EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (the "Agreement"), dated as of May 9, 1997, by
and among Northeast Bancorp (the "Acquiror"), a Maine corporation, Northeast
Bank, F.S.B. (the "Acquiror Sub"), a Federally chartered savings bank and a
wholly-owned subsidiary of the Acquiror, and Cushnoc Bank and Trust Company
(the "Company"), a Maine-chartered financial institution.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Acquiror and the Company have
determined that it is in the best interests of their respective companies and
their shareholders to consummate the business combination transactions provided
for herein, including the merger of the Company with and into the Acquiror Sub,
subject to the terms and conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Acquiror Common Stock" shall mean the common stock, par value $1.00 per
share, of the Acquiror.
"Acquiror Employee Plans" shall have the meaning set forth in Section
4.14(a) hereof.
"Acquiror Employee Stock Benefit Plans" shall mean the following employee
benefit plans of the Acquiror: Employee Stock Purchase Plan; 1987 Stock Option
Plan; 1989 Stock Option Plan; 1992 Stock Option Plan.
"Acquiror Financial Statements" shall mean (i) the consolidated statements
of the financial condition (including related notes and schedules, if any) of
the Acquiror as of June 30, 1994, 1995 and 1996 and the consolidated statements
of operations, shareholders' equity and cash flows (including related notes and
schedules, if any) of the Acquiror for each of the years ended June 30, 1994,
1995 and 1996 as filed by the Acquiror in its Securities Documents, and (ii)
the consolidated statements of financial condition of the Acquiror (including
related notes and schedules, if any) and the consolidated statements of
operations, shareholders' equity and cash flows (including related notes and
schedules, if any) of the Acquiror included in the Securities Documents filed
by the Acquiror with respect to the quarterly and annual periods ended
subsequent to June 30, 1996.
"Articles of Merger" shall have the meaning set forth in section 2.2 below.
"BIF" means the Bank Insurance Fund administered by the FDIC or any
successor thereto.
"CFR" means the Code of Federal Regulations.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company Common Stock" shall mean the common stock, par value $15.00 per
share, of the Company.
"Company Employee Plans" shall have the meaning set forth in Section
3.14(a) hereof.
"Company Financial Statements" shall mean (i) the statements of financial
condition (including related notes and schedules, if any) of the Company as of
December 31, 1994, 1995 and 1996 and the statements of operations,
shareholders' equity and cash flows (including related notes and schedules, if
any) of the Company for each of the years ended December 31, 1994, 1995 and
1996, and (ii) the statements of financial condition of the Company (including
related notes and schedules, if any) and the statements of operations,
shareholders' equity and cash flows (including related notes and schedules, if
any) of the Company with respect to the quarterly and annual periods ended
subsequent to December 31, 1996.
"Dissenting Shares" shall have the meaning set forth in Section 2.5 hereof.
"Effective Time" shall mean the date and time specified pursuant to Section
2.2 hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any Governmental Entity
or third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on, or resulting from the presence, or
release into the environment, of any Materials of Environmental Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation or code, and any published license, permit,
authorization, approval, consent, order, judgment, decree, injunction or
agreement with any governmental entity relating to (1) the protection,
preservation or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural resource),
and/or (2) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Materials
of Environment Concern. The term Environmental Law includes without limitation
(1) the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, 42 U.S.C. section 9601, et seq; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. section 6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. section 7401, et seq; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. section 1251, et seq; the Toxic Substances Control
Act, as amended, 15 U.S.C. section 9601, et seq; the Emergency Planning and
Community Right to Know Act, 42 U.S.C. section 1101, et seq; the Safe Drinking
Water Act, 42 U.S.C. section 300f, et seq; and all comparable state and local
laws, and (2) any common law (including without limitation common law that may
impose strict liability) that may impose liability or obligations for injuries
or damages due to, or threatened as a result of, the presence of or exposure to
any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in Section 2.3 hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Form S-4" shall mean the registration statement on Form S-4 (or on any
successor or other appropriate form) to be filed by the Acquiror in connection
with the issuance of shares of Acquiror Common Stock pursuant to the Merger, as
amended and supplemented.
"Governmental Entity" shall mean any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" shall mean the Home Owners Loan Act.
"Material Adverse Effect" shall mean, with respect to the Acquiror or the
Company, respectively, any effect that (i) is material and adverse to the
financial condition, results of operations or business of the Acquiror and its
Subsidiaries taken as whole and the Company taken as a whole, respectively,
or (ii) materially impairs the ability of the Company or the Acquiror to
consummate the transactions contemplated by this Agreement, provided, however,
that Material Adverse Effect shall not be deemed to include the impact of (a)
changes in laws and regulations or interpretations thereof that are generally
applicable to the banking or savings industries (including without limitation
prospective changes which result in assessments of all institutions with SAIF
-insured deposits which are intended to recapitalize the SAIF), (b) changes in
generally accepted accounting principles that are generally applicable to the
banking or savings industries, (c) expenses incurred in connection with the
transactions contemplated hereby and (d) actions or omissions of a party (or
any of its subsidiaries) taken with the prior informed written consent of the
other party or parties in contemplation of the transactions contemplated
hereby, including without limitation any actions taken by the Company
contemplated by Section 5.12 hereof.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" shall mean the merger of the Company with and into the Acquiror
Sub pursuant to the terms hereof.
"MRSA" shall mean the Maine Revised Statutes Annotated.
"OTS" shall mean the Office of Thrift Supervision.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Previously Disclosed" shall mean disclosed (i) in a letter dated the date
hereof delivered from the disclosing party to the other party specifically
referring to the appropriate section of this Agreement and describing in
reasonable detail the matters contained therein, or (ii) a letter dated after
the date hereof from the disclosing party specifically referring to this
Agreement and describing in reasonable detail the matters contained therein and
delivered by the other party pursuant to Section 5.14 hereof.
"Proxy Statement" shall mean the prospectus/proxy statement contained in
the Form S-4, as amended or supplemented, and to be delivered to shareholders
of the Company.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests.
"SAIF" means the Savings Association Insurance Fund administered by the
FDIC or any successor thereto.
"Securities Act" shall mean the Securities Act of 1993, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all other documents filed, or required
to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set forth
in Rule 1-02 of Regulations S-X of the Commission.
"Superintendent" shall mean the Superintendent of the Bureau of Banking of
the State of Maine.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER
Section 2.1 The Merger
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 2.2 below), the Company shall be merged
with and into the Acquiror Sub (the "Merger") in accordance with the applicable
provisions of the MRSA and Federal Law. The Acquiror Sub shall be the
surviving corporation (hereinafter sometimes called the "Surviving
Corporation") of the Merger, and shall continue its corporate existence under
the laws of the United States of America. The name of the Surviving
Corporation shall continue to be "Northeast Bank F.S.B." Upon consummation of
the Merger, the separate corporate existence of the Company shall terminate.
(b) From and after the Effective Time, the Merger shall have the effects
set forth in Section 552.13 of Title 12 of the C.F.R. and Section 905 of Title
13-A of the M.R.S.A.
(c) The Charter and Bylaws of the Acquiror Sub, as in effect immediately
prior to the Effective Time, shall be the Charter and Bylaws of the Surviving
Corporation, respectively, until altered, amended or repealed in accordance
with their terms and applicable law.
(d) The authorized capital stock of the Surviving Corporation shall be as
stated in the Articles of Incorporation of the Acquiror Sub immediately prior
to the Effective Time.
(e) Upon consummation of the Merger, (i) the directors of the Surviving
Corporation shall be the persons whose name and residence address, and whose
term as a director, are listed on Exhibit 2.1(d) attached hereto and
incorporated herein by reference, and (ii) the executive officers of the
Surviving Corporation shall be the executive officers of the Acquiror Sub
immediately prior to the Effective Time.
Section 2.2 Effective Time; Closing
The Merger shall become effective upon the occurrence of the filing of
articles of merger (the "Articles of Merger") with the Secretary of State of
the State of Maine pursuant to the MRSA, unless a later date and time is
specified as the effective time in such Articles of Merger (the "Effective
Time"). A closing (the "Closing") shall take place immediately prior to the
Effective Time at 10:00 a.m., Eastern Time, on the fifth business day following
the satisfaction or waiver, to the extent permitted hereunder, of the
conditions to the consummation of the Merger specified in Article VI of this
Agreement (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), at the principal
executive offices of the Acquiror in Auburn, Maine, or at such other place, at
such other time, or on such other date as the parties may mutually agree upon,
provided that, notwithstanding the foregoing, the parties hereby agree to hold
the Closing on the first day which is at least two business days following the
satisfaction or waiver, to the extent permitted hereunder, of the conditions to
consummation of the Merger specified in Article VI of this Agreement (other
than the delivery of certificates, opinions and other instruments and documents
to be delivered at the Closing) if necessary for the Effective Time to occur on
or before December 31, 1997.
At the Closing, there shall be delivered to the Acquiror and the Company
the opinions, certificates and other documents required to be delivered under
Article VI hereof.
Section 2.3 Treatment of Capital Stock
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
shareholder:
(a) each share of Acquiror Common Stock issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain issued and
outstanding;
(b) each share of Acquiror Sub common stock issued and outstanding
immediately prior to the Effective Time shall be unchanged and shall remain
issued and outstanding; and
(c) subject to Sections 2.5 and 2.6 hereof, each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares held by the Acquiror or any of its Subsidiaries other than in a
fiduciary capacity that are beneficially owned by third parties or as a result
of debts previously contracted, which shall be cancelled and retired) shall
become and be converted into the right to receive 2.089 shares of Acquiror
Common Stock (subject to possible adjustment as set forth in Section 2.8
hereof, the "Exchange Ratio").
Section 2.4 Shareholder Rights; Stock Transfers
Except as provided for in Section 2.5 hereof, at the Effective Time,
holders of Company Common Stock shall cease to be and shall have no rights as
shareholders of the Company, other than to receive the consideration provided
under this Article II. After the Effective Time, there shall be no transfers
on the stock transfers books of the Company or the Surviving Corporation of
shares of Company Common Stock.
Section 2.5 Dissenting Shares
Each outstanding share of Company Common Stock the holder of which has
perfected his right to dissent under the MRSA and has not effectively withdrawn
or lost such right as of the Effective Time (the "Dissenting Shares") shall not
be converted into or represent a right to receive shares of Acquiror Common
Stock hereunder, and the holder thereof shall be entitled only to such rights
as are granted by the MRSA. The Company shall give the Acquiror prompt notice
upon receipt by the Company of any such written demands for payment of the fair
value of such shares of Company Common Stock and of withdrawals of such demands
and any other instruments provided pursuant to the MRSA (any shareholder duly
making such demand being hereinafter called a "Dissenting Shareholder"). If
any Dissenting Shareholder shall effectively withdraw or lose (through failure
to perfect or otherwise) his right to such payment at any time, such holder's
shares of Company Common Stock shall be converted into the right to receive
Acquiror Common Stock in accordance with the applicable provisions of this
Agreement. Any payments made in respect of Dissenting Shares shall be made by
the Surviving Corporation.
Section 2.6 Fractional Shares
Notwithstanding any other provision hereof, no fractional shares of
Acquiror Common Stock shall be issued to holders of Company Common Stock. In
lieu thereof, each holder of shares of Company Common Stock entitled to a
fraction of a share of Acquiror Common Stock shall, at the time of surrender of
the certificate or certificates representing such holder's shares, receive an
amount of cash (without interest) equal to the product arrived at by
multiplying such fraction of a share of Acquiror Common Stock by the average
closing price of the Acquiror Common Stock on the American Stock Exchange on
the ten business days preceding the Effective Time, as reported in the Wall
Street Journal, or if not reported therein, in another authoritative source,
rounded to the nearest whole cent. No such holder shall be entitled to
dividends, voting rights or other rights in respect of any fractional share
interest.
Section 2.7 Exchange Procedures
(a) At or after the Effective Time, each holder of a certificate or
certificates theretofore evidencing issued and outstanding shares of Company
Common Stock, upon surrender of the same to an agent duly appointed by the
Acquiror ("Exchange Agent"), shall be entitled to receive in exchange therefor
a certificate or certificates representing the number of full shares of
Acquiror Common Stock into which the shares of Company Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted as provided in Section 2.3(c) hereof. As promptly as practicable
after the Effective Time (and in no event later than the fifth business day
following the Effective Time), the Exchange Agent shall mail to each holder of
record of an outstanding certificate which immediately prior to the Effective
Time evidenced shares of Company Common Stock, and which is to be exchanged for
Acquiror Common Stock as provided in Section 2.3 hereof, a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to such certificate shall pass, only upon delivery of such
certificate to the Exchange Agent) advising such holder of the terms of the
exchange effected by the Merger and of the procedure for surrendering to the
Exchange Agent such certificate in exchange for a certificate or certificates
evidencing Acquiror Common Stock or cash in lieu of any fractional share.
Notwithstanding anything in this Agreement to the contrary, certificates
representing Company Common Stock surrendered for exchange by any Affiliate of
the Company (as defined in Section 5.13(a) hereof) shall not be exchanged for
certificates representing shares of Acquiror Common Stock in accordance with
the terms of this Agreement until the Acquiror has received a written agreement
from such person as specified in Section 5.13(b).
(b) No holder of a certificate theretofore representing shares of Company
Common Stock shall be entitled to receive any dividends in respect of the
Acquiror Common Stock into which such shares shall have been converted by
virtue of the Merger until the certificate representing such shares is
surrendered in exchange for a certificate or certificates representing shares
of Acquiror Common Stock. In the event that dividends are declared and paid by
the Acquiror in respect of Acquiror Common Stock after the Effective Time but
prior to any holder's surrender of certificates representing shares of Company
Common Stock, dividends payable to such holder in respect of Acquiror Common
Stock not then issued shall accrue (without interest). Any such dividends
shall be paid (without interest) upon surrender of the certificates
representing such shares of Company Common Stock. The Acquiror shall be
entitled, after the Effective Time, to treat certificates representing shares
of Company Common Stock as evidencing ownership of the number of full shares of
Acquiror Common Stock into which the shares of Company Common Stock represented
by such certificates shall have been converted pursuant to this Agreement,
notwithstanding the failure on the part of the holder thereof to surrender such
certificates.
(c) The Acquiror shall not be obligated to deliver a certificate or
certificates representing shares of Acquiror Common Stock to which a holder of
Company Common Stock would otherwise be entitled as a result of the Merger
until such holder surrenders the certificate or certificates representing the
shares of Company Common Stock for exchange as provided in this Section 2.7,
or, in default thereof, an appropriate affidavit of loss and indemnity
agreement and/or bond in an amount as may be reasonably required in each case
by the Acquiror. If any certificate evidencing shares of Acquiror Common Stock
is to be issued in a name other than that in which the certificate evidencing
Company Common Stock surrendered in exchange therefor is registered, it shall
be a condition of the issuance thereof that the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange pay to the Exchange Agent any transfer or
other tax required by reason of the issuance of a certificate for shares of
Acquiror Common Stock in any name other than that of the registered holder of
the certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
Section 2.8 Anti-Dilution Provisions
If, on the Effective Time, (i) Acquiror has, at any time after the date
hereof and before the Effective Time, (A) issued a dividend in shares of
Acquiror Common Stock, (B) combined the outstanding shares of Acquiror Common
Stock into a smaller number of shares, (C) subdivided the outstanding shares of
Acquiror Common Stock, or (D) reclassified the shares of Acquiror Common Stock,
then the number of shares of Acquiror Common Stock to be delivered pursuant to
Section 2.7 to Company shareholders who are entitled to receive shares of
Acquiror Common Stock in exchange for shares of Company Common Stock shall be
adjusted so that each Company shareholder shall be entitled to receive such
number of shares of Acquiror Common Stock as such shareholder would have been
entitled to receive if the Effective Time had occurred prior to the happening
of such event. (By way of illustration, if Acquiror shall declare a stock
dividend of 7% payable with respect to a record date on or prior to the
Effective Time, the Exchange Ratio determined pursuant to Section 2.3 shall be
adjusted upward by 7%.)
Section 2.9 Additional Actions
If, at any time after the Effective Time, the Surviving Corporation shall
consider that any further assignments or assurances in law or any other acts
are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger, or (ii) otherwise carry out the purposes of this Agreement, the
Company and its proper officers and directors shall be deemed to have granted
to the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments and assurances in law and to do all
acts necessary or proper to vest, perfect or confirm title to and possession of
such rights, properties or assets in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement; and the proper officers and
directors of the Surviving Corporation are fully authorized in the name of the
Company or otherwise to take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Acquiror that:
Section 3.1 Capital Structure; Subsidiaries
The authorized capital stock of the Company consists of 90,000 shares of
Company Common Stock. As of the date hereof, there are 90,000 shares of
Company Common Stock issued and outstanding, -0- shares of Company Common Stock
are directly or indirectly held by the Company as treasury stock. All
outstanding shares of Company Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and none of the
outstanding shares of Company Common Stock has been issued in violation of the
preemptive rights of any person, firm or entity. There are no Rights
authorized, issued or outstanding with respect to the capital stock of the
Company. The Company has no subsidiaries.
Section 3.2 Organization, Standing and Authority of the
Company
The Company is a commercial bank duly organized, validly existing and in
good standing under the laws of the State of Maine with full corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as now conducted and is licensed or qualified to do business and
is in good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on the Company. The deposit
accounts of the Company are insured by the BIF to the maximum extent permitted
by the FDIA, and the Company has paid all deposit insurance premiums and
assessments required by the FDIA and the regulations thereunder. The Company
has heretofore delivered or made available to the Acquiror true and complete
copies of its Articles of Incorporation and Bylaws as in effect as of the date
hereof.
Section 3.3 Authorized and Effective Agreement
(a) The Company has all requisite corporate power and authority to enter
into this Agreement and (subject to receipt of all necessary governmental
approvals and the approval of the Company's shareholders of this Agreement) to
perform all of its obligations under 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 in respect thereof on the part of the Company, except for the
approval of this Agreement by the Company's shareholders. This Agreement has
been duly and validly executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Acquiror and the Acquiror Sub,
constitutes a legal, valid and binding obligation of the Company which is
enforceable against the Company in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(b) Neither the execution and delivery of this Agreement, nor consummation
of the transactions contemplated hereby (including the Merger), nor compliance
by the Company with any of the provisions hereof (i) does or will conflict with
or result in a breach of any provisions of the Articles of Incorporation or
Bylaws of the Company, (ii) violate, conflict with or result in a breach of any
term, condition or provision of, or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
give rise to any right of termination, cancellation or acceleration with
respect to, or result in the creation of any lien, charge or encumbrance upon
any property or asset of the Company pursuant to, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company is a party, or by which any of
its properties or assets may be bound or affected, or (iii) subject to receipt
of all required governmental and shareholder approvals, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the
Company.
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the OTS, the FDIC, and the
Superintendent, (ii) the filing and effectiveness of the Form S-4 with the
Commission, (iii) compliance with applicable state securities or "blue sky"
laws and the American Stock Exchange Rules in connection with the issuance of
Acquiror Common Stock pursuant to this Agreement, (iv) the approval of this
Agreement by the requisite vote of the shareholders of the Company and the
Acquiror Sub and (v) the filing of Articles of Merger with the Secretary of
State of Maine pursuant to the MRSA and Articles of Combination with the OTS
pursuant to the CFR in connection with the Merger, no consents or approvals of
or filings or registrations with any Governmental Entity or with any third
party are necessary on the part of the Company in connection with the execution
and delivery by the Company of this Agreement and consummation by the Company
of the transactions contemplated hereby.
(d) As of the date hereof, the Company is not aware of anyreasons relating
to the Company (including without limitation Community Reinvestment Act
compliance) why all consents and approvals shall not be procured from all
regulatory agencies having jurisdiction over the transactions contemplated by
this Agreement as shall be necessary for (i) consummation of the transactions
contemplated by this Agreement and (ii) the continuation by the Acquiror after
the Effective Time of the business of each of the Acquiror, the Acquiror Sub
and the Company as such business is carried on immediately prior to the
Effective Time, free of any conditions or requirements which, in the reasonable
opinion of the Company, could have a Material Adverse Effect on the Acquiror,
the Acquiror Sub or the Company or materially impair the value of the Company
to the Acquiror.
Section 3.4 Regulatory Reports
Since January 1, 1994, the Company has duly filed with the FDIC and the
Superintendent, as the case may be, the reports required to be filed under
applicable laws and regulations and such reports were in all material respects
complete and accurate and in compliance with the requirements of applicable
laws and regulations. In connection with the most recent examinations of the
Company by the FDIC or the Superintendent, the Company was not required to
correct or change any action, procedure or proceeding which the Company
believes has not been corrected or changed as required.
Section 3.5 Financial Statements
(a) The Company has previously delivered or made available to the Acquiror
accurate and complete copies of the Company Financial Statements which, in the
case of the statements of financial condition of the Company as of December 31,
1996, and the statements of operations, shareholders' equity and cash flows for
the year ended December 31, 1996, are accompanied by the audit reports of
Xxxxxx, Xxxxxxxx & Associates, independent public accountants with respect to
the Company. The Company Financial Statements referred to herein, as well as
the Company Financial Statements to be delivered pursuant to Section 5.7
hereof, fairly present or will fairly present, as the case may be, the
financial condition of the Company as of the respective dates set forth
therein, and the results of operations, shareholders' equity and cash flows of
the Company for the respective periods or as of the respective dates set forth
therein.
(b) Each of the Company Financial Statements referred to in Section 3.5(a)
has been or will be, as the case may be, prepared in accordance with generally
accepted accounting principles consistently applied during the periods
involved, except as stated therein. The audits of the Company have been
conducted in all material respects in accordance with generally accepted
auditing standards. The books and records of the Company are being maintained
in material compliance with applicable legal and accounting requirements, and
such books and records accurately reflect in all material respects all dealings
and transactions in respect of the business, assets, liabilities and affairs of
the Company.
(c) Except and to the extent (i) reflected, disclosed or provided for in
the Company Financial Statements and (ii) of liabilities incurred since
December 31, 1996 in the ordinary course of business, the Company has no
liabilities, whether absolute, accrued, contingent or otherwise, material to
the financial condition, results of operations or business of the Company.
Section 3.6 Material Adverse Change
Since December 31, 1996, (i) the Company has conducted its business in the
ordinary and usual course (excluding the incurrence of expenses in connection
with this Agreement and the transactions contemplated hereby) and (ii) no event
has occurred or circumstance arisen that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company.
Section 3.7 Environmental Matters
(a) To the best of the Company's knowledge, the Company is in compliance
with all Environmental Laws. The Company has not received any communication
alleging that the Company is not in such compliance and, to the best knowledge
of the Company, there are no present circumstances that would prevent or
interfere with the continuation of such compliance.
(b) To the best of the Company's knowledge, none of the properties owned,
leased or operated by the Company (other than properties held by the Company
solely as security for a debt) has been or is in violation of or liable under
any Environmental Law.
(c) To the best of the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against the Company or against any person
or entity whose liability for any Environmental Claim the Company has or may
have retained or assumed either contractually or by operation of law.
(d) Except as Previously Disclosed, the Company has not conducted any
environmental studies during the past five years with respect to any properties
owned by it as of the date hereof or which secure loans of the Company as of
the date hereof.
Section 3.8 Tax Matters
(a) The Company has timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property, personal
property and other tax returns required by applicable law to be filed by it
(including, without limitation, estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and has paid,
or where payment is not required to have been made, has set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all taxes for any subsequent
periods ending on or prior to the Effective Time. The Company will not have
any material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by the Company are complete and accurate in all material respects. The
Company is not delinquent in the payment of any tax, assessment or governmental
charge, and except as Previously Disclosed, has not requested any extension of
time within which to file any tax returns in respect of any fiscal year or
portion thereof which have not since been filed. Except as Previously
Disclosed, the federal, state and local income tax returns of the Company have
been examined by the applicable tax authorities (or are closed to examination
due to the expiration of the applicable statute of limitations) and no
deficiencies for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or otherwise) against the Company as a result
of such examinations or otherwise which have not been settled and paid. There
are currently no agreements in effect with respect to the Company to extend the
period of limitations for the assessment or collection of any tax. Except as
Previously Disclosed, as of the date hereof, no audit, examination or
deficiency or refund litigation with respect to such return is pending or, to
the best of the Company's knowledge, threatened.
(c) Except as Previously Disclosed, the Company (i) is not a party to any
agreement providing for the allocation or sharing of taxes, (ii) is not
required to include in income any adjustment pursuant to Section 481(a) of the
Code by reason of a voluntary change in accounting method initiated by the
Company (nor does the Company have any knowledge that the Internal Revenue
Service has proposed any such adjustment or change of accounting method) or
(iii) has not filed a consent pursuant to Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply.
Section 3.9 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of the Company,
threatened against the Company or against any asset, interest or right of the
Company, or against any officer, director or employee of the Company that in
any such case, if decided adversely, would have a Material Adverse Effect on
the Company. The Company is not a party to any order, judgment or decree which
has or could reasonably be expected to have a Material Adverse Effect on the
Company.
Section 3.10 Compliance with Laws
(a) The Company has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or
regulatory bodies that are required in order to permit it to carry on its
business as it is presently being conducted and the absence of which could
reasonably be expected to have a Material Adverse Effect on the Company; all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of the Company, no suspension
or cancellation of any of the same is threatened.
(b) The Company is not in violation of its Articles of Incorporation or
Bylaws, or, to the best of the Company's knowledge, of any applicable federal,
state or local law or ordinance or any order, rule or regulation of any
federal, state, local or other governmental agency or body (including, without
limitation, all banking (including without limitation all regulatory capital
requirements), securities, municipal securities, safety, health, zoning, anti-
discrimination, antitrust, and wage and hour laws, ordinances, orders, rules
and regulations), or in default with respect to any order, writ, injunction or
decree of any court specifically addressed to the Company, or in default under
any order, license, regulation or demand of any governmental agency
specifically addressed to the Company, any of which violations or defaults
could reasonably be expected to have a Material Adverse Effect on the Company;
and the Company has not received any notice or communication from any federal,
state or local governmental authority asserting that the Company is in
violation of any of the foregoing which could reasonably be expected to have a
Material Adverse Effect on the Company. The Company is not subject to any
regulatory or supervisory cease or desist order, agreement, written directive,
memorandum of understanding or written commitment (other than those of general
applicability to all banks issued by governmental authorities), and has not
received any written communication requesting that it enter into any of the
foregoing.
Section 3.11 Certain Information
None of the information relating to the Company supplied or to be supplied
by the Company for inclusion or incorporation by reference in (i) the Form S-4,
at the time the Form S-4 and any amendment thereto becomes effective under the
Securities Act, and (ii) the Proxy Statement, as of the date(s) such Proxy
Statement is mailed to shareholders of the Company and up to andincluding the
date of the meeting of shareholders to which such Proxy Statement relates, will
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided that information as of a
later date shall be deemed to modify information as of an earlier date. The
Proxy Statement mailed by the Company to its shareholders in connection with
the meeting of shareholders at which this Agreement will be considered by such
shareholders will include or be accompanied by such information as the Acquiror
shall request for purposes of compliance with the Exchange Act and the rules
and regulations promulgated thereunder.
Section 3.12 Employee Benefit Plans
(a) The Company has Previously Disclosed all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
deferred compensation, consultant, bonus or group insurance contract or any
other incentive, welfare, severance or employee benefit plan or agreement
maintained for the benefit of employees or former employees of the Company (the
"Company Employee Plans"), and the Company has previously furnished or made
available to the Acquiror accurate and complete copies of the same together
with (i) the most recent actuarial and financial reports prepared with respect
to any qualified plan, (ii) the most recent annual reports filed with any
governmental agency, and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain to any qualified plan.
(b) None of the Company, any pension plan maintained by it and qualified
under Section 401 of the Code or, to the best of the Company's knowledge, any
fiduciary of such plan has incurred any material liability to the PBGC or the
Internal Revenue Service with respect to any employees of the Company. To the
best of the Company's knowledge, no reportable event under Section 4043(b) of
ERISA has occurred with respect to any such pension plan.
(c) The Company does not participate in and has not incurred any liability
under Section 4201 of ERISA for a complete or partial withdrawal from a multi
-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each Company Employee Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a
"Company Pension Plan") which is intended to qualify under Section 401 of the
Code to the effect that such plan is qualified under Section 401 of the Code
and the trust associated with such employee pension plan is tax exempt under
Section 501 of the Code. No such letter has been revoked or, to the best of
the Company's knowledge, is threatened to be revoked and the Company does not
know of any ground on which such revocation may be based. The Company has
no liability under any such plan that is not reflected on the consolidated
statement of financial condition of the Company at December 31, 1996 included
in the Company Financial Statements, other than liabilities incurred in the
ordinary course of business in connection therewith subsequent to the date
thereof.
(e) To the best of the Company's knowledge, no prohibited transaction
(which shall mean any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code) has occurred
with respect to any Company Employee Plan which would result in the imposition,
directly or indirectly, of a material excise tax under Section 4975 of the Code
or otherwise have a Material Adverse Effect on the Company.
(f) Full payment has been made (or proper accruals have been established)
of all contributions which are required for periods prior to the date hereof,
and full payment will also be made (or proper accruals will be so established)
of all contributions which are required for periods after the date hereof and
prior to the Effective Time, under the terms of each Company Employee Plan or
ERISA; no accumulated funding deficiency (as defined in Section 302 of ERISA or
Section 412 of the Code), whether or not waived, exists with respect to any
Company Pension Plan, and there is no "unfunded current liability" (as defined
in Section 412 of the Code) with respect to any Company Pension Plan.
(g) To the best of the Company's knowledge, the Company Employee Plans
have been operated in compliance in all material respects with the applicable
provisions of ERISA, the Code, all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations.
(h) There are no pending or, to the best knowledge of the Company,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Company Employee Plans or any trust related thereto or any
fiduciary thereof.
Section 3.13 Certain Contracts
(a) Except as Previously Disclosed, the Company is not a party to, is not
bound or affected by, and does not receive and is not obligated to pay benefits
under, (i) any agreement, arrangement or commitment, including without
limitation any agreement, indenture or other instrument, relating to the
borrowing of money by the Company (other than deposits, federal funds purchased
and securities sold under agreements to repurchase) or the guarantee by the
Company of any obligation, (ii) any agreement, arrangement or commitment
relating to the employment of a consultant or the employment, election or
retention in office of any present or former director, officer or employee of
the Company, (iii) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may become
due to any director, officer or employee of the Company upon execution of this
Agreement or upon or following consummation of the transactions contemplated by
this Agreement (either alone or in connection with the occurrence of any
additional acts or events); (iv) any agreement, arrangement or understanding
pursuant to which the Company is obligated to indemnify any director, officer,
employee or agent of the Company; (v) any agreement, arrangement or
understanding to which the Company is a party or by which any of the same is
bound which limits the freedom of the Company to compete in any line of
business or with any person, or (vi) 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
Superintendent or any other regulatory agency.
(b) Schedule 3.13(b) sets forth all of the following contracts and
agreements to which the Company is a party or to which or by which it or its
assets or properties are subject or bound:
(i) contracts and other agreements with any current or former officer,
director, employee, consultant, agent, partner or other representative, or with
any entity in which any of the foregoing has an interest;
(ii) contracts and other agreements (a) for the sale of any of the assets
or properties or for the grant to any person of any preferential rights to
purchase any of the assets or properties of the Company, or (b) which create
any liens or encumbrances on any assets or properties of the Company;
(iii) contracts and other agreements calling for an aggregate purchase
price or payments in any one year of more than $10,000 in any one case (or in
the aggregate in the case of any related series of contracts or agreement);
(iv) contracts and any other agreements relating to the acquisition by the
Company of any operating business or the capital stock of any other corporation
or any partnership or joint venture interest;
(v) any and all licenses necessary for, or required in connection with,
the operation of the Company;
(vi) any contracts or agreement with respect to the payment of dividends
or any other distribution in respect of capital stock of the Company; and
(vii) contracts or agreements with affiliates.
There have been delivered or made available to the Acquiror true and complete
copies of all of such contracts. All of such contracts and other agreement are
valid and binding upon the respective parties thereto in accordance with their
respective terms, and there are no defaults under any such contracts. Except
as separately identified on Schedule 3.13(b), no approval or consent of any
person is needed in order that the contracts and other agreements set forth in
such Schedule 3.13(b) continue in full force and effect following the
consummation of the transactions contemplated hereby.
(c) The Company is not in default or in noncompliance, which default or
noncompliance could reasonably be expected to have a Material Adverse Effect on
the Company, under any contract agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or affected, whether entered into
in the ordinary course of business or otherwise and whether written or oral,
and there has not occurred any event that with the lapse of time or the giving
of notice, or both, would constitute such a default or non-compliance.
Section 3.14 Brokers and Finders
Except as Previously Disclosed, neither the Company nor any of its
directors, officers, or employees, has employed any broker or finder or
incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
Section 3.15 Insurance
The Company has Previously Disclosed a list of insurance policies in effect
under which the Company is an insured. All such policies are with financially
sound and reputable insurance companies, and all premiums thereon have been
paid to the date hereof.
Section 3.1 Properties
All real and personal property owned by the Company or presently used by it
in its business is in an adequate condition (ordinary wear and tear excepted)
and is sufficient to carry on the business of the Company in the ordinary
course of business consistent with its past practices. The Company has good
and marketable title free and clear of all liens, encumbrances, charges,
defaults or equities (other than equities of redemption under applicable
foreclosure laws) to all of the material properties and assets, real and
personal, reflected on the statement of financial condition of the Company as
of December 31, 1996 included in the Company Financial Statements or acquired
after such date, except (i) liens for current taxes not yet due or payable (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
its banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent and
(iv) as reflected on the statement of financial condition of the Company as of
December 31, 1996 included in the Company Financial Statements. All real and
personal property which is material to the Company's business and leased or
licensed by the Company is held pursuant to leases or licenses which are valid
and enforceable in accordance with their respective terms and such leases will
not terminate or lapse prior to the Effective Time.
Section 3.17 Labor
No work stoppage involving the Company is pending or, to the best knowledge
of the Company, threatened. The Company is not involved in, or threatened with
or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of the Company which could have a Material
Adverse Effect on the Company. Employees of the Company are not represented by
any labor union nor are any collective bargaining agreements otherwise in
effect with respect to such employees, and to the best of the Company's
knowledge, there have been no efforts to unionize or organize any employees of
the Company during the past five years.
Section 3.18 Required Vote
(a) The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of Company Common Stock is necessary to approve this
Agreement and the transactions contemplated hereby on behalf of the Company.
(b) A majority of the Directors of the Company has approved the Merger and
this Agreement.
Section 3.19 Accounting for the Merger; Reorganization
As of the date hereof, the Company has no reason to believe that any action
it has taken will cause the Merger to fail to qualify (i) for pooling-of-
interests accounting treatment under generally accepted accounting principles
or (ii) as a reorganization under Section 368(a) of the Code.
Section 3.20 Disclosures
None of the representations and warranties of the Company or any of the
written information or documents furnished or to be furnished by the Company to
the Acquiror in connection with or pursuant to this Agreement or the
consummation of the transactions contemplated hereby, when considered as a
whole, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to be stated or
necessary to make any such information or document, in light of the
circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
The Acquiror represents and warrants to the Company that:
Section 4.1 Capital Structure
The authorized capital stock of the Acquiror consists of 3,000,000 shares
of Acquiror Common Stock and 1,000,000 shares of Acquiror Preferred Stock. As
of May 9, 1997, there were 1,274,969 shares of issued and outstanding. No
shares of Acquiror Common Stock were held as treasury stock and not outstanding
and there were 116,882 shares of Acquiror Preferred Stock issued and
outstanding, of which 45,454 were classified as Series A and 71,428 were
classified as Series B. As of May 9, 1997, there were 233,764 shares of
Acquiror Common Stock issuable upon conversion of outstanding Acquiror
Preferred Stock, 92,000 shares issuable upon exercise of outstanding options
and 108,764 shares issuable upon exercise of outstanding warrants. All
outstanding shares of Acquiror Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and none of the
outstanding shares of Acquiror Common Stock has been issued in violation of the
preemptive rights of any person, firm or entity. As of the date hereof, there
are no other Rights authorized, issued or outstanding with respect to the
capital stock of the Acquiror, except for (I) shares of Acquiror Common Stock
issuable pursuant to the Acquiror Employee Stock Benefit Plans, now or
hereafter, and (ii) by virtue of this Agreement.
Section 4.2 Organization, Standing and Authority of the Acquiror
The Acquiror is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maine with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted and is licensed or qualified to do business and is in
good standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on the Acquiror. The
Acquiror is duly registered as a savings and loan holding company under the
HOLA and the regulations of the OTS. The Acquiror has heretofore delivered to
the Company true and complete copies of the Articles of Incorporation and
Bylaws of the Acquiror as in effect as of the date hereof.
Section 4.3 Ownership of the Acquiror Subsidiaries
The Acquiror has Previously Disclosed each direct or indirect Acquiror
Subsidiary. Except for capital stock of the Acquiror Subsidiaries, securities
and other interest held in a fiduciary capacity or taken in consideration of
debts previously contracted and by virtue of this Agreement, the Acquiror does
not own or have the right to acquire, directly or indirectly, any outstanding
capital stock or other voting securities or ownership interests of any
corporation, bank, savings association, partnership, joint venture or other
organization. The outstanding shares of capital stock of each of the Acquiror
Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and are directly or indirectly owned by the Acquiror free and
clear of all liens, claims, encumbrances, charges, pledges, restrictions or
rights of third parties of any kind whatsoever, except certain covenants
contained in a Loan Agreement between the Acquiror and Fleet National Bank,
dated as of August 7, 1996. No Rights are authorized, issued or outstanding
with respect to the capital stock or other ownership interests of any Acquiror
Subsidiary and there are no agreements, understandings or commitments relating
to the right of the Acquiror to vote or to dispose of said shares or other
ownership interests.
Section 4.4 Organization, Standing and Authority of the Acquiror
Subsidiaries
Each Acquiror Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the United States or the laws of the
jurisdiction in which it is organized, as applicable. Each of the Acquiror
Subsidiaries (I) has full power and authority to own or lease all of its
properties and assets and to carry on its business as now conducted, and (ii)
is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which its ownership or leasing of property or the conduct of
its business requires such qualification and where the failure to be so
licensed, qualified or in good standing would have a Material Adverse Effect on
the Acquiror. The deposit accounts of each Acquiror Subsidiary which is an
insured depository institution under the FDIA are insured by either the BIF or,
in the case of certain deposits of each such institution, the SAIF to the
maximum extent permitted by the FDIA, and each such entity has paid all
premiums and assessments required by the FDIA and the regulations thereunder.
The Acquiror has heretofore delivered or made available to the Company true and
complete copies of the Articles of Incorporation and Bylaws of it and the
Acquiror Sub.
Section 4.5 Authorized and Effective Agreement
(a) Each of the Acquiror and the Acquiror Sub has all requisite corporate
power and authority to enter into this Agreement and (subject to receipt of all
necessary governmental approvals) to perform all of its obligations under 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 in respect thereof on the part of the
Acquiror and the Acquiror Sub. This Agreement has been duly and validly
executed and delivered by the Acquiror and the Acquiror Sub and, assuming due
authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of the Acquiror and the Acquiror Sub which is
enforceable against the Acquiror and the Acquiror Sub in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby (including the Merger),
nor compliance by the Acquiror and the Acquiror Sub with any of the provisions
hereof (i) does or will conflict with or result in a breach of any provisions
of the Articles of Incorporation or Bylaws of the Acquiror, or the Charter or
Bylaws of any Acquiror Subsidiary, (ii) violate, conflict with or result in a
breach of any term, condition or provision of, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or give rise to any right of termination, cancellation or acceleration
with respect to, or result in the creation of any lien, charge or encumbrance
upon any property or asset of the Acquiror or the Acquiror Sub pursuant to, any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Acquiror or any
Acquiror Subsidiary is a party, or by which any of their respective properties
or assets may be bound or affected, or (iii) subject to receipt of all required
governmental and shareholder approvals, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Acquiror or any Acquiror
Subsidiary.
(c) Except for (i) the filing of applications and notices with, and the
consents and approvals of, as applicable, the OTS, the FDIC, and the
Superintendent, (ii) the filing and effectiveness of the Form S-4 with the
Commission, (iii) compliance with applicable state securities or "blue sky"
laws and the American Stock Exchange Rules in connection with the issuance of
acquiror Common Stock pursuant to this Agreement, (iv) the approval of this
Agreement by the requisite vote of the shareholders of the Company and the
Acquiror Sub, and (v) the filing of Articles of Merger with the Secretary of
State of Maine pursuant to the MRSA and Articles of Combination with the OTS
pursuant to the CFR in connection with the Merger, no consents or approvals of
or filing or registrations with any Governmental Entity or with any third party
are necessary on the part of the Acquiror, or the Acquiror Sub in connection
with the execution and delivery by the Acquiror and the Acquiror Sub of this
Agreement and the consummation by the Acquiror of the transactions contemplated
hereby.
(d) As of the date hereof, neither the Acquiror nor Acquiror Sub is aware
of any reasons relating to the Acquiror or any of its Subsidiaries (including,
without limitation Community Reinvestment Act compliance) why all consents and
approvals shall not be procured from all regulatory agencies having
jurisdiction over the transactions contemplated by this Agreement as shall be
necessary for (i) consummation of the transactions contemplated by this
Agreement and (ii) the continuation by the Acquiror after the Effective Time of
the business of each of the Acquiror, the Acquiror Sub and the Company as such
business is carried on immediately prior to the Effective Time, free of any
conditions or requirements which, in the reasonable opinion of the Acquiror,
could have a Material Adverse Effect on the Acquiror, the Acquiror Sub or the
Company or materially impair the value of the Company to the Acquiror.
Section 4.6 Securities Documents; Regulatory Reports
(a) Since January 1, 1994, the Acquiror has timely filed with the
Commission, the American Stock Exchange and the NASD all Securities Documents
required by the Securities Laws for which a failure to file could reasonably be
expected to have a Material Adverse effect on the Acquiror and such Securities
Documents complied in all material respect with the Securities Laws and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Since January 1, 1994, the Acquiror, the Acquiror Sub and each
Acquiror Subsidiary which is an insured depository institution under the FDIA
has duly filed with the OTS, the FDIC and the Superintendent, as the case may
be, in correct form the reports required to be filed under applicable laws and
regulations and such reports were in all material respects complete and
accurate and in compliance with the requirements of applicable laws and
regulation. In connection with the most recent examinations of the Acquiror or
an Acquiror Subsidiary by the OTS, the FDIC or the Superintendent, neither the
Acquiror nor any Acquiror Subsidiary was required to correct or change any
action, procedure or proceeding which the Acquiror or the Acquiror Subsidiary
believes has not been corrected or changed as required.
Section 4.7 Financial Statements
(a) The Acquiror has previously delivered or made available to the
Company accurate and complete copies of the Acquiror Financial Statements
which, in the case of the consolidated statements of financial condition of the
Acquiror as of June 30, 1994, 1995 and 1996 and the consolidated statements of
operations, shareholders' equity and cash flows for each of the three years
ended June 30, 1994, 1995 and 1996 are accompanied by the audit report of
Xxxxx, Xxxxxx & Xxxxx, LLP, independent public accountants with respect to the
Acquiror. The Acquiror Financial Statements referred to herein, as well as the
Acquiror Financial Statements to be delivered pursuant to Section 5.7 hereof,
fairly present or will fairly present, as the case may be, the consolidated
financial condition of the Acquiror as of the respective dates set forth
therein, and the consolidated results of operations, shareholders' equity and
cash flows of the Acquiror for the respective periods or as of the respective
dates set forth therein.
(b) Each of the Acquiror Financial Statements referred to in Section
4.7(a) has been or will be, as the case may be, prepared in accordance with
generally accepted principles consistently applied during the periods involved,
except as stated therein. The audits of the Acquiror and the Acquiror
Subsidiaries have been conducted in all material respects in accordance with
generally accepted auditing standards. The books and records of the Acquiror
and the Acquiror Subsidiaries are being maintained in material compliance with
applicable legal and accounting requirements, and all such books and records
accurately reflect in all material respects all dealings and transactions in
respect of the business, assets, liabilities and affairs of the Acquiror and
the Acquiror Subsidiaries.
(c) Except and to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of the Acquiror as of June
30, 1996, (including related notes) and (ii) of liabilities incurred since June
30, 1996 in the ordinary course of business, neither the Acquiror nor any
Acquiror Subsidiary has any liabilities, whether absolute, accrued, contingent
or otherwise, material to the financial condition, results of operations or
business of the Acquiror on a consolidated basis.
Section 4.8 Material Adverse Change
Since June 30, 1996, (i) the Acquiror has conducted its business in the
ordinary and usual course (excluding the incurrence of expenses in connection
with this Agreement and the transactions contemplated hereby) and (ii) no event
has occurred or circumstances arisen that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Acquiror.
Section 4.9 Tax Matters
The Acquiror and the Acquiror Subsidiaries and each of their predecessors
has timely filed all federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other tax
returns required by applicable law to be filed by it (including, without
limitation, estimated tax returns, income tax returns, information returns and
withholding and employment tax returns) and has paid, or where payment is not
required to have been made, has set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns and, as of the Effective Time, will have paid, or where payment is
not required to have been made, will have set up an adequate reserve or accrual
for the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither the Acquiror nor any Acquiror Subsidiary will have
any material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established. No audit, examination or deficiency or
refund litigation with respect to any federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property, personal
property and other tax returns filed by the Acquiror or any Acquiror Subsidiary
is pending or, to the best of the Acquiror's knowledge, threatened.
Section 4.10 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of the Acquiror
threatened against the Acquiror or any Acquiror Subsidiary or against any
asset, interest or right of the Acquiror or any Acquiror Subsidiary, or against
any officer, director or employee of the Acquiror or any Acquiror Subsidiary
that in any such case, if decided adversely, would have a Material Adverse
Effect on the Acquiror. Neither the Acquiror or any Acquiror Subsidiary is a
party to any order, judgment or decree which has or could reasonable be expect
to have a Material Adverse Effect on the Acquiror.
Section 4.11 Compliance with Laws
(a) Each of the Acquiror and each Acquiror Subsidiary has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect on the
Acquiror; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best knowledge of the
Acquiror, no suspension or cancellation of any of the same is threatened.
(b) Neither the Acquiror nor any Acquiror Subsidiary is in violation of
its respective Articles of Incorporation or Bylaws, or of any applicable
federal, state or local law or ordinance or any order, rule or regulation of
any federal, state, local or other governmental agency or body (including,
without limitation, all banking (including without limitation all regulatory
capital requirements), securities, municipal securities, safety, health,
zoning, anti-discrimination, antitrust, and wage and hour laws, ordinances,
orders, rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonable be expected to have a Material Adverse Effect on the
Acquiror; and neither the Acquiror nor any Acquiror Subsidiary has received any
notice or communication from any federal, state or local governmental authority
asserting that the Acquiror or any Acquiror Subsidiary is in violation of any
of the foregoing which could reasonably be expected to have a Material Adverse
Effect on the Acquiror. Neither the Acquiror nor any Acquiror Subsidiary is
subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other
than those of general applicability to all banks, savings associations or
holding companies thereof, as applicable, issued by governmental authorities),
and none of them has received any written communication requesting that it
enter into any of the foregoing.
Section 4.12 Certain Information
None of the information relating to the Acquiror and the Acquiror
Subsidiaries to be included or incorporated by reference in (i) the Form S-4,
at the time the Form S-4 and any amendment thereto becomes effective under the
Securities Act, and (ii) the Proxy Statement, as of the date(s) such Proxy
Statement is mailed to shareholders of the Company and up to and including the
date(s) of the meetings of shareholders to which such Proxy Statement relates,
will contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
Section 4.13 Brokers and Finders
Except as previously disclosed, neither the Acquiror nor any Acquiror
Subsidiary nor any of its directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
Section 4.14 Certain Contracts
Neither the Acquiror nor any Acquiror Subsidiary is in default or in non-
compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on the Acquiror, under any contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which
it is a party or by which its assets, business or operations may be bound or
affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
Section 4.15 Insurance
The Acquiror and each Acquiror Subsidiary is insured for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured and has maintained all insurance
required by applicable laws and regulations.
Section 4.16 Properties
All real and personal property owned by the Acquiror or each Acquiror
Subsidiary or presently used by any of them in its respective business is in an
adequate condition (ordinary wear and tear excepted) and is sufficient to carry
on its business in the ordinary course of business consistent with their past
practices. The Acquiror has good and marketable title free and clear of all
liens, encumbrances, charges, defaults or equities (other than equities or
redemption under applicable foreclosure laws) to all of the material properties
and assets, real and personal, reflected on the consolidated statement of
financial condition of the Acquiror as of June 30 1996 included in the Acquiror
Financial Statements or acquired after such date, except (i) liens for current
taxes not yet due or payable (ii) pledges to secure deposits and other liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Acquiror as of June 30, 1996 included
in the Acquiror Financial Statements. All real and personal property which is
material to the Acquiror's business on a consolidated basis and leased or
licensed by the Acquiror or an Acquiror Subsidiary is held pursuant to leases
or licenses which are valid and enforceable in accordance with their respective
terms and such leases will not terminate or lapse prior to the Effective Time.
Section 4.17 Labor
No work stoppage involving the Acquiror or an Acquiror Subsidiary is
pending or, to the best knowledge of the Acquiror, threatened. Neither the
Acquiror nor any Acquiror Subsidiary is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving its employees which could have a Material Adverse Effect
on the Acquiror. Employees of the Acquiror and any Acquiror Subsidiary are not
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees, and to the best of the
Acquiror's knowledge, there have been no efforts to unionize or organize any
employees of the Acquiror or any Acquiror Subsidiary during the past five
years.
Section 4.18 Required Vote
The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of Common Stock of the Acquiror Sub (all of which shares are
owned by the Acquiror) is necessary to approve this Agreement and the
transactions contemplated hereby on behalf of the Acquiror Sub. No shareholder
vote is necessary to approve this Agreement and the transactions contemplated
hereby on behalf of the Acquiror.
Section 4.19 Accounting for the Merger; Reorganization
As of the date hereof, neither the Acquiror nor any Acquiror Subsidiary
has any reason to believe that the Merger will fail to qualify (i) for pooling-
of-interests treatment under generally accepted accounting principles or (ii)
as a reorganization under Section 368(a) of the Code.
Section 4.20 Disclosures
None of the representations and warranties of the Acquiror or any of the
written information or documents furnished or to be furnished by the Acquiror
to the Company in connection with or pursuant to this Agreement or the
consummation of the transactions contemplated hereby, when considered as a
whole, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to be stated or
necessary to make any such information or document, in light of the
circumstances, not misleading.
ARTICLE V
COVENANTS
Section 5.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each of the
Company, the Acquiror and the Acquiror Sub shall use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary or advisable under applicable laws and
regulations so as to permit consummation of the Merger as promptly as
practicable and to otherwise enable consummation of the transactions
contemplated hereby, and shall cooperate fully with the other party or parties
hereto to that end.
Section 5.2 Shareholder Meeting
The Company shall take all action necessary to properly call and convene a
meeting of its shareholders as soon as practicable after the date hereof to
consider and vote upon this Agreement and the transactions contemplated hereby.
The Board of Directors of the Acquiror and the Board of Directors of the
Company will recommend that the shareholders of the Acquiror Sub and the
Company, respectively, approve this Agreement and the transactions contemplated
hereby provided that the Board of Directors of the Acquiror and the Board of
Directors of the Company may fail to make such recommendation, or withdraw,
modify or change any such recommendation, if such Board of Directors, after
having consulted with and considered the advice of outside counsel, has
determined that the making of such recommendation, or the failure to withdraw,
modify or change such recommendation, would constitute a breach of the
fiduciary duties of such directors under applicable law.
Section 5.3 Regulatory Matters
(a) The parties hereto shall promptly cooperate with each other in the
preparation and filing of the Form S-4. The Acquiror shall use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act
as promptly as practicable after such filing. The Acquiror also shall use its
reasonable best efforts to obtain all necessary state securities law or "blue
sky" permits and approvals required to carry out the issuance of Acquiror
Common Stock pursuant to the Merger and all other transactions contemplated by
this Agreement, and the Company shall furnish all information concerning the
Company and the holders of the Company Common Stock as may be reasonably
requested in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. The Acquiror and the Company shall have the right to review in
advance, and to the extent practicable each will consult with the other on,
in each case subject to applicable laws relating to the exchange of
information, all the information which appears in any filing made with or
written materials submitted to any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals
and authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) The Acquiror and the Company shall, upon request, furnish each other
with all information concerning themselves, their respective Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with the Form S-4 or any
other statement, filing, notice or application made by or on behalf of the
Acquiror, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other transactions
contemplated hereby.
(d) The Acquiror and the Company shall promptly furnish each other with
copies of written communications received by the Acquiror or the Company, as
the case may be, or any of their respective Subsidiaries from, or delivered by
any of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
Section 5.4 Investigation and Confidentiality
(a) Each party shall permit the other party and its representatives
reasonable access to its properties and personnel, and shall disclose and make
available to such other party all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and liabilities of
it and its Subsidiaries, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) and shareholders, organizational
documents, bylaws, material contracts and agreements, filing with any
regulatory authority, accountants' work papers, litigation files, loan files,
plans affecting employees, and any other business activities or prospects in
which the other party may have a reasonable interest, provided that such access
shall be reasonably related to the transactions contemplated hereby and, in the
reasonable opinion of the respective parties providing such access, not unduly
interfere with normal operations. Each party and its Subsidiaries shall make
their respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants)
available to confer with the other party and its representatives, provided that
such access shall be reasonably related to the transactions contemplated hereby
and shall not unduly interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall return to the party which
furnished such information all documents or other materials containing,
reflecting or referring to such information, shall use its best efforts to keep
confidential all such information, and shall not directly or indirectly use
such information for any competitive or other commercial purposes. The
obligation to keep such information confidential shall continue for two years
from the date the proposed transactions are abandoned but shall not apply to
(i) any information which (x) the party receiving the information can establish
by convincing evidence was already in its possession prior to the disclosure
thereof by the party furnishing the information; (y) was then generally known
to the public; or (z) became known to the public through no fault of the party
receiving the information; or (ii) disclosures pursuant to a legal requirement
or in accordance with an order of a court of competent jurisdiction, provided
that the party which is the subject of any such legal requirement or order
shall use its best efforts to give the other party at least ten business days
prior notice thereof.
Section 5.5 Press Releases
The Acquiror and the Company shall agree with each other as to the form
and substance of any press release related to this Agreement or the
transactions contemplated hereby, and consult with each other as to the form
and substance of other public disclosures which may relate to the transactions
contemplated by this Agreement, provided, however, that nothing contained
herein shall prohibit either party, following notification to the other party,
from making any disclosure which, based on advice of counsel, is required by
law or regulation.
Section 5.6 Business of the Parties
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of the Acquiror, the Company shall
carry on its business in the ordinary course consistent with past practice.
The Company will use reasonable efforts to (x) preserve its business
organization intact, (y) keep available to itself and the Acquiror the present
services of its employees and (z) preserve for itself and the Acquiror the
goodwill of its customers and others with whom business relationships exist.
Without limiting the generality of the foregoing, except with the prior written
consent of the Acquiror, between the date hereof and the Effective Time, the
Company shall not:
(i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the Company Common Stock;
(ii) issue any shares of its capital stock, or issue, grant, modify or
authorize any Rights; purchase any shares of Company Common Stock; or effect
any recapitalization, reclassification, stock dividend, stock split or like
change in capitalization;
(iii) amend its Articles of Incorporation or Bylaws; impose, or suffer
the imposition, of any material lien, charge or encumbrance on its assets or
permit any such lien, charge or encumbrance to exist; or waive or release any
material right or cancel or compromise any material debt or claim;
(iv) increase the rate of compensation of any of its directors, officers
or employees, or pay or agree to pay any bonus or severance to, or provide any
other new employee benefit or incentive to, any of its directors, officers or
employees, except (i) as may be required pursuant to binding commitments
existing on the date hereof and (ii) such as may be granted in the ordinary
course of business consistent with past practice;
(v) except as previously disclosed enter into or, except as may be
required by law, modify any pension, retirement, stock option, stock purchase,
stock appreciation right, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers or
employees; or make any contributions to the Company's defined contribution
Pension Plan not in the ordinary course of business consistent with past
practice;
(vi) enter into (w) any agreement, arrangement or commitment not made in
the ordinary course of business, (x) any agreement, indenture or other
instrument relating to the borrowing of money by the Company or guarantee by
the Company of any such obligation, except for deposits, federal funds
purchased and securities sold under agreements to repurchase in the ordinary
course of business consistent with past practice (y) any agreement, arrangement
or commitment relating to the employment of any employee, or, amend any such
existing agreement, arrangement or commitment, provided that the Company may
employ an employee if necessary to operate the business of the Company in the
ordinary course of business consistent with past practice and if the employment
of such employee is terminable by the Company at will without liability, other
than as required by law; or (z) any contract, agreement or understanding with a
labor union;
(vii) change its method of accounting in effect for the year ended
December 31, 1996, except as required by changes in laws or regulations or
generally accepted accounting principles, or change any of its methods of
reporting income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax return for the year ended
December 31, 1996, except as required by changes in laws or regulations;
(viii) make any capital expenditures in excess of $10,000 individually or
$25,000 in the aggregate other than pursuant to binding commitments existing on
the date hereof and other than expenditures necessary to maintain existing
assets in good repair;
(ix) file any applications or make any contract with respect to branching
or site location or relocation;
(x) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity;
(xi) enter into any futures contract, option contract, interest rate
caps, interest rate floors, interest rate exchange agreement or other agreement
for purposes of hedging the exposure of its interest-earning assets and
interest-bearing liabilities to changes in market rates of interest;
(xii) enter or agree to enter into any agreement or arrangement granting
any preferential right to purchase any of its assets or rights or requiring the
consent of any party to the transfer and assignment of any such assets or
rights;
(xiii) knowingly take any action that would prevent or impede the Merger
from qualifying (A) for pooling-of-interests accounting treatment under
generally accepted accounting principles or (B) as a reorganization within the
meaning of Section 368;
(xiv) take any action that would result in any of the representations and
warranties of the Company contained in this Agreement not to be true and
correct in any material respect at the Effective Time;
(xv) permit its stockholders equity as of the end of the month preceding
the Effective Time to be less than $2,125,000: or
(xvi) agree to do any of the foregoing.
(b) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of the Company, the Acquiror and
the Acquiror Sub shall carry on their respective businesses in the ordinary
course consistent with past practice and use all reasonableefforts to preserve
intact their present business organizations and relationships. Without
limiting the generality of the foregoing, except with the prior written consent
of the Company or as expressly contemplated hereby, between the date hereof and
the Effective Time, the Acquiror and the Acquiror Sub shall not:
(i) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the Acquiror Common Stock, except for regular quarterly cash dividends which
are not in excess of $0.10 per share of Acquiror Common Stock, provided,
however, that nothing contained herein shall be deemed to affect the ability of
the Acquiror's Subsidiaries to pay dividends on their respective common stocks
to the Acquiror;
(ii) issue any shares of its capital stock or issue, grant, modify or
authorize any Rights, other than in each case pursuant to (i) Rights granted
pursuant to the Acquiror Employee Stock Benefit Plans, (ii) any presently
existing Acquiror stock option plan, or (iii) any acquisition to the extent
permitted under subsection (v) below; provided, however, that Acquiror may
issue its common stock in exchange for the shares of any Acquiror Subsidiary
not presently wholly owned by Acquiror;
(iii) effect any recapitalization, reclassification, stock split or like
change in capitalization;
(iv) amend its Articles of Incorporation, Charter or other governing
instrument or Bylaws in a manner which would adversely affect in any manner the
terms of the Acquiror Common Stock or the ability of the Acquiror to consummate
the transactions contemplated hereby;
(v) make any acquisition (including acquisitions of branch offices and
related deposit liabilities) or take any other action that individually or in
the aggregate could materially adversely affect the ability of the Acquiror to
consummate the transactions contemplated hereby in a reasonably timely manner;
(vi) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment under generally
accepted accounting principles or (B) as a reorganization within the meaning of
Section 368 of the Code;
(vii) take any action that would result in any of the representations and
warranties of the Acquiror contained in this Agreement not to be true and
correct in any material respect at the Effective Time; or
(viii) agree to do any of the foregoing.
(c) The Company shall not solicit or encourage inquiries or proposals
with respect to, furnish any information relating to, or participate in any
negotiations or discussions concerning, any acquisition, lease or purchase of
all or a substantial portion of the assets of, or any equity interest in, the
Company (an "Acquisition Transaction") (other than with the Acquiror or an
affiliate thereof), provided, however, that the Board of Directors of the
Company may furnish such information or participate in such negotiations or
discussions if such Board of Directors, after having consulted with and
considered the advice of outside counsel, has determined that their fiduciary
duty under applicable law requires them to do so. The Company will promptly
inform the other party of any such request for information or of any such
negotiations or discussions, as well as instruct its directors, officers,
representatives and agents to refrain from taking any action prohibited by this
Section 5.6(c).
Section 5.7 Current Information
During the period from the date of this Agreement to the Effective Time,
each party shall, upon the request of the other party, cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of the other party regarding its financial condition,
operations and business and matters relating to the completion of the
transactions contemplated hereby. Within 25 days after the end of each month,
the Company and the Acquiror will deliver to the other party a consolidated
balance sheet and a consolidated statement of operations, without related
notes, for such month prepared in accordance with generally accepted accounting
principles.
Section 5.8 Indemnification; Insurance
(a) From and after the Effective Time through the sixth anniversary of
the Effective Time, the Acquiror (the "Indemnifying Party") shall indemnify and
hold harmless each present and former director, officer and employee of the
Company determined as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent to which such Indemnified Parties were entitled under the
Articles of Organization or Bylaws of the Company in effect on the date hereof,
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. Without limiting the foregoing obligation, the Acquiror also
agrees that all limitations of liability existing in favor of the Indemnified
Parties in the Articles of Organization and Bylaws of the Company, in each case
as in effect on the date hereof, arising out of matters existing or occurring
at or prior to the Effective Time shall survive the Merger and shall continue
in full force and effect for a period of six years from the Effective Time,
provided, however, that all such rights in respect of any claim asserted or
made within such period shall continue until the final disposition of such
claim.
(b) Any Indemnified Party wishing to claim indemnification under Section
5.8(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
the Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as
statements therefor are received, the reasonable fees and expenses of such
counsel for the Indemnified parties (which may not exceed one firm in any
jurisdiction unless the use of one counsel for such Indemnified parties would
present such counsel with a conflict of interest), (ii) the Indemnified Parties
will cooperate in the defense of any such matter, (iii) the Indemnifying Party
shall not be liable for any settlement effected without its prior written
consent and (iv) the Indemnifying Party shall have no obligation hereunder in
the event a federal banking agency or a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of an Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(c) The Acquiror shall cause the Surviving Corporation to maintain the
Company's existing directors' and officers' liability insurance policy as of
the date hereof (or a policy providing coverage on substantially the same terms
and conditions) for acts or omissions occurring prior to the Effective Time by
persons who are currently covered by such insurance policy maintained by the
Company for a period of three years following the Effective Time.
(d) In the event that the Acquiror or any of its respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case the successors and assigns of such
entity shall assume the obligations set forth in this Section 5.8, which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each director and officer covered hereby.
Section 5.9 Certain Directors
The Acquiror agrees to take all action necessary to appoint or elect,
effective as of the Effective Time, one member of the Company's Board of
Directors, to be selected by Acquiror, as a director of the Acquiror. Such
person shall serve until the first annual meeting of shareholders of the
Acquiror following the Effective Time and until a successor is elected and
qualified. The Acquiror shall include such person on the list of nominees for
directors presented by the Board of Directors of the Acquiror and for which
said Board shall solicit proxies at the first annual meeting of shareholders of
the Acquiror following the Effective Time.
Section 5.10 Benefit Plans and Arrangements
As soon as administratively practicable after the Effective Time, the
Acquiror shall take all reasonable action so that employees of the Company
shall be entitled to participate in the Acquiror Employee Plans of general
applicability, and until such time the Company Employee Plans shall remain in
effect, provided that no employee of the Company who becomes an employee of the
Acquiror Sub and subject to the Acquiror's medical insurance plans shall be
excluded coverage thereunder on the basis of a preexisting condition that was
not also excluded under the Company's medical insurance plans, except to the
extent such preexisting condition was excluded under the Company's medical
insurance plans, in which case this Section 5.10 shall not require coverage for
such pre-existing condition unless and until the employee satisfies the pre-
existing exclusion period that was applicable under the Company's medical
insurance plans. For purposes of determining eligibility to participate in and
the vesting of benefits under the Acquiror Employee Plans, the Acquiror shall
recognize years of service with the Company as such service is recognized by
the Company. With respect to any severance for employees of the Company,
Acquiror will, for Company employees who become Acquiror employees, for one
year following the Effective Time pay severance pay in accordance with Exhibit
5.10 attached hereto.
Section 5.11 Accountants' Letters
Each of the Company and the Acquiror shall use its reasonable best efforts
to cause to be delivered to the other party, and such other party's directors
and officers who sign the Form S-4, a letter of its respective independent
public accountants, dated (i) the date on which the Form S-4 shall become
effective and (ii) a date shortly prior to the Effective Time, and addressed to
such other party, and such directors and officers, in form and substance
customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
Section 5.12 Certain Policies; Integration
(a) If requested by the Acquiror, immediately prior to the Effective
Time, the Company shall, consistent with generally accepted accounting
principles, establish such additional accruals and reserves as may be necessary
to conform the Company's accounting and credit loss reserve practices and
methods to those of the Acquiror (as such practices and methods are to be
applied to the Company from and after the Effective Time) and reflect the
Acquiror's plans with respect to the conduct of the Company's business
following the Merger and to provide for the costs and expenses relating to the
consummation by the Company of the transactions contemplated by this Agreement;
provided, however, that the Company shall not be required to take such action
(i) if such action is prohibited by applicable law or (ii) unless the Acquiror
informs the Company that it has no reason to believe that all conditions to the
Acquiror's obligations to consummate the transactions contemplated by this
Agreement set forth in Article VI hereof will not be satisfied or waived. The
establishment or adjustment of such accruals and reserves shall not constitute
a breach of any representation or warranty of the Company contained in this
Agreement.
(b) During the period from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its directors, officers and employees
to, cooperate with and assist the Acquiror in the formulation of a plan of
integration for the Acquiror and the Company and their respective banking
subsidiaries.
Section 5.13 Restrictions on Resale
(a) The Company has Previously Disclosed to the Acquiror, and the
Acquiror has Previously Disclosed to the Company, a schedule of each person
that, to the best of its knowledge, is deemed to be an "affiliate" of the
Company and the Acquiror, respectively (each an "Affiliate"), as that term is
used in Rule 145 under the Securities Act or Accounting Series Releases 130 and
135 of the Commission.
(b) Each of the Company and the Acquiror shall use its reasonable best
efforts to cause each person who may be deemed to be an Affiliate of the
Company and the Acquiror, respectively, to execute and deliver to the Acquiror
on or before the date of the mailing of the Proxy Statement an agreement in the
form of Exhibit D and Exhibit E, respectively.
(c) If requested by an Affiliate of the Company in connection with a
proposed sale of Acquiror Common Stock which in the reasonable judgment of the
Acquiror cannot be effected without jeopardizing the manner in which the Merger
was accounted for under generally accepted accounting principles, the Acquiror
shall use its reasonable best efforts to publish as promptly as reasonably
practicable but in no event later than 90 days after the end of the first month
after the Effective Time in which there are at least 30 days of post-Merger
combined operations, combined sales and net income figures as contemplated by
and in accordance with Accounting Series Release No. 135 of the Commission and
to file a Form 8-K with the Commission containing such figures.
Section 5.14 Disclosure Supplements
From time to time prior to the Effective Time, each party shall promptly
supplement or amend any materials Previously Disclosed and delivered to the
other party pursuant hereto 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 materials Previously Disclosed to the
other party or which is necessary to correct any information in such materials
which has been rendered materially inaccurate thereby; no such supplement or
amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
Section 5.15 Failure to Fulfill Conditions
In the event that either of the parties hereto determines that a condition
to its respective obligations to consummate the transactions contemplated
hereby cannot be fulfilled on or prior to the termination of this Agreement, it
will promptly notify the other party or parties. Each party will promptly
inform the other party or parties of any facts applicable to it that would be
likely to prevent or materially delay approval of the Merger by any
Governmental Entity or third party or which would otherwise prevent or
materially delay completion of the Merger.
In the event the Closing shall not have occurred on or before any record
date established for the payment of cash dividends by the Acquiror subsequent
to September 30, 1997, the Exchange Ratio will be increased to the amount of
such dividend times the Exchange Ratio divided by $14.00, plus the existing
Exchange Ratio, subject to adjustment as provided in Section 2.8.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1 Conditions Precedent - The Acquiror, the Acquiror Sub and
the Company
The respective obligations of the Acquiror, the Acquiror Sub and the
Company to effect the transactions contemplated by this Agreement shall be
subject to satisfaction of the following conditions at or prior to the
Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby shall have been duly and validly taken by the Acquiror, the Acquiror
Sub, and the Company, including approval by the requisite vote of the
respective shareholders of the Acquiror Sub and the Company of this Agreement.
(b) All approvals and consents for the transactions contemplated hereby
from the OTS, the FDIC, the Superintendent and any other Governmental Entity
the approval or consent of which is required for the consummation of the Merger
and the other transactions contemplated hereby shall have been received and all
statutory waiting periods in respect thereof shall have expired; and the
Acquiror and the Company shall have procured all other approvals, consents and
waivers of each person (other than the Governmental Entities referred to above)
whose approval, consent or waiver is necessary to the consummation of the
Merger and the other transactions contemplated hereby and the failure of which
to obtain would have the effects set forth in the following proviso clause;
provided, however, that no approval or consent referred to in this Section
6.1(b) shall be deemed to have been received if it shall include any condition
or requirement that is not customary and useful in transactions of the type
contemplated by this Agreement and that, individually or in the aggregate,
would so materially reduce the economic or business benefits of the
transactions contemplated by this Agreement to the Acquiror that had such
condition or requirement been known the Acquiror, in its reasonable judgment,
would not have entered into this Agreement.
(c) None of the Acquiror, the Company or their respective Subsidiaries
shall be subject to any statute, rule, regulation, injunction or other order or
decree which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
consummation of the Merger or any of the other transactions contemplated
hereby.
(d) The Form S-4 shall have become effective under the Securities Act,
and the Acquiror shall have received all state securities laws or "blue sky"
permits and other authorizations or there shall be exemptions from registration
requirements necessary to issue the Acquiror Common Stock in connection with
the Merger, and neither the Form S-4 nor any such permit, authorization or
exemption shall be subject to a stop order or threatened stop order by the
Commission or any state securities authority.
(e) The shares of Acquiror Common Stock to be issued in connection with
the Merger shall have been approved for listing on the American Stock Exchange.
(f) Each of Xxxxx, Xxxxxx & Xxxxx LLP, the Acquiror's independent public
accountants, and Xxxxxx, Xxxxxxxx & Associates LLP, the Company's independent
public accountants, shall have issued a letter dated as of the Effective Time,
to the Acquiror and to the Company, respectively, to the effect that, based on
a review of this Agreement and related agreements (including without limitation
the agreements referred to in Section 5.13(b) hereof) and the facts and
circumstances then known to it (including without limitation the number of
Dissenting Shares, if any, in relation to the number of outstanding shares of
Company Common Stock immediately prior to the Effective Time), the Merger shall
be accounted for as a pooling-of-interests under generally accepted accounting
principles.
(g) The Acquiror shall have received the written opinion of Xxxxxxxx
Xxxxxxx & XxxXxxxx to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code, and the Company
shall have received the written opinion of Breyer & Aguggia to such effect and
to the effect that (i) except for cash received in lieu of fractional share
interests, holders of Company Common Stock who receive Acquiror Common Stock in
the Merger will not recognize income, gain or loss for federal income tax
purposes, (ii) the basis of such Acquiror Common Stock will equal the basis of
the Company Common Stock for which it is exchanged, and (iii) the holding
period of such Acquiror Common Stock will include the holding period of the
Company Common Stock for which it is exchanged, assuming that such stock is a
capital asset in the hands of the holder thereof at the Effective Time. Each
such opinion shall be based on such written representations from the Acquiror,
the Company and others as such counsel shall reasonably request as to factual
matters.
Section 6.2 Conditions Precedent - The Company
The obligations of the Company to effect the transactions contemplated by
this Agreement shall be subject to satisfaction of the following conditions at
or prior to the Effective Time unless waived by the Company pursuant to Section
7.4 hereof.
(a) The representations and warranties of the Acquiror as set forth in
Article IV hereof shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that not
withstanding anything herein to the contrary, this Section 6.2(a) shall be
deemed to have been satisfied even if such representations or warranties are
not true and correct unless the failure of any of the representations or
warranties to be so true and correct would have, individually or in the
aggregate, a Material Adverse Effect on the Acquiror.
(b) The Acquiror shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) The Acquiror shall have delivered to the Company a certificate, dated
the date of the Closing and signed by its President and by its Chief Financial
Officer, to the effect that the conditions set forth in Sections 6.2(a) and
6.2(b) have been satisfied.
(d) The Company shall have received the written opinion of Xxxxxxxx
Xxxxxxx & XxxXxxxx, dated the date of the Closing, that addresses the matters
set forth in Exhibit 6.2(d) hereto.
(e) The Acquiror and the Acquiror Sub shall have furnished the Company
with such certificates of its respective officers or others and such other
documents to evidence fulfillment of the conditions set forth in Sections 6.1
and 6.2 as such conditions relate to the Acquiror and the Acquiror Sub as the
Company may reasonably request.
(f) The oral fairness opinion from Xxxx Xxxx received by the Company on
or prior to the date hereof shall not have been withdrawn by Xxxx Xxxx, and the
Company shall have received a fairness opinion letter from Xxxx Xxxx dated as
of a date which is within five (5) days prior to the date of the Proxy
Statement to the effect that in the opinion of such firm the Exchange Ratio is
fair to the Company stockholders from a financial point of view.
Section 6.3 Conditions Precedent - The Acquiror and the Acquiror Sub
The obligations of the Acquiror and the Acquiror Sub to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions at or prior to the Effective Time unless waived by the
Acquiror or the Acquiror Sub pursuant to Section 7.4 hereof.
(a) The representations and warranties of the Company set forth in
Article III hereof shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that not
withstanding anything herein to the contrary, this Section 6.3(a) shall be
deemed to have been satisfied even if such representations or warranties are
not true and correct unless the failure of any of the representations and
warranties to be so true and correct would have, individually or in the
aggregate, a Material Adverse Effect on the Company.
(b) The Company shall have performed in all material respects all
obligations and covenants required to be performed by it pursuant to this
Agreement on or prior to the Effective Time.
(c) The Company shall have delivered to the Acquiror a certificate, dated
the date of the Closing and signed by its President and by its Chief Financial
Officer, to the effect that the conditions set forth in Sections 6.3(a) and
6.3(b) have been satisfied.
(d) The Acquiror shall have received the written opinion of Breyer &
Aguggia, dated the date of the Closing, that addresses the matters set forth in
Exhibit 6.3(d) hereto.
(e) The Company shall have furnished the Acquiror with such certificates
of its officers or others and such other documents to evidence fulfillment of
the conditions set forth in Sections 6.1 and 6.3 as such conditions relate to
the Company as the Acquiror may reasonably request.
(f) No more than 10% of the Company Common Stock shall be Dissenting
Shares as defined in Section 2.5 above.
(g) The Company shall have received the written consent of Fleet National
Bank to the Merger.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.1 Termination
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual consent
in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by the Acquiror or the
Acquiror Sub in writing if the Company has, or by the Company in writing if the
Acquiror or the Acquiror Sub has, in any material respect, breached (i) any
material covenant or undertaking contained herein or (ii) any representation or
warranty contained herein, in any case if such breach has not been cured by the
earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Effective Time;
(c) at any time, by any party hereto in writing, if any of the
applications for prior approval referred to in Section 5.3 hereof are denied or
are approved in a manner which does not satisfy the requirements of Section
6.1(b) hereof, and the time period for appeals and requests for reconsideration
has run;
(d) at any time, by any party hereto in writing, if the shareholders of
the Company do not approve this Agreement after a vote taken thereon at a
meeting duly called for such purpose (or at any adjournment thereof), unless
the failure of such occurrence shall be due to the failure of the party seeking
to terminate to perform or observe in any material respect its agreements set
forth herein to be performed or observed by such party at or before the
Effective Time;
(e) by either the Company or the Acquiror in writing if the Effective
Time has not occurred by the close of business on December 31, 1997, provided
that this right to terminate shall not be available to any party whose failure
to perform an obligation in breach of such party's obligations under this
Agreement has been the cause of, or resulted in, the failure of the Merger and
the other transactions contemplated hereby to be consummated by such date (the
Acquiror and the Acquiror Sub being treated as a single entity for purposes of
this Section 7.1(e));
(f) by the Company at any time during the ten day period commencing with
the Determination Date (as defined below) if the Average Closing Price (as
defined below) shall be less than $11.50, subject, however, to the following
three sentences. If the Company elects to exercise its termination right
pursuant to this Section 7.1(f), it shall give written notice to the Acquiror
(provided that such notice of election to terminate may be withdrawn at any
time within the aforementioned ten day period). During the five day period
commencing with its receipt of such notice, the Acquiror shall have the option
to increase the consideration to be received by the holders of the Company
Common Stock hereunder by adjusting the Exchange Ratio to equal a number
(calculated to the nearest one thousandth) obtained by dividing (A) $24.02 by
(B) the Average Closing Price. If the Acquiror so elects within such five day
period, it shall give prompt written notice to the Company of such election and
the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 7.1(f) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified). For purposes of this Section 7.1(f), (i) the term "Average Closing
Price" means the average of the daily closing prices of a share of Acquiror
Common Stock, as reported by the American Stock Exchange (as reported in The
Wall Street Journal or, if not reported thereby, another authoritative source)
during the period of twenty consecutive trading days ending on the
Determination Date and (ii) the term "Determination Date" means the date on
which the approval of the OTS for consummation of the Merger is received. All
of the share amounts and per share figures in this Section 7.1(f) are subject
to adjustment as provided in Sections 2.8 and 5.16.
Section 7.2 Effect of Termination
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i)
the provisions relating to confidentiality and expenses set forth in Section
5.4 and Section 8.1, respectively, and this Section 7.2 shall survive any such
termination, (ii) a termination pursuant to Section 7.1(b), (d), or (e) shall
not relieve the breaching party from liability for willful breach of any
covenant, undertaking, representation or warranty giving rise to such
termination and (iii) Section 7.6 shall survive to the extent of any amounts
payable thereunder.
Section 7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including without
limitation the covenants set forth in Sections 5.8, 5.9 and 5.10 hereof),
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive the Acquiror, the Acquiror
Sub or the Company (or any director, officer or controlling person thereof) of
any defense at law or in equity which otherwise would be available against the
claims of any person, including, without limitation, any shareholder or former
shareholder of either the Acquiror or the Company.
Section 7.4 Waiver
Each party hereto by written instrument signed by an executive officer of
such party, may at any time (whether before or after approval of this Agreement
by the shareholders of the Acquiror Sub and the Company) extend the time for
the performance of any of the obligations or other acts of the other party
hereto and may waive (i) any inaccuracies of the other party in the
representations or warranties contained in the Agreement or any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other party, (iii) to the extent permitted by
law, satisfaction of any of the conditions precedent to its obligations
contained herein or (iv) the performance by the other party of any of its
obligations set forth herein, provided that any such waiver granted, or any
amendment or supplement pursuant to Section 7.5 hereof executed after
shareholders of the Acquiror Sub or the Company have approved this Agreement
shall not modify either the amount or form of the consideration to be provided
hereby to the holders of Company Common Stock upon consummation of the Merger
or otherwise materially adversely affect such shareholders without the approval
of the shareholders who would be so affected.
Section 7.5 Amendment or Supplement
This Agreement may be amended or supplemented at any time by mutual
agreement of the Acquiror, the Acquiror Sub and the Company, subject to the
proviso to Section 7.4 hereof. Any such amendment or supplement must be in
writing and authorized by their respective Boards of Directors.
Section 7.6 Termination Fee
In order to induce the Acquiror to enter into this Agreement and to
reimburse the Acquiror for its costs and expenses related to entering into this
Agreement and seeking to consummate the transactions contemplated by this
Agreement, the Company will make a cash payment to the Buyer of $100,000 (the
"Termination Fee") if and only if at the time of such termination any person
(other than the Acquiror) shall have made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction and:
(i) The Acquiror or Company has terminated this Agreement pursuant to
Section 7.1(d) because of a failure by the Company's shareholders to approve
this Agreement; or
(ii) The Acquiror has terminated this Agreement pursuant to 7.1(b);
Any payment required by this section will be payable by the Company to the
Acquiror (by wire transfer of immediately available funds to an account
designed by the Acquiror) within five business days after demand by the
Acquiror.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Expenses
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Agreement, including
fees and expenses of its own financial consultants, accountants and counsel.
Section 8.2 Entire Agreement
This Agreement contains the entire agreement among the parties with
respect to the transactions contemplated hereby and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other
than documents referred to herein and therein. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and thereto and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities other than as set forth in Sections 5.8, 5.9 and
5.10.
Section 8.3 No Assignment
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
Section 8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally,
telecopied (with confirmation) or sent by overnight mail service or by
registered or certified mail (return receipt requested), postage prepaid,
addressed as follows:
If to the Acquiror or the Acquiror Sub:
Northeast Bancorp
000 Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxxx, President
and Chief Executive Officer
Fax - 000-000-0000
With a required copy to:
Xxxxxxxx Xxxxxxx & XxxXxxxx
000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx III
Fax - 000-000-0000
If to the Company:
Cushnoc Bank and Trust Company
Xxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxxx
Fax - 000-000-0000
With a required copy to:
Breyer & Aguggia
Suite 470 East
0000 X Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxxx, Xx.
Fax - 000-000-0000
Section 8.5 Interpretation
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement.
Section 8.6 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section 8.7 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maine applicable to agreements made and entirely to be
performed within such jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
NORTHEAST BANCORP
Attest:
/s/ Xxxxx Xxxx Xxxx By: /s/ Xxxxx X. Xxxxxxxxx
______________________________ __________________________________
Name: Xxxxx Xxxx Xxxx Name: Xxxxx X. Xxxxxxxxx
Title: Corporate Clerk and Title: President and
Secretary Chief Executive Officer
NORTHEAST BANK F.S.B.
Attest:
/s/ Xxxxx Xxxx Xxxx By: /s/ Xxxxx X. Xxxxxxxxx
______________________________ __________________________________
Name: Xxxxx Xxxx Xxxx Name: Xxxxx X. Xxxxxxxxx
Title: Corporate Clerk and Title: President and
Secretary Chief Executive Officer
CUSHNOC BANK AND TRUST COMPANY
Attest:
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
______________________________ __________________________________
Name: Xxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Treasurer Title:
EXHIBIT 2.1 (d)
List of Directors
Name Residence Term to Expire
____ _________ ______________
Xxxxxx X. Xxxxxx Brunswick, ME 1997
Xxxxxx X. Xxxxx Bethel, ME 1997
Xxxxxx X. Xxxxxx Moncton, NB 0000
Xxxx X. Xxxxxxxx X. Xxxxxxxxx, XX 1997
Xxxxxx X. Xxxxxx Bethel, ME 1997
Xxxx Xxxxxxxx Brunswick, ME 1998
A. Xxxxxxx Xxxxxx Saco, ME 1998
Xxxxxx X. Xxxxx Lexington, ME 1998
Xxxxxxx X. Xxxxx Bethel, ME 1998
Xxxxxx X. Xxxxxx Xxxxxx, ME 1998
Xxxxx X. Xxxxxxxxx Oxford, ME 1999
Xxxxxx X. Xxxxx Brunswick, ME 1999
Xxxxxx Xxxxxxx Xxxxxxxx, ME 1999
Xxxxxx X. Xxxxxxx Xxxxxx, ME 1999
Xxxxxx Xxxxxxx Brunswick, ME 1999
_______________________
(1) As a result of an Amendement to the Bylaws of Acquiror, beginning in 1997
directors will be elected for a term of one year.
SCHEDULE 3.13(b)
CONTRACTS
NAME TYPE EXPIRATION CANCELLATION
M&M Consulting Compliance 9/15/97 30 Days Notice
PLUS System, Inc. Membership N/A Non-Transferrable
Cirrus System, Inc. Membership N/A Non-Transferrable
AMEXCO ATM 5/16/97 90 Days
NoticeMastermoney Debit Card 6/20/00 90 Days Notice
Mellon Bank EFT Services 5/16/99 Penalty*
Infinet Payment
Services EFT SErvices 8/31/98 180 Days Notice
NYCE AT N/A 180 Days Notice
Macrosoft Software Perpetual 30 Days Notice
FISC Item Processing N/A 60 Days Notice
General Electric Vehicle 6/11/99 Payoff Future
Payments
* Penalty of minimum monthly fee times months remaining in initial agreement.
EXHIBIT 5.10
Any employee of the Company who, during the period beginning at the
Effective Time and ending on the first anniversary thereof, is terminated by
the Acquiror without Just Cause, shall, within ten business days of the date of
such termination, receive a lump sum payment from the Acquiror equal to six (6)
times the employee's monthly compensation (determined at the employee's monthly
rate of base compensation in effect on the date of termination). No benefit
shall be payable under this paragraph if an employee is terminated for Just
Cause or in the event of the employee's voluntary termination of employment.
For purposes of this paragraph, "Just Cause" shall mean termination of
employment by reason of an employee's personal dishonesty, willful misconduct,
intentional failure to perform stated duties, breach of fiduciary duty
involving personal profit, or willful violation of any law, rule or regulation
(other than traffic violations or similar offenses).
EXHIBIT D
AFFILIATES OF COMPANY
__________, 1997
Northeast Bancorp
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
Pursuant to Section 5.13 of the Agreement and Plan of Merger, dated as of
__________, 1997 (the "Agreement"), among Northeast Bancorp (the "Acquiror"),
Northeast Bank F.S.B. (the "Acquiror Sub") and Cushnoc Bank and Trust Company
(the "Company"), I hereby agree as follows:
1. I will not sell, pledge, transfer or otherwise dispose of the shares
of Acquiror Common Stock or Company Common Stock (both as defined in the
Agreement) owned by me during the period commencing 30 business days prior to
the Effective Time (as defined in the Agreement) (the anticipated date of which
shall be set forth in a notice by the Company to me as soon as such information
is available) and continuing to the date on which financial results covering at
least 30 days combined operations of the Acquiror and the Company have been
published within the meaning of Topic 2-E of the Staff Accounting Bulletin
Series of the Securities and Exchange Commission; provided, however, that this
paragraph shall not prevent me from selling, transferring or disposing of such
numbers of shares of Acquiror Common Stock or Company Common Stock as will not,
in the reasonable judgment of accountants to the Acquiror, interfere with or
prevent the Merger (as defined in the Agreement) from being accounted for as a
"pooling of interests," taking into account the nature, extent and timing of
such sale, transfer or disposition and of similar sales, transfers or
dispositions by all other affiliates of the Acquiror and all other affiliates
of the Company.
2. I will comply with paragraph (d) of Rule 145 under the Securities Act
of 1933, as amended, and will not sell, pledge, transfer or otherwise dispose
of any shares of Acquiror Common Stock received by me in exchange for shares of
Common Stock pursuant to the Merger (as defined in the Agreement), except upon
the Acquiror's receipt of an opinion of counsel, at the Acquiror's expense,
that the proposed disposition will not violate paragraph (d) of Rule 145.
The transfer agent of each of the Company and the Acquiror shall be given
an appropriate stop transfer order and shall not be required to register any
attempted transfer of shares of Company Common Stock and Acquiror Common Stock,
respectively, unless the transfer has been effected in compliance with the
terms of this letter agreement. In addition, the certificates evidencing
shares of Acquiror Common Stock acquired by me in exchange for Company Common
Stock pursuant to the Merger shall bear a legend noting the restrictions on
transfer set forth in this letter agreement.
3. For a period three (3) years from the Effective Time (as defined in
the Agreement) of the Merger, I will not participate, directly or indirectly,
as an investor in or lender to, or a guarantor of any loan to, or otherwise
assist in the capitalization of, any new or inactive financial institution
having a place of business within fifty (50) miles of Augusta, Maine.
This provision does not preclude the undersigned from serving as a
director of an existing financial institution or an existing thrift institution
converting from mutual to stock form of ownership, or from investing in an
existing thrift institution's conversion from mutual to stock ownership so long
as the aggregate amount of stock in the institution owned directly or
indirectly by the undersigned does not exceed 5% of the issued and outstanding
stock of such institution.
Very truly yours,
______________________________
Name
Agreed and accepted this
________ day of ___________, 1997
Northeast Bancorp
By:___________________________
Name:
Title:
EXHIBIT E
AFFILIATES OF ACQUIROR
_____________, 1997
Northeast Bancorp
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
Pursuant to Section 5.13 of the Agreement and Plan of Merger dated as of
____________, 1997 (the "Agreement"), among Northeast Bancorp (the "Acquiror"),
Northeast Bank F.S.B. (the "Acquiror Sub") and Cushnoc Bank and Trust Company
(the "Company"), I hereby agree not to sell, pledge, transfer or otherwise
dispose of the shares of Acquiror Common Stock or Company Common Stock (both as
defined in the Agreement) owned by me during the period commencing 30 business
days prior to the Effective Time (as defined in the Agreement) (the anticipated
date of which shall be set forth in a notice by the Company to me as soon as
such information is available) and continuing to the date on which financial
results covering at least 30 days combined operations of the Acquiror and the
Company have been published within the meaning of Topic 2-E of the Staff
Accounting Bulletin Series of the Securities and Exchange Commission; provided,
however, that this paragraph shall not prevent me from selling, transferring or
disposing of such number of shares of Acquiror Common Stock or Company Common
Stock as will not, in the reasonable judgment of accountants to the Acquiror,
interfere with or prevent the Merger (as defined in the Agreement) from being
accounted for as a "pooling of interests," taking into account the nature,
extent and timing of such sale, transfer or disposition and of similar sales,
transfers or dispositions by all other affiliates of the Acquiror and all other
affiliates of the Company.
The transfer agent of each of the Company and the Acquiror shall be given
an appropriate stop transfer order and shall not be required to register any
attempted transfer of shares of the Company Common Stock and Acquiror Common
Stock, respectively, unless the transfer has been effected in compliance with
the terms of this letter agreement.
Very truly yours,
______________________________
Name
Agreed and accepted this
_______ day of _________, 1997
Northeast Bancorp
By:_________________________
Name:
Title:
EXHIBIT 6.2(d)
(Matters to be covered in Opinion(s) of Counsel to be delivered to the Company
pursuant to Section 6.2(d) of the Agreement)
(a) Each of the Acquiror and the Acquiror Sub is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and the Acquiror is duly registered as a savings and loan
holding company under the HOLA.
(b) The authorized capital stock of the Acquiror consists of 3,000,000
shares of Acquiror Common Stock, of which ___________ were issued and
outstanding of record as of (the end of the month preceding the closing date),
and 1,000,000 shares of Acquiror Preferred Stock, of which _________ were
issued and outstanding as Series A Preferred and ________ were issued and
outstanding as Series B Preferred as of (the end of the month preceding the
Effective Time). All of the outstanding shares of Acquiror Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable,
and the shareholders of the Acquiror have no preemptive rights with respect to
any shares of capital stock of the Acquiror. All of the outstanding shares of
capital stock of the Acquiror have been duly authorized and validly issued, are
fully paid and nonassessable and, to the knowledge of such counsel, are
directly or indirectly owned by the Acquiror free and clear of all liens,
claims, encumbrances, charges, restrictions or rights of third parties of any
kind whatsoever. To such counsel's knowledge, except as set forth in the
Agreement, there were no Rights authorized, issued or outstanding with respect
to the capital stock of the Acquiror as of the date of the Agreement.
(c) The Agreement has been duly authorized, executed and delivered by the
Acquiror and the Acquiror Sub and, assuming due authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of the
Acquiror and the Acquiror Sub may be limited by (i) bankruptcy, insolvency,
moratorium, reorganization, receivership, conservatorship or similar laws
relating to or affecting the enforcement of creditors rights generally or the
rights of creditors of depository institutions whose accounts are insured by
the FDIC, (ii) equitable principles limiting the right to obtain specific
performance of other similar equitable relief and (iii) considerations of
public policy, and except that certain remedies may not be available in the
case of a nonmaterial breach of the Agreement.
(d) All corporate and shareholder actions required to be taken by the
Acquiror and the Acquiror Sub by law and their respective Articles of
Incorporation and Bylaws to authorize the execution and delivery of the
Agreement and consummation of the Merger have been taken.
(e) All consents or approvals of or filings or registrations with any
Governmental Entity or, to such counsel's knowledge, any third party which are
necessary to be obtained by the Acquiror and the Acquiror Sub to permit the
execution, delivery and performance of the Agreement and consummation of the
Merger have been obtained.
(f) The shares of Acquiror Common Stock to be issued pursuant to the
terms of the Agreement have been duly authorized by all necessary corporate
action on the part of the Acquiror and, when issued in accordance with the
terms of the Agreement, will be validly issued and fully paid and
nonassessable.
(g) To such counsel's knowledge, and except as Previously Disclosed or as
disclosed in the Acquiror's Securities Documents, there are no material legal
or governmental proceedings pending to which the Acquiror or any Acquiror
Subsidiary is a party or to which any property of the Acquiror or any Acquiror
Subsidiary is subject and no such proceedings are threatened by governmental
authorities or by others.
Such counsel also shall state that it has no reason to believe that the
information relating to the Acquiror or an Acquiror Subsidiary contained or
incorporated by reference in (i) the Form S-4, at the time the Form S-4 and any
amendment thereto became effective under the Securities Act, contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) the Proxy Statement, as of the
date(s) such Proxy Statement was mailed to shareholders of the Company and up
to and including the date(s) of the meetings of shareholders to which such
Proxy Statement relates, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers of
the Acquiror Subsidiary. The opinion of such counsel need refer only to
matters of Maine, and federal law, and may add other qualifications and
explanations of the basis of their opinion as may be reasonably acceptable to
the Company.
EXHIBIT 6.3(d)
The opinion of counsel for the Company contemplated in Section 6.3(d) of
the Agreement to which this Exhibit 6.3(d) is attached shall be to the
following effect (all terms used herein which are defined in the Agreement have
the meanings set forth therein):
(i) The Company is a state-chartered commercial bank validly existing
under the laws of the State of Maine. The Company is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder.
(ii) The authorized capital stock of the Company consists of 90,000
shares of Company Common Stock, of which _______ shares are issued and
outstanding of record as of the date hereof. All of the outstanding shares of
Company Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable, and the shareholders of the Company have no preemptive
rights with respect to any shares of capital stock of the Company. To such
counsel's knowledge, there are no Rights authorized, issued or outstanding with
respect to the capital stock of the Company.
(iii) The execution and delivery of the agreement by the Company, and the
consummation by the Company of the transactions provided for therein, have been
duly authorized by all requisite corporate action on the part of the Company.
(iv) The Agreement has been duly executed and delivered by the Company,
and is a valid and binding obligation of the Company, enforceable in accordance
with its terms, except as the enforceability thereof may be limited by (1)
bankruptcy, insolvency, moratorium, reorganization, receivership,
conservatorship or similar laws relating to or affecting the enforcement of
creditors' rights generally or the rights of creditors of depository
institutions whose accounts are insured by the FDIC and (2) general principles
of equity, whether applied by a court of law or equity.
(v) The execution, delivery and performance of the Agreement by the
Company, and the consummation of the transactions contemplated thereby by the
Company, do not (1) violate any federal statutory law or regulation applicable
to the Company, or any judgment, decree or order of which we have knowledge and
which specifically names the Company, which violation is reasonably likely,
individually or in the aggregate, to have a material adverse effect on the
financial condition and results of operations of the Company; (2) constitute a
breach of or default under any agreement or other arrangement that has been
Previously Disclosed to the Acquiror, which breach or default is reasonably
likely, individually or in the aggregate, to have a material adverse effect on
the financial condition or results of operations of the Company; or (3) violate
the Articles of Incorporation or Bylaws of the Company.
(vi) All consents or approvals of or filings or registrations with any
Governmental Entity or, to such counsel's knowledge, any third party which are
necessary to be obtained by the Company to permit the execution, delivery and
performance of the Agreement and consummation of the Merger have been obtained.
(vii) To such counsel's knowledge, and except as Previously Disclosed,
there are no material legal or governmental proceedings pending to which the
company is a party or to which any property of the Company is subject and no
such proceedings are threatened by governmental authorities or by others.
Such counsel also shall state that it has no reason to believe that the
information relating to the Company contained or incorporated by reference in
(i) the form S-4, at the time of the Form S-4 and any amendment thereto became
effective under the Securities Act, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) the Proxy Statement, as of the date(s) such Proxy
Statement was mailed to shareholders of the Company and the Acquiror and up to
and including the date(s) of the meetings of shareholders to which such Proxy
Statement relates, contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials, certificates or opinions of other counsel to the
Company reasonably satisfactory to the Acquiror and, as to matters of act,
certificates of officers of the Company. The opinion of such counsel need
refer only to matters of Maine and federal law and may add other qualifications
and explanations of the basis of their opinion as may be reasonably acceptable
to the Acquiror.
(viii) To the best of our knowledge, the Merger has been approved by the
shareholders of the Bank.
In giving such opinion, counsel may rely on certificates of public
officials as to matters of fact on certificates of officers of the Bank.
