) Buyer Sub to be organized, (ii) Buyer Sub to
become a direct or indirect wholly-owned subsidiary of Buyer, (iii) the
directors and stockholder or stockholders of Buyer Sub to approve the
transactions contemplated by this Agreement, and (iv) Buyer Sub to execute one
or more counterparts of this Agreement and to deliver at least one such
counterpart so executed to Seller, whereupon Buyer Sub shall become a party to
and bound by this Agreement. On and as of the date Buyer Sub becomes a party
to this Agreement, Buyer and Buyer Sub will represent and warrant to Seller as
follows:
(a) Buyer Sub is a trust company in stock form, duly organized (or in
organization, as the case may be), validly existing and in good standing
under the laws of New Hampshire, all of the outstanding capital stock of
which is, or will be prior to the Effective Time, owned directly or
indirectly by Buyer free and clear of any lien, charge or other
encumbrance. Since the date of its incorporation, Buyer Sub has not engaged
in any activities other than in connection with or as contemplated by this
Agreement.
(b) Buyer Sub has, or will have prior to the Effective Time, the
corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder. The execution, delivery and performance of this
Agreement by Buyer Sub and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Buyer Sub. This
Agreement is a valid and binding obligation of Buyer Sub, enforceable in
accordance with its terms, subject to (i) bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and
28
remedies of creditors generally and (ii) general principles of equity,
regardless of whether enforcement is sought in proceedings in equity or at
law.
6.14 Approval of Buyer's Stockholders. Buyer will take all reasonable steps
necessary to duly call, give notice of, solicit proxies for, convene and hold
a special meeting (the "Buyer Special Meeting") of its stockholders as soon as
practicable for the purpose of approving this Agreement and the transactions
contemplated hereby. The date of the Special Meeting shall occur as soon as
practicable following the later of (a) clearance of the Proxy Statement-
Prospectus by the FDIC and (b) effectiveness of the Registration Statement on
Form S-4 (as more fully described in Section 7.1) filed with the SEC. The
Board of Directors of Buyer will recommend to Buyer's stockholders the
approval of this Agreement and the transactions contemplated hereby and will
use all reasonable efforts to obtain, as promptly as practicable, the
necessary approvals by Buyer's stockholders of this Agreement and the
transactions contemplated hereby.
ARTICLE VII
Regulatory and Other Matters
7.1 Proxy Statement-Prospectus. For the purposes (x) of registering Buyer
Common Stock to be issued to holders of Seller's Common Stock in connection
with the Merger with the SEC under the Securities Act and applicable state
securities laws and (y) of holding the Seller shareholders' meeting, Buyer and
Seller shall cooperate in the preparation of a registration statement (such
registration statement, together with all and any amendments and supplements
thereto, being herein referred to as the "Registration Statement"), including
a proxy statement/prospectus or statements satisfying all applicable
requirements of applicable state securities and banking laws, and of the
Securities Act and the Exchange Act, and the rules and regulations thereunder
(such proxy statement/prospectus in the form mailed by Seller to the Seller
shareholders, together with any and all amendments or supplements thereto,
being herein referred to as the "Proxy Statement-Prospectus"). Buyer shall
promptly prepare and file with the SEC the Registration Statement, in which
the Proxy Statement-Prospectus will be included as a prospectus. Each of Buyer
and Seller shall use their best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, and each of Seller and Buyer shall thereafter promptly mail the
Proxy Statement-Prospectus to its respective stockholders. Buyer shall also
use its 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, and Seller shall furnish all information concerning Seller
and the holders of Seller Common Stock as may be reasonably requested in
connection with any such action. Seller and Buyer shall each promptly notify
the other if at any time it becomes aware that the Proxy Statement-Prospectus
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. In such event, Seller and Buyer shall cooperate in the
preparation of a supplement or amendment to the Proxy Statement-Prospectus,
which corrects such misstatement or omission, and shall cause the same to be
filed with the FDIC and the SEC and distributed to stockholders of Seller.
7.2 Regulatory Approvals. Each of Seller and Buyer will cooperate with the
other and use all reasonable efforts to prepare and execute all necessary
documentation (including, without limitation, a Contract for Union in a form
reasonably acceptable to Seller and Buyer), to promptly effect all necessary
filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement and the Stock
Option Agreement. Seller and Buyer will furnish each other and each other's
counsel with all information concerning themselves, their subsidiaries,
directors, officers and stockholders and such other matters as may be
necessary or advisable in connection with the Proxy Statement-Prospectus and
any application, petition or any other statement or application made by or on
behalf of Seller or Buyer to any governmental body in connection with the
Merger and the other transactions contemplated by this Agreement. Seller and
Buyer shall have the right to review and approve in advance all
characterizations of the information relating to Buyer or Seller, as the case
may be, and
29
any of their respective subsidiaries, which appear in any filing made in
connection with the transactions contemplated by this Agreement with any
governmental body. In addition, Seller and Buyer shall each furnish to the
other a final copy of each such filing made in connection with the
transactions contemplated by this Agreement with any governmental body.
7.3 Affiliates; Publication of Combined Financial Results. Each of Buyer and
Seller shall use all reasonable efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act and for purposes of qualifying the Merger for "pooling-of-
interests" accounting treatment) of such party to deliver to the other party
hereto, as soon as practicable after the date of this Agreement, and prior to
the date of the shareholders meeting called by Seller to approve this
Agreement, a written agreement, in the form of Exhibit 7.3 hereto, providing
that such person will not sell, pledge, transfer or otherwise dispose of any
shares of Buyer Common Stock or Seller Common Stock held by such "affiliate",
and, in the case of the "affiliates" of Seller, the shares of Buyer Common
Stock to be received by such "affiliate" in the Merger: (1) otherwise than in
compliance with the applicable provisions of the Securities Act and the rules
and regulations thereunder or (2) during the period commencing 30 days prior
to the Merger and ending at the time of the publication of financial results
covering at least 30 days of combined operations of Buyer and Seller. Such
agreement shall also contain such representations as are necessary or
appropriate to support the tax-free nature of the Merger.
7.4 Agreement to Vote in Favor of Merger. Seller has caused each director
and certain of their related interests to grant to Buyer an irrevocable proxy
in the form attached hereto as Exhibit 7.4. Such proxy shall grant to Buyer
the authority (x) to call a special meeting of stockholders of Seller to
approve the Merger, this Agreement and the transactions contemplated hereby
and (y) to vote, in any manner that Buyer may determine in its sole and
absolute discretion to be in the best interest of Buyer, all of the shares of
Seller Common Stock as to which each such person has voting power at any
meeting of stockholders of Seller on matters in any way relating to the
Merger, the Merger Agreement, and the transactions contemplated thereby.
ARTICLE VIII
Closing Conditions
8.1 Conditions to Each Party's Obligations under this Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions,
none of which may be waived:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved in accordance with applicable
law by the requisite votes of the stockholders of Seller and of Buyer.
(b) Injunctions; Illegality. No order, decree or injunction of a court or
agency of competent jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the Merger, or any of the
other transactions contemplated by this Agreement, shall be in effect and
no proceeding initiated by a third party including, without limitation, any
Governmental Entity, seeking an Injunction, shall be pending; provided,
however, that, with respect to any such pending matter, counsel to the
party seeking to postpone the Closing of the transactions contemplated
hereby or terminate this Agreement has advised such party that such pending
matter may reasonably be expected to have a material adverse effect on the
other party. No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal
consummation of the Merger, or any of the other transactions contemplated
by this Agreement.
(c) Regulatory Approvals. All necessary approvals, authorizations and
consents of all governmental bodies required to consummate the Merger and
the other transactions contemplated by this Agreement shall have been
obtained and shall remain in full force and effect and all waiting periods
relating to such approvals, authorizations or consents shall have expired.
30
(d) Effectiveness of Registration Statement. The Registration Statement
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued, and no proceedings for that purpose shall have been initiated or
threatened by the SEC.
(e) Tax Rulings or Opinions. Each of Buyer and Seller shall have received
an opinion of counsel reasonably acceptable to Buyer and Seller, addressed
to Buyer and the shareholders of Seller, with respect to federal tax laws
or regulations, to the effect that:
(1) The merger will constitute a reorganization within the meaning of
Section 368(a)(1) of the Code;
(2) No gain or loss will be recognized by Buyer, Seller or Buyer Sub
or Surviving Bank by reason of the Merger;
(3) The bases of the assets of Seller in the hands of the Surviving
Bank will be the same as the bases of such assets in the hands of
Seller immediately prior to the Merger;
(4) The holding period of the assets of Seller in the hands of the
Surviving Bank will include the period during which such assets were
held by Seller prior to the Merger;
(5) No gain or loss will be recognized by the Seller shareholders on
the exchange of shares of Seller Common Stock solely for shares of
Buyer Common Stock; income gain or loss will be recognized, however, to
each such shareholder upon the receipt of cash by such shareholders on
the exchange. The determination of whether the receipt of cash by
Seller shareholders will have the effect of the distribution of a
dividend will be made by treating the shareholder as having received
solely shares of Buyer Common Stock in the reorganization exchange and
then having received the cash payment from Buyer in a hypothetical
redemption of that number of shares of Buyer Common Stock equal in
value to such cash payment.
(6) The basis of the shares of Buyer Common Stock to be received by
Seller shareholders will be the same as the basis of the shares of
Seller's Common Stock surrendered in the reorganization exchange,
decreased by the amount of cash received and increased by the amount of
any gain (and by the amount of any dividend income) recognized on the
exchange.
(7) The holding period of the shares of Buyer Common Stock to be
received by the shareholders of Seller will include the period during
which they held the shares of Seller's Common Stock surrendered,
provided the shares of Seller's Common Stock are held as a capital
asset on the date of the exchange.
8.2 Conditions to the Obligations of Buyer under this Agreement. The
obligations of Buyer under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Seller in this Agreement which is qualified as to materiality
shall be true and correct and each such representation or warranty that is
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement, as applicable, and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Effective Time. Seller shall have delivered to Buyer a
certificate of Seller to such effect signed by the Chief Executive Officer
and the Chief Financial Officer of Seller as of the Effective Time.
(b) Material Adverse Change. There shall have occurred no material
adverse change in the business, operations, results of operations,
properties, assets, liabilities, securities, capitalization or condition
(financial or otherwise) of Seller or any Seller Subsidiaries since the
date of the consolidated financial statements contained in the Seller
Audited Financial Statements. The fact that the conditions set forth in
Sections 8.2(c) and (d) hereof have been satisfied shall not preclude the
existence of any material adverse change that may otherwise exist for
purposes of this Section 8.2(b).
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(c) Non-Performing Assets. As of the last day of any fiscal quarter of
Seller following the date hereof, or as of any date following satisfaction
of the condition set forth in Section 8.1(c) and prior to the Effective
Time, the aggregate balance of Seller's Non-Performing Assets (determined
in accordance with regulatory requirements) shall not exceed 2% of Seller's
aggregate balance of Loans and Non-Performing Assets. The term Non-
Performing Assets, as of any date, shall include (A) all Loans with respect
to which, as of the close of business on such date, any payment of interest
or principal that was due more than 90 days before such date has not been
made, (B) all Loans classified as "in substance foreclosure", (C) the
carrying value of all other real estate owned by Seller (other than bank
premises), (D) all Loans (other than Loans included pursuant to (A), (B) or
(C) above) which Seller has classified as non-accruing for any other
reason, and (E) all Loans that are the subject of troubled debt
restructurings, as defined in Statement of Financial Accounting Standards
15.
(d) Minimum Increase in Net Worth. As of the last day of any fiscal
quarter of Seller following the date hereof, and as of any date following
satisfaction of the conditions set forth in Section 8.1(c) and prior to the
Effective Time, the consolidated net worth of Seller ("Seller Net Worth")
shall have increased by at least $100,000 during each calendar quarter
(beginning with the calendar quarter ended March 31, 1995) from its
consolidated net worth as of December 31, 1994. All calculations of Seller
Net Worth shall be in accordance with GAAP, except that (1) the base Seller
Net Worth as of December 31, 1994, shall be based upon the consolidated net
worth set forth on the balance sheet contained in the 1994 Seller Audited
Financial Statements but shall be restated to eliminate the effects of any
adjustments to such consolidated net worth made to reflect the changes in
the value of securities pursuant FASB 115; (2) all determinations of Seller
Net Worth shall be calculated so as to eliminate the effects of any
adjustments made to such consolidated net worth in order to reflect the
changes in value of securities pursuant FASB 115; (3) the amounts of any
gains upon sales of securities or capital assets shall not be included in
determination of Seller Net Worth; and (4) the expenses reasonably incurred
by Seller in connection with the Merger shall not be deducted in making
such calculations.
(e) Agreements and Covenants. Seller shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants of Seller to be performed or complied with by it at
or prior to the Effective Time under this Agreement and Buyer shall have
received a certificate signed on behalf of Seller by the Chief Executive
Officer and Chief Financial Officer of Seller to such effect dated as of
the Effective Time.
(f) Permits, Authorizations, Etc. Seller and the Seller Subsidiaries
shall have obtained any and all material permits, authorizations, consents,
waivers, clearances or approvals required for the lawful consummation of
the Merger by Seller.
(g) Legal Opinion. Buyer shall have received an opinion, dated the
Closing Date, from McLane, Graf, Xxxxxxxxx & Xxxxxxxxx, PA, counsel to
Seller, acceptable in form and substance to Buyer and its counsel. In
rendering any such opinion, such counsel may require and, to the extent
they deem necessary or appropriate may rely upon, opinions of other counsel
and upon representations made in certificates of officers of Seller, Buyer,
Affiliates of the foregoing, and others.
(h) Pooling of Interests. Buyer shall have received a letter from KPMG
Peat Marwick LLP, addressed to Buyer, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment.
(i) Dissenting Seller Shareholders. The holders of not more than 8% of
the Seller Common Stock outstanding immediately prior to the Effective Time
shall have given notice of their intention to exercise dissenters' rights
pursuant to the NHRSA.
(j) Accountants' Letter. Buyer shall have received a "comfort" letter
from the independent certified public accountants for Seller, dated (i) the
effective date of the Registration Statement and (ii) the Closing Date, in
each case stating:
(1) that it is a firm of independent public accountants with respect
to Seller and its subsidiaries within the meaning of the Securities Act
and the rules and regulations of the SEC thereunder;
32
(2) that in its opinion the audited consolidated financial statements
of Seller and its subsidiaries examined by it and included in the
Registration Statement comply as to form in all material respects with
the applicable requirements of the Securities Act and the applicable
published rules and regulations of the SEC thereunder with respect to
registration statements on the form employed;
(3) that, on the basis of specified procedures (which do not
constitute an examination in accordance with generally accepted
auditing standards), consisting of a reading of the unaudited
consolidated financial statements, if any, of Seller included in such
Registration Statement and of the latest available unaudited
consolidated financial statements of Seller, inquiries of officers
responsible for financial and accounting matters of Seller and its
subsidiaries and a reading of the minutes of meetings of shareholders
and the Board of Directors of Seller and its subsidiaries, nothing has
come to its attention which causes it to believe: (i) that the
consolidated financial statements, if any, of Seller included in such
Registration Statement do not comply in all material respects with the
applicable accounting requirements of the Securities Act and the
published rules and regulations thereunder; and (ii) that any such
unaudited consolidated financial statements of Seller from which
unaudited quarterly financial information set forth in such
Registration Statement has been derived, are not fairly presented in
conformity with generally accepted accounting principles applied on a
basis consistent with that of the audited consolidated financial
statements; and
(4) Whether, from the date of the latest available unaudited
consolidated financial statements of Seller through the date of the
letter, there were any changes in financial statement amounts, such
financial statement amounts being those customarily appearing in
comfort letters.
(k) Fairness Opinion. Buyer shall have received a letter from MBD, dated
as of a date not more than five (5) days prior to the date the Proxy
Statement-Prospectus contemplated by Section 7.1 is mailed to stockholders,
confirming its oral opinion, delivered prior to the date of this Agreement,
that the consideration to be paid to Seller's stockholders pursuant to the
Merger is fair to Buyer and its stockholders, from a financial point of
view.
Seller will furnish Buyer with such certificates of its officers or others
and such other documents to evidence fulfillment of the conditions set forth
in this Section 8.2 as Buyer may reasonably request.
8.3 Conditions to the Obligations of Seller under this Agreement. The
obligations of Seller under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Buyer in this Agreement which is qualified as to materiality
shall be true and correct and each such representation or warranty that is
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement, as applicable, and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Effective Time. Buyer shall have delivered to Seller a
certificate of Buyer to such effect signed by the Chief Executive Officer
and the Chief Financial Officer of Buyer as of the Effective Time.
(b) Material Adverse Change. There shall have occurred no material
adverse change in the business, operations, results of operations,
properties, assets, liabilities, securities, capitalization or condition
(financial or otherwise) of Buyer and the Buyer Subsidiaries, taken as a
whole, since the date of the consolidated financial statements contained in
the Buyer Audited Financial Statements, including, without limiting the
generality of the foregoing, a decline in the market price of the Buyer's
Common Stock so that the Average Closing Price is less than 75% of Buyer's
Book Value Per Share. Any change in the stock price, results of operations,
capitalization, or financial condition of Buyer that results from (i) a
change in law affecting savings banks generally, such as a change in the
tax deduction for bad debt reserves applicable to savings banks, or (ii) a
purchase of deposits or retail branches in connection with the
Fleet/Shawmut merger, shall be deemed not to constitute or contribute to a
material adverse change.
33
(c) Agreements and Covenants. Buyer shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants of Buyer to be performed or complied with by it at
or prior to the Effective Time under this Agreement and Seller shall have
received a certificate signed on behalf of Buyer by the Chief Executive
Officer and Chief Financial Officer of Buyer to such effect dated as of the
Effective Time.
(d) Permits, Authorizations, Etc. Buyer and its subsidiaries shall have
obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required for the lawful consummation of the Merger
by Buyer, the failure to obtain which would have a material adverse effect
on Buyer and its subsidiaries, taken as a whole.
(e) Legal Opinion. Seller shall have received an opinion from Xxxxx, Xxxx
& Xxxxx, counsel to Buyer, dated the Closing Date, acceptable in form and
substance to Seller and its counsel. In rendering any such opinion, such
counsel may require and, to the extent they deem necessary or appropriate
may rely upon, opinions of other counsel and upon representations made in
certificates of officers of Buyer, Seller, Affiliates of the foregoing, and
others.
(f) Fairness Opinion. Seller shall have received a letter from its
investment advisor, dated as of a date not more than five (5) days prior to
the date the Proxy Statement-Prospectus contemplated by Section 7.1 is
mailed to stockholders, confirming its oral opinion, delivered prior to the
date of this Agreement, that the consideration to be paid to Seller's
stockholders pursuant to the Merger is fair to such stockholders, from a
financial point of view.
Buyer will furnish Seller with such certificates of its officers or others
and such other documents to evidence fulfillment of the conditions set forth
in this Section 8.3 as Seller may reasonably request.
ARTICLE IX
The Closing
9.1 Time and Place. Subject to the provisions of Articles VIII and X hereof,
the Closing of the transactions contemplated hereby shall take place at the
offices of Xxxxx, Xxxx & Xxxxx, Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
at 10:00 a.m. on a date specified by Buyer at least three business days prior
to such date. The Closing Date shall be as soon as practicable after the last
required approval for the Merger has been obtained and the last of all
required waiting periods under such approvals have expired, or at such other
place, date or time as Buyer and Seller may mutually agree upon.
9.2 Deliveries at the Closing. At the Closing there shall be delivered to
Buyer and Seller the opinions, certificates, and other documents and
instruments required to be delivered under Article VIII hereof.
ARTICLE X
Termination, Amendment and Waiver
10.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the Merger by the
stockholders of Seller:
(a) At any time by the mutual written agreement of Buyer and Seller;
(b) By either Seller or Buyer (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein), if there has been a material breach on the
part of the other party of any representation, warranty or agreement
contained herein which cannot be or has not been cured within 30 days after
written notice by the Buyer to Seller (or by Seller to Buyer) of such
breach;
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(c) At the election of either Buyer or Seller, if the Closing shall not
have occurred on or before the date that is one year after the execution of
this Agreement (the "Termination Date"), or such later date as shall have
been agreed to in writing by Buyer and Seller; provided, that no party may
terminate this Agreement pursuant to this Section 10.1(c) if the failure of
the Closing to have occurred on or before said date was due to such party's
breach of any of its obligations under this Agreement;
(d) By either Seller or Buyer if the stockholders of Seller or Buyer
shall have voted at the Special Meeting on the transactions contemplated by
this Agreement and such vote shall not have been sufficient to approve such
transactions; or
(e) By either Seller or Buyer if final action has been taken by a
regulatory authority whose approval is required in connection with this
Agreement and the transactions contemplated hereby, which final action (i)
has become unappealable and (ii) does not approve this Agreement or the
transactions contemplated hereby.
10.2 Effect of Termination. (a) In the event of termination of this
Agreement pursuant to any provision of Section 10.1, this Agreement shall
forthwith become void and have no further force, except that (i) the
provisions of Sections 10.3, 11.1, 12.1, 12.7, 12.10, and 12.11 (and of this
Section 10.2) shall survive such termination of this Agreement and remain in
full force and effect and (ii) notwithstanding anything to the contrary
contained in this Agreement, each party shall remain liable (in an action at
law or otherwise) for any liabilities or damages arising out of its gross
negligence or its wilful breach of any provision of this Agreement.
(b) If this Agreement is terminated, expenses of the parties hereto shall
be determined as follows:
(1) Any termination of this Agreement pursuant to Sections 10.1(a),
10.1(c), 10.1(d), or 10.1(e) hereof (other than as a result of a wilful
breach or gross negligence by a party hereto) shall be without cost or
expense on the part of any party to the other; and
(2) In the event of a termination of this Agreement pursuant to
Section 10.1(b) hereof as a result of a breach of a representation,
warranty or covenant which is caused by the wilful conduct or gross
negligence of a party, such party shall (while remaining liable for any
liabilities or damages arising out of such wilful breach or gross
negligence) be obligated to reimburse the other party for all out-of-
pocket costs and expenses, including, without limitation, reasonable
legal, accounting and investment banking fees and expenses, incurred by
such other party in connection with the entering into of this Agreement
and the carrying out of any and all acts contemplated hereunder
(collectively referred to as "Expenses"), provided that in no event
shall such amount exceed $200,000.
(c) 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 and notwithstanding anything to the contrary contained
herein, no party shall be relieved or released from any liabilities or
damages arising out of its gross negligence or wilful breach of any
provision of this Agreement.
(d) In no event shall any officer, agent or director of Seller, any
Seller Subsidiary, Buyer or any Buyer subsidiary, be personally liable
hereunder for any default by any party in any of its obligations hereunder
unless any such default was intentionally caused by such officer, agent or
director.
10.3 Expenses. Except as provided in Section 10.2(b) hereof, whether or not
the Merger is consummated, all Expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by the party
incurring such costs and expenses, provided, however, that the Expenses of
printing and mailing the Proxy Statement-Prospectus shall be shared equally by
the parties, and provided, further, that nothing contained herein shall limit
either party's rights under Section 10.2 hereof, including but not limited to
the right to recover any liability or damages arising out of the other party's
gross negligence or wilful breach of this Agreement.
10.4 Amendment, Extension and Waiver. Subject to applicable law, at any time
prior to the Effective Time (whether before or after approval thereof by the
stockholders), the parties hereto may (a) amend this Agreement, (b) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained herein. This
35
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto; provided, however, that (i) after any
approval of this Agreement and the transactions contemplated hereby by the
stockholders of Seller, there may not be, without further approval of such
stockholders, any amendment or waiver of this Agreement which decreases the
amount or changes the form of consideration to be delivered to Seller's
stockholders pursuant to this Agreement, and (ii) after any approval of this
Agreement and the transactions contemplated hereby by the stockholders of
Buyer, there may not be, without further approval of such stockholders, any
amendment or waiver of this Agreement which increases the amount or changes
the form of consideration to be delivered to Seller's stockholders pursuant to
this Agreement. Any agreement on the part of a party hereto to any extension
or waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party, but such waiver or failure to insist on strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE XI
Certain Definitions
11.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings (unless the context otherwise requires, both here
and throughout this Agreement, references to Articles and Sections refer to
Articles and Sections of this Agreement).
(a) "Affiliate" of a specified Person shall mean a Person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified Person, including, without
limitation, any partnership or joint venture in which a Person (either
alone, or through or together with any subsidiary) has, directly or
indirectly, an interest of 5% or more.
(b) "Average Closing Price" shall mean the average of the Closing Price
(defined below) per share of Buyer Common Stock on the Stock Exchange (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source), for the fifteen Trading Days (defined below) ending
on the business day before the date on which the last regulatory approval
required to consummate the transactions contemplated hereby is obtained.
(c) "Buyer's Book Value Per Share" means the book value per share of
Buyer as of the most recent quarter end, determined in accordance with
GAAP, except that (1) all determinations of Buyer's Book Value Per Share
shall be calculated so as to eliminate the effects of any adjustments made
to such book value in order to reflect the changes in value of securities
pursuant FASB 115; and (2) the amounts of any gains upon sales of
securities or capital assets realized after the date of this Agreement
shall not be included in determination of Book Value Per Share; and (3) the
expenses reasonably incurred by Buyer in connection with the Merger shall
not be deducted in making such calculations.
(d) "Closing Price" shall mean the average of the bid and asked prices of
the Buyer's Common Stock at the close of a Trading Day.
(e) "Environment" shall mean any soil, surface waters, groundwaters,
stream sediments, surface or subsurface strata, and ambient air, and any
other environmental medium.
(f) "Environmental Laws" shall mean any federal, state or local law
relating to (A) releases or threatened releases of Hazardous Substances or
materials containing Hazardous Substances, (B) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous Substances or
materials containing Hazardous Substances, or (C) otherwise relating to
pollution of the environment.
(g) "Hazardous Substances" means (A) those substances defined in or
regulated under the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, Chapter
147-A and 146-C, NHRSA or the Massachusetts Oil and Hazardous Material
Release Prevention and Response Act, M.G.L. c. 21E, or any other federal,
state, or local environmental law, regulation, or requirement, all as may
be amended from time to time, and all regulations
36
thereunder, (B) petroleum and petroleum products including crude oil and
any fractions thereof, (C) natural gas, synthetic gas, and any mixtures
thereof, (D) radon, (E) any other contaminant, and (F) any substance with
respect to which a federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation.
(h) "Loan Property" shall mean any property in which Seller holds a
security interest, and, where required by the context, said term means the
owner or operator of such property.
(i) "Participation Facility" shall mean any facility in which Seller
participates or has participated in the management and, where required by
the context, said term means the owner or operator of such property.
(j) "Person" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or government or
any agency or political subdivision thereof.
(k) "Stock Exchange" shall mean NASDAQ National Market.
(l) "subsidiary" or "subsidiaries" of any Person shall mean an Affiliate
controlled by such Person, directly or indirectly, through one or more
intermediaries, except as otherwise defined herein.
(m) "Trading Day" shall mean each day that any trade of Buyer's Common
Stock is consummated on the Stock Exchange.
ARTICLE XII
Miscellaneous
12.1 Confidentiality. Except as specifically set forth herein, Buyer and
Seller mutually agree to be bound by the terms of the Confidentiality
Agreement previously executed by the parties hereto, which Agreement is hereby
incorporated herein by reference. The parties hereto agree that such
Confidentiality Agreement shall continue in accordance with its respective
terms, notwithstanding the termination of this Agreement.
12.2 Public Announcements. Seller and Buyer shall cooperate with each other
in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby, except as may be otherwise required by law,
and neither Seller nor Buyer shall issue any joint news releases with respect
to this Agreement or any of the transactions contemplated hereby, unless such
news releases have been mutually agreed upon by the parties hereto.
12.3 Survival. Except for any agreement of the parties contained in this
Agreement which by its terms is intended to be performed after the Effective
Time, the respective representations, warranties and agreements of the parties
contained in this Agreement or in any Exhibit, Schedule, certificate, list,
letter or other instrument referred to in this Agreement, and which are
delivered or made pursuant to this Agreement (or in connection with any
transaction contemplated by this Agreement) shall not survive the Effective
Time but shall terminate as of the Effective Time.
12.4 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered by receipted hand delivery or
mailed by prepaid registered or certified mail (return receipt requested) or
by cable, telegram, telex or telecopy addressed as follows:
If to Buyer to:
Community Bankshares, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxxxx, President
37
Copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxxx Xxxxx, Esq.
Xxxxx, Xxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
If to Seller, to:
Centerpoint Bank
000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
Copy to:
Xxxxxxx X. Xxxxxxx, Esq.
McLane, Graf, Xxxxxxxxx & Middleton, PA
000 Xxx Xxxxxx
Post Office Box 326
Manchester, New Hampshire 03105
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
12.5 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, and that (except as
otherwise expressly provided in this Agreement) nothing in this Agreement is
intended to confer upon any other Person any rights or remedies under or by
reason of this Agreement.
12.6 Rights of Employment. Nothing in this Agreement shall be deemed to
prohibit the resignation, removal or failure to re-elect any of the persons
referred to herein to any position referred to therein, including without
limitation, as a director or member of any committee of the Board of
Directors, after his initial election to such position. Nothing in this
Agreement shall be deemed to confer upon any person any rights of employment
with or any rights to hold any particular office with Buyer or Surviving Bank
or to limit the right of Buyer and Surviving Bank to terminate the employment
or office of any person.
12.7 Complete Agreement. This Agreement, including the Exhibits and
Schedules hereto and the documents and other writings referred to herein or
delivered pursuant hereto, contains the entire agreement and understanding of
the parties with respect to its subject matter. There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the
parties other than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings (other than the
Confidentiality Agreement referred to in Section 12.1 hereof) between the
parties, both written and oral, with respect to its subject matter.
12.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.9 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect, by any court of competent jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement and the parties shall use their reasonable efforts to substitute a
valid, legal and enforceable provision which, insofar as practical, implements
the purposes and intents of this Agreement.
12.10 Governing Law. This Agreement shall be governed by the laws of the
State of New Hampshire.
38
12.11 Headings. The Article and Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
* * * * *
39
IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed under seal by their duly authorized officers as of the day and year
first above written.
Community Bankshares
/s/ Xxxxxxx Xxxxxxxxxx
{SEAL} By: _________________________________
Its President
/s/ Xxxxxxx X. Xxxx
By: _________________________________
Its Secretary
Centerpoint Bank
/s/ Xxxxxx X. Xxxxx
{SEAL} By: _________________________________
Its President
/s/ Xxxx X. Xxxxx
By: _________________________________
Its Secretary
40
EXHIBIT 1.7
STOCK OPTION AGREEMENT
41
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN PROVISIONS CONTAINED
HEREIN AND MAY BE SUBJECT TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND RULES OF THE FEDERAL DEPOSIT INSURANCE CORPORATION
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is entered into as of August
, 1995 by and between Community Bankshares, Inc., a New Hampshire bank
holding company ("Community") and Centerpoint Bank, a New Hampshire trust
company ("Centerpoint").
Whereas, Centerpoint and Community propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement";
capitalized terms not defined herein shall have the meanings set forth in the
Merger Agreement), providing for, among other things, the combination and
merger of a newly-formed bank subsidiary of Community and Centerpoint into a
single bank, which will be a subsidiary of Community; and
Whereas, as a condition and an inducement to Community's willingness to
enter into the Merger Agreement, Community has requested that Centerpoint
agree, and Centerpoint has agreed, to grant Community the Option (as defined
below);
Now, Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, Centerpoint and Community agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Centerpoint hereby grants to Community an irrevocable option (the "Option") to
acquire up to 165,920 shares (the "Option Shares") of common stock, par value
$1.00 per share, of Centerpoint ("Centerpoint Common Stock") at an acquisition
price of $12.00 per Option Share (the "Purchase Price"). The number of shares
of Centerpoint Common Stock that may be received upon the exercise of the
Option and the Purchase Price are subject to adjustment as herein set forth.
2. Certain Definitions. (a) The holder or holders of this Option ("Holder")
may exercise the Option, in whole or in part, at any time and from time to
time following the occurrence of a Triggering Event (as defined below). Except
as otherwise provided in this Agreement, the right to exercise the Option
shall expire and be of no further force and effect upon the occurrence of a
Termination Event (as defined below).
(b) Each of the following shall constitute a "Termination Event":
(i) the Effective Time;
(ii) the first anniversary of a Triggering Event;
(iii) the second anniversary of a termination of the Merger Agreement by
reason of a material breach or wilful violation by Centerpoint of its
representations, warranties or obligations under the Merger Agreement,
provided, however, that such anniversary shall be a Termination Event only
if such anniversary occurs prior to the occurrence of a Triggering Event;
(iv) immediately (A) upon termination of the Merger Agreement by
Centerpoint by reason of a breach or violation by Community of its
representations, warranties or obligations under the Merger Agreement, or
(B) if the holders of Community Common Stock shall not have approved the
Merger Agreement and the transactions contemplated thereby at the Community
Special Meeting held for the purpose of voting on the Merger Agreement; or
42
(v) the second anniversary of a termination of the Merger Agreement other
than as described in Section 2(b)(iii) or Section 2(b)(iv), provided,
however, that such anniversary shall be a Termination Event only if such
anniversary occurs prior to the occurrence of a Triggering Event.
(c) Notwithstanding any expiration or termination of the Option, Community
shall be entitled to acquire those Option Shares with respect to which it has
exercised the Option in accordance with the terms hereof prior to the
expiration or termination of the Option. Any purchase of shares upon exercise
of the Option shall be subject to compliance with requirements established by
the New Hampshire Board of Trust Company Incorporation and with all other
requirements of applicable law, including the Bank Holding Company Act of
1956, as amended (the "BHC Act").
(d) A "Triggering Event" shall occur for purposes of this Agreement upon the
occurrence of any of the following:
(i) without having received Community's prior written consent,
Centerpoint shall have entered into, or the Board of Directors of
Centerpoint shall have approved or recommended that the shareholders of
Centerpoint approve or accept, an agreement with any person (other than
Community or any affiliate of Community) to (A) effect a merger,
consolidation or similar transaction involving Centerpoint, (B) sell, lease
or otherwise dispose of assets of Centerpoint (other than sales of loans or
securities classified as available for sale in the ordinary course of
business of Centerpoint) representing 15% or more of the consolidated
assets of Centerpoint, or (C) issue, sell or otherwise dispose of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 15% or more of the voting power of
Centerpoint (any of the foregoing an "Acquisition Transaction");
(ii) any person (other than Community or any affiliate of Community)
shall, after the date hereof, have acquired beneficial ownership (as
defined in Rule 13(d)-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), or the right to acquire beneficial ownership
of, or any "group" (as such term is defined under the Exchange Act) shall
have been formed which beneficially owns or has the right to acquire
beneficial ownership of, 15% or more of the then outstanding Centerpoint
Common Stock;
(iii) any person (other than Community or any affiliate of Community) (1)
publicly announces a proposal, or publicly discloses an intention to make a
proposal, to engage in an Acquisition Transaction, (2) files an application
under the BHC Act for approval to engage in an Acquisition Transaction, or
(3) files a notice under the Change in Bank Control Act of 1978 or other
applicable law of intent to engage in an Acquisition Transaction;
(iv) Centerpoint's Board of Directors shall have failed to recommend to
its shareholders approval of the Merger Agreement, or shall have withdrawn
or modified in a manner adverse to Community its recommendation with
respect to the Merger Agreement; or
(v) the holders of Centerpoint Common Stock shall not have approved the
Merger Agreement and the transactions contemplated thereby at the Special
Meeting held for the purpose of voting on the Merger Agreement or such
Special Meeting shall not, due to actions or failure to act of Centerpoint,
have been held prior to a date which is 60 days ("End Date") after
effectiveness of the Registration Statement on Form S-4, provided, however,
that the events described in this Section 2(d)(v) shall constitute a
Triggering Event only if, prior to the End Date, Centerpoint shall have
agreed to provide to a stockholder or a stockholder representative a copy
of its list of Centerpoint stockholders for use in connection with possible
communications with other Centerpoint stockholders.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and includes any individual,
corporation, partnership, company, group or other entity. Terms defined herein
by reference to the Exchange Act shall be construed as if Centerpoint had
registered under the Exchange Act.
43
3. Exercise of Option. (a) In the event Community wishes to exercise the
Option, it shall send to Centerpoint a written notice (the date of such notice
being herein referred to as the "Notice Date") specifying (i) the total number
of Option Shares it intends to acquire pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 15 business
days from the Notice Date for the closing of such acquisition (the "Closing
Date").
(b) If the closing of the acquisition pursuant to the exercise of the Option
(the "Closing") cannot be consummated by reason of any judgment, decree or
order, the period of time that otherwise would run pursuant to Section 3(a)
shall run instead until the date on which such judgment, decree or order
becomes final and nonappealable. Without limiting the foregoing, if prior
notification to or approval of the Board of Governors of the Federal Reserve
System ("FRB") or an other regulatory authority is required in connection with
such purchase, Community shall promptly file the required notice or
application for approval and shall expeditiously process the same (and
Centerpoint shall cooperate with Community in the filing of any such notice or
application and the obtaining of any such approval), and the period of time
that otherwise would run pursuant to Section 3(a) shall run instead from the
date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained, and in
either event, any requisite waiting period has passed.
4. Payment and Delivery of Certificates. (a) On each Closing Date, Community
shall pay Centerpoint, in immediately available funds by wire transfer to a
bank account designated by Centerpoint, an amount equal to the Purchase Price
multiplied by the number of Option Shares to be purchased on such Closing
Date.
(b) At each Closing, simultaneously with the delivery of the consideration
specified in Section 4(a), Centerpoint shall deliver to Community a
certificate or certificates representing the Option Shares to be acquired at
such Closing, which Option Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever (including any
preemptive rights of any stockholder).
5. Representations and Warranties of Centerpoint. Centerpoint hereby
represents and warrants to Community as follows:
(a) Due Authorization. Centerpoint has all necessary corporate power and
authority to execute and deliver this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action on the part of Centerpoint. This Agreement has been duly and validly
executed and delivered by Centerpoint.
(b) Authorized Stock. Centerpoint has taken all necessary corporate and
other action to authorize and reserve and, subject to obtaining the
governmental and other approvals and consents referred to herein, to permit
it to issue, and, at all times from the date hereof until the obligation to
deliver Centerpoint Common Stock upon the exercise of the Option
terminates, will have reserved for issuance, upon exercise of the Option,
shares of Centerpoint Common Stock necessary for Community to exercise the
Option, and Centerpoint will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Centerpoint
Common Stock or other securities which may be issued pursuant to Section 7
upon exercise of the Option. The shares of Centerpoint Common Stock to be
issued upon due exercise of the Option, including all additional shares of
Centerpoint Common Stock or other securities which may be issuable pursuant
to Section 7, upon issuance pursuant hereto, shall be duly and validly
issued, fully paid and nonassessable, and shall be delivered free and clear
of all liens, claims, charges and encumbrances of any kind or nature
whatsoever, including any preemptive rights of any stockholder of
Centerpoint.
(c) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not,
conflict with or violate any provision of the Charter or By-laws or
equivalent organizational document of Centerpoint or any Subsidiary or,
subject to obtaining any required approvals or consents, violate, conflict
with or result in any breach of any provisions of, constitute a default (or
an event which with notice or lapse of time or both would constitute a
default) under, result in the
44
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of Centerpoint or any Subsidiary
under any of the terms, conditions or provisions of any note, bond, capital
note, debenture, mortgage, indenture, deed of trust, license, lease,
agreement, obligation, instrument, permit, concession, franchise, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Centerpoint or any Subsidiary or their respective properties or assets.
(d) Access to Stockholder Lists. The list of Centerpoint's stockholders
has been protected as confidential and proprietary information by
Centerpoint, has not been copied or distributed within the Bank, and no
copies of such list have been made available to stockholders or other third
parties.
6. Representations and Warranties of Community. Community hereby represents
and warrants to Centerpoint that:
(a) Due Authorization. Community has all necessary corporate power and
authority to execute and deliver this Agreement. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action on the part of Community. This Agreement has been duly and validly
executed and delivered by Community.
(b) No Conflicts. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not,
conflict with or violate any provision of the Charter or By-laws or
equivalent organizational document of Community or any subsidiary Community
or, subject to obtaining any required approvals or consents contemplated
hereby, violate, conflict with or result in any breach of any provisions
of, constitute a default (or event which with notice or lapse of time or
both would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any
lien, security interest, charge or other encumbrance upon any of the
respective properties or assets of Community or any of its subsidiaries
under any of the terms, conditions or provisions of any note, bond, capital
note, debenture, mortgage, indenture, deed of trust, license, lease,
agreement, obligation, instrument, permit, concession, franchise, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Community or any subsidiary of Community or their respective properties or
assets.
(c) Purchase Not for Distribution. Any Option Shares or other securities
acquired by Community upon exercise of the Option will not be taken with a
view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act of 1933.
7. Adjustment Upon Share Issuances, Changes in Capitalization, Etc. (a) In
the event of any change in Centerpoint Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction, the type and number of shares or securities to be
delivered by Centerpoint pursuant to the Option shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that Community shall receive upon exercise of the Option
the number and class of shares or other securities or property that Community
would have received if the Option had been exercised immediately prior to such
event, or the record date therefor, as applicable.
(b) In the event that Centerpoint shall enter into an agreement (i) to
consolidate with or merge into any person, other than Community or one of its
affiliates, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Community or
one of its affiliates, to merge into Centerpoint and shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Centerpoint Common Stock shall be changed into or
exchanged for stock or other securities of Centerpoint or any other person or
cash or any other property or the then outstanding shares of Centerpoint
Common Stock shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Community or one of its affiliates, then, and in each such
case, the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction
45
and upon the terms and conditions set forth in this Agreement, be converted
into, or exchanged for, an option to acquire the same type of consideration
received by the holders of Centerpoint Common Stock pursuant to such a
transaction. The provisions of this Agreement shall apply with appropriate
adjustments to any securities for which the Option becomes exercisable
pursuant to this Section 7.
(c) Notwithstanding any other provision of this Agreement, from and after
any reorganization or recapitalization affecting Centerpoint which is related
to an internal corporate reorganization and from and after the issuance of
additional or replacement equity securities by Centerpoint, the Option shall
remain exercisable for equity securities of Centerpoint representing 19.9% of
the voting power of all Centerpoint equity securities, calculated on a fully-
diluted basis. In connection with any such reorganization or recapitalization
affecting Centerpoint, the type and number of shares or securities to be
delivered by Centerpoint pursuant to the Option shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that the Option shall remain exercisable for equity
securities of Centerpoint representing 19.9% of the voting power of all
Centerpoint equity securities, calculated on a fully-diluted basis.
8. Repurchase at the Option of Community.
(a) Repurchase Event. A "Repurchase Event" shall occur for purposes of this
Agreement upon the occurrence of any of the following:
(i) without having received Community's prior written consent,
Centerpoint shall have entered into an agreement with respect to, or
consummated, a merger, consolidation or sale of substantially all of its
assets; or
(ii) any person (other than Community or any affiliate of Community)
shall, after the date hereof, have acquired beneficial ownership (as
defined in Rule 13(d)-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 51% or more of the then
outstanding Centerpoint Common Stock.
(b) Section 8 Repurchase Consideration. At the request of Community at any
time commencing upon the occurrence of a Repurchase Event and ending upon the
earlier to occur of (x) 9 months immediately thereafter or (y) a Termination
Event, Centerpoint (or any successor entity thereof) shall repurchase from
Community (1) the Option (unless the Option shall have expired or been
terminated in accordance with the terms hereof) and (2) all shares of
Centerpoint Common Stock purchased by Community pursuant hereto with respect
to which Community then has beneficial ownership. The date on which Community
exercises its rights under this Section 8 is referred to as the "Request
Date". Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate exercise price paid by Community for any shares of
Centerpoint Common Stock acquired pursuant to the Option with respect to
which Community then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined below)
for each share of Centerpoint Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Centerpoint Common Stock with respect to which the Option has not
been exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase Price
(subject to adjustment pursuant to Section 7) paid (or, in the case of
Option Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by Community for each share of
Centerpoint Common Stock with respect to which the Option has been
exercised and with respect to which Community then has beneficial
ownership, multiplied by the number of such shares.
(c) If Community exercises its rights under this Xxxxxxx 0, Xxxxxxxxxxx
shall, within 10 business days after the Request Date, pay the Section 8
Repurchase Consideration to Community in immediately available funds, and
Community shall surrender to Centerpoint the Option and the certificates
evidencing the shares of
46
Centerpoint Common Stock purchased thereunder with respect to which Community
then has beneficial ownership; and Community shall warrant that it has sole
record and beneficial ownership of such shares and that the same are then free
and clear of all liens, claims, charges and encumbrances of any kind
whatsoever. Notwithstanding the foregoing, to the extent that prior
notification to or approval of the FRB or other Governmental Entity is
required in connection with the payment of all or any portion of the Section 8
Repurchase Consideration or is not then permissible under applicable law,
Centerpoint shall deliver from time to time that portion of the Section 8
Repurchase Consideration that it is not then so prohibited from paying and
shall promptly file the required notice or application for approval and shall
expeditiously process the same (and Community shall cooperate with Centerpoint
in the filing of any such notice or application and the obtaining of any such
approval), and the period of time that otherwise would run pursuant to the
preceding sentence for the payment of the portion of the Section 8 Repurchase
Consideration requiring such notification or approval shall run instead from
the date on which, as the case may be, (i) any required notification period
has expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If the FRB or
any other Governmental Entity disapproves of any part of Centerpoint's
proposed repurchase pursuant to this Xxxxxxx 0, Xxxxxxxxxxx shall promptly
give notice of such fact to Community and redeliver to Community the Option
Shares it has acquired from Community pursuant hereto and is then prohibited
from repurchasing, and Community shall have the right to exercise the Option
as to the number of Option Shares for which the Option was exercisable at the
Request Date less the number of shares as to which payment has been made
pursuant to Section 8(b); provided that if the Option shall have expired prior
to the date of such notice or shall be scheduled to expire at any time before
the expiration of a period ending on the thirtieth business day after such
date, Community shall nonetheless have the right so to exercise the Option
until the expiration of such period of 30 business days. Notwithstanding
anything herein to the contrary, Centerpoint shall not be obligated to
repurchase the Option or any shares of Centerpoint Common Stock pursuant to
this Section 8 on more than one occasion.
(d) For purposes of this Agreement, the "Applicable Price" means the highest
of (i) the highest price per share at which a tender or exchange offer has
been made for shares of Centerpoint Common Stock after the date hereof and on
or prior to the Request Date, (ii) the price per share to be paid by any third
party for shares of Centerpoint Common Stock or the consideration per share to
be received by holders of Centerpoint Common Stock, in each case pursuant to
an agreement for a merger or other business combination transaction with
Centerpoint entered into on or prior to the Request Date or (iii) the highest
bid price per share as quoted on the principal trading market on which such
shares are traded as reported by a recognized source during the 60 business
days preceding the Request Date. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in
good faith by an independent nationally recognized investment banking firm
selected by Community and reasonably acceptable to Centerpoint, which
determination shall be conclusive for all purposes of this Agreement.
9. REPURCHASE AT THE OPTION OF CENTERPOINT.
(a) Except to the extent that Community shall have previously exercised its
rights under Section 8, at the request of Centerpoint during the 30-day period
commencing 12 months following the first occurrence of a Repurchase Event,
Centerpoint may repurchase from Community, and Community shall sell to
Centerpoint, all (but not less than all) of the shares of Centerpoint Common
Stock acquired by Community pursuant hereto and with respect to which
Community has beneficial ownership at the time of such repurchase at a price
equal to the greater of (A) 110% of the Current Market Price (as defined
below) or (B) the sum of (1) the Purchase Price in respect of the shares so
acquired plus (2) Community's pre-tax per share carrying cost (as defined
below), multiplied in either case by the number of shares so acquired (the
"Section 9 Repurchase Consideration"); provided that Centerpoint's rights
under this Section 9 shall be suspended (with any such rights being extended
accordingly) during any period when the exercise of such rights would subject
Community to liability pursuant to Section 16(b) of the Exchange Act by reason
of Community's purchase of shares of Centerpoint Common Stock hereunder.
47
(b) If Centerpoint exercises its rights under this Section 9 and Community
does not sell the shares to a third party pursuant thereto, Centerpoint shall,
within 10 business days after the expiration of the 30-day period referred to
in paragraph (a) above or, if applicable, upon abandonment of the transaction
covered by the Offeror's Notice, pay the Section 9 Repurchase Consideration in
immediately available funds, and Community shall surrender to Centerpoint the
certificates evidencing the shares of Centerpoint Common Stock purchased
hereunder with respect to which Community then has beneficial ownership, and
Community shall warrant that it has sole record and beneficial ownership of
such shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever.
(c) As used herein, (i) "Current Market Price" means the average closing
sales price per share of Centerpoint Common Stock quoted on the principal
trading market on which such shares are traded as reported by a recognized
source for the 10 business days preceding the date of Centerpoint's request
for repurchase pursuant to this Section 9 and (ii) "Community's pre-tax per
share carrying cost" shall be the amount equal to the interest on the
aggregate Purchase Price paid for the shares of Centerpoint Common Stock
purchased from the date of purchase to the date of repurchase at the rate of
interest announced by Bank of Boston as its prime or base lending or reference
rate during such period, less any dividends received on the shares so
purchased, divided by the number of shares so purchased.
10. Division of Option. This Agreement and the Option granted hereby are
exchangeable, without expense, at the option of Community upon partial
exercise of the Option or partial assignment of the Option, in both instances
as provided herein, upon presentation and surrender of this Agreement at the
principal office of Centerpoint, for other Agreements providing for Options of
different denominations entitling the holder thereof to acquire in the
aggregate the same number of shares of Centerpoint Common Stock which may be
acquired hereunder. The terms "Agreement" and "Option" as used herein include
any other Agreements and related Options for which this Agreement and the
Option granted hereby may be exchanged.
11. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger Agreement, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) Entire Agreement: No Third-Party Beneficial Severability. Except as
otherwise set forth in the Merger Agreement, this Agreement (including other
documents and instruments referred to herein or therein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof and (ii) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or a regulatory agency to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(d) Governing Law. This Agreement shall be governed by the internal laws of
New Hampshire without regard its conflicts of law principles.
(e) Descriptive Headings. The descriptive headings contained herein are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered as provided in the Merger
Agreement.
48
(g) Counterparts. This Agreement and any amendments hereto may be executed,
including by facsimile, in two counterparts, each of which shall be considered
one and the same agreement and shall become effective when both counterparts
have been signed by each of the parties and delivered to the other party, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that: (i) Community may assign this
Agreement to any subsidiary or affiliate, and (ii) after the occurrence of a
Repurchase Event Community may assign its rights under this Agreement to third
parties; provided, however, that until the date 30 days following the date on
which the Federal Reserve Board approves an application by Community under the
BHC Act to acquire the shares of Centerpoint Common Stock subject to the
Option, Community may not assign its rights under the Option except in a
manner approved by the Federal Reserve Board, and provided, further, that,
notwithstanding any such assignment, Community shall continue to be liable for
the performance of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Community, Centerpoint and Community shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
In Witness Whereof, Centerpoint and Community have caused this Stock Option
Agreement to be executed as a sealed instrument by their respective officers
thereunto duly authorized, all as of the date first written above.
Attest: Centerpoint Bank
By:
--------------------------------- ---------------------------------
Name:
Title:
Attest: Community Bankshares, Inc.
By:
--------------------------------- ---------------------------------
Name:
Title:
49
EXHIBIT 7.3
AFFILIATE AGREEMENT
August , 1995
Community Bankshares, Inc.
00 Xxxxx Xxxx Xxxxxx
Post Office Box 739
Concord, New Hampshire 03302-0739
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Reorganization dated as
of August 29, 1995 (the "Merger Agreement"), among Community Bankshares, Inc.,
a New Hampshire corporation ("Parent"), a new "interim bank" to be created as
a wholly owned subsidiary of Parent ("Bank Sub"), and Centerpoint Bank, a New
Hampshire trust company ("Centerpoint"). Parent will acquire Centerpoint
through the merger of Bank Sub with Centerpoint (the "Merger"). Subject to the
terms and conditions of the Merger Agreement, at the Effective Time (as
defined in the Merger Agreement), outstanding shares of the common stock, par
value $1.00 per share, of Centerpoint (the "Centerpoint Common Stock") will be
converted into the right to receive shares of common stock, par value $1.00
per share, of Parent (the "Parent Common Stock") on the basis described in the
Merger Agreement.
The undersigned has been advised that as of the date hereof it may be deemed
to be an "affiliate" of Centerpoint, as the term "affiliate" is (i) defined
for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended, of
the and/or (ii) used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the Commission, although nothing contained herein shall be
construed as an admission of such fact.
The undersigned understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, stockholders of
Parent, Centerpoint, other stockholders of Centerpoint and their respective
counsel and accounting firms.
The undersigned represents and warrants to and agrees with Parent that:
1. The undersigned has full power to execute and deliver this Affiliate
Agreement and to make the representations and warranties herein and to
perform its obligations hereunder.
2. The undersigned has carefully read this Affiliate Agreement and the
Merger Agreement and discussed its requirements and other applicable
limitations upon its ability to sell, transfer or otherwise dispose of
Parent Common Stock to the extent the undersigned felt necessary, with its
counsel or counsel for Centerpoint.
3. The undersigned shall not make any sale, transfer, exchange, pledge or
other disposition of Parent Common Stock in violation of the Act or the
Rules and Regulations.
4. The undersigned has been advised that the issuance of shares of Parent
Common Stock to the undersigned in connection with the Merger has been or
will be registered with the Commission under the Act on a Registration
Statement on Form S-4. However, the undersigned has also been advised that,
since, at the time the Merger is to be submitted for a vote of the
stockholders of Centerpoint the undersigned may be deemed to be an
affiliate of Centerpoint and the distribution by the undersigned of any
Parent Common Stock will not have been registered under the Act, the
undersigned may not sell, transfer or otherwise dispose of Parent Common
Stock issued to the undersigned in the Merger unless (i) such sale,
transfer or other disposition has been registered under the Act, (ii) such
sale, transfer or other disposition is made in conformity with the
requirements of Rule 145 promulgated by the Commission under the Act, or
(iii) in the
50
opinion of counsel reasonably acceptable to Parent, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
5. Parent is under no obligation to register the sale, transfer or other
disposition of Parent Common Stock by the undersigned or on its behalf
under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available. Parent
agrees that it shall make available adequate current public information as
required by Rule 144(c) promulgated by the Commission under the Act.
6. Stop transfer instructions will be given to Parent's transfer agent
with respect to the Parent Common Stock and there will be placed on the
certificates for the Parent Common Stock issued to the undersigned, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act
of 1933 applies. The shares represented by this certificate may only
be transferred in accordance with the terms of an Affiliate
Agreement dated August 29, 1995, between the registered holder
hereof and Parent, a copy of which agreement is on file at the
principal offices of Parent."
7. The legend set forth in paragraph 6 above shall be removed by delivery
of substitute certificates without such legend if the undersigned shall
have delivered to Parent a copy of a letter from the staff of the
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to Parent, to the effect that such legend is not required for
purposes of the Act.
8. The undersigned will not sell, exchange, transfer, pledge, dispose of
or grant any option, establish any "short" or put-equivalent position with
respect to or enter into any similar transaction intended to reduce his
risk relative to the shares of Parent Common Stock received by the
undersigned in connection with the Merger, except for de minimis sales with
the prior written consent of Parent, during the period beginning from the
date hereof, and ending on the second day after the day Parent publicly
announces financial results covering at least 30 days of combined
operations of the Parent and Centerpoint. Parent, at its discretion, may
cause stop transfer orders consistent with the foregoing to be placed with
its transfer agent with respect to the certificates for Parent Common
Stock.
9. (a) The undersigned currently is the beneficial owner of that number
of shares of Centerpoint Common Stock set forth in Appendix A hereto (the
"Centerpoint Securities") and, except as otherwise set forth in Appendix A,
(i) has held Centerpoint Securities at all times since January 1, 1995 and
(ii) did not acquire any of Centerpoint Securities in contemplation of the
Merger;
(b) Except as otherwise set forth in Appendix A hereto, the undersigned
has not engaged in a Sale (as defined below) of any shares of Centerpoint
Common Stock (including Centerpoint Securities) (i) at any time since
January 1, 1995 or (ii) in contemplation of the Merger;
(c) The undersigned has no plan or intention (a "Plan") to engage in a
sale, exchange, transfer, distribution (including a distribution by a
partnership to its partners or by a corporation to its stockholders),
redemption or reduction in any way of the undersigned's risk of ownership
by short sale or otherwise, or other disposition, directly or indirectly
(such actions being collectively referred to herein as a "Sale") of the
shares of Parent Common Stock to be received by the undersigned in the
Merger. For purposes of the preceding sentence, shares of Centerpoint
Common Stock (or the portion thereof) (i) with respect to which the
undersigned will receive consideration in the Merger other than Parent
Common Stock (including, without limitation, cash to be received in lieu of
fractional shares of Parent Common Stock) and/or (ii) with respect to which
a Sale (A) occurred after January 1, 1995 or otherwise in contemplation of
the Merger or (B) will occur prior to the Merger, shall be considered
shares of Centerpoint Common Stock exchanged for Parent Common Stock in the
Merger and then disposed of pursuant to a Plan;
(d) The undersigned has no Plan to exercise dissenters' rights in
connection with the Merger;
(e) The undersigned is not aware of, or participating in, any Plan on the
part of the stockholders of Centerpoint to engage in a Sale or Sales of the
Parent Common Stock to be received in the Merger such
51
that the aggregate fair market value, as of the Effective Date of the
Merger, of the shares subject to such Sales would exceed 50% of the
aggregate fair market value of all shares of outstanding Centerpoint Common
Stock immediately prior to the Merger. For purposes of the preceding
sentence, shares of Centerpoint Common Stock (or the portion thereof) (i)
with respect to which a Centerpoint stockholder receives consideration in
the Merger other than Parent Common Stock (including, without limitation,
cash received pursuant to the exercise of dissenters' rights or in lieu of
fractional shares of Parent Common Stock) or (ii) with respect to which a
Sale occurs prior to and in contemplation of the Merger, shall be
considered shares of outstanding Centerpoint Common Stock exchanged for
Parent Common Stock in the Merger and then disposed of pursuant to a Plan;
(f) Except to the extent written notification to the contrary is received
by Centerpoint from the undersigned prior to the Merger, the
representations contained herein shall be true and correct at all times
from the date hereof through the date on which the Merger occurs; and
(g) The undersigned has consulted with such legal and financial counsel
as the undersigned has deemed appropriate in connection with the execution
of this Agreement.
10. The undersigned understands that Centerpoint, Bank Sub, Parent and their
respective stockholders, as well as legal counsel to Centerpoint and Parent
(in connection with rendering their opinions that the Merger will be a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended) will be relying on (a) the truth and accuracy of the
representations contained herein and (b) the undersigned's performance of the
obligations set forth herein.
11. Except for Centerpoint Securities and options to purchase that number of
shares of Centerpoint Common Stock set forth in Appendix A hereto, the
undersigned does not beneficially own any shares of Centerpoint Common Stock
or any other equity securities of Centerpoint or any options, warrants or
other rights to acquire any equity securities of Centerpoint.
12. For the convenience of the parties hereto, this Affiliate Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
13. This Affiliate Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns"
shall mean, where the context so permits, heirs, executors, administrators,
trustees and successor trustees, and personal and other representatives.
14. This Affiliate Agreement shall be governed by and construed, interpreted
and enforced in accordance with the laws of the State of New Hampshire.
15. If a court of competent jurisdiction determines that any provision of
this Affiliate Agreement is not enforceable or enforceable only if limited in
time and/or scope, this Affiliate Agreement shall continue in full force and
effect with such provision stricken or so limited.
* * * *
52
16. Counsel to and accountants for the parties to the Merger Agreement shall
be entitled to rely upon this Affiliate Agreement as needed.
Very truly yours
_____________________________________
(print name of stockholder above)
By: _________________________________
Title: ______________________________
Accepted this day of , 1995,
Community Bankshares, Inc.
By: _________________________________
Name: _______________________________
Title: ______________________________
53
APPENDIX A
Stockholder: ___________________________________________________________________
Entity: ________________________________________________________________________
(individual, corporation, partnership, other--please specify)
Total Number of shares of Centerpoint Common Stock owned on the date hereof: ___
Total Number of shares of Centerpoint Common Stock owned on January 1, 1995: ___
Total Number of shares of Centerpoint Common Stock disposed of in a Sale (i)
after January 1, 1995 or(ii) otherwise in contemplation of the Merger: _________
Total Number of shares of Centerpoint Common Stock acquired (i) after January
1, 1995 or (ii) otherwise in contemplation of the Merger: ______________________
Please specify the date and number of shares of Centerpoint Common Stock
acquired or disposed of in each transaction (i) after January 1, 1995 or (ii)
otherwise in contemplation of the Merger: ______________________________________
________________________________________________________________________________
Please describe any plan or intent to dispose of, in a Sale, shares of
Centerpoint Common Stock prior to the Merger or shares of Parent Common Stock
after the Merger (attach a separate sheet if necessary): _______________________
________________________________________________________________________________
________________________________________________________________________________
Total Number of options to purchase Centerpoint Common Stock owned on the date
hereof: ________________________________________________________________________
54
EXHIBIT 7.4
FORM OF VOTING AGREEMENT
August , 1995
Community Bankshares, Inc.
00 Xxxxx Xxxx Xxxxxx
Post Office Box 739
Concord, New Hampshire 03302-0739
Gentlemen:
Each of the undersigned (a "Stockholder") beneficially owns and has sole
voting power with respect to all shares of the common stock, par value $1.00
per share, now owned or hereafter acquired, whether pursuant to the exercise
of stock options or otherwise (the "Shares"), of Centerpoint Bank (the
"Company").
Simultaneously with the execution of this letter agreement, Community
Bankshares, Inc. ("Parent") and the Company are entering into an Agreement and
Plan of Merger (the "Merger Agreement") providing, among other things, for the
merger of a subsidiary of Parent with the Company (the "Merger"). We
understand that Parent has undertaken and will continue to undertake
substantial expenses in connection with the negotiation and execution of the
Merger Agreement and the subsequent actions necessary to consummate the Merger
and the other transactions contemplated by the Merger Agreement.
In consideration of, and as a condition to, Parent's entering into the
Merger Agreement, and in consideration of the expenses incurred and to be
incurred by Parent in connection therewith, each Stockholder and Parent agree
as follows:
1. AGREEMENT TO VOTE IN FAVOR OF MERGER. Each Stockholder specifically
agrees that: (i) he will use all reasonable efforts to cause a special
meeting of stockholders of the Company (the "Special Meeting") to be held
as soon as is practicable to vote to approve the Merger, the Merger
Agreement and the transactions contemplated thereby, and (ii) at the
Special Meeting, he will vote all of his Shares in favor of the Merger, the
Merger Agreement and the transactions contemplated thereby.
2. IRREVOCABLE PROXY. Each Stockholder hereby revokes any proxy
heretofore granted with respect to any shares of capital stock of the
Company owned by such Stockholder. Each Stockholder hereby agrees to grant
to Parent an irrevocable proxy in the form of Exhibit A attached hereto
upon request of Parent. It is expressly understood and agreed that such
irrevocable proxy shall be coupled with an interest and that Parent shall
have no duty, liability and obligation whatsoever to the undersigned
arising out of the exercise by Parent of such irrevocable proxy unless
Parent acts in a manner inconsistent with the understandings set forth in
this Agreement and the Merger Agreement. Without limiting the generality of
the foregoing, each Stockholder expressly acknowledges and agrees that he
will not impede the exercise of Parent's rights under the Merger Agreement
and that Parent shall have the right, pursuant to the irrevocable proxy, to
vote (i) with respect to all matters relating to the Merger, the Merger
Agreement or the transactions contemplated thereby, and (ii) with respect
to any other matter that Parent deems to be inconsistent with the
consummation of the transactions contemplated by the Merger Agreement.
3. RESTRICTIONS ON SALE OR OTHER DISPOSITION OF SHARES. Each Stockholder
hereby agrees that from and after the date hereof and until the Effective
Time of the Merger (as defined in the Merger Agreement), each Stockholder
will not, directly or indirectly, without the prior written consent of
Parent, sell, assign, hypothecate, transfer, pledge, give, place in trust
or dispose of (including, without limitation, by granting of proxies (other
than proxies not inconsistent with this Agreement, such as proxies relating
to the routine election of directors), or relinquishment of voting rights,
with respect to) any of the Shares owned by each Stockholder, except for
the grant of the irrevocable proxy as provided for herein or any other
proxies granted to Parent.
55
4. NO SOLICITATION. Neither any Stockholder, nor any of his affiliates,
employees, representatives or agents or other persons controlled by him
shall, directly or indirectly, encourage or solicit or hold discussions or
negotiations with or assist or provide any information to, any person,
entity or group (other than Parent) concerning any merger, disposition of a
substantial portion of the Company's assets, acquisition of a substantial
portion of its capital stock or similar transactions involving the Company
or any of its subsidiaries or any branch or division of the Company. Each
Stockholder will immediately communicate to Parent the terms of any
proposal or offer or any inquiry or request for information which it may
receive in respect of any such transaction.
5. REPRESENTATIONS AND WARRANTIES. Each Stockholder represents and
warrants to Parent as follows:
(a) This Agreement has been duly executed and delivered by each
Stockholder and constitutes his legal and valid obligation enforceable
against him in accordance with its terms.
(b) He is the record owner of the number of Shares indicated opposite
such Stockholder's name below; he has plenary voting and dispositive
power with respect to such Shares; he owns no other shares of capital
stock of the Company; there are no proxies, voting trusts or other
agreements or understandings with respect to the voting of any of the
Shares other than this Agreement; and no Stockholder has entered into
(and no Stockholder will enter into) any agreement or arrangement in
any way inconsistent with this Agreement.
6. EQUITABLE REMEDIES. The parties hereto acknowledge that irreparable
damage would result if this Agreement is not specifically enforced and
that, therefore, the rights and obligations of the parties under this
Agreement may be enforced by a decree of specific performance issued by a
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall,
however, not be exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
7. NOTICES. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered by receipted hand delivery
or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram, telex or telecopy addressed as follows:
If to Parent to:
Community Bankshares, Inc.
00 Xxxxx Xxxx Xxxxxx
Post Office Box 739
Concord, New Hampshire 03302-0739
Attention: President
Copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxxxxx Xxxxx, Esq.
Xxxxx, Xxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
If to a Stockholder to his address on the signature page hereof, with a
copy to:
Xxxxxxx X. Xxxxxxx, Esq.
McLane, Graf, Xxxxxxxxx & Xxxxxxxxx, PA
000 Xxx Xxxxxx
Post Office Box 326
Manchester, New Hampshire 03105
or such other address as shall be furnished in writing by any party, and
any such notice or communication shall be deemed to have been given as of
the date so mailed.
56
8. MISCELLANEOUS. This Agreement shall terminate on the later to occur of
(i) one year from the date hereof or (ii) in the event of a material breach
of the Merger Agreement by the Company, on the date the Stock Option
Agreement terminates. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement. This Agreement
shall be governed by and construed in accordance with the laws of New
Hampshire, without giving effect to conflicts of law principles. If any
provision hereof is deemed unenforceable, the enforceability of the other
provisions hereof shall not be affected.
9. SEVERAL OBLIGATION. Each of the Stockholders has signed this letter
agreement intending to be bound severally thereby and not to be bound as
joint obligors.
* * * *
Please confirm our agreement with you by signing a copy of this letter.
STOCKHOLDER NUMBER OF
NAME AND ADDRESS SHARES SIGNATURES
---------------- --------- ----------
Xxxxxx X. Xxxxx 11,551 ______________________________
Xxxxxxx Xxxxx 40,000 (Options) Xxxxxx X. Xxxxx
Centerpoint Bank
000 Xxxxx Xxxxx Xxxx ______________________________
Xxxxxxx, XX 00000 Xxxxxxx Xxxxx
Xx. Xxxxxx X. Xxxxxx 89,496 ______________________________
President Xxxxxx Xxxxxx, individually
Concord Oil Company and as Trustee of Musterfield
147 Xxxxxx Road Realty Trust
Xxxxxxx, XX 00000
______________________________
Xxxxxxxx X. Xxxxxx, Trustee of
Xxxxxxxx X. Xxxxxx Revocable
Trust
Concord Oil Company
By: __________________________
President
Xx. Xxxxxx X. Xxxxxx 20,383
Xxxxxx Xxxxxx ______________________________
Xxxxxxx Xxxxxx Xxxxxx X. Xxxxxx, individually
0 Xxxxxxxx Xxx and as custodian for Xxxxxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000 and Xxxxxxx
______________________________
Xxxxxx Xxxxxx
______________________________
Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxx 30,500 ______________________________
Xxxxxx X. Xxxxx, individually
and as beneficiary of Xxxx
Xxxxxx XXX
57
STOCKHOLDER NUMBER OF
NAME AND ADDRESS SHARES SIGNATURES
---------------- --------- ----------
Xx. Xxxx X. Xxxxxx, Xx. 7,499 _________________________________
000 Xxxx Xxx Xxxx Xxxx X. Xxxxxx, Xx.
Epping, New Hampshire 03042
Xxxx X. xxXxxxxxxxxxx 10,000 _________________________________
Lighthouse Press Xxxx X. xxXxxxxxxxxxx,
000 Xxxx Xxxxxxxxxx Xxxx Xxxxx individually and as Trustee of
Xxxxxxxxxx, XX 00000 d'Argent Financial Trust
Xxxx X. Xxxxx 7,500 (options) _________________________________
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxx 35,833 _________________________________
Hemming Associates Xxxxxx X. Xxxxxxx
North Bridge Business Center
00 Xxxxxxxxxxxx Xxxxxxxxx,
Xxxx 00
Xxxxxx, XX 00000
P.D. "Xxx" Infantine 24,050 _________________________________
0000 Xxx Xxxxxx Xxxxx Xxxxxxx Xxxxxxxxx, as Executor
Contesa #804 of the Estate of Xxxxxxx
Xxxxxx, Xxxxxxx 00000 Infantine
_________________________________
X.X. Xxxxxxxxx, as beneficiary of
First Albany Corp. XXX and as
Trustee of Infantine Family
Nominee Trust
_________________________________
Xxxxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx 10,000 _________________________________
Xxxxxx Xxxxxxxxx Xxxxxx X. Xxxxxxxxx
Lavassuer & Associates
00 Xxxx Xxxxxx _________________________________
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000 Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx 1,251 _________________________________
7,500 (options) Xxxxxx Xxxxxx, individually
and as beneficiary of AG
Xxxxxxx XXX
Xxxxx Xxxxxxx 28,636 _________________________________
Xxxxx Xxxxxxx
58
STOCKHOLDER NUMBER OF
NAME AND ADDRESS SHARES SIGNATURES
---------------- --------- ----------
Xxxxxxx Xxxxxxxxx 5,000 _______________________________
President Xxxxxxx Xxxxxxxxx, individually
Xxxxxx Xxxx & Associates and as beneficiary of Invest
00 Xxxx Xxxxxxx Xxxxxx Financial Corp. XXX
Xxxxxxxxxx, Xxx Xxxxxxxxx
00000
_______________________________
Xxxxxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx 2117 _______________________________
00 Xxxxxx Xxxx Xxxxxx Xxxxxxxxx, as
Bedford, New Hampshire beneficiary of Xxxxx Xxxxxx-
03110 Xxxxxxxx XXX
Xxxxxxx X. Xxxxxx 2,400 _______________________________
Xxxxxxx X. Xxxxxx
Agreed to and accepted this day of , 1995.
Community Bankshares, Inc.
By: _________________________________
Name:
Title:
59
EXHIBIT A
IRREVOCABLE PROXY
The undersigned (the "Stockholder") hereby revokes any proxy heretofore
granted with respect to any shares of capital stock of Centerpoint Bank
("Centerpoint") owned by such Stockholder. The Stockholder hereby grants to
Community Bankshares, Inc. ("Parent") an irrevocable proxy:
(x) To call a special meeting of stockholders of Centerpoint to approve
the business combination (the "Merger") contemplated by that certain
Agreement and Plan of Merger dated as of August 29, 1995 (the "Merger
Agreement") by and between Parent and Centerpoint, the Merger Agreement or
the transactions contemplated thereby or any other business combination
involving Centerpoint, and
(y) To vote at any meeting of stockholders of Centerpoint, in any manner
that Parent may determine in its sole and absolute discretion to be in the
best interest of Parent, all of the shares of capital stock of Centerpoint
with respect to which the undersigned has voting power (the "Shares"): (i)
with respect to all matters relating to the Merger, the Merger Agreement or
the transactions contemplated thereby, and (ii) with respect to any other
matter that Parent deems to be inconsistent with the consummation of the
transactions contemplated by the Merger Agreement.
It is expressly understood and agreed that the foregoing irrevocable proxy
is coupled with an interest and that Parent shall have no duty, liability and
obligation whatsoever to the undersigned arising out of the exercise by Parent
of the irrevocable proxy granted hereby. Without limiting the generality of
the foregoing, the undersigned expressly acknowledges and agrees that (i) the
undersigned will not impede the exercise of Parent's rights under the Merger
Agreement, (ii) the irrevocable proxy granted hereunder secures, among other
things, the duty in clause (i), and (iii) the undersigned waives and
relinquishes any claim, right or action it might have, as a shareholder of
Centerpoint or otherwise, against Parent or any of its affiliates in
connection with any exercise of the irrevocable proxy granted hereunder.
This Proxy shall terminate on the later to occur of (i) August 29, 1996 or
(ii) in the event of a material breach of the Merger Agreement by Centerpoint,
on the date of termination of the Stock Option Agreement (as defined in the
Merger Agreement).
Witness:
_____________________________________ _____________________________________
60
