AGREEMENT AND PLAN OF MERGER by and between CHITTENDEN CORPORATION and MERRILL MERCHANTS BANCSHARES, INC. Dated as of January 18, 2007
AGREEMENT
AND PLAN OF MERGER
by
and between
XXXXXXXXXX
CORPORATION
and
XXXXXXX
MERCHANTS BANCSHARES, INC.
Dated
as of January 18, 2007
TABLE
OF CONTENTS
|
ARTICLE
I - THE MERGER
|
1
|
|
|
1.1
|
The
Merger
|
1
|
|
1.2
|
Effective
Time
|
1
|
|
1.3
|
Effects
of the Merger
|
2
|
|
1.4
|
Closing.
|
2
|
|
1.5
|
Articles
of Incorporation and Bylaws
|
2
|
|
1.6
|
Directors
of the Surviving Corporation
|
2
|
|
1.7
|
Officers
of the Surviving Corporation
|
2
|
|
1.8
|
Company
Bank Board Representation
|
2
|
|
1.9
|
Tax
Consequences
|
3
|
|
ARTICLE
II - MERGER CONSIDERATION; ELECTION AND EXCHANGE
PROCEDURES
|
3
|
|
|
2.1
|
Merger
Consideration
|
3
|
|
2.2
|
Rights
as Shareholders; Stock Transfers
|
3
|
|
2.3
|
Fractional
Shares
|
4
|
|
2.4
|
Election
Procedures
|
4
|
|
2.5
|
Exchange
Procedures
|
6
|
|
2.6
|
Anti-Dilution
Provisions
|
8
|
|
2.7
|
Options
|
8
|
|
ARTICLE
III - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
|
9
|
|
|
3.1
|
Making
of Representations and Warranties
|
9
|
|
3.2
|
Organization,
Standing and Authority
|
9
|
|
3.3
|
Capitalization
|
10
|
|
3.4
|
Subsidiaries
|
10
|
|
3.5
|
Corporate
Power
|
11
|
|
3.6
|
Corporate
Authority
|
11
|
|
3.7
|
Non-Contravention
|
11
|
|
3.8
|
Articles
of Incorporation; Bylaws; Corporate Records
|
12
|
|
3.9
|
Compliance
with Laws
|
12
|
|
3.10
|
Litigation;
Regulatory Action
|
13
|
|
3.11
|
SEC
Documents; Financial Reports; and Regulatory Reports
|
14
|
|
3.12
|
Absence
of Certain Changes or Events
|
15
|
|
3.13
|
Taxes
and Tax Returns
|
16
|
|
3.14
|
Employee
Benefit Plans
|
18
|
|
3.15
|
Labor
Matters
|
21
|
|
3.16
|
Insurance
|
21
|
|
3.17
|
Environmental
Matters
|
21
|
|
3.18
|
Intellectual
Property
|
23
|
|
3.19
|
Material
Agreements; Defaults
|
23
|
|
3.20
|
Property
and Leases
|
24
|
|
3.21
|
Inapplicability
of Takeover Laws
|
25
|
|
3.22
|
Regulatory
Capitalization
|
25
|
|
3.23
|
Loans;
Nonperforming and Classified Assets
|
25
|
i
|
3.24
|
Trust
Business; Administration of Fiduciary Accounts
|
26
|
|
3.25
|
Investment
Management and Related Activities
|
26
|
|
3.26
|
Derivative
Transactions
|
27
|
|
3.27
|
Repurchase
Agreements
|
27
|
|
3.28
|
Deposit
Insurance
|
27
|
|
3.29
|
CRA,
Anti-money Laundering and Customer Information Security
|
27
|
|
3.30
|
Transactions
with Affiliates
|
28
|
|
3.31
|
Brokers;
Fairness Opinion
|
28
|
|
3.32
|
Disclosure
|
29
|
|
ARTICLE
IV - REPRESENTATIONS AND WARRANTIES OF BUYER
|
29
|
|
|
4.1
|
Making
of Representations and Warranties
|
29
|
|
4.2
|
Organization,
Standing and Authority
|
29
|
|
4.3
|
Capitalization
|
30
|
|
4.4
|
Subsidiaries
|
30
|
|
4.5
|
Corporate
Power
|
30
|
|
4.6
|
Corporate
Authority
|
31
|
|
4.7
|
Non-Contravention
|
31
|
|
4.8
|
Articles
of Incorporation; Bylaws
|
31
|
|
4.9
|
Compliance
with Laws
|
32
|
|
4.10
|
Litigation
|
32
|
|
4.11
|
SEC
Documents; Financial Reports; and Regulatory Reports
|
33
|
|
4.12
|
Absence
of Certain Changes or Events
|
34
|
|
4.13
|
Tax
Treatment
|
34
|
|
4.14
|
Employee
Benefit Plans
|
34
|
|
4.15
|
Regulatory
Capitalization
|
34
|
|
4.16
|
CRA,
Anti-money Laundering and Customer Information Security
|
35
|
|
4.17
|
Brokers
|
35
|
|
4.18
|
Deposit
Insurance
|
35
|
|
4.19
|
Sufficient
Funds
|
35
|
|
4.20
|
Disclosure
|
35
|
|
ARTICLE
V - COVENANTS RELATING TO CONDUCT OF BUSINESS
|
36
|
|
|
5.1
|
Company
Forbearances
|
36
|
|
5.2
|
Buyer
Forbearances
|
39
|
|
ARTICLE
VI - ADDITIONAL AGREEMENTS
|
39
|
|
|
6.1
|
Reasonable
Best Efforts
|
39
|
|
6.2
|
Shareholder
Approval
|
39
|
|
6.3
|
Registration
Statement
|
40
|
|
6.4
|
Press
Releases
|
41
|
|
6.5
|
Access;
Information
|
41
|
|
6.6
|
No
Solicitation
|
42
|
|
6.7
|
Affiliate
Agreements
|
45
|
|
6.8
|
Takeover
Laws
|
45
|
|
6.9
|
Shares
Listed
|
45
|
|
6.10
|
Regulatory
Applications; Filings; Consents
|
45
|
ii
|
6.11
|
Indemnification;
Directors’ and Officers’ Insurance
|
46
|
|
6.12
|
Employees
and Benefit Plans
|
47
|
|
6.13
|
Notification
of Certain Matters
|
48
|
|
6.14
|
Confidentiality
Agreement
|
48
|
|
6.15
|
Section
16 Votes
|
48
|
|
ARTICLE
VII - CONDITIONS TO CONSUMMATION OF THE MERGER
|
49
|
|
|
7.1
|
Conditions
to Each Party’s Obligations to Effect the Merger
|
49
|
|
7.2
|
Conditions
to the Obligations of Buyer
|
49
|
|
7.3
|
Conditions
to the Obligations of the Company
|
50
|
|
ARTICLE
VIII - TERMINATION
|
51
|
|
|
8.1
|
Termination
|
51
|
|
8.2
|
Effect
of Termination and Abandonment
|
52
|
|
ARTICLE
IX - MISCELLANEOUS
|
53
|
|
|
9.1
|
Survival
|
53
|
|
9.2
|
Certain
Definitions
|
53
|
|
9.3
|
Waiver;
Amendment
|
60
|
|
9.4
|
Expenses
|
60
|
|
9.5
|
Notices
|
60
|
|
9.6
|
Understanding;
No Third Party Beneficiaries
|
61
|
|
9.7
|
Assignability;
Binding Effect
|
61
|
|
9.8
|
Headings;
Interpretation
|
61
|
|
9.9
|
Counterparts
|
62
|
|
9.10
|
Governing
Law
|
62
|
EXHIBIT
A
- Form
of Affiliate Letter Addressed to Buyer
iii
AGREEMENT
AND PLAN OF MERGER,
dated
as of January 18, 2007 (this “Agreement”),
by
and between Xxxxxxxxxx Corporation, a Vermont corporation (“Buyer”),
and
Xxxxxxx Merchants Bancshares, Inc., a Maine corporation (the “Company”).
RECITALS
WHEREAS,
the
respective Boards of Directors of Buyer and the Company have determined that
it
is in the best interests of their respective corporations and shareholders
to
enter into this Agreement and to consummate the strategic business combination
provided for herein, pursuant to which, subject to the terms and conditions
set
forth herein, the Company will merge with and into Buyer, with Buyer being
the
surviving corporation and continuing its corporate existence under the laws
of
the State of Vermont (the “Merger”);
WHEREAS,
as a
condition to the willingness of Buyer to enter into this Agreement, each of
the
directors and executive officers of the Company (the “Voting
Agreement Shareholders”)
has
entered into a Voting Agreement, dated as of the date hereof, with Buyer (each
a
“Voting
Agreement”),
pursuant to which each Voting Agreement Shareholder has agreed, among other
things, to vote such Voting Agreement Shareholder’s shares of common stock, par
value $1.00 per share, of the Company (“Company
Common Stock”)
in
favor of the approval of this Agreement and the transactions contemplated
hereby, upon the terms and subject to the conditions set forth in the Voting
Agreement;
WHEREAS,
the
parties intend the Merger to qualify as a “reorganization” within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
“Code”),
and
that this Agreement shall constitute a “plan of reorganization” for purposes of
Sections 354 and 361 of the Code; and
WHEREAS,
the
parties desire to make certain representations, warranties and agreements in
connection with the Merger and also to prescribe certain conditions to the
Merger.
NOW,
THEREFORE,
in
consideration of the mutual covenants, representations, warranties and
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE
I - THE
MERGER
1.1 The
Merger.
Subject
to the terms and conditions of this Agreement, in accordance with the Vermont
Business Corporation Act (“VBCA”)
and
the Maine Business Corporation Act (the “MBCA”),
and
in reliance upon the representations, warranties and covenants set forth herein,
at the Effective Time, the Company shall merge with and into Buyer, the separate
corporate existence of the Company shall cease and Buyer shall survive and
continue its corporate existence under the laws of the State of Vermont (Buyer,
as the surviving corporation in the Merger, being sometimes referred to herein
as the “Surviving
Corporation”).
1.2 Effective
Time.
On the
Closing Date, as promptly as practicable after all of the conditions set forth
in Article VII shall have been satisfied or, if permissible, waived by the
party
entitled to the benefit of the same, Buyer and the Company shall (a) execute
and
file with the Secretary of State of the State of Vermont, articles of merger
in
a form reasonably satisfactory to Buyer and the Company, in accordance with
the
VBCA and (b) execute and file with the Secretary of State of the State of Maine,
articles of merger in a form reasonably satisfactory to Buyer and the Company,
in accordance with the MBCA. The Merger shall become effective at the time
and
on the date of such filings or at the time and on the date specified therein
(the “Effective
Time”).
1
1.3 Effects
of the Merger.
At the
Effective Time, the effect of the Merger shall be as provided herein and as
provided in the applicable provisions of the VBCA and the MBCA.
1.4 Closing.
The
transactions contemplated by this Agreement shall be consummated at a closing
(the “Closing”)
that
will take place at the offices of Xxxxxxx Procter LLP,
Exchange Place, Boston, Massachusetts 02109 on a date to be specified by the
parties, which shall be no later than five (5) Business Days (as defined in
Section 9.2(a)) after all of the conditions to the Closing set forth in Article
VII (other than conditions to be satisfied at the Closing, which shall be
satisfied or waived at the Closing) have been satisfied or waived in accordance
with the terms hereof, such day being referred to herein as the “Closing
Date.”
Notwithstanding the foregoing, the Closing may take place at such other place,
time or date as may be mutually agreed upon in writing by Buyer and the
Company.
1.5 Articles
of Incorporation and Bylaws.
The
Articles of Incorporation of Buyer, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation, until thereafter amended as provided therein and in accordance
with
applicable law. The Bylaws of Buyer, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter amended as provided therein and in accordance with applicable
law.
1.6 Directors
of the Surviving Corporation.
The
directors of Buyer immediately prior to the Effective Time shall become the
directors of the Surviving Corporation, each of whom shall serve in accordance
with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
1.7 Officers
of the Surviving Corporation.
The
officers of Buyer immediately prior to the Effective Time shall become the
officers of the Surviving Corporation, each to hold office in accordance with
the Articles of Incorporation and Bylaws of the Surviving
Corporation.
1.8 Company
Bank Board Representation.
The
Board of Directors of Xxxxxxx Merchants Bank (the “Company
Bank”)
immediately prior to the Effective Time shall continue as the directors of
the
Company Bank, together with one additional director designated by Buyer and
reasonably acceptable to the Company, each of whom shall serve in accordance
with the organizational documents of the Company Bank.
1.9 Tax
Consequences.
It is
intended that the Merger shall qualify as a “reorganization” under Section
368(a) of the Code, and that the Agreement shall constitute a “plan of
reorganization” for purposes of Sections 354 and 361 of the Code.
2
ARTICLE
II - MERGER
CONSIDERATION;
ELECTION
AND EXCHANGE PROCEDURES
2.1 Merger
Consideration.
Subject
to the provisions of this Agreement, at the Effective Time, automatically by
virtue of the Merger and without any action on the part of Buyer, the Company
or
any shareholder of the Company:
(a) Each
share of common stock, par value $1.00 per share, of Buyer (“Buyer
Common Stock”)
that
is issued and outstanding immediately prior to the Effective Time shall remain
outstanding following the Effective Time and shall be unchanged by the
Merger.
(b) Each
share of Company Common Stock held as Treasury Stock (as defined in Section
9.2(a)) immediately prior to the Effective Time shall be cancelled and retired
at the Effective Time without any conversion thereof, and no payment shall
be
made with respect thereto.
(c) Each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than Treasury Stock) shall become and be converted into,
as provided in and subject to the limitations set forth in this Agreement,
the
right to receive at the election of the holder thereof as provided in Section
2.4 either: (i) $31.00 in cash (the “Cash
Consideration”);
or
(ii) 1.02 shares (the “Exchange
Ratio”)
of
Buyer Common Stock (the “Stock
Consideration”).
The
Cash Consideration and the Stock Consideration are sometimes referred to herein
collectively as the “Merger
Consideration.”
2.2 Rights
as Shareholders; Stock Transfers.
All
shares of Company Common Stock, when converted as provided in Section 2.1(c),
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each certificate (a “Certificate”)
previously evidencing such shares shall thereafter represent only the right
to
receive for each such share of Company Common Stock, the Merger Consideration
and any cash in lieu of fractional shares of Buyer Common Stock in accordance
with Sections 2.1(c) and 2.3. At the Effective Time, holders of Company Common
Stock shall cease to be, and shall have no rights as, shareholders of the
Company, other than the right to receive the Merger Consideration and cash
in
lieu of fractional shares of Buyer Common Stock as provided under this Article
II and the right to receive any unpaid dividend with respect to the Company
Common Stock with a record date occurring prior to the Effective Time. After
the
Effective Time, there shall be no transfers on the stock transfer books of
the
Company of shares of Company Common Stock, other than transfers of Company
Common Stock that have occurred prior to the Effective Time.
2.3 Fractional
Shares.
Notwithstanding any other provision hereof, no fractional shares of Buyer Common
Stock and no certificates or scrip therefor, or other evidence of ownership
thereof, will be issued in the Merger. In lieu thereof, Buyer shall pay to
each
holder of a fractional share of Buyer Common Stock an amount of cash (without
interest) determined by multiplying the fractional share interest to which
such
holder would otherwise be entitled by the average of the last sale prices of
Buyer Common Stock, as reported on The New York Stock Exchange, Inc.
(“NYSE”)
(as
reported in The
Wall Street Journal
or, if
not reported therein, in another authoritative source), for the five (5) NYSE
trading days immediately preceding the Closing Date, rounded to the nearest
whole cent.
3
2.4 Election
Procedures.
(a) An
election form and other appropriate and customary transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to
Certificates shall pass, only upon proper delivery of such Certificates to
a
bank or trust company designated by Buyer and reasonably satisfactory to the
Company (the “Exchange
Agent”))
in
such form as the Company and Buyer shall mutually agree (the “Election
Form”),
shall
be mailed no later than fifteen (15) Business Days prior to the anticipated
Election Deadline (the “Mailing
Date”)
to
each holder of record of Company Common Stock. Each Election Form shall permit
the holder of record of Company Common Stock (or in the case of nominee record
holders, the beneficial owner through proper instructions and documentation)
to
(i) elect to receive the Cash Consideration for all or a portion of such
holder’s shares (a “Cash
Election”),
(ii)
elect to receive the Stock Consideration for all or a portion of such holder’s
shares (a “Stock
Election”),
or
(iii)
make no election with respect to the receipt of the Cash Consideration or the
Stock Consideration (a “Non-Election”);
provided
that,
notwithstanding any other provision of this Agreement, sixty percent (60%)
of
the total number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, excluding any Treasury Stock (the
“Stock
Conversion Number”),
shall
be converted into the Stock Consideration and forty percent (40%) of such shares
of Company Common Stock shall be converted into the Cash Consideration. A record
holder acting in different capacities or acting on behalf of other Persons
(as
defined in Section 9.2(a)) in any way will be entitled to submit an Election
Form for each capacity in which such record holder so acts with respect to
each
Person for which it so acts. Shares of Company Common Stock as to which a Cash
Election has been made are referred to herein as “Cash
Election Shares.”
Shares
of Company Common Stock as to which a Stock Election has been made are referred
to herein as “Stock
Election Shares.”
Shares
of Company Common Stock as to which no election has been made (or as to which
an
Election Form is not properly completed and returned in a timely fashion) are
referred to herein as “Non-Election
Shares.”
The
aggregate number of shares of Company Common Stock with respect to which a
Stock
Election has been made is referred to herein as the “Stock
Election Number.”
(b) To
be
effective, a properly completed Election Form shall be submitted to the Exchange
Agent on or before 5:00 p.m., New York City time, on a date no later than the
5th Business Day prior to the Closing Date to be mutually agreed upon by the
parties (which date shall be publicly announced by Buyer as soon as practicable
prior to such date) (the “Election
Deadline”),
accompanied by the Certificates as to which such Election Form is being made
or
by an appropriate guarantee of delivery of such Certificates, as set forth
in
the Election Form, from a member of any registered national securities exchange
or a commercial bank or trust company in the United States (provided
that
such Certificates are in fact delivered to the Exchange Agent by the time
required in such guarantee of delivery; failure to deliver shares of Company
Common Stock covered by such guarantee of delivery within the time set forth
on
such guarantee shall be deemed to invalidate any otherwise properly made
election, unless otherwise determined by Buyer, in its sole discretion). For
shares of Company Common Stock held in book entry form, Buyer shall establish
procedures for delivery of such shares, which procedures shall be reasonably
acceptable to the Company. If a holder of Company Common Stock either (i) does
not submit a properly completed Election Form in a timely fashion or (ii)
revokes the holder’s Election Form prior to the Election Deadline (without later
submitting a properly completed Election Form prior to the Election Deadline),
the shares of Company Common Stock held by such holder shall be designated
Non-Election Shares. In addition, all Election Forms shall automatically be
revoked, and all Certificates returned, if the Exchange Agent is notified in
writing by Buyer and the Company that this Agreement has been terminated.
Subject to the terms of this Agreement and of the Election Form, the Exchange
Agent shall have reasonable discretion to determine whether any election,
revocation or change has been properly or timely made and to disregard
immaterial defects in any Election Form, and any good faith decisions of the
Exchange Agent regarding such matters shall be binding and conclusive. Neither
Buyer nor the Exchange Agent shall be under any obligation to notify any Person
of any defect in an Election Form.
4
(c) The
allocation among the holders of shares of Company Common Stock of rights to
receive the Cash Consideration and the Stock Consideration will be made as
follows:
(i) If
the
Stock Election Number exceeds the Stock Conversion Number, then all Cash
Election Shares and all Non-Election Shares shall be converted into the right
to
receive the Cash Consideration, and, subject to Section 2.3 hereof, each holder
of Stock Election Shares will be entitled to receive the Stock Consideration
in
respect of that number of Stock Election Shares held by such holder equal to
the
product obtained by multiplying (x) the number of Stock Election Shares held
by
such holder by (y) a fraction, the numerator of which is the Stock Conversion
Number and the denominator of which is the Stock Election Number, with the
remaining number of such holder’s Stock Election Shares being converted into the
right to receive the Cash Consideration;
(ii) If
the
Stock Election Number is less than the Stock Conversion Number (the amount
by
which the Stock Conversion Number exceeds the Stock Election Number being
referred to herein as the “Shortfall
Number”),
then
all Stock Election Shares shall be converted into the right to receive the
Stock
Consideration and the Non-Election Shares and the Cash Election Shares shall
be
treated in the following manner:
(A)if
the
Shortfall Number is less than or equal to the number of Non-Election Shares,
then all Cash Election Shares shall be converted into the right to receive
the
Cash Consideration and, subject to Section 2.3 hereof, each holder of
Non-Election Shares shall receive the Stock Consideration in respect of that
number of Non-Election Shares held by such holder equal to the product obtained
by multiplying (x) the number of Non-Election Shares held by such holder by
(y)
a fraction, the numerator of which is the Shortfall Number and the denominator
of which is the total number of Non-Election Shares, with the remaining number
of such holder’s Non-Election Shares being converted into the right to receive
the Cash Consideration; or
(B)if
the
Shortfall Number exceeds the number of Non-Election Shares, then all
Non-Election Shares shall be converted into the right to receive the Stock
Consideration, and, subject to Section 2.3 hereof, each holder of Cash Election
Shares shall receive the Stock Consideration in respect of that number of Cash
Election Shares equal to the product obtained by multiplying (x) the number
of
Cash Election Shares held by such holder by (y) a fraction, the numerator of
which is the amount by which (1) the Shortfall Number exceeds (2) the total
number of Non-Election Shares and the denominator of which is the total number
of Cash Election Shares, with the remaining number of such holder’s Cash
Election Shares being converted into the right to receive the Cash
Consideration.
5
2.5 Exchange
Procedures.
(a) On
or
before the Closing Date, for the benefit of the holders of Certificates, (i)
Buyer shall cause to be delivered to the Exchange Agent, for exchange in
accordance with this Article II, certificates representing the shares of Buyer
Common Stock issuable pursuant to this Article II (“New
Certificates”)
and
(ii) Buyer shall deliver, or shall cause to be delivered, to the Exchange Agent
an aggregate amount of cash sufficient to pay the aggregate amount of cash
payable pursuant to this Article II (including the estimated amount of cash
to
be paid in lieu of fractional shares of Buyer Common Stock) (such cash and
New
Certificates, being hereinafter referred to as the “Exchange
Fund”).
(b) No
later
than five (5) Business Days following the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate or Certificates who has
not
previously surrendered such Certificate or Certificates with an Election Form,
a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and instructions for use
in
effecting the surrender of the Certificates in exchange for the Merger
Consideration into which the shares of Company Common Stock represented by
such
Certificate or Certificates shall have been converted pursuant to Sections
2.1,
2.3 and 2.4 of this Agreement. Upon proper surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with a properly
completed letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor, as applicable, (i) a New
Certificate representing that number of shares of Buyer Common Stock (if any)
to
which such former holder of Company Common Stock shall have become entitled
pursuant to this Agreement, (ii) a check representing that amount of cash (if
any) to which such former holder of Company Common Stock shall have become
entitled pursuant to this Agreement and/or (iii) a check representing the amount
of cash (if any) payable in lieu of a fractional share of Buyer Common Stock
which such former holder has the right to receive in respect of the Certificate
surrendered pursuant to this Agreement, and the Certificate so surrendered
shall
forthwith be cancelled. Until surrendered as contemplated by this Section
2.5(b), each Certificate (other than Certificates representing Treasury Stock)
shall be deemed at any time after the Effective Time to represent only the
right
to receive upon such surrender the Merger Consideration provided in Sections
2.1, 2.3 and 2.4 and any unpaid dividends and distributions thereon as provided
in paragraph (c) of this Section 2.5. No interest shall be paid or accrued
on
any cash constituting Merger Consideration (including any cash in lieu of
fractional shares) and any unpaid dividends and distributions payable to holders
of Certificates.
(c) No
dividends or other distributions with a record date after the Effective Time
with respect to Buyer Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Section 2.5. After the surrender of a
Certificate in accordance with this Section 2.5, the record holder thereof
shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares
of
Buyer Common Stock represented by such Certificate.
6
(d) The
Exchange Agent and Buyer, as the case may be, shall not be obligated to deliver
cash and/or a New Certificate or New Certificates representing shares of Buyer
Common Stock to which a holder of Company Common Stock would otherwise be
entitled as a result of the Merger until such holder surrenders the Certificate
or Certificates representing the shares of Company Common Stock for exchange
as
provided in this Section 2.5, or, an appropriate affidavit of loss and indemnity
agreement and/or a bond in an amount as may be required in each case by Buyer.
If any New Certificates evidencing shares of Buyer Common Stock are to be issued
in a name other than that in which the Certificate evidencing Company Common
Stock surrendered in exchange therefor is registered, it shall be a condition
of
the issuance thereof that the Certificate so surrendered shall be properly
endorsed or accompanied by an executed form of assignment separate from the
Certificate and otherwise in proper form for transfer, and that the Person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a New Certificate for shares of Buyer
Common Stock in any name other than that of the registered holder of the
Certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Any
portion of the Exchange Fund that remains unclaimed by the shareholders of
the
Company for six (6) months after the Effective Time (as well as any interest
or
proceeds from any investment thereof) shall be delivered by the Exchange Agent
to Buyer. Any shareholders of the Company who have not theretofore complied
with
Section 2.5(b) shall thereafter look only to the Surviving Corporation for
the
Merger Consideration deliverable in respect of each share of Company Common
Stock such shareholder holds as determined pursuant to this Agreement, in each
case without any interest thereon. If outstanding Certificates for shares of
Company Common Stock are not surrendered or the payment for them is not claimed
prior to the date on which such shares of Buyer Common Stock or cash would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed items shall, to the extent permitted by abandoned property and
any
other applicable law, become the property of Buyer (and to the extent not in
its
possession shall be delivered to it), free and clear of all claims or interest
of any Person previously entitled to such property. Neither the Exchange Agent
nor any party to this Agreement shall be liable to any holder of shares of
Company Common Stock represented by any Certificate for any consideration paid
to a public official pursuant to applicable abandoned property, escheat or
similar laws. Buyer and the Exchange Agent shall be entitled to rely upon the
stock transfer books of the Company to establish the identity of those Persons
entitled to receive the Merger Consideration specified in this Agreement, which
books shall be conclusive with respect thereto. In the event of a dispute with
respect to ownership of any shares of Company Common Stock represented by any
Certificate, Buyer and the Exchange Agent shall be entitled to deposit any
Merger Consideration represented thereby in escrow with an independent third
party and thereafter be relieved with respect to any claims
thereto.
(f) Buyer
(through the Exchange Agent, if applicable) shall be entitled to deduct and
withhold from any amounts otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as Buyer is required
to
deduct and withhold under applicable law. Any amounts so deducted and withheld
shall be treated for all purposes of this Agreement as having been paid to
the
holder of Company Common Stock in respect of which such deduction and
withholding was made by Buyer.
7
2.6 Anti-Dilution
Provisions.
In the
event Buyer or the Company changes (or establishes a record date for changing)
the number of, or provides for the exchange of, shares of Buyer Common Stock
or
Company Common Stock issued and outstanding prior to the Effective Time as
a
result of a stock split, stock dividend, recapitalization, reclassification,
or
similar transaction with respect to the outstanding Buyer Common Stock or
Company Common Stock and the record date therefor shall be prior to the
Effective Time, the Exchange Ratio and/or the Cash Consideration shall be
proportionately and appropriately adjusted; provided
that,
for the avoidance of doubt, no such adjustment shall be made with regard to
the
Buyer Common Stock if (i) Buyer issues additional shares of Buyer Common Stock
and receives consideration for such shares in a bona fide third party
transaction or (ii) Buyer issues employee or director stock grants or similar
equity awards.
2.7 Options.
Each
option to purchase Company Common Stock (collectively, the “Options”)
granted under the Company’s 1993 Stock Option Plan (the “Company
Option Plan”),
whether vested or unvested, which is outstanding immediately prior to the
Effective Time and which has not been exercised or canceled prior thereto shall,
at the Effective Time, be canceled and, on the Closing Date, the Company or
the
Company Bank shall pay to the holder thereof cash in an amount equal to the
product of (i) the number of shares of Company Common Stock provided for in
such
Option and (ii) the excess, if any, of the Cash Consideration over the exercise
price per share of Company Common Stock provided for in such Option, which
cash
payment shall be made without interest and shall be net of all applicable
withholding taxes. Prior to the Closing Date, the Company shall use its
reasonable best efforts to obtain the written acknowledgment of each holder
of a
then-outstanding Option with respect to the termination of the Option and the
payment for such Option in accordance with the terms of this Section 2.7. At
the
Effective Time, the Company Option Plan shall terminate and the provisions
in
any other plan, program or arrangement providing for the issuance or grant
of
any other interest in respect of the capital stock of the Company shall be
of no
further force and effect and shall be deemed to be deleted.
ARTICLE
III - REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
3.1 Making
of Representations and Warranties.
(a) As
a
material inducement to Buyer to enter into this Agreement and to consummate
the
transactions contemplated hereby, the Company hereby makes to Buyer the
representations and warranties contained in this Article III.
(b) On
or
prior to the date hereof, the Company has delivered to Buyer a schedule (the
“Company
Disclosure Schedule)
listing, among other things, items the disclosure of which is necessary or
appropriate in relation to any or all of the Company’s representations and
warranties contained in this Article III; provided,
however,
that no
such item is required to be set forth on the Company Disclosure Schedule as
an
exception to a representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being untrue or
incorrect under the standards established by Section 3.1(c).
8
(c) No
representation or warranty of the Company contained in this Article III shall
be
deemed untrue or incorrect, and the Company shall not be deemed to have breached
a representation or warranty, as a consequence of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually
or
taken together with all other facts, circumstances or events inconsistent with
any section of this Article III, has had or would reasonably be expected to
have
a Company Material Adverse Effect (as defined in Section 9.2(a)); provided,
however,
that
the foregoing standard shall not apply to the representations and warranties
contained in Sections 3.3, 3.4(a), 3.4(b), 3.5 and 3.6, Section 3.13(f), the
first two sentences of Section 3.2, and the last sentence of Section 3.14(f),
which shall be deemed untrue, incorrect and breached if they are not true and
correct in all material respects.
3.2 Organization,
Standing and Authority.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maine. The Company is duly registered as a bank
holding company which has elected financial holding company status under the
Bank Holding Company Act of 1956, as amended (“BHCA”),
and
the regulations of the Board of Governors of the Federal Reserve System (the
“FRB”)
promulgated thereunder. The Company is duly qualified to do business and is
in
good standing in the jurisdictions where its ownership or leasing of property
or
the conduct of its business requires it to be so qualified. A complete and
accurate list of all such jurisdictions is set forth on Schedule
3.2
of the
Company Disclosure Schedule.
3.3 Capitalization.
(a) As
of the
date hereof, the authorized capital stock of the Company consists solely of
4,000,000 shares of Company Common Stock, of which 3,550,410 shares were issued
and outstanding. In addition, as of the date hereof, there are 48,838 shares
of
Company Common Stock reserved for issuance upon exercise of outstanding Company
Stock Options. The outstanding shares of the Company Common Stock are validly
issued, fully paid and nonassessable with no personal liability attaching to
the
ownership thereof, and subject to no preemptive or similar rights (and were
not
issued in violation of any preemptive or similar rights). Except as set forth
on
Schedule
3.3
of the
Company Disclosure Schedule, there are no additional shares of the Company’s
capital stock authorized or reserved for issuance, the Company does not have
any
securities (including units of beneficial ownership interest in any partnership
or limited liability company) convertible into or exchangeable for any
additional shares of stock, any stock appreciation rights, or any other rights
to subscribe for or acquire shares of its capital stock issued and outstanding,
and the Company does not have, and is not bound by, any commitment to authorize,
issue or sell any such shares or other rights.
(b) Except
as
set forth on Schedule
3.3
of the
Company Disclosure Schedule, there are no outstanding contractual obligations
of
the Company to repurchase, redeem or otherwise acquire any shares of capital
stock of, or other equity interests in, the Company or to provide funds to,
or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary (as defined in Section 9.2(a)) of the Company.
9
(c) Schedule
3.3
of the
Company Disclosure Schedule sets forth, as of the date hereof, for each Option,
the name of the grantee, the date of grant, the type of grant, the status of
the
option grant as qualified or non-qualified under Section 422 of the Code, the
number of shares of Company Common Stock subject to each Option, the vesting
schedule of each Option, the number of shares of Company Common Stock that
are
currently exercisable with respect to such Option, the expiration date of each
Option, and the exercise price per share.
3.4 Subsidiaries.
(a) (i)
Schedule
3.4
of the
Company Disclosure Schedule sets forth a complete and accurate list of all
of
the Company’s Subsidiaries, including the jurisdiction of organization of each
such Subsidiary, (ii) except as set forth on Schedule
3.4
of the
Company Disclosure Schedule, the Company owns, directly or indirectly, all
of
the issued and outstanding equity securities of each Subsidiary, (iii) no equity
securities of any of the Company’s Subsidiaries are or may become required to be
issued (other than to the Company) by reason of any contractual right or
otherwise, (iv) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any of its equity securities (other than to the Company
or a
wholly-owned Subsidiary of the Company), (v) there are no contracts,
commitments, understandings or arrangements relating to the Company’s rights to
vote or to dispose of such securities and (vi) all of the equity securities
of
each such Subsidiary held by the Company, directly or indirectly, are validly
issued, fully paid and nonassessable, not subject to preemptive or similar
rights and are owned by the Company free and clear of all mortgages, pledges,
liens, security interests, conditional and installment sale agreements,
encumbrances, charges or other claims of third parties of any kind
(collectively, “Liens”).
(b) Except
as
set forth on Schedule
3.4
of the
Company Disclosure Schedule, the Company does not own (other than in a bona
fide
fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, any equity securities or similar interests
of any Person, or any interest in a partnership or joint venture of any
kind.
(c) Each
of
the Company’s Subsidiaries has been duly organized and qualified under the laws
of the jurisdiction of its organization and is duly qualified to do business
and
in good standing in the jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified. A complete and
accurate list of all such jurisdictions is set forth on Schedule
3.4
of the
Company Disclosure Schedule.
3.5 Corporate
Power.
Each of
the Company and its Subsidiaries has the corporate power and authority to carry
on its business as it is now being conducted and to own all of its properties
and assets; and the Company has the corporate power and authority to execute
and
deliver this Agreement, to perform its obligations under this Agreement and
to
consummate the transactions contemplated hereby.
3.6 Corporate
Authority.
This
Agreement and the transactions contemplated hereby, subject to approval by
the
holders of a majority of the shares of Company Common Stock outstanding and
entitled to vote thereon, have been authorized by all necessary corporate action
of the Company and the Board of Directors of the Company (the “Company
Board”).
The
Company Board (i) unanimously approved this Agreement and determined that this
Agreement and the transactions contemplated hereby, including the Merger, are
advisable and in the best interests of the holders of Company Common Stock
and
(ii) unanimously resolved to recommend that the holders of Company Common Stock
vote for the approval of this Agreement and the transactions contemplated hereby
at a meeting of the shareholders of the Company. The Company has duly executed
and delivered this Agreement and, assuming the due authorization, execution
and
delivery by Buyer, this Agreement is a legal, valid and binding agreement of
the
Company, enforceable in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors’ rights or by general principles of equity). The affirmative
vote of the holders of a majority of the outstanding shares of Company Common
Stock entitled to vote thereon is the only vote of any class of capital stock
of
the Company required by the MBCA, the Articles of Incorporation of the Company
or the Bylaws of the Company to approve this Agreement and the transactions
contemplated hereby. In accordance with the applicable provisions of the MBCA,
the shareholders of the Company are not entitled to appraisal or dissenters’
rights in connection with any of the transactions contemplated hereby.
10
3.7 Non-Contravention.
(a) Subject
to the receipt of the Regulatory Approvals (as defined in Section 9.2(a)),
and
the required filings under federal and state securities laws, and except as
set
forth on Schedule
3.7
of the
Company Disclosure Schedule, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) by the Company do not and will
not
(i) constitute a breach or violation of, or a default under, result in a right
of termination or the acceleration of any right or obligation under, any law,
rule or regulation or any judgment, decree, order, permit, license, credit
agreement, indenture, loan, note, bond, mortgage, reciprocal easement agreement,
lease, instrument, concession, franchise or other agreement of the Company
or
any of its Subsidiaries or to which the Company or any of its Subsidiaries,
properties or assets is subject or bound, (ii)
constitute a breach or violation of, or a default under, the Company’s Articles
of Incorporation or Bylaws, or (iii) require the consent or approval of any
third party or Governmental Authority (as defined in Section 9.2(a)) under
any
such law, rule, regulation, judgment, decree, order, permit, license, credit
agreement, indenture, loan, note, bond, mortgage, reciprocal easement agreement,
lease, instrument, concession, franchise or other agreement.
(b) As
of the
date hereof, the Company is not aware of any reasons relating to the Company
or
the Company Bank (including, without limitation, Community Reinvestment Act
compliance or the USA Patriot Act) (i) why all of the Regulatory Approvals
shall
not be procured from the applicable Governmental Authorities having jurisdiction
over the transactions contemplated by this Agreement or (ii) why any Burdensome
Condition(s) (as defined in Section 6.10) would be imposed.
3.8 Articles
of Incorporation; Bylaws; Corporate Records.
The
Company has made available to Buyer a complete and correct copy of its Articles
of Incorporation and the Bylaws or equivalent organizational documents, each
as
amended to date, of the Company and each of its Subsidiaries. The Company is
not
in violation of any of the terms of its Articles of Incorporation or Bylaws.
The
minute books of the Company and each of its Subsidiaries contain complete and
accurate records of all meetings held, and complete and accurate records of
all
other corporate actions of their respective shareholders and boards of directors
(including committees of their respective boards of directors).
11
3.9 Compliance
with Laws.
Each of
the Company and its Subsidiaries:
(a) is
in
compliance with all applicable federal, state, local and foreign statutes,
laws,
regulations, ordinances, rules, judgments, orders or decrees applicable thereto
or to the employees conducting their businesses, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable
fair
lending laws and other laws relating to discriminatory business
practices;
(b) has
all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Authorities
that
are required in order to permit them to own or lease their properties and to
conduct their businesses as presently conducted; all such permits, licenses,
authorizations, orders and approvals are in full force and effect and, to the
knowledge of the Company, no suspension or cancellation of any of them is
threatened;
(c) has
received, since December 31, 2001, no notification or communication from any
Governmental Authority (i) asserting that the Company or any of its Subsidiaries
is not in compliance with any of the statutes, regulations, or ordinances which
such Governmental Authority enforces, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization, (iii) threatening or
contemplating revocation or limitation of, or which would have the effect of
revoking or limiting, federal deposit insurance (nor, to the knowledge of the
Company, do any grounds for any of the foregoing exist) or (iv) failing to
approve any proposed acquisition, or stating its intention not to approve
acquisitions, proposed to be effected by the Company within a certain time
period or indefinitely; and
(d) has
conducted any finance activities (including, without limitation, mortgage
banking and mortgage lending activities and consumer finance activities) in
compliance with all applicable statutes and regulations regulating the business
of consumer lending, including, without limitation, state usury laws, the Truth
in Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Equal Credit Opportunity Act, the Fair Credit Reporting
Act,
the Homeowners Ownership and Equity Protection Act, the Fair Debt Collections
Act and other federal, state, local and foreign laws regulating lending
(“Finance
Laws”),
and
with all applicable collection practices in seeking payment under any loan
or
credit extension of such entity. In addition, there is no pending or, to the
knowledge of the Company, threatened charge by any Governmental Authority that
any of the Company and its Subsidiaries has violated, nor any pending or, to
the
knowledge of the Company, threatened investigation by any Governmental Authority
with respect to possible violations of, any applicable Finance
Laws.
3.10 Litigation;
Regulatory Action.
(a) Except
as
set forth on Schedule
3.10
of the
Company Disclosure Schedule, no litigation, claim, suit, investigation or other
proceeding before any court, governmental agency or arbitrator is pending
against the Company or any of its Subsidiaries, and, to the knowledge of the
Company, no such litigation, claim, suit, investigation or other proceeding
has
been threatened and there are no facts which could reasonably give rise to
such
litigation, claim, suit, investigation or other proceeding.
12
(b) Neither
the Company nor any of its Subsidiaries nor any of their respective properties
is a party to or is subject to any assistance agreement, board resolution,
order, decree, supervisory agreement, memorandum of understanding, condition
or
similar arrangement with, or a commitment letter or similar submission to,
any
Governmental Authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of deposits
(including, without limitation, the FRB, the Federal Deposit Insurance
Corporation (“FDIC”),
and
the Maine Superintendent of Banks) or the supervision or regulation of the
Company or any of its Subsidiaries. Except as set forth on Schedule
3.10
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has
been subject to any order or directive by, or been ordered to pay any civil
money penalty by, or has been since January 1, 2003, a recipient of any
supervisory letter from, or since January 1, 2003, has adopted any policies,
procedures or board resolutions at the request or suggestion of, any
Governmental Authority that currently regulates in any material respect the
conduct of its business or that in any manner relates to its capital adequacy,
its ability to pay dividends, its credit or risk management policies, its
management or its business, other than those of general application that apply
to similarly-situated bank or financial holding companies or their
subsidiaries.
(c) Neither
the Company nor any of its Subsidiaries, has been advised by a Governmental
Authority that it will issue, or is aware of any facts which could give rise
to
the issuance by any Governmental Authority or is aware that such Governmental
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
board resolution, memorandum of understanding, supervisory letter, commitment
letter, condition or similar submission.
3.11 SEC
Documents; Financial Reports; and Regulatory Reports.
(a) Except
as
set forth on Schedule
3.11
of the
Company Disclosure Schedule, the Company’s Annual Report on Form 10-K, as
amended through the date hereof, for the fiscal year ended December 31,
2005 (the “Company
2005 Form 10-K”),
and
all other reports, registration statements, definitive proxy statements or
information statements required to be filed by the Company or any of its
Subsidiaries subsequent to December 31, 2000 under the Securities Act (as
defined in Section 9.2(a)), or under Sections 13(a), 13(c), 14 and 15(d) of
the
Exchange Act (as defined in Section 9.2(a)) (collectively, the “Company
SEC Documents”),
with
the Securities and Exchange Commission (“SEC”),
and
all of the Company SEC Documents filed with the SEC after the date hereof,
in
the form filed or to be filed, (i) complied or will comply in all respects
as to
form with the applicable requirements under the Securities Act or the Exchange
Act, as the case may be, and (ii) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such Company
SEC Document (including the related notes and schedules thereto) fairly presents
and will fairly present the financial position of the entity or entities to
which such balance sheet relates as of its date, and each of the statements
of
income and changes in shareholders’ equity and cash flows or equivalent
statements in such Company SEC Documents (including any related notes and
schedules thereto) fairly presents and will fairly present the results of
operations, changes in shareholders’ equity and changes in cash flows, as the
case may be, of the entity or entities to which such statement relates for
the
periods to which it relates, in each case in accordance with GAAP (as defined
in
Section 9.2(a)) consistently applied during the periods involved, except in
each
case as may be noted therein, subject to normal year-end audit adjustments
in
the case of unaudited statements. Except for those liabilities that are fully
reflected or reserved against in the most recent consolidated balance sheet
of
the Company and its Subsidiaries (the “Company
Balance Sheet”)
contained in the Company 2005 Form 10-K and, except for liabilities reflected
in
Company SEC Documents filed prior to the date hereof or incurred in the ordinary
course of business consistent with past practices or in connection with this
Agreement, since December 31, 2005, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on its
consolidated balance sheet or in the notes thereto.
13
(b) Except
as
set forth on Schedule
3.11
of the
Company Disclosure Schedule, the Company and each of its Subsidiaries, officers
and directors are in compliance with, and have complied, with (1) the applicable
provisions of the Xxxxxxxx-Xxxxx Act of 2002 (“Xxxxxxxx-Xxxxx”)
and
the related rules and regulations promulgated under such act and the Exchange
Act and (2) the applicable listing and corporate governance rules and
regulations of the Nasdaq Stock Market. The Company (i) has established and
maintained disclosure controls and procedures and internal control over
financial reporting (as such terms are defined in paragraphs (3) and (f),
respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15
under the Exchange Act, and (ii) has disclosed based on its most recent
evaluations, to its outside auditors and the audit committee of the Company
Board (A) all significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial data
and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal control over
financial reporting.
(c) Since
December 31, 2001, the Company and its Subsidiaries have duly filed with the
FRB, the FDIC, the Maine Superintendent of Banks and any other applicable
Governmental Authority, in correct form the reports required to be filed under
applicable laws and regulations and such reports were in all respects complete
and accurate in compliance with the requirements of applicable laws and
regulations.
3.12 Absence
of Certain Changes or Events.
Except
as disclosed in the Company SEC Documents filed prior to the date hereof or
in
Schedule
3.12
of the
Company Disclosure Schedule, or as otherwise expressly permitted or expressly
contemplated by this Agreement, since December 31, 2005, there has not been
(i)
any change or development in the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations, cash flows or
properties of the Company or any of its Subsidiaries which has had, or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, and to the knowledge of the Company, no fact or
condition exists which is reasonably likely to cause a Company Material Adverse
Effect in the future, (ii) any change by the Company or any of its Subsidiaries
in its accounting methods, principles or practices, other than changes required
by applicable law or GAAP or regulatory accounting as concurred in by the
Company’s independent accountants, (iii) any entry by the Company or any of its
Subsidiaries into any contract or commitment of (A) more than $250,000 or (B)
$100,000 per annum with a term of more than one year, other than loans and
loan
commitments in the ordinary course of business, (iv) any declaration, setting
aside or payment of any dividend or distribution in respect of any capital
stock
of the Company or any of its Subsidiaries or any redemption, purchase or other
acquisition of any of its securities, other than in the ordinary course of
business consistent with past practice, (v) any increase in or establishment
of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards, or restricted
stock awards), stock purchase or other employee benefit plan, or any other
increase in the compensation payable or to become payable to any directors,
officers or employees of the Company or any of its Subsidiaries, or any grant
of
severance or termination pay, or any contract or arrangement entered into to
make or grant any severance or termination pay, any payment of any bonus, or
the
taking of any action not in the ordinary course of business with respect to
the
compensation or employment of directors, officers or employees of the Company
or
any of its Subsidiaries, (vi) any material election made by the Company or
any
of its Subsidiaries for federal or state income tax purposes, (vii) any material
change in the credit policies or procedures of the Company or any of its
Subsidiaries, the effect of which was or is to make any such policy or procedure
less restrictive in any respect, (viii) any material acquisition or disposition
of any assets or properties, or any contract for any such acquisition or
disposition entered into other than loans and loan commitments, or (ix) any
material lease of real or personal property entered into, other than in
connection with foreclosed property or in the ordinary course of business
consistent with past practice.
14
3.13 Taxes
and Tax Returns.
Except
as set forth on Schedule
3.13
of the
Company Disclosure Schedule:
(a) The
Company and each of its Subsidiaries have timely filed in correct form all
Tax
Returns (as defined in Section 9.2(a)) that were required to be filed by any
of
them, and have paid all Taxes (as defined in Section 9.2(a)) owed by them
(whether or not shown as due on any Tax Returns).
(b) No
assessment that has not been settled or otherwise resolved has been made with
respect to Taxes, other than such additional Taxes as are being contested in
good faith and which are described on Schedule
3.13
of the
Company Disclosure Schedule. The Tax Returns of the Company and its Subsidiaries
have been examined by the Internal Revenue Service (“IRS”)
or
other taxing authority, as applicable, for all years through December 31, 2002
(or the statute of limitations has closed without examination) and any liability
with respect thereto has been satisfied. There are no disputes pending or
written claims asserted for Taxes or assessments upon either the Company or
any
of its Subsidiaries, nor has the Company or any of its Subsidiaries been
requested to give, or has given, any currently effective waivers extending
the
statutory period of limitation applicable to any Tax assessment or deficiency.
Neither the Company nor any of its Subsidiaries is currently the beneficiary
of
any extension of time within which to file any Tax Return. No deficiency in
Taxes or other proposed adjustment that has not been settled or otherwise
resolved has been asserted in writing by any taxing authority against the
Company or any of its Subsidiaries. To the knowledge of the Company, no Tax
Return of the Company or any of its Subsidiaries is now under examination by
any
applicable taxing authority. There are no Liens for Taxes (other than current
Taxes not yet due and payable) on any of the assets of the Company or any of
its
Subsidiaries.
15
(c) Adequate
provision has been made on the Company Balance Sheet for all Taxes of the
Company and its Subsidiaries in respect of all periods through the date hereof.
In addition, (A) proper and accurate amounts have been withheld by each of
the
Company and its Subsidiaries from its respective employees for all prior periods
in compliance in all respects with the tax withholding provisions of applicable
federal, state, county and local laws; (B) federal, state, county and local
returns which are complete and accurate in all respects have been filed by
the
Company and its Subsidiaries for all periods for which returns were due with
respect to income tax withholding, Social Security and unemployment taxes;
and
(C) the amounts shown on such returns to be due and payable have been paid
in
full or adequate provision therefor has been included by the Company in its
consolidated financial statements included in the Company 2005 Form 10-K, or,
with respect to returns filed after the date hereof, will be so paid or provided
for in the consolidated financial statements of the Company for the period
covered by such returns. Since the date of the Company Balance Sheet, neither
the Company nor any of its Subsidiaries has incurred any liability for Taxes
arising from extraordinary gains or losses, as that term is used in GAAP,
outside the ordinary course of business consistent with past practice. The
Company has made available to Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company, or any of its Subsidiaries filed or
received since December 31, 2002.
(d) Neither
the Company nor any of its Subsidiaries is a party to or bound by any Tax
indemnification, Tax allocation or Tax sharing agreement with any Person or
has
any current or potential contractual obligation to indemnify any other Person
with respect to Taxes.
(e) Neither
the Company nor any of its Subsidiaries has filed or been included in a
combined, consolidated or unitary income Tax Return (including any consolidated
federal income Tax Return) other than one of which the Company was the
parent.
(f) Neither
the Company nor any of its Subsidiaries has made any payment, is obligated
to
make any payment, or is a party to any agreement that could obligate it to
make
any payment that will not be deductible under Code Section 162(m) or Code
Section 280G.
(g) No
property of the Company or any of its Subsidiaries is property that is or will
be required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Code (as in effect prior to its amendment
by the Tax Reform Act of 1986) or is “tax exempt use property” within the
meaning of Section 168(h) of the Code. Neither the Company nor any of its
Subsidiaries has been required to include in income any adjustment pursuant
to
Section 481 of the Code by reason of a voluntary change in accounting method
initiated by the Company or any of its Subsidiaries, and the IRS has not
initiated or proposed any such adjustment or change in accounting
method.
(h) None
of
the Company or its Subsidiaries will be required to include any item of income
in, or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of any: (A)
closing agreement as described in Code Section 7121 (or any corresponding or
similar provision of state, local, or foreign income Tax law) executed on or
prior to the Closing Date; (B) intercompany transactions or any excess loss
account described in Treasury Regulations under Code Section 1502 (or any
corresponding or similar provision of state, local, or foreign income Tax law);
(C) installment sale or open transaction disposition made on or prior to the
Closing Date; or (D) prepaid amount received on or prior to the Closing
Date.
16
(i) Neither
the Company nor any of its Subsidiaries has distributed stock of another Person,
or has had its stock distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by Code Section 355
or
Section 361.
(j) As
of the
date hereof, the Company is aware of no reason why the Merger will fail to
qualify as a “reorganization” under Section 368(a) of the Code.
3.14 Employee
Benefit Plans.
(a) Schedule
3.14(a)
of the
Company Disclosure Schedule sets forth a list of every Employee Program (as
defined below) that has been maintained by the Company or an ERISA Affiliate
(as
defined below) at any time during the six-year period ending on the Closing
Date.
(b) Each
Employee Program which has ever been maintained by the Company or an ERISA
Affiliate and which has been intended to qualify under Section 401(a) or
501(c)(9) of the Code has received a favorable determination or approval letter
from the IRS regarding its qualification under such section and has, in fact,
been qualified under the applicable section of the Code from the effective
date
of such Employee Program through and including the Closing Date (or, if earlier,
the date that all of such Employee Program’s assets were distributed). No event
or omission has occurred which would cause any Employee Program to lose its
qualification or otherwise fail to satisfy the relevant requirements to provide
tax-favored benefits under the applicable Code Section (including, without
limitation, Code Sections 105, 125, 401(a) and 501(c)(9)). Each asset held
under
any such Employee Program may be liquidated or terminated without the imposition
of any redemption fee, surrender charge or comparable liability. No partial
termination (within the meaning of Section 411(d)(3) of the Code) has occurred
with respect to any Employee Program.
(c) Neither
the Company nor any ERISA Affiliate knows, nor should any of them reasonably
know, of any failure of any party to comply with any laws applicable with
respect to the Employee Programs that have ever been maintained by the Company
or any ERISA Affiliate. With respect to any Employee Program ever maintained
by
the Company or any ERISA Affiliate, there has been no (i) “prohibited
transaction,” as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”),
or
Code Section 4975, (ii) failure to comply with any provision of ERISA, other
applicable law, or any agreement, or (iii) non-deductible contribution, which,
in the case of any of (i), (ii), or (iii), could subject the Company or any
ERISA Affiliate to liability either directly or indirectly (including, without
limitation, through any obligation of indemnification or contribution) for
any
damages, penalties, or Taxes, or any other loss or expense. No litigation or
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or, to
the
Company’s knowledge, threatened with respect to any such Employee Program. All
payments and/or contributions required to have been made (under the provisions
of any agreements or other governing documents or applicable law) with respect
to all Employee Programs ever maintained by the Company or any ERISA Affiliate,
for all periods prior to the Closing Date, either have been made or have been
properly accrued.
17
(d) Neither
the Company nor any ERISA Affiliate has ever maintained any Employee Program
which has been subject to Title IV of ERISA or Code Section 412 or ERISA Section
302, including, but not limited to, any Multiemployer Plan (as defined below).
Except as described in Schedule
3.14(d)
of the
Company Disclosure Schedule, no Employee Program maintained by the Company
or
any ERISA Affiliate and subject to Title IV of ERISA (other than a
Multiemployer Plan) has any “unfunded benefit liabilities” within the meaning of
ERISA Section 4001(a)(18), as of the Closing Date. Except as described in
Schedule
3.14(d)
of the
Company Disclosure Schedule, neither the Company nor any ERISA Affiliate has
ever maintained a Multiemployer Plan. Except as described in Schedule
3.14(d)
of the
Company Disclosure Schedule, none of the Employee Programs ever maintained
by
the Company or any ERISA Affiliate has ever provided health care or any other
non-pension benefits to any employees after their employment is terminated
(other than as required by part 6 of subtitle B of Title I of
ERISA) or has ever promised to provide such post-termination
benefits.
(e) With
respect to each Employee Program maintained by the Company within the six (6)
years preceding the Closing Date, complete and correct copies of the following
documents (if applicable to such Employee Program) have previously been made
available to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, trust agreements) as they may have been amended to the date hereof;
(ii) the most recent IRS determination or approval letter with respect to such
Employee Program under Code Section 401(a) or 501(c)(9), and any applications
for determination or approval subsequently filed with the IRS; (iii) the six
(6)
most recently filed IRS Forms 5500, with all applicable schedules and
accountants’ opinions attached thereto; (iv) the six (6) most recent actuarial
valuation reports completed with respect to such Employee Program; (v) the
summary plan description for such Employee Program (or other descriptions of
such Employee Program provided to employees) and all modifications thereto;
(vi)
any insurance policy (including any fiduciary liability insurance policy or
fidelity bond) related to such Employee Program; (vii) any registration
statement or other filing made pursuant to any federal or state securities
law;
and (viii) all correspondence to and from any state or federal agency within
the
last six (6) years with respect to such Employee Program.
(f) Except
as
described in Schedule
3.14(f)
of the
Company Disclosure Schedule, each Employee Program required to be listed on
Schedule
3.14(a)
of the
Company Disclosure Schedule may be amended, terminated, or otherwise modified
by
the Company to the greatest extent permitted by applicable law, including the
elimination of any and all future benefit accruals under any Employee Program
and no employee communications or provision of any Employee Program document
has
failed to effectively reserve the right of the Company or the ERISA Affiliate
to
so amend, terminate or otherwise modify such Employee Program. Except as
described in Schedule
3.14(f)
of the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) result in, cause the
accelerated vesting, funding or delivery of, or increase the amount or value
of,
any payment or benefit to any current or former employee, officer or director
of
the Company or any of its Subsidiaries.
18
(g) Each
Employee Program ever maintained by the Company (including each non-qualified
deferred compensation arrangement) has been maintained in compliance with all
applicable requirements of federal and state securities laws including (without
limitation, if applicable) the requirements that the offering of interests
in
such Employee Program be registered under the Securities Act and/or state “blue
sky” laws.
(h) Each
Employee Program ever maintained by the Company or an ERISA Affiliate has
complied with the applicable notification and other applicable requirements
of
the Consolidated Omnibus Budget Reconciliation Act of 1985, Health Insurance
Portability and Accountability Act of 1996, the Newborns’ and Mothers’ Health
Protection Act of 1996, the Mental Health Parity Act of 1996, and the Women’s
Health and Cancer Rights Act of 1998.
(i) Except
as
set forth on Schedule
3.14(i)
of the
Company Disclosure Schedule, no Employee Program is a nonqualified deferred
compensation plan, as such term is defined under Section 409A(d)(1) of the
Code
and the guidance thereunder (a “409A
Plan”).
Each
409A Plan has been operated in compliance with Section 409A of the Code since
January 1, 2005, based upon a good faith, reasonable interpretation of Section
409A of the Code, the proposed regulations issued thereunder and IRS Notices
2005-1 and 2006-79. Each 409A Plan complies in all respects, in both form and
operation, with the requirements of Section 409A of the Code and the guidance
thereunder. No payment to be made under any 409A Plan is, or to the knowledge
of
the Company will be, subject to the penalties of Section 409A(a)(1) of the
Code.
No Options provide for a deferral of compensation subject to Section 409A of
the
Code and all Options were granted with an exercise price equal to at least
100%
of the fair market value of the underlying Company Common Stock on the date
the
Option was granted based upon a reasonable valuation method.
(j) For
purposes of this Agreement:
(i) “Employee
Program”
means
(A) all employee benefit plans within the meaning of ERISA Section 3(3),
including, but not limited to, multiple employer welfare arrangements (within
the meaning of ERISA Section 3(40)), plans to which more than one unaffiliated
employer contributes and employee benefit plans (such as foreign or excess
benefit plans) which are not subject to ERISA; (B) all stock option plans,
stock
purchase plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, and all other employee benefit plans, agreements, and
arrangements (including any informal arrangements) not described in (A) above,
including, without limitation, any arrangement intended to comply with Code
Section 120, 125, 127, 129 or 137; and (C) all plans or arrangements providing
compensation to employee and non-employee directors, including, without
limitation, any employment agreements, severance agreements, change in control
agreements or similar agreements. In the case of an Employee Program funded
through a trust described in Code Section 401(a) or an organization described
in
Code Section 501(c)(9), or any other funding vehicle, each reference to such
Employee Program shall include a reference to such trust, organization or other
vehicle.
19
(ii) An
entity
“maintains”
an
Employee Program if such entity sponsors, contributes to, or provides benefits
under or through such Employee Program, or has any obligation (by agreement
or
under applicable law) to contribute to or provide benefits under or through
such
Employee Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses, dependents, or
beneficiaries).
(iii) An
entity
is an “ERISA
Affiliate”
of
the
Company if it would have ever been considered a single employer with the Company
under ERISA Section 4001(b) or part of the same “controlled group” as the
Company for purposes of ERISA Section 302(d)(8)(C).
(iv) “Multiemployer
Plan”
means
an employee pension or welfare benefit plan to which more than one unaffiliated
employer contributes and which is maintained pursuant to one or more collective
bargaining agreements.
3.15 Labor
Matters.
The
Company and its Subsidiaries are in compliance with all federal, state and
local
laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and other than normal accruals of wages during
regular payroll cycles, there are no arrearages in the payment of wages. Neither
the Company nor any of its Subsidiaries is a party to, or bound by any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is the Company or any of its
Subsidiaries the subject of a proceeding asserting that the Company or any
of
its Subsidiaries has committed an unfair labor practice (within the meaning
of
the National Labor Relations Act) or seeking to compel the Company or any of
its
Subsidiaries to bargain with any labor organization as to wages and conditions
of employment. No work stoppage involving the Company or any of its Subsidiaries
is pending, or to the knowledge of the Company, threatened. Neither the Company
nor any of its Subsidiaries is involved in, or, to the knowledge of the Company,
threatened with or affected by, any dispute, arbitration, lawsuit or
administrative proceeding relating to labor or employment matters that would
reasonably be expected to interfere in any respect with the respective business
activities represented by any labor union, and to the knowledge of the Company,
no labor union is attempting to organize employees of the Company or any of
its
Subsidiaries.
3.16 Insurance.
The
Company and each of its Subsidiaries is insured, and during each of the past
three (3) calendar years has been 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. Schedule
3.16
of the
Company Disclosure Schedule lists all insurance policies maintained by the
Company and each of its Subsidiaries as of the date hereof. All of the policies
and bonds maintained by the Company or any of its Subsidiaries are in full
force
and effect and all claims thereunder have been filed in a due and timely manner
and, to the knowledge of the Company, no such claim has been denied. Neither
the
Company nor any of its Subsidiaries is in breach of or default under any
insurance policy, and there has not occurred any event that, with the lapse
of
time or the giving of notice or both, would constitute such a breach or
default.
20
3.17 Environmental
Matters.
(a) Except
as
disclosed on Schedule
3.17
of the
Company Disclosure Schedule, each of the Company and its Subsidiaries and each
property owned, leased or operated by any of them (the “Company
Property”)
and,
to the knowledge of the Company, the Loan Properties (as defined below), are,
and have been, in compliance with all Environmental Laws (as defined
below).
(b) There
is
no suit, claim, action or proceeding pending or,
to
the knowledge of the Company, threatened,
before any Governmental Authority in which the Company or any of its
Subsidiaries
has been
or,
with
respect to threatened proceedings, may be, named
as
a defendant, responsible party or potentially responsible party (A) for alleged
noncompliance (including by any predecessor)
with any
Environmental Law or (B) relating to the release into or presence
of any
Hazardous Materials (as defined below) or Oil (as defined below) at,
on
or
from a Company Property or any previously
owned,
operated or
leased
property.
(c) There
is
no suit, claim, action or proceeding pending or, to the knowledge of the
Company, threatened, before any Governmental Authority or other forum in which
the
Company or any of its Subsidiaries has
been or,
with
respect to threatened proceedings, may be, named
as
a defendant, responsible party or potentially responsible party (A) for alleged
noncompliance (including by any predecessor) with any Environmental Law or
(B)
relating to the release into or presence
of any
Hazardous Material or Oil at,
on or
from a Loan Property.
(d) Except
as
set forth on Schedule
3.17
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries,
nor to the knowledge of the Company, any Loan
Property,
has
received or
been
named in any
written
notice regarding a matter on which a suit, claim, action or proceeding as
described in subsection (b) or (c) of this Section 3.17 could reasonably be
based.
(e) During
the period of (i) the Company’s or any of its Subsidiaries’ ownership or
operation of any Company
Property or
(ii)
the Company’s or any of its Subsidiaries’ holding of a security interest in a
Loan Property, to the knowledge of the Company, there has been no release
of Hazardous Material or Oil in, on, under or affecting such property or
Loan
Property,
and no
Hazardous Material is present in, on, under or affecting any such property
or
Loan Property that would result in any liabilities
or
obligation pursuant to Environmental Law.
To the
knowledge of the Company, prior to the period of the
Company’s or any of its Subsidiaries’ ownership or operation of any Company
Properties
or any
previously owned,
operated
or
leased
properties,
there
was no release or presence of Hazardous Material in, on, under or affecting
any
such property that
would
result in any
liabilities or obligation pursuant to Environmental Law.
(f) Neither
the Company nor any of its Subsidiaries is an owner or operator of
any
Loan
Property and there are no Participation Facilities (as defined
below).
21
(g) The
following definitions apply for purposes of this Agreement:
(A)
“Loan
Property”
means
any property in which the Company or any of its Subsidiaries holds a security
interest, and, where required by the context (as a result of foreclosure),
said
term means the owner or operator of such property; (B) “Participation
Facility”
means
any facility in which the Company or any of its Subsidiaries participates or
has
participated in the management and, where required by the context, said term
means the owner or operator of such property, pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601
et seq.; (C) “Hazardous
Material”
means
any compound,
chemical, pollutant,
contaminant, toxic
substance,
hazardous waste, hazardous
material,
or
hazardous substance, as any of the foregoing may be defined, identified or
regulated under
or
pursuant to any
Environmental Laws, and including without limitation, asbestos,
asbestos-containing materials, polychlorinated biphenyls, toxic mold, or fungi,
or any other material that may pose a threat to the Environment or to human
health and safety
but
excludes substances in kind and amounts used or stored for cleaning purposes
or
other maintenance or operation of motor vehicles used by tenants (if applicable)
or guests and otherwise in compliance with Environmental Laws; (D) “Oil”
means
oil or petroleum of any kind or origin or in any form, as defined in or pursuant
to the Federal Clean Water Act, 33 U.S.C. Section 1251 et seq., or any other
Environmental Law; (E) “Environment”
means
any air,
water vapor, surface water, groundwater, drinking water supply, surface soil,
subsurface soil, sediment,
surface
or subsurface strata, plant and
animal
life,
and any
other environmental medium
or
natural resource;
and
(F)
“Environmental
Laws”
means
any applicable federal, state or local law, statute, ordinance, rule,
regulation, code, license, permit, approval, consent, order, judgment, decree,
injunction or agreement with any governmental entity relating to (1) the
protection, preservation or restoration of the Environment,
and/or
(2) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Material.
The
term Environmental Law includes without limitation (a) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
§ 9601, et seq.; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. § 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C.
§ 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33
U.S.C. § 1251, et seq.; the Toxic Substances Control Act, as amended, 15
U.S.C. § 2601, et seq.; the Emergency Planning and Community Right to Xxxx
Xxx, 00 X.X.X. § 00000, et seq.; the Safe Drinking Water Act, 42 U.S.C.
§ 300f, et seq.; and all comparable state and local laws, and (b) 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 the presence of or exposure to any Hazardous
Material
as in
effect on or prior to the date of this Agreement.
3.18 Intellectual
Property.
The
Company or its Subsidiaries owns or possesses valid and binding licenses and
other rights to use all patents, copyrights, trade secrets, trade names,
servicemarks and trademarks used in their businesses (the “Company
Intellectual Property”),
each
without payment, and neither the Company nor any of its Subsidiaries has
received any notice of infringement or conflict with respect thereto that
asserts the rights of others, nor does the Company have knowledge of any such
infringement or conflict. The Company and its Subsidiaries have performed all
the obligations required to be performed, and are not in default in any respect,
under any contract, agreement, arrangement or commitment relating to the Company
Intellectual Property.
22
3.19 Material
Agreements; Defaults.
(a) Except
as
set forth on Schedule
3.19
of the
Company Disclosure Schedule or the index of exhibits in the Company 2005 Form
10-K, and except for this Agreement and the transactions contemplated hereby,
neither the Company nor any of its Subsidiaries is a party to or is bound by
(i)
any agreement, arrangement, or commitment that is material to the financial
condition, results of operations or business of the Company; (ii) any written
(or oral) agreement, arrangement, or commitment relating to the employment,
including, without limitation, engagement as a consultant of any Person, or
the
election or retention in office or severance of any present or former director
or officer of the Company or any of its Subsidiaries; (iii) any contract,
agreement, or understanding with any labor union; (iv) any agreement by and
among the Company or any of its Subsidiaries, and/or any Affiliate thereof;
(v)
any contract or agreement or amendment thereto that would be required to be
filed as an exhibit to a Form 10-K filed by the Company as of the date hereof
that has not been filed as an exhibit to the Company 2005 Form 10-K; (vi) any
agreement, arrangement, or commitment (whether written or oral) which, upon
the
consummation of the transactions contemplated by this Agreement would result
in
any payment (whether of severance pay or otherwise) becoming due from the
Company or any of its Subsidiaries to any officer or employee thereof; (vii)
any
agreement, arrangement or commitment (whether written or oral) which is a
consulting or other agreement (including agreements entered into in the ordinary
course and data processing, software programming and licensing contracts) not
terminable on sixty (60) days or less notice involving the payment of in excess
of $100,000 per annum individually or $250,000 in the aggregate; (viii) any
agreement, arrangement or commitment (whether written or oral) which restricts
the conduct of any line of business by the Company or any of its Subsidiaries;
or (ix) any agreement, arrangement or commitment (whether written or oral)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by
the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any
of
the transactions contemplated by this Agreement. Each contract, arrangement,
commitment or understanding of the type described in this Section 3.19(a),
whether or not set forth on Schedule
3.19
of the
Company Disclosure Schedule, is referred to herein as a “Company
Material Contract.”
The
Company has previously made available to Buyer complete and correct copies
of
all of the Company Material Contracts, including any and all amendments and
modifications thereto.
(b) Each
Company Material Contract is legal, valid and binding upon the Company or its
Subsidiaries, as the case may be, and to the knowledge of the Company, all
other
parties thereto, and is in full force and effect. Neither the Company nor any
of
its Subsidiaries is in breach of or default under any Company Material Contract,
or any other agreement or instrument to which it is a party, by which its
assets, business, or operations may be bound or affected, or under which it
or
its respective assets, business, or operations receives benefits, and there
has
not occurred any event that, with the lapse of time or the giving of notice
or
both, would constitute such a breach or default. To the knowledge of the
Company, no other party to any Company Material Contract is in breach of or
default under such Company Material Contract, and there has not occurred any
event that, with the lapse of time or the giving of notice or both, would
constitute such a breach or default.
3.20 Property
and Leases.
(a) Each
of
the Company and its Subsidiaries has good and marketable title to all the real
property and all other property owned by it and included in the most recent
balance sheet in the Company SEC Documents, free and clear of all Liens, other
than (i) Liens that secure liabilities that are reflected in the Company Balance
Sheet or incurred in the ordinary course of business after the date of the
Company Balance Sheet, (ii) Liens for current taxes and assessments not yet
past
due or which are being contested in good faith, (iii) inchoate mechanics’ and
materialmen’s Liens for construction in progress, (iv) workmen’s, repairmen’s,
warehousemen’s and carriers’ Liens arising in the ordinary course of business of
the Company or any of its Subsidiaries consistent with past practice, and (v)
those items that secure public or statutory obligations or any discount with,
borrowing from, or obligations to any FRB or Federal Home Loan Bank, interbank
credit facilities, or any transaction by the Company’s Subsidiaries acting in a
fiduciary capacity.
23
(b) Each
lease of real property to which the Company or any of its Subsidiaries is a
party requiring rental payments in excess of $50,000 during the period of the
lease, and all amendments and modifications thereto, is in full force and
effect, and there exists no default under any such lease by the Company or
any
of its Subsidiaries, nor any event which with notice or lapse of time or both
would constitute a breach or default thereunder by the Company or any of its
Subsidiaries, except for such breaches and defaults which, individually or
in
the aggregate, would not result in the forfeiture of the use or occupancy of
the
property covered by such lease.
3.21 Inapplicability
of Takeover Laws.
The
Company has taken all action required to be taken by it in order to exempt
this
Agreement, the Voting Agreements and the transactions contemplated hereby and
thereby from, and this Agreement, the Voting Agreements and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
“moratorium,” “business combination,” “control share,” “fair price” or other
takeover defense laws and regulations (collectively, “Takeover
Laws”),
if
any, of the State of Maine.
3.22 Regulatory
Capitalization.
The
Company Bank is, and immediately after the Effective Time will be, “well
capitalized,” as such term is defined in the rules and regulations promulgated
by the FDIC. The Company is, and immediately prior to the Effective Time will
be, “well capitalized” as such term is defined in the rules and regulations
promulgated by the FRB.
3.23 Loans;
Nonperforming and Classified Assets.
(a) Each
loan
agreement, note or borrowing arrangement, including, without limitation,
portions of outstanding lines of credit and loan commitments (collectively,
“Loans”),
on
the Company’s or any of its Subsidiaries’ books and records, was made and has
been serviced in accordance with the Company’s lending standards in the ordinary
course of business; is evidenced by appropriate and sufficient documentation;
to
the extent secured, has been secured by valid liens and security interests
which
have been perfected; and constitutes the legal, valid and binding obligation
of
the obligor named therein, enforceable in accordance with its terms, subject
to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditor’s rights and to general equity
principles. The Company has previously made available to Buyer complete and
correct copies of its lending policies. The deposit and loan agreements of
the
Company and its Subsidiaries comply with all applicable laws, rules and
regulations. The allowance for loan losses reflected in the Company SEC
Documents and financial statements filed therewith, as of their respective
dates, is adequate under GAAP and all regulatory requirements applicable to
financial institutions.
24
(b) Schedule
3.23
of the
Company Disclosure Schedule discloses as of December 31, 2006: (A) any Loan
under the terms of which the obligor is sixty (60) or more days delinquent
in
payment of principal or interest, or to the knowledge of the Company, in default
of any other provision thereof; (B) each Loan which has been classified as
“other loans specially maintained,” “classified,” “criticized,” “substandard,”
“doubtful,” “credit risk assets,” “watch list assets,” “loss” or “special
mention” (or words of similar import) by the Company, its Subsidiaries or a
Governmental Authority (the “Classified
Loans”);
(C) a
listing of the real estate owned, acquired by foreclosure or by deed-in-lieu
thereof, including the book value thereof; and (D) each Loan with any director,
executive officer or five percent (5%) or greater shareholder of the Company,
or
to the knowledge of the Company, any Person controlling, controlled by or under
common control with any of the foregoing. All Loans which are classified as
“Insider Transactions” by Regulation O of the FRB have been made by the Company
or any of its Subsidiaries in an arms-length manner made on substantially the
same terms, including interest rates and collateral, as those prevailing at
the
time for comparable transactions with other Persons and do not involve more
than
normal risk of collectibility or present other unfavorable
features.
(c) The
Company shall promptly after the end of each quarter after the date hereof
and
upon Closing inform Buyer of the amount of Loans subject to each type of
classification of the Classified Loans.
3.24 Trust
Business; Administration of Fiduciary Accounts.
The
Company Bank (i) has been duly appointed to all fiduciary or representative
capacities it holds with respect to the Trust Business (as defined below) and
all such appointments are currently in effect, and (ii) has all
authorizations, approvals, licenses and permits necessary for the conduct of
its
Trust Business. The Company Bank has properly administered the accounts for
which it acts as a fiduciary, including, without limitation, to accounts for
which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator or investment advisor, in accordance with the terms of
the
governing documents and applicable state and federal law and regulation and
common law. To the knowledge of the Company, neither the Company nor any of
its
Subsidiaries and none of their respective directors, officers or employees
has
committed any breach of trust with respect to any such fiduciary account, and
the accountings for each such fiduciary account are true and correct and
accurately reflect the assets of such fiduciary account. For purposes of this
Section 3.24, “Trust
Business”
shall
mean the trusts, executorships, administrations, guardianships,
conservatorships, and other representative capacities at the Company Bank’s
banking and trust offices.
3.25 Investment
Management and Related Activities.
Except
as set forth on Schedule
3.25
of the
Company Disclosure Schedule, none of the Company, any of its Subsidiaries or
the
Company’s or its Subsidiaries’ directors, officers or employees is required to
be registered, licensed or authorized under the laws or regulations issued
by
any Governmental Authority as an investment adviser, a broker or dealer, an
insurance agency or company, a commodity trading adviser, a commodity pool
operator, a futures commission merchant, an introducing broker, a registered
representative or associated person, investment adviser, representative or
solicitor, a counseling officer, an insurance agent, a sales person or in any
similar capacity with a Governmental Authority.
25
3.26 Derivative
Transactions.
All
Derivative Transactions (as defined below) entered into by the Company or any
of
its Subsidiaries were entered into in accordance with applicable rules,
regulations and policies of any Governmental Authority, and in accordance with
the investment, securities, commodities, risk management and other policies,
practices and procedures employed by the Company and its Subsidiaries, and
were
entered into with counterparties believed at the time to be financially
responsible and able to understand (either alone or in consultation with their
advisers) and to bear the risks of such Derivative Transactions. The Company
and
its Subsidiaries have duly performed all of their obligations under the
Derivative Transactions to the extent that such obligations to perform have
accrued, and, to the knowledge of the Company, there are no breaches, violations
or defaults or allegations or assertions of such by any party thereunder. The
Company and its Subsidiaries have adopted policies and procedures consistent
with the publications of Governmental Authorities with respect to their
derivatives program. For purposes of this Agreement, “Derivative
Transactions”
shall
mean any swap transaction, option, warrant, forward purchase or forward sale
transaction, futures transaction, cap transaction, floor transaction or collar
transaction relating to one or more currencies, commodities, bonds, equity
securities, loans, interest rates, credit-related events or conditions or any
indexes, or any other similar transaction or combination of any of these
transactions, including collateralized mortgage obligations or other similar
instruments or any debt or equity instruments evidencing or embedding any such
types of transactions, and any related credit support, collateral or other
similar arrangements related to such transactions.
3.27 Repurchase
Agreements.
With
respect to all agreements pursuant to which the Company or any of its
Subsidiaries has purchased securities subject to an agreement to resell, if
any,
the Company or any of its Subsidiaries, as the case may be, has a valid,
perfected first lien or security interest in the government securities or other
collateral securing the repurchase agreement, and, as of the date hereof, the
value of such collateral equals or exceeds the amount of the debt secured
thereby.
3.28 Deposit
Insurance
.
The
deposits of the Company Bank are insured by the FDIC in accordance with the
Federal Deposit Insurance Act (“FDIA”)
to the
fullest extent permitted by law, and each Subsidiary has paid all premiums
and
assessments and filed all reports required by the FDIA. No proceedings for
the
revocation or termination of such deposit insurance are pending or, to the
knowledge of the Company, threatened.
3.29 CRA,
Anti-money Laundering and Customer Information Security.
Neither
the Company nor any of its Subsidiaries is a party to any agreement with any
individual or group regarding Community Reinvestment Act matters and the Company
is not aware of, and none of the Company and its Subsidiaries has been advised
of, or has any reason to believe (because the Company Bank’s Home Mortgage
Disclosure Act data for the year ended December 31, 2005, filed with the FDIC,
or otherwise) that any facts or circumstances exist, which would cause the
Company Bank: (i) to be deemed not to be in satisfactory compliance with the
Community Reinvestment Act, and the regulations promulgated thereunder, or
to be
assigned a rating for Community Reinvestment Act purposes by federal or state
bank regulators of lower than “satisfactory”; or (ii) to be deemed to be
operating in violation of the federal Bank Secrecy Act, as amended, and its
implementing regulations (31 C.F.R. Part 103), the USA Patriot Act of 2001,
Public Law 107-56, and the regulations promulgated thereunder (the “USA
Patriot Act”),
any
order issued with respect to anti-money laundering by the U.S. Department of
the
Treasury’s Office of Foreign Assets Control, or any other applicable anti-money
laundering statute, rule or regulation; or (iii) to be deemed not to be in
satisfactory compliance with the applicable privacy of customer information
requirements contained in any federal and state privacy laws and regulations,
including, without limitation, in Title V of the Xxxxx-Xxxxx-Xxxxxx Act of
1999
and regulations promulgated thereunder, as well as the provisions of the
information security program adopted by the Company Bank pursuant to 12 C.F.R.
Part 364. Furthermore, the Board of Directors of the Company Bank has adopted
and the Company Bank has implemented an anti-money laundering program that
contains adequate and appropriate customer identification verification
procedures that has not been deemed ineffective by any Governmental Authority
and that meets the requirements of Sections 352 and 326 of the USA Patriot
Act.
26
3.30 Transactions
with Affiliates.
Except
as set forth in Schedule
3.30
of the
Company Disclosure Schedule, there are no outstanding amounts payable to or
receivable from, or advances by the Company or any of its Subsidiaries to,
and
neither the Company nor any of its Subsidiaries is otherwise a creditor or
debtor to, any shareholder, director, employee or Affiliate (as defined in
Section 9.2(a)) of the Company or any of its Subsidiaries, other than as part
of
the normal and customary terms of such persons’ employment or service as a
director with the Company or any of its Subsidiaries. Except as set forth in
Schedule
3.30
of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is
a party to any transaction or agreement with any of its respective Affiliates,
shareholders, directors or executive officers or any material transaction or
agreement with any employee other than executive officers. All agreements
between the Company and any of its Affiliates comply, to the extent applicable,
with Regulation W of the FRB.
3.31 Brokers;
Fairness Opinion.
No
action has been taken by the Company or any of its Subsidiaries that would
give
rise to any valid claim against the Company for a brokerage commission, finder’s
fee or other like payment with respect to the transactions contemplated by
this
Agreement, except in connection with the engagement of Xxxxx, Xxxxxxxx &
Xxxxx (the “Financial
Advisor”)
by the
Company. The fee payable to the Financial Advisor in connection with the
transactions contemplated by this Agreement is described in an engagement letter
between the Company and the Financial Advisor, a complete and correct copy
of
which has been previously provided to Buyer. The Company has received the
opinion of the Financial Advisor, to the effect that, as of the date hereof,
the
Merger Consideration to be received by the shareholders of the Company pursuant
to the Merger is fair from a financial point of view to such shareholders,
and
such opinion has not been amended or rescinded, and remains in full force and
effect. The Company has been authorized by the Financial Advisor to permit
the
inclusion of such opinion in its entirety in the Proxy Statement/Prospectus
(as
defined in Section 6.3(a)).
3.32 Disclosure.
No
representation or warranty contained in this Agreement, and no statement
contained in any certificate, list or other writing, including but not
necessarily limited to the Company Disclosure Schedule and, including, without
limitation, the Company SEC Documents as the same may be updated as of the
date
hereof, furnished to Buyer pursuant to the provisions hereof, contains or will
contain any untrue statement of a material fact or omits or will omit to state
a
material fact necessary in order to make the statements herein or therein not
misleading.
27
ARTICLE
IV - REPRESENTATIONS
AND WARRANTIES OF BUYER
4.1 Making
of Representations and Warranties.
(a) As
a
material inducement to the Company to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby makes to the
Company the representations and warranties contained in this Article
IV.
(b) On
or
prior to the date hereof, Buyer has delivered to the Company a schedule (the
“Buyer
Disclosure Schedule”)
listing, among other things, items the disclosure of which is necessary or
appropriate in relation to any or all of its representations and warranties;
provided,
however,
that no
such item is required to be set forth on the Buyer Disclosure Schedule as an
exception to a representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being untrue or
incorrect under the standards established by Section 4.1(c).
(c) No
representation or warranty of Buyer contained in this Article IV shall be deemed
untrue or incorrect, and no party hereto shall be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually
or
taken together with all other facts, circumstances or events inconsistent with
any section of this Article IV, has had or would reasonably be expected to
have
a Buyer Material Adverse Effect (as defined in Section 9.2(a)); provided,
however,
that
the foregoing standard shall not apply to the representations and warranties
contained in Sections 4.3, 4.4(a) (as it relates to the Buyer Banks (as defined
in Section 9.2(a)), 4.5 and 4.6 and the first two sentences of Section 4.2,
which shall be deemed untrue, incorrect and breached if they are not true and
correct in all material respects.
4.2 Organization,
Standing and Authority.
Buyer
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Vermont. Buyer is duly registered as a bank holding company
under the BHCA and the regulations of the FRB thereunder. Buyer is duly
qualified to do business and is in good standing in the jurisdictions where
its
ownership or leasing of property or the conduct of its business requires it
to
be so qualified.
4.3 Capitalization.
As of
the date hereof, the authorized capital stock of Buyer consists solely of
120,000,000 shares of Buyer Common Stock, of which 45,384,610 shares were
issued and outstanding, and 4,871,786 shares were held, directly or
indirectly, by Buyer as treasury stock; and 1,000,000 shares of preferred stock,
par value $100.00 per share, none of which were issued and outstanding. The
outstanding shares of Buyer’s capital stock are validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof,
and
subject to no preemptive rights or similar rights (and were not issued in
violation of any preemptive or similar rights). The shares of Buyer Common
Stock
to be issued in the Merger have been duly and validly reserved for issuance,
and
when issued in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and nonassessable and free of any preemptive or
similar rights.
28
4.4 Subsidiaries.
(a)
(i)
Schedule
4.4
of the
Buyer Disclosure Schedule sets forth a complete and accurate list of all of
Buyer’s Subsidiaries, including the jurisdiction of organization of each such
Subsidiary, (ii) Buyer owns, directly or indirectly, all of the issued and
outstanding equity securities of each Subsidiary, (iii) no equity securities
of
any of Buyer’s Subsidiaries are or may become required to be issued (other than
to Buyer) by reason of any contractual right or otherwise, (iv) there are no
contracts, commitments, understandings or arrangements by which any of such
Subsidiaries is or may be bound to sell or otherwise transfer any of its equity
securities (other than to Buyer or a wholly-owned Subsidiary of Buyer), (v)
there are no contracts, commitments, understandings or arrangements relating
to
Buyer’s rights to vote or to dispose of such securities and (vi) all of the
equity securities of each such Subsidiary held by Buyer, directly or indirectly,
are validly issued, fully paid and nonassessable, not subject to preemptive
or
similar rights and are owned by Buyer free and clear of all Liens.
(b) Except
as
set forth on Schedule
4.4
of the
Buyer Disclosure Schedule, Buyer does not own (other than in a bona fide
fiduciary capacity or in satisfaction of a debt previously contracted)
beneficially, directly or indirectly, any equity securities or similar interests
of any Person, or any interest in a partnership or joint venture of any
kind.
(c) Each
of
Buyer’s Subsidiaries has been duly organized and qualified under the laws of the
jurisdiction of its organization and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of property
or
the conduct of its business requires it to be so qualified.
4.5 Corporate
Power.
Each of
Buyer and its Subsidiaries has the corporate power and authority to carry on
its
business as it is now being conducted and to own all of its properties and
assets; and Buyer has the corporate power and authority to execute and deliver
this Agreement, to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
4.6 Corporate
Authority.
This
Agreement and the transactions contemplated hereby have been authorized by
all
necessary corporate action of Buyer and the Board of Directors of Buyer
(“Buyer
Board”).
Buyer
has duly executed and delivered this Agreement and, assuming the due
authorization, execution and delivery by the Company, this Agreement is a legal,
valid and binding agreement of Buyer, enforceable in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws
of
general applicability relating to or affecting creditors’ rights or by general
principles of equity).
4.7 Non-Contravention.
(a) Subject
to the receipt of the Regulatory Approvals, and the required filings under
federal and state securities laws, and except as set forth on Schedule
4.7
of the
Buyer Disclosure Schedule, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) by Buyer do not and will not (i)
constitute a breach or violation of, or a default under, result in a right
of
termination, or the acceleration of any right or obligation under, any law,
rule
or regulation or any judgment, decree, order, permit, license, credit agreement,
indenture, loan, note, bond, mortgage, reciprocal easement agreement, lease,
instrument, concession, franchise or other agreement of Buyer or of any of
its
Subsidiaries or to which Buyer or any of its Subsidiaries, properties or assets
is subject or bound, (ii) constitute a breach or violation of, or a default
under, Buyer’s Articles of Organization or Bylaws, or (iii) require the consent
or approval of any third party or Governmental Authority under any such law,
rule, regulation, judgment, decree, order, permit, license, credit agreement,
indenture, loan, note, bond, mortgage, reciprocal easement agreement, lease,
instrument, concession, franchise or other agreement.
29
(b) As
of the
date hereof, Buyer is not aware of any reasons relating to Buyer or its
Subsidiaries (including, without limitation, Community Reinvestment Act
compliance or the USA Patriot Act) (i) why all of the Regulatory Approvals
shall
not be procured from the applicable Governmental Authorities having jurisdiction
over the transactions contemplated by this Agreement or (ii) why any Burdensome
Condition(s) would be imposed.
4.8 Articles
of Incorporation; Bylaws.
Buyer
has made available to the Company a complete and correct copy of its Articles
of
Incorporation and Bylaws, each as amended to date, of Buyer and each of its
Subsidiaries. Buyer is not in violation of any of the terms of its Articles
of
Incorporation or Bylaws. The minute books of Buyer and each of its Subsidiaries
contain complete and accurate records of all meetings held, and complete and
accurate records of all other corporate actions of their respective shareholders
and boards of directors (including committees of their respective boards of
directors).
4.9 Compliance
with Laws.
Each of
Buyer and its Subsidiaries:
(a) is
in
compliance with all applicable federal, state, local and foreign statutes,
laws,
regulations, ordinances, rules, judgments, orders or decrees applicable thereto
or to the employees conducting their businesses, including, without limitation,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable
fair
lending laws and other laws relating to discriminatory business
practices;
(b) has
all
permits, licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Authorities
that
are required in order to permit them to own or lease their properties and to
conduct their businesses as presently conducted; all such permits, licenses,
authorizations, orders and approvals are in full force and effect and, to the
knowledge of Buyer, no suspension or cancellation of any of them is threatened;
(c) has
received, since December 31, 2001, no notification or communication from any
Governmental Authority (i) asserting that Buyer or any of its Subsidiaries
is
not in compliance with any of the statutes, regulations, or ordinances which
such Governmental Authority enforces, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization, (iii) threatening or
contemplating revocation or limitation of, or which would have the effect of
revoking or limiting, federal deposit insurance (nor, to the knowledge of the
Buyer, do any grounds for any of the foregoing exist) or (iv) failing to approve
any proposed acquisition, or stating its intention not to approve acquisitions,
proposed to be effected by the Buyer within a certain time period or
indefinitely; and
30
(d) has
conducted any finance activities (including, without limitation, mortgage
banking and mortgage lending activities and consumer finance activities) in
compliance with all Finance Laws, and with all applicable collection practices
in seeking payment under any loan or credit extension of such entity. In
addition, there is no pending or, to the knowledge of Buyer, threatened charge
by any Governmental Authority that any of Buyer and its Subsidiaries has
violated, nor any pending or, to the knowledge of Buyer, threatened
investigation by any Governmental Authority with respect to possible violations
of, any applicable Finance Laws.
4.10 Litigation.
(a) No
litigation, claim, suit, investigation or other proceeding before any court,
governmental agency or arbitrator is pending against Buyer or any of its
Subsidiaries, and, to the knowledge of Buyer, no litigation, claim, suit,
investigation or other proceeding has been threatened and there are no facts
which could reasonably give rise to such litigation, claim, suit, investigation
or other proceeding.
(b) Neither
Buyer nor any of its Subsidiaries nor any of their respective properties is
a
party to or is subject to any assistance agreement, board resolution, order,
decree, supervisory agreement, memorandum of understanding, condition or similar
arrangement with, or a commitment letter or similar submission to, any
Governmental Authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of deposits
or
the supervision or regulation of Buyer or any of its Subsidiaries.
(c) Neither
Buyer nor any of its Subsidiaries, has been advised by a Governmental Authority
that it will issue, or is aware of any facts which could give rise to the
issuance by any Governmental Authority or is aware that such Governmental
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
board resolution, memorandum of understanding, supervisory letter, commitment
letter, condition or similar submission.
4.11 SEC
Documents; Financial Reports; and Regulatory Reports.
(a) Buyer’s
Annual Report on Form 10-K, as amended through the date hereof, for the fiscal
year ended December 31, 2005 (the “Buyer
2005 Form 10-K”),
and
all other reports, registration statements, definitive proxy statements or
information statements required to be filed by Buyer or any of its Subsidiaries
subsequent to December 31, 2000 under the Securities Act, or under Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act (collectively, the “Buyer
SEC Documents”),
with
the SEC, and all of the Buyer SEC Documents filed with the SEC after the date
hereof, in the form filed or to be filed, (i) complied or will comply in all
respects as to form with the applicable requirements under the Securities Act
or
the Exchange Act, as the case may be, and (ii) did not and will not contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements made therein, in light
of
the circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such Buyer
SEC
Document (including the related notes and schedules thereto) fairly presents
and
will fairly present the financial position of the entity or entities to which
such balance sheet relates as of its date, and each of the statements of income
and changes in shareholders’ equity and cash flows or equivalent statements in
such Buyer SEC Documents (including any related notes and schedules thereto)
fairly presents and will fairly present the results of operations, changes
in
shareholders’ equity and changes in cash flows, as the case may be, of the
entity or entities to which such statement relates for the periods to which
it
relates, in each case in accordance with GAAP consistently applied during the
periods involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements. Except for
those
liabilities that are fully reflected or reserved against in the most recent
consolidated balance sheet of Buyer and its Subsidiaries contained in the Buyer
2005 Form 10-K and, except for liabilities reflected in Buyer SEC Documents
filed prior to the date hereof or incurred in the ordinary course of business
consistent with past practices or in connection with this Agreement, since
December 31, 2005, neither Buyer nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on its consolidated balance sheet
or
in the notes thereto.
31
(b) Buyer
and
each of its Subsidiaries, officers and directors are in compliance with, and
have complied, with (1) the applicable provisions of Xxxxxxxx-Xxxxx and the
related rules and regulations promulgated under such act and the Exchange Act
and (2) the applicable listing and corporate governance rules and regulations
of
the NYSE. Buyer (i) has established and maintained disclosure controls and
procedures and internal control over financial reporting (as such terms are
defined in paragraphs (3) and (f), respectively, of Rule 13a-15 under the
Exchange Act) as required by Rule 13a-15 under the Exchange Act, and (ii) has
disclosed based on its most recent evaluations, to its outside auditors and
the
audit committee of the Buyer Board (A) all significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are
reasonably likely to adversely affect Buyer’s ability to record, process,
summarize and report financial data and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in
Buyer’s internal control over financial reporting.
(c) Since
December 31, 2001, Buyer and its Subsidiaries have duly filed with the FRB,
the
FDIC and any other applicable Governmental Authority, in correct form the
reports required to be filed under applicable laws and regulations and such
reports were in all respects complete and accurate in compliance with the
requirements of applicable laws and regulations.
4.12 Absence
of Certain Changes or Events.
Except
as disclosed in the Buyer SEC Documents filed prior to the date hereof, or
as
otherwise expressly permitted or expressly contemplated by this Agreement,
since
December 31, 2005, there has been no change or development in the business,
operations, assets, liabilities, condition (financial or otherwise), results
of
operations, cash flows or properties of Buyer or any of its Subsidiaries which
has had, or would reasonably be expected to have, individually or in the
aggregate, a Buyer Material Adverse Effect, and to the knowledge of Buyer,
no
fact or condition exists which is reasonably likely to cause a Buyer Material
Adverse Effect in the future.
4.13 Tax
Treatment.
As of
the date hereof, Buyer is aware of no reason why the Merger will fail to qualify
as a “reorganization” under Section 368(a) of the Code.
4.14 Employee
Benefit Plans. Schedule 4.14 of the Buyer Disclosure Schedule sets forth a
list of every Employee Program currently maintained by Buyer or an ERISA
Affiliate. Each such Employee Program has been administered in accordance with
the terms thereof and applicable law. Such Employee Programs which are “employee
benefit plans” within the meaning of Section 3(3) of ERISA are in compliance
with ERISA, the Code and all other applicable laws. No outstanding stock options
of Buyer provide for a deferral of compensation subject to Section 409A of
the
Code and all outstanding stock options of Buyer were granted with an exercise
price equal to at least 100% of the fair market value of the underlying Buyer
Common Stock on the date such option was granted based upon a reasonable
valuation method.
32
4.15 Regulatory
Capitalization.
The
Buyer Banks are, and immediately after the Effective Time will be, “well
capitalized,” as such term is defined in the rules and regulations promulgated
by the FDIC. Buyer is, and immediately after the Effective Time will be, “well
capitalized” as such term is defined in the rules and regulations promulgated by
the FRB.
4.16 CRA,
Anti-money Laundering and Customer Information Security.
Neither
Buyer nor any of its Subsidiaries is a party to any agreement with any
individual or group regarding Community Reinvestment Act matters and Buyer
is
not aware of, and none of Buyer and its Subsidiaries has been advised of, or
has
any reason to believe (because the Buyer Banks’ Home Mortgage Disclosure Act
data for the year ended December 31, 2005, filed with the FDIC, or otherwise)
that any facts or circumstances exist, which would cause a Buyer Bank: (i)
to be
deemed not to be in satisfactory compliance with the Community Reinvestment
Act,
and the regulations promulgated thereunder, or to be assigned a rating for
Community Reinvestment Act purposes by federal or state bank regulators of
lower
than “satisfactory”; (ii) to be deemed to be operating in violation of the USA
Patriot Act, any order issued with respect to anti-money laundering by the
U.S.
Department of the Treasury’s Office of Foreign Assets Control, or any other
applicable anti-money laundering statute, rule or regulation; or (iii) to be
deemed not to be in satisfactory compliance with the applicable privacy of
customer information requirements contained in any federal and state privacy
laws and regulations, including, without limitation, in Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 and regulations promulgated thereunder, as well
as the provisions of the information security program adopted by the Buyer
Banks
pursuant to 12 C.F.R. Part 364. Furthermore, the Board of Directors of each
of
the Buyer Banks has adopted and each such bank has implemented an anti-money
laundering program that contains adequate and appropriate customer
identification verification procedures that has not been deemed ineffective
by
any Governmental Authority and that meets the requirements of Sections 352
and
326 of the USA Patriot Act.
4.17 Brokers.
No
action has been taken by Buyer or any of its Subsidiaries that would give rise
to any valid claim against Buyer for a brokerage commission, finder’s fee or
other like payment with respect to the transactions contemplated by this
Agreement.
4.18 Deposit
Insurance.
The
deposits of the Buyer Banks are insured by the FDIC in accordance with the
FDIA
to the fullest extent permitted by law, and each Buyer Bank has paid all
premiums and assessments and filed all reports required by the FDIA. No
proceedings for the revocation or termination of such deposit insurance are
pending or, to the knowledge of Buyer, threatened.
4.19 Sufficient
Funds.
Buyer
has, and will have at the Effective Time, sufficient funds to consummate the
transactions contemplated by this Agreement, including the payment of the
aggregate Cash Consideration and the consideration to be paid to the holders
of
Options in accordance with Section 2.7, subject to the terms and conditions
of
this Agreement.
33
4.20 Disclosure.
No
representation or warranty contained in this Agreement, and no statement
contained in any certificate, list or other writing, including but not
necessarily limited to the Buyer Disclosure Schedule and, including, without
limitation, the Buyer SEC Documents as the same may be updated as of the date
hereof, furnished to the Company pursuant to the provisions hereof, contains
or
will contain any untrue statement of a material fact or omits or will omit
to
state a material fact necessary in order to make the statements herein or
therein not misleading.
ARTICLE
V - COVENANTS
RELATING TO CONDUCT OF BUSINESS
5.1 Company
Forbearances.
From
the date hereof until the Effective Time, except as set forth in the Company
Disclosure Schedule or as expressly contemplated by this Agreement, without
the
prior written consent of Buyer, the Company will not, and will cause each of
its
Subsidiaries not to:
(a) Ordinary
Course.
Conduct
its business other than in the ordinary and usual course consistent with past
practice or, fail to use reasonable best efforts to preserve intact its business
organizations and assets and maintain its rights, franchises and existing
relations with customers, suppliers, employees and business associates, or
take
any action that would (i) adversely affect the ability of any party to obtain
any necessary approval of any Governmental Authority required for the
transactions contemplated hereby or (ii) adversely affect its ability to perform
any of its material obligations under this Agreement.
(b) Stock.
(i)
Other than pursuant to stock options or stock-based awards outstanding as of
the
date hereof and listed on the Company Disclosure Schedule, issue, sell or
otherwise permit to become outstanding, or authorize the creation of, any
additional shares of stock, any securities (including units of beneficial
ownership interest in any partnership or limited liability company) convertible
into or exchangeable for any additional shares of stock, any stock appreciation
rights, or any other rights to subscribe for or acquire shares of stock, or
take
any action related to such issuance or sale, (ii) enter into any agreement
with
respect to the foregoing, (iii) accelerate the vesting of any existing stock
options, stock appreciation rights or other rights to subscribe for or acquire
shares of stock, or (iv) change (or establish a record date for changing) the
number of, or provide for the exchange of, shares of its stock, any securities
(including units of beneficial ownership interest in any partnership or limited
liability company) convertible into or exchangeable for any additional shares
of
stock, any stock appreciation rights, or any other rights to subscribe for
or
acquire shares of stock issued and outstanding prior to the Effective Time
as a
result of a stock split, stock dividend, recapitalization, reclassification,
or
similar transaction with respect to its outstanding stock or any other such
securities.
(c) Dividends,
Etc.
(i)
Make, declare or pay any dividend on or in respect of, or declare or make any
distribution on, any shares of Company Common Stock other than (A) regular
quarterly cash dividends on Company Common Stock of no more than $0.20 per
share
consistent with past practice, and (B) dividends from wholly-owned Subsidiaries
to the Company or any wholly-owned Subsidiary of the Company, as applicable
or
(ii) directly or indirectly combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its stock. After the date hereof, the Company shall
coordinate with Buyer regarding the declaration of any dividends in respect
of
the Company Common Stock and the record dates and payment dates relating
thereto, it being the intention of the parties hereto that holders of the
Company Common Stock shall not receive two dividends for any single calendar
quarter with respect to their shares of Company Common Stock and any shares
of
Buyer Common Stock that such holders receive in exchange therefor in the
Merger.
34
(d) Compensation;
Employment Agreements; Etc.
Enter
into or amend any employment, severance or similar agreements or arrangements
with any of its directors, officers, employees or consultants, or grant any
salary or wage increase, or increase any employee benefit (including incentive
or bonus payments), except for (i) normal increases in compensation to employees
in the ordinary course of business consistent with past practice; provided
that no
such increase shall exceed five percent (5%) of an individual’s current annual
compensation, (ii) as may be required by law, (iii) to satisfy contractual
obligations existing as of the date hereof and disclosed on Schedule
3.19
of the
Company Disclosure Schedule, or (iv) the hiring of at-will employees at an
annual rate of salary not to exceed $75,000 to fill vacancies that may arise
from time to time in the ordinary course of business.
(e) Benefit
Plans.
Except
as may be required by (i) applicable law or (ii) to satisfy contractual
obligations existing as of the date hereof and disclosed on Schedule
3.14
of the
Company Disclosure Schedule, enter into, establish, adopt or amend any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any director, officer or other employee of the
Company or any of its Subsidiaries, including, without limitation, taking any
action that accelerates the vesting or exercise of any benefits payable
thereunder.
(f) Dispositions.
Sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of
its
assets, deposits, business or properties except in the ordinary course of
business consistent with past practice and in a transaction that, together
with
all other such transactions, is not material to the Company and its Subsidiaries
taken as a whole.
(g) Governing
Documents.
Amend
its Articles of Incorporation or Bylaws (or equivalent documents).
(h) Acquisitions.
Acquire
(other than by way of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously contracted in good
faith, in each case in the ordinary course of business consistent with past
practice) all or any portion of the assets, business, deposits or properties
of
any other entity.
(i) Capital
Expenditures.
Except
as set forth on Schedule
5.1(i)
of the
Company Disclosure Schedule, make any capital expenditures other than capital
expenditures in the ordinary course of business consistent with past practice
in
amounts not exceeding $50,000 individually or $500,000 in the
aggregate.
(j) Contracts.
Enter
into or terminate any Company Material Contract or amend or modify in any
material respect any of its existing Company Material Contracts.
35
(k) Claims.
Enter
into any settlement or similar agreement with respect to any action, suit,
proceeding, order or investigation to which the Company or any of its
Subsidiaries is a party as of the date hereof or becomes a party after the
date
of this Agreement.
(l) Banking
Operations.
Enter
into any new material line of business; change its material lending, investment,
underwriting, risk and asset liability management and other material banking
and
operating policies, except as required by applicable law, regulation or policies
imposed by any Governmental Authority; or file any application or make any
contract with respect to branching or site location or branching or site
relocation.
(m) Derivative
Transactions.
Enter
into any Derivative Transactions.
(n) Indebtedness.
Incur
any indebtedness for borrowed money (other than deposits, federal funds
purchased, federal home loan bank advances, and securities sold under agreements
to repurchase, in each case in the ordinary course of business consistent with
past practice) or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other Person, other than in the
ordinary course of business consistent with past practice.
(o) Investment
Securities.
Acquire
(other than by way of foreclosures or acquisitions in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith, in
each case in the ordinary course of business consistent with past practice)
(i)
any debt security or equity investment of a type or in an amount that is not
permissible for a national bank or (ii) any other debt security other than
in
the ordinary course of business consistent with past practice.
(p) Loans.
Make
any loan, loan commitment, letter of credit or other extension of credit other
than in the ordinary course of business consistent with past
practice.
(q) Investments
in Real Estate.
Make
any investment or commitment to invest in real estate or in any real estate
development project (other than by way of foreclosure or acquisitions in a
bona
fide fiduciary capacity or in satisfaction of a debt previously contracted
in
good faith, in each case in the ordinary course of business consistent with
past
practice).
(r) Accounting
Methods.
Implement or adopt any change in its accounting principles, practices or
methods, other than as may be required by changes in laws or regulations or
by
GAAP.
(s) Tax
Matters.
Make or
change any Tax election, file any amended Tax Return, fail to timely file any
Tax Return, enter into any closing agreement, settle or compromise any liability
with respect to Taxes, agree to any adjustment of any Tax attribute, file any
claim for a refund of Taxes, or consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment.
(t) Loan
Policies.
Change
its loan policies or procedures in effect as of the date hereof, except as
required by any Governmental Authority.
36
(u) Adverse
Actions.
(i)
Knowingly take any action that would, or would be reasonably likely to, prevent
or impede the Merger from qualifying as a “reorganization” within the meaning of
Section 368(a) of the Code; or (ii) knowingly take any action that is intended
or is reasonably likely to result in (x) any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, (y) any of the conditions
to
the Merger set forth in Article VII not being satisfied, or (z) a material
violation of any provision of this Agreement, except, in each case, as may
be
required by applicable law.
(v) Agreements.
Agree
or commit to do anything prohibited by this Section
5.1.
5.2 Buyer
Forbearances.
From
the date hereof until the Effective Time, except as set forth in the Buyer
Disclosure Schedule or as expressly contemplated by this Agreement, without
the
prior written consent of the Company, Buyer will not, and will cause each of
its
Subsidiaries not to knowingly take any action that would, or would be reasonably
likely to, (i) prevent or impede the Merger from qualifying as a
“reorganization” within the meaning of Section 368(a) of the Code; or (ii)
knowingly take any action that is intended or is reasonably likely to result
in
(x) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time prior to the Effective
Time, (y) any of the conditions to the Merger set forth in Article VII not
being
satisfied, or (z) a material violation of any provision of this Agreement,
except, in each case, as may be required by applicable law.
ARTICLE
VI - ADDITIONAL
AGREEMENTS
6.1 Reasonable
Best Efforts.
Subject
to the terms and conditions of this Agreement, each of the Company and Buyer
agree to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation
of
the Merger as promptly as practicable and otherwise to enable consummation
of
the transactions contemplated hereby, including, without limitation, effecting
all filings and obtaining (and cooperating with the other party hereto to
obtain) any permit, consent, authorization, order or approval of, or any
exemption by, any Governmental Authority (including, but not limited to, the
Regulatory Approvals) and any other third party that is required to be obtained
by the Company or Buyer or any of their respective Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement,
and
using reasonable best efforts to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the Merger and the transactions contemplated hereby, and using
reasonable best efforts to defend any litigation seeking to enjoin, prevent
or
delay the consummation of the Merger and the transactions contemplated hereby
or
seeking material damages, and each shall cooperate fully with the other party
hereto to that end.
6.2 Shareholder
Approval.
(a) Following
the execution of this Agreement, the Company shall take, in accordance with
applicable law, applicable rules of the National Association of Securities
Dealers, Inc. and its Articles of Incorporation and Bylaws, all action necessary
to convene a meeting of its shareholders as promptly as practicable (and in
any
event within forty-five (45) days following the time when the Registration
Statement becomes effective, subject to extension with the consent of Buyer)
to
consider and vote upon the approval of this Agreement and the transactions
contemplated hereby (including the Merger) and any other matter required to
be
approved by the shareholders of the Company in order to consummate the Merger
and the transactions contemplated hereby (including any adjournment or
postponement thereof, the “Company
Meeting”).
37
(b) Subject
to Section 6.6 hereof, the Company shall ensure that the Company Meeting is
called, noticed, convened, held and conducted, and that all proxies solicited
by
the Company in connection with the Company Meeting are solicited in compliance
with the MBCA, the Articles of Incorporation and Bylaws of the Company, and
all
other applicable legal requirements.
(c) Subject
to Section 6.6 hereof, (i) the Company Board shall recommend that the Company’s
shareholders vote to approve this Agreement and the transactions contemplated
hereby (including the Merger) and any other matters required to be approved
by
the Company’s shareholders for consummation of the Merger and the transactions
contemplated hereby (the “Company
Recommendation”),
and
(ii) the Proxy Statement/Prospectus shall include the Company
Recommendation.
6.3 Registration
Statement.
(a) Buyer
and
the Company agree to cooperate in the preparation of a registration statement
on
Form S-4 (the “Registration
Statement”)
to be
filed by Buyer with the SEC in connection with the issuance of the Buyer Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of the Company constituting a part thereof (the
“Proxy
Statement/Prospectus”)
and
all related documents). Each of Buyer and the Company agree to use its
reasonable best efforts to cause the Registration Statement to be declared
effective by the SEC as promptly as reasonably practicable after the filing
thereof. Buyer also agrees to use reasonable best efforts to obtain any
necessary state securities law or “blue sky” permits and approvals required to
carry out the transactions contemplated by this Agreement. The Company agrees
to
cooperate with Buyer and Buyer’s counsel and accountants in requesting and
obtaining appropriate opinions, consents and letters from the Financial Advisor
and the Company’s independent auditors in connection with the Registration
Statement and the Proxy Statement/Prospectus. After the Registration Statement
is declared effective under the Securities Act, the Company, at its expense,
shall promptly mail the Proxy Statement/Prospectus to its
shareholders.
(b) Each
of
Buyer and the Company agrees, upon request, to furnish the other party with
all
information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Registration Statement, the Proxy Statement/Prospectus
or
any filing, notice or application made by or on behalf of such other party
or
any of its Subsidiaries to any Governmental Authority in connection with the
transactions contemplated hereby. Each of Buyer and the Company agrees, as
to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it for inclusion or incorporation by reference in (i) the
Registration Statement, at the time the Registration Statement and each
amendment or supplement thereto, if any, becomes effective under the Securities
Act, will contain any untrue statement of a material fact or omit to state
a
material fact necessary in order to make the statements therein, in the light
of
the circumstances under which they are made, not misleading, and (ii) the Proxy
Statement/Prospectus and any amendment or supplement thereto, at the date of
mailing to shareholders and at the time of the Company Meeting, will contain
any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under
which they are made, not misleading. Each of Buyer and the Company further
agrees that if it shall become aware prior to the Effective Time of any
information that would cause any of the statements in the Proxy
Statement/Prospectus to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, it shall promptly inform the other party
thereof and shall take the necessary steps to correct the Proxy
Statement/Prospectus.
38
(c) Buyer
will advise the Company, promptly after Buyer receives notice thereof, of the
time when the Registration Statement has become effective or any supplement
or
amendment has been filed, of the issuance of any stop order or the suspension
of
the qualification of Buyer Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.4 Press
Releases.
Buyer
and the Company will consult with each other before issuing any press release
with respect to this Agreement and the transactions contemplated hereby and
will
not issue any press release or written statement for general circulation
relating to the transactions contemplated hereby or make any such public
statements without the prior consent of the other party, which consent shall
not
be unreasonably withheld; provided,
however,
that a
party may, without the prior consent of the other party (but after consultation
with the other party, to the extent practicable), issue such press release
or
public statements as may be required by applicable law or the rules and
regulations of any stock exchange.
6.5 Access;
Information.
(a) Upon
reasonable notice and subject to applicable laws relating to the exchange of
information, the Company shall, and shall cause its Subsidiaries to, afford
Buyer and its officers, employees, counsel, accountants, advisors and other
authorized representatives (collectively, “Buyer
Representatives”),
access, during normal business hours throughout the period prior to the
Effective Time, to all of its properties, books, contracts, commitments and
records (including, without limitation, work papers of independent auditors),
and to its officers, employees, accountants, counsel or other representatives,
and, during such period, it shall, and shall cause its Subsidiaries to, furnish
promptly to such Buyer and the Buyer Representatives (i) a copy of each material
report, schedule and other document filed by it pursuant to the requirements
of
federal or state securities laws (other than reports or documents that the
Company, or its Subsidiaries, as the case may be, are not permitted to disclose
under applicable law), and (ii) all other information concerning the business,
properties and personnel of the Company and its Subsidiaries as Buyer or any
Buyer Representative may reasonably request. Neither the Company nor any of
its
Subsidiaries shall be required to provide access to or to disclose information
where such access jeopardizes the attorney-client privilege of the institution
in possession or control of such information or contravenes any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement.
39
(b) Buyer
agrees to hold all information and documents obtained pursuant to this Section
6.5 in confidence (as provided in, and subject to the provisions of, the
Confidentiality Agreement (as defined in Section 9.2(a)), as if it were the
party receiving the confidential information as described therein). No
investigation by Buyer of the business and affairs of the Company shall affect
or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to Buyer’s obligation to
consummate the transactions contemplated by this Agreement.
6.6 No
Solicitation.
(a) The
Company shall not and shall cause its Subsidiaries and the respective officers,
directors, employees, investment bankers, financial advisors, attorneys,
accountants, consultants, affiliates and other agents of the Company and its
Subsidiaries (collectively, the “Company
Representatives”)
not
to, directly or indirectly, (i) initiate, solicit, induce or knowingly
encourage, or take any action to facilitate the making of, any inquiry, offer
or
proposal which constitutes, or could reasonably be expected to lead to, an
Acquisition Proposal; (ii) participate in any discussions or negotiations
regarding any Acquisition Proposal or furnish, or otherwise afford access,
to
any Person (other than Buyer) any information or data with respect to the
Company or any of its Subsidiaries or otherwise relating to an Acquisition
Proposal; (iii) release any Person from, waive any provisions of, or fail to
enforce any confidentiality agreement or standstill agreement to which the
Company is a party; or (iv) enter into any agreement, agreement in principle
or
letter of intent with respect to any Acquisition Proposal or approve or resolve
to approve any Acquisition Proposal or any agreement, agreement in principle
or
letter of intent relating to an Acquisition Proposal. Any violation of the
foregoing restrictions by any of the Company Representatives, whether or not
such Company Representative is so authorized and whether or not such Company
Representative is purporting to act on behalf of the Company or otherwise,
shall
be deemed to be a breach of this Agreement by the Company. The Company and
its
Subsidiaries shall, and shall cause each of the Company Representatives to,
immediately cease and cause to be terminated any and all existing discussions,
negotiations, and communications with any Persons with respect to any existing
or potential Acquisition Proposal.
For
purposes of this Agreement, “Acquisition
Proposal” shall
mean any inquiry, offer or proposal (other than an inquiry, offer or proposal
from Buyer), whether or not in writing, contemplating, relating to, or that
could reasonably be expected to lead to, an Acquisition Transaction. For
purposes of this Agreement, “Acquisition
Transaction”
shall
mean (A) any transaction or series of transactions involving any merger,
consolidation, recapitalization, share exchange, liquidation, dissolution or
similar transaction involving the Company or any of its Subsidiaries; (B) any
transaction pursuant to which any third party or group acquires or would acquire
(whether through sale, lease or other disposition), directly or indirectly,
any
assets of the Company or any of its Subsidiaries representing, in the aggregate,
fifteen percent (15%) or more of the assets of the Company and its Subsidiaries
on a consolidated basis; (C) any issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities (or options, rights or warrants to purchase or
securities convertible into, such securities) representing fifteen percent
(15%)
or more of the votes attached to the outstanding securities of the Company
or
any of its Subsidiaries; (D) any tender offer or exchange offer that, if
consummated, would result in any third party or group beneficially owning
fifteen percent (15%) or more of any class of equity securities of the Company
or any of its Subsidiaries; or (E) any transaction which is similar in form,
substance or purpose to any of the foregoing transactions, or any combination
of
the foregoing.
40
(b) Notwithstanding
Section 6.6(a), the Company may take any of the actions described in clause
(ii)
of Section 6.6(a) if, but only if, (i) the Company has received a bona fide
unsolicited written Acquisition Proposal that did not result from a breach
of
this Section 6.6; (ii) the Company Board determines in good faith, after
consultation with and having considered the advice of its outside legal counsel
and a nationally recognized, independent financial advisor, that (A) such
Acquisition Proposal constitutes or is reasonably likely to lead to a Superior
Proposal and (B) it is required to take such actions to comply with its
fiduciary duties to the Company’s shareholders under applicable law; (iii) the
Company has provided Buyer with at least three (3) Business Days’ prior notice
of such determination; and (iv) prior to furnishing or affording access to
any
information or data with respect to the Company or any of its Subsidiaries
or
otherwise relating to an Acquisition Proposal, the Company receives from such
Person a confidentiality agreement with terms no less favorable to the Company
than those contained in the Confidentiality Agreement.
The
Company shall promptly provide to Buyer any non-public information regarding
the
Company or its Subsidiaries provided to any other Person which was not
previously provided to Buyer, such additional information to be provided no
later than the date of provision of such information to such other
party.
For
purposes of this Agreement, “Superior
Proposal”
shall
mean any bona fide written proposal (on its most recently amended or modified
terms, if amended or modified) made by a third party to enter into an
Acquisition Transaction on terms that the Company Board determines in its good
faith judgment, after consultation with and having considered the advice of
outside legal counsel and a financial advisor of nationally recognized
reputation (i) would, if consummated, result in the acquisition of all, but
not
less than all, of the issued and outstanding shares of Company Common Stock
or
all, or substantially all, of the assets of the Company and its Subsidiaries
on
a consolidated basis; (ii) would result in a transaction that (A) involves
consideration to the holders of the shares of Company Common Stock that is
more
favorable, from a financial point of view, than the consideration to be paid
to
the Company’s shareholders pursuant to this Agreement, considering, among other
things, the nature of the consideration being offered and any material
regulatory approvals or other risks associated with the timing of the proposed
transaction beyond or in addition to those specifically contemplated hereby,
and
which proposal is not conditioned upon obtaining additional financing and (B)
is, in light of the other terms of such proposal, more favorable to the
Company’s shareholders than the Merger and the transactions contemplated by this
Agreement; and (iii) is reasonably likely to be completed on the terms proposed,
in each case taking into account all legal, financial, regulatory and other
aspects of the proposal.
(c) The
Company shall promptly (and in any event within twenty-four (24) hours) notify
Buyer in writing if any proposals or offers are received by, any information
is
requested from, or any negotiations or discussions are sought to be initiated
or
continued with, the Company or the Company Representatives, in each case in
connection with any Acquisition Proposal, and such notice shall indicate the
name of the Person initiating such discussions or negotiations or making such
proposal, offer or information request and the material terms and conditions
of
any proposals or offers (and, in the case of written materials relating to
such
proposal, offer, information request, negotiations or discussion, providing
copies of such materials (including e-mails or other electronic communications)
unless (i) such materials constitute confidential information of the party
making such offer or proposal under an effective confidentiality agreement,
(ii)
disclosure of such materials jeopardizes the attorney-client privilege or (iii)
disclosure of such materials contravenes any law, rule, regulation, order,
judgment or decree. The Company agrees that it shall keep Buyer informed, on
a
current basis, of the status and terms of any such proposal, offer, information
request, negotiations or discussions (including any amendments or modifications
to such proposal, offer or request).
41
(d) Neither
the Company Board nor any committee thereof shall (i) withdraw, qualify or
modify, or propose to withdraw, qualify or modify, in a manner adverse to Buyer
in connection with the transactions contemplated by this Agreement (including
the Merger), the Company Recommendation, or make any statement, filing or
release, in connection with the Company Meeting or otherwise, inconsistent
with
the Company Recommendation (it being understood that taking a neutral position
or no position with respect to an Acquisition Proposal shall be considered
an
adverse modification of the Company Recommendation); (ii) approve or recommend,
or propose to approve or recommend, any Acquisition Proposal; or
(iii) enter into (or cause the Company or any of its Subsidiaries to enter
into) any letter of intent, agreement in principle, acquisition agreement or
other agreement (A) related to any Acquisition Transaction (other than a
confidentiality agreement entered into in accordance with the provisions of
Section 6.6(b)) or (B) requiring the Company to abandon, terminate or fail
to
consummate the Merger or any other transaction contemplated by this
Agreement.
(e) Notwithstanding
Section 6.6(d), prior to the date of the Company Meeting, the Company Board
may
approve or recommend to the shareholders of the Company a Superior Proposal
and
withdraw, qualify or modify the Company Recommendation in connection therewith
(a “Company
Subsequent Determination”)
after
the fifth (5th)
Business Day following Buyer’s receipt of a notice (the “Notice
of Superior Proposal”)
from
the Company advising Buyer that the Company Board has decided that a bona fide
unsolicited written Acquisition Proposal that it received (that did not result
from a breach of this Section 6.6) constitutes a Superior Proposal (it being
understood that the Company shall be required to deliver a new Notice of
Superior Proposal in respect of any revised Superior Proposal from such third
party or its affiliates that the Company proposes to accept) if, but only if,
(i) the Company Board has reasonably determined in good faith, after
consultation with and having considered the advice of outside legal counsel
and
a financial advisor of nationally recognized reputation, that it is required
to
take such actions to comply with its fiduciary duties to the Company’s
shareholders under applicable law, (ii) during the five (5) Business Day Period
after receipt of the Notice of Superior Proposal by Buyer, the Company and
the
Company Board shall have cooperated and negotiated in good faith with Buyer
to
make such adjustments, modifications or amendments to the terms and conditions
of this Agreement as would enable the Company to proceed with the Company
Recommendation without a Company Subsequent Determination; provided,
however,
that
Buyer shall not have any obligation to propose any adjustments, modifications
or
amendments to the terms and conditions of this Agreement and (iii) at the end
of
such five (5) Business Day period, after taking into account any such adjusted,
modified or amended terms as may have been proposed by Buyer since its receipt
of such Notice of Superior Proposal, the Company Board has again in good faith
made the determination (A) in clause (i) of this Section 6.6(e) and (B) that
such Acquisition Proposal constitutes a Superior Proposal.
Notwithstanding the foregoing, the changing, qualifying or modifying of the
Company Recommendation or the making of a Company Subsequent Determination
by
the Company Board shall not change the approval of the Company Board for
purposes of causing any Takeover Laws to be inapplicable to this Agreement
and
the Voting Agreements and the transactions contemplated hereby and thereby,
including the Merger.
42
(f) Nothing
contained in this Section 6.6 shall prohibit the Company or the Company Board
from complying with the Company’s obligations required under Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act; provided,
however,
that
any such disclosure relating to an Acquisition Proposal shall be deemed a change
in the Company Recommendation unless the Company Board reaffirms the Company
Recommendation in such disclosure.
6.7 Affiliate
Agreements.
Not
later than the 15th calendar day prior to the mailing of the Proxy Statement,
the Company shall deliver to Buyer, a schedule of each Person that, to the
best
of its knowledge, is or is reasonably likely to be, as of the date of the
Company Meeting, deemed to be an “affiliate” of the Company within the meaning
of Rule 145 promulgated under the Securities Act. The Company shall use its
reasonable best efforts to cause each such person who may be deemed to be an
“affiliate” of the Company within the meaning of Rule 145 to execute and deliver
to Buyer on or before the date of mailing of the Proxy Statement a written
agreement to comply with the requirements of Rule 145 in connection with the
sale or other transfer of Buyer Common Stock received in the Merger, in the
form
attached hereto as Exhibit
A.
6.8 Takeover
Laws.
No
party shall take any action that would cause the transactions contemplated
by
this Agreement to be subject to requirements imposed by any Takeover Laws,
as
applicable, and each party shall take all necessary steps within its control
to
exempt (or ensure the continued exemption of) the transactions contemplated
by
this Agreement from, or if necessary challenge the validity or applicability
of,
any applicable Takeover Laws, as now or hereafter in effect, that purports
to
apply to this Agreement or the transactions contemplated hereby.
6.9 Shares
Listed.
Prior
to the Effective Time, Buyer shall use its reasonable best efforts to obtain
approval for listing on the NYSE the shares of Buyer Common Stock to be issued
to the holders of the Company Common Stock in the Merger.
6.10 Regulatory
Applications; Filings; Consents.
Buyer
and the Company and their respective Subsidiaries shall cooperate and use their
respective reasonable best efforts (a) to prepare all documentation, to effect
all filings, to obtain all permits, consents, approvals and authorizations
of
all third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement, including, without limitation,
the
Regulatory Approvals, (b) to comply with the terms and conditions of such
permits, consents, approvals and authorizations and (c) to cause the Merger
to
be consummated as expeditiously as practicable (including by avoiding or setting
aside any preliminary or permanent injunction or other order of any United
States federal or state court of competent jurisdiction or any other
Governmental Authority); provided,
however,
that in
no event shall Buyer be required to agree to any prohibition, limitation, or
other requirement which would prohibit or materially limit the ownership or
operation by the Company or any of its Subsidiaries, or by Buyer or any of
its
Subsidiaries, of all or any material portion of the business or assets of the
Company or any of its Subsidiaries or Buyer or its Subsidiaries, or compel
Buyer
or any of its Subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Company or any of its Subsidiaries
or
Buyer or any of its Subsidiaries (together, the “Burdensome
Conditions”).
Provided the Company has cooperated as required above, Buyer agrees to file
the
requisite applications to be filed by it with the FRB, FDIC, the Maine
Superintendent of Banks and the Governmental Authorities of the states in which
Buyer, the Company and their respective Subsidiaries operate. Each of Buyer
and
the Company shall have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to applicable
laws relating to the exchange of information, with respect to, all material
written information submitted to any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it
will
consult with the other parties hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
parties apprised of the status of material matters relating to completion of
the
transactions contemplated hereby.
43
6.11 Indemnification;
Directors’ and Officers’ Insurance.
(a) Buyer
agrees that all rights to indemnification and all limitations of liability
existing in favor of any director or officer of the Company or its Subsidiaries
(the “Indemnified
Parties”)
as
provided in the Company’s Articles of Incorporation or Bylaws or in the similar
governing documents of the Company’s Subsidiaries as in effect as of the date
hereof (including, without limitation, the right to the advancement of expenses)
with respect to matters occurring on or prior to the Effective Time shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto, for a period of six (6) years from the Effective Time;
provided,
however,
that
all rights to indemnification in respect of any Claim asserted or made within
such period shall continue until the final disposition of such
Claim.
(b) Prior
to
the Effective Time, the Company shall purchase an extended reporting period
endorsement under the Company’s existing directors’ and officers’ liability
insurance coverage for the Company’s directors and officers in a form acceptable
to the Company which shall provide such directors and officers with coverage
for
six (6) years following the Effective Time of not less than the existing
coverage under, and have other terms not materially less favorable to, the
insured persons than the directors’ and officers’ liability insurance coverage
presently maintained by the Company, so long as the aggregate cost is less
than
$150,000 (the “Premium
Limit”).
In
the event that the Premium Limit is insufficient for such coverage, the Company
may enter into an agreement to spend up to that amount to purchase such lesser
coverage as may be obtained with such amount.
(c) In
the
event Buyer or any of its successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or conveys all
or
substantially all of its properties and assets to any Person, then, and in
each
such case, to the extent necessary, proper provision shall be made so that
the
successors and assigns of Buyer shall assume the obligations set forth in this
Section 6.11.
(d) The
provisions of this Section 6.11 are intended to be for the benefit of, and
to
grant third party rights to, and shall be enforceable by, each Indemnified
Party
and his or her heirs and representatives.
44
6.12 Employees
and Benefit Plans.
(a) From
and
after the Effective Time, Buyer agrees to provide the employees of the Company
and any of its Subsidiaries who remain employed after the Effective Time
(collectively, the “Company
Employees”)
with
at least the types and levels of employee benefits (including employee
contribution levels) comparable to those maintained by Buyer for
similarly-situated employees of Buyer. Buyer will treat, and cause its
applicable benefit plans to treat, the service of the Company Employees with
the
Company or any of its Subsidiaries as service rendered to Buyer or any of its
Subsidiaries for purposes of eligibility to participate, vesting and for other
appropriate benefits including, but not limited to, applicability of minimum
waiting periods for participation, but not for benefit accrual under any defined
benefit plan (including minimum pension amount) attributable to any period
before the Effective Time. Without limiting the foregoing, but subject to the
terms and conditions of Buyer’s health and similar plans, Buyer shall not treat
any employee of the Company or any of its Subsidiaries as a “new” employee for
purposes of any exclusions under any health or similar plan of Buyer for a
pre-existing medical condition to the extent that any such exclusion did not
apply under a health or similar plan of the Company or its Subsidiaries, and
any
deductibles, co-payments or out-of-pocket expenses paid under any of the
Company’s or any of its Subsidiaries’ health plans shall be credited towards
deductibles, co-payments or out-of-pocket expenses under Buyer’s health plans
upon delivery to Buyer of appropriate documentation. Buyer will make appropriate
arrangements with its insurance carrier(s) to ensure such result.
(b) Notwithstanding
anything to the contrary contained herein, Buyer shall have sole discretion
with
respect to the determination as to whether or when to terminate, merge or
continue any employee benefit plans and programs of the Company.
(c) Prior
to
the Effective Time, Buyer will allocate an aggregate of up to $200,000 (the
“Employee
Retention Amount”)
among
certain Company Employees, and subject to such additional terms and conditions,
as Buyer and the Company shall mutually agree. Each portion of the Employee
Retention Amount that is allocated to a Company Employee will be paid in such
amounts, at such times and upon such conditions as shall be set forth in letter
agreements with each such Company Employee.
(d) At
and
following the Effective Time, Buyer agrees to honor the severance guidelines
attached as Schedule
6.12(d)
in
connection with the termination of employment of any Company Employee, in such
amounts, at such times and upon such conditions as set forth on said Schedule.
(e) The
Company shall use its best efforts to obtain from each of the individuals named
in Schedule
6.12(e),
an
agreement (a “Settlement
Agreement”)
to
accept in full settlement of his or her rights under the specified programs
the
amounts and benefits determined under his or her Settlement Agreement (the
aggregate amount of such payment to be specified in Schedule
6.12(e))
and pay
such amounts to such individuals who are employed at the Effective Time. Each
officer or employee of the Company who is a party to a Settlement Agreement
shall be entitled to receive the benefits payable or to be otherwise provided
under such Settlement Agreement on the Closing Date, and Buyer agrees to provide
the non-cash benefits provided in the Settlement Agreement, if any. In the
case
of any employee who has executed and delivered a Settlement Agreement, payment
of the monetary amounts specified for such person in Schedule
6.12(e)
shall be
made by the Company or the Company Bank on the Closing Date.
(f) Notwithstanding
anything else contained herein to the contrary, nothing in this Section 6.12
shall be construed to create any third party beneficiary rights in any Person
who is not a party to this Agreement.
45
6.13 Notification
of Certain Matters.
Each of
Buyer and the Company shall give prompt notice to the other of any fact, event
or circumstance known to it that (a) is reasonably likely, individually or
taken
together with all other facts, events and circumstances known to it, to result
in any Buyer Material Adverse Effect or Company Material Adverse Effect,
respectively, or (b) notwithstanding the standards set forth in Section 3.1(c)
or 4.1(c), as applicable, would cause or constitute a material breach of any
of
its representations, warranties, covenants or agreements contained herein.
No
such notice by Buyer or the Company shall affect or be deemed to modify or
waive
any representation, warranty, covenant or agreement in this Agreement, or the
conditions to Buyer’s or the Company’s obligations to consummate the
transactions contemplated by this Agreement
6.14 Confidentiality
Agreement.
The
Confidentiality Agreement shall remain in full force and effect after the date
hereof in accordance with its terms.
6.15 Section
16 Votes.
Prior
to the Effective Time, the Company shall approve in accordance with the
procedures set forth in Rule 16b-3 promulgated under the Exchange Act and the
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP SEC No-Action Letter (January 12,
1999) any disposition of equity securities of the Company (including derivative
securities) resulting from the transactions contemplated by this Agreement
by
each officer and director of the Company who is subject to Section 16 of the
Exchange Act.
ARTICLE
VII - CONDITIONS
TO CONSUMMATION OF THE MERGER
7.1 Conditions
to Each Party’s Obligations to Effect the Merger.
The
obligations of each of the parties to consummate the Merger is conditioned
upon
the satisfaction at or prior to the Effective Time of each of the following
conditions:
(a) Shareholder
Vote.
This
Agreement and the transactions contemplated hereby shall have been approved
by
the requisite affirmative vote of the shareholders of the Company present and
voting at the Company Meeting.
(b) Regulatory
Approvals; No Burdensome Condition.
All
regulatory approvals required to consummate the transactions contemplated hereby
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired. None of such
regulatory approvals shall impose any term, condition or restriction upon Buyer
or any of its Subsidiaries that Buyer reasonably determines is a Burdensome
Condition.
46
(c) No
Injunction, Etc.
No
order, decree or injunction of any court or agency of competent jurisdiction
shall be in effect, and no law, statute or regulation shall have been enacted
or
adopted, that enjoins, prohibits, materially restricts or makes illegal
consummation of any of the transactions contemplated hereby.
(d) Effective
Registration Statement.
The
Registration Statement shall have become effective and no stop order suspending
the effectiveness of the Registration Statement shall have been issued and
no
proceedings for that purpose shall have been initiated or threatened by the
SEC
or any other Governmental Authority.
(e) NYSE
Listing.
The
shares of Buyer Common Stock issuable pursuant to this Agreement shall have
been
approved for listing on the NYSE, subject to official notice of
issuance.
7.2 Conditions
to the Obligations of Buyer.
The
obligation of Buyer to consummate the Merger is also conditioned upon the
satisfaction or waiver by Buyer, at or prior to the Effective Time, of each
of
the following conditions:
(a) Representations,
Warranties and Covenants of the Company.
(i)
Each of the representations and warranties of the Company contained herein
shall
be true and correct as of the date hereof and as of the Closing Date with the
same effect as though all such representations and warranties had been made
on
the Closing Date, except for any such representations and warranties made as
of
a specified date, which shall be true and correct as of such date, in any case
subject to the standard set forth in Section 3.1(c), and (ii) each and all
of
the agreements and covenants of the Company to be performed and complied with
pursuant to this Agreement on or prior to the Closing Date shall have been
duly
performed and complied with in all material respects.
(b) Company
Material Adverse Effect.
Since
the date of this Agreement, there shall not have occurred any Company Material
Adverse Effect.
(c) Officer’s
Certificate.
Buyer
shall have received a certificate, dated the Closing Date, signed by the Chief
Executive Officer or Chief Financial Officer of the Company, to the effect
that
the conditions set forth in Sections 7.2(a) and (b) have been
satisfied.
(d) Third
Party Consents.
All
consents or approvals of all Persons (other than Governmental Authorities)
required for the consummation of the Merger shall have been obtained and shall
be in full force and effect, unless the failure to obtain any such consent
or
approval would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(e) Tax
Opinion Relating to the Merger.
Buyer
shall have received an opinion from Xxxxxxx Procter LLP,
dated
as of the Closing Date, substantially to the effect that, on the basis of the
facts, representations and assumptions set forth in such opinion, the Merger
will be treated for federal income tax purposes as a “reorganization” within the
meaning of Section 368(a) of the Code. In rendering its opinion, Xxxxxxx Procter
LLP
may
require and rely upon representations contained in certificates of officers
of
each of Buyer and the Company.
47
7.3 Conditions
to the Obligations of the Company.
The
obligation of the Company to consummate the Merger is also conditioned upon
the
satisfaction or waiver by the Company, at or prior to the Effective Time, of
each of the following conditions:
(a) Representations,
Warranties and Covenants of Buyer.
(i)
Each of the representations and warranties of Buyer contained herein shall
be
true and correct as of the date hereof and as of the Closing Date with the
same
effect as though all such representations and warranties had been made on the
Closing Date, except for any such representations and warranties made as of
a
specified date, which shall be true and correct as of such date, in any case
subject to the standard set forth in Section 4.1(c), and (ii) each and all
of
the agreements and covenants of Buyer to be performed and complied with pursuant
to this Agreement on or prior to the Closing Date shall have been duly performed
and complied with in all material respects.
(b) Buyer
Material Adverse Effect.
Since
the date of this Agreement, there shall not have occurred any Buyer Material
Adverse Effect.
(c) Officer’s
Certificate.
The
Company shall have received a certificate, dated the Closing Date, signed by
the
Chief Executive Officer or Chief Financial Officer of Buyer, to the effect
that
the conditions set forth in Sections 7.3(a) and (b) have been
satisfied.
(d) Tax
Opinion Relating to the Merger.
The
Company shall have received an opinion from Xxxxxxx Xxxxxxxx & Wood LLP,
dated as of the Closing Date, substantially to the effect that, on the basis
of
the facts, representations and assumptions set forth in such opinion, the Merger
will be treated for federal income tax purposes as a “reorganization” within the
meaning of Section 368(a) of the Code. In rendering its opinion, Xxxxxxx
Xxxxxxxx & Xxxx LLP may require and rely upon representations contained in
certificates of officers of each of Buyer and the Company.
ARTICLE
VIII - TERMINATION
8.1 Termination.
This
Agreement may be terminated, and the Merger and the transactions contemplated
hereby may be abandoned:
(a) by
the
mutual consent of Buyer and the Company in a written instrument;
(b) by
Buyer
or the Company (provided
that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), in the event of either:
(i) a breach by the other party of any representation or warranty contained
herein (subject to the standards set forth in Section 3.1(c) or 4.1(c), as
applicable), which breach cannot be or has not been cured within thirty (30)
days after the giving of written notice to the breaching party of such breach;
or (ii) a material breach by the other party of any of the covenants or
agreements contained herein, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party
of
such breach;
(c) by
Buyer
or the Company, in the event that the Merger is not consummated by September
30,
2007, except to the extent that the failure of the Merger to be consummated
shall be due to the failure of the party seeking to terminate this Agreement
to
perform or observe the covenants and agreements of such party set forth
herein;
48
(d) by
Buyer
or the Company, in the event the approval of any Governmental Authority required
for consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority, or any governmental entity of competent jurisdiction
shall have issued a final nonappealable order, injunction or decree enjoining
or
otherwise prohibiting the consummation of the transactions contemplated by
this
Agreement; provided
that the
party seeking to terminate this Agreement shall have used its reasonable best
efforts to have such order, injunction or decree lifted;
(e) by
Buyer
or the Company, if the approval of the Company’s shareholders required for the
consummation of the Merger shall not have been obtained by reason of the failure
to obtain the required vote at a duly held meeting of the Company’s shareholders
or at any adjournment or postponement thereof;
(f) by
Buyer,
if (i) the Company Board (A) modifies, qualifies, withholds or withdraws the
Company Recommendation (it being understood that taking a neutral position
or no
position with respect to an Acquisition Proposal shall be considered an adverse
modification of the Company Recommendation), or makes any statement, filing
or
release, in connection with the Company Meeting or otherwise, inconsistent
with
the Company Recommendation, (B) breaches its obligations to call, give notice
of
and commence the Company Meeting under Section 6.2(a), (C) approves or
recommends an Acquisition Proposal, (D) fails to publicly recommend against
a
publicly announced Acquisition Proposal within five (5) Business Days of being
requested to do so by Buyer, (E) fails to publicly reconfirm the Company
Recommendation within five (5) Business Days of being requested to do so by
Buyer, or (F) resolves or otherwise determines to take, or announces an
intention to take, any of the foregoing actions or (ii) there shall have been
a
material breach by the Company of Section 6.6;
or
(g) by
the
Company, in connection with entering into a definitive agreement to effect
a
Superior Proposal after making a Company Subsequent Determination in accordance
with Section 6.6(e).
8.2 Effect
of Termination and Abandonment.
(a) In
the
event of termination of this Agreement by either Buyer or the Company as
provided in Section 8.1, this Agreement shall forthwith become void and have no
effect, and none of Buyer, the Company, any of their respective Subsidiaries
or
any of the officers or directors of any of them shall have any liability of
any
nature whatsoever hereunder, or in connection with the transactions contemplated
hereby, except that Sections 6.4, 6.14 and 9.4 and this Section 8.2 and all
other obligations of the parties specifically intended to be performed after
the
termination of this Agreement shall survive any termination of this Agreement;
provided,
however,
that,
notwithstanding anything to the contrary herein, neither Buyer nor the Company
shall be relieved or released from any liabilities or damages arising out of
its
willful breach of any provision of this Agreement.
49
(b) In
the
event this Agreement is terminated by Buyer pursuant to Section 8.1(f) or by
the
Company pursuant to Section 8.1(g), the Company shall pay to Buyer an amount
equal to $5,500,000 (the “Termination
Fee”).
(c) In
the
event that this Agreement is terminated by Buyer or the Company pursuant to
Section 8.1(e) or Section 8.1(c) due to the failure to obtain the approval
of
the Company’s shareholders required for the consummation of the Merger, and (i)
an Acquisition Proposal with respect to the Company shall have been publicly
announced, disclosed or otherwise communicated to the Company Board prior to
the
date specified in Section 8.1(c) or prior to the Company Meeting, and (ii)
within twelve (12) months of such termination, the Company shall have entered
into a definitive agreement with respect to, or the Company shall have
consummated, an Acquisition Transaction, then the Company shall pay to Buyer
an
amount equal to the Termination Fee.
(d) In
the
event that this Agreement is terminated by Buyer pursuant to Section 8.1(b)
and
(i) an Acquisition Proposal with respect to the Company shall have been publicly
announced, disclosed or otherwise communicated to the Company Board prior to
any
breach by the Company of any representation, warranty, covenant or other
agreement giving rise to such termination by Buyer or during the cure period
therefor provided in Section 8.1(b) and
(ii)
within twelve (12) months of such termination, the Company shall have entered
into a definitive agreement with respect to, or the Company shall have
consummated, an Acquisition Transaction, then the Company shall pay to Buyer
an
amount equal to the Termination Fee.
(e) Any
payment of the Termination Fee required to be made pursuant to this Section
8.2
shall be made not more than two (2) Business Days after the date of the event
giving rise to the obligation to make such payment, unless the Termination
Fee
is payable as a result of the termination of this Agreement by the Company
pursuant to Section 8.1(g), in which case, the Termination Fee shall be payable
concurrently with such termination. All payments under this Section 8.2 shall
be
made by wire transfer of immediately available funds to an account designated
by
Buyer. No payment of the Termination Fee under this Section 8.2 shall limit
in
any respect any rights or remedies available to Buyer relating to any breach
or
failure of the Company to perform any representation, warranty, covenant or
agreement set forth in this Agreement resulting, directly or indirectly, in
the
right to receive the Termination Fee under this Section 8.2.
(f) Buyer
and
the Company acknowledge that the agreements contained in this Section 8.2 are
an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, Buyer would not enter into this Agreement.
Accordingly, if the Company fails promptly to pay any amount due pursuant to
this Section 8.2 and, in order to obtain such payment, Buyer commences a suit
which results in a judgment against the Company for the amount set forth in
this
Section 8.2, the Company shall pay to Buyer its costs and expenses (including
reasonable attorneys’ fees and expenses) in connection with such suit, together
with interest on the amount of the Termination Fee at the prime rate of Citibank
N.A. in effect on the date such payment was required to be made.
50
ARTICLE
IX - MISCELLANEOUS
9.1 Survival.
No
representations, warranties, agreements and covenants contained in this
Agreement shall survive the Effective Time. This Section 9.1 shall not limit
any
covenant or agreement of the parties set forth herein relating to the delivery
of the Exchange Fund.
9.2 Certain
Definitions.
(a) As
used
in this Agreement, the following terms shall have the meanings set forth
below:
“Affiliate”
shall
mean, with respect to any Person, any other Person controlling, controlled
by or
under common control with such Person. As used in this definition, “control”
(including, with its correlative meanings, “controlled
by”
and
“under
common control with”)
means
the possession, directly or indirectly, of power to direct or cause the
direction of the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise.
“Business
Day”
means
Monday through Friday of each week, except any legal holiday recognized as
such
by the U.S. Government or any day on which banking institutions in the State
of
Vermont or the State of Maine are authorized or obligated to close.
“Buyer
Banks”
shall
mean Xxxxxxxxxx Trust Company, Ocean National Bank, Flagship Bank and Trust
Company, The Bank of Western Massachusetts and Maine Bank & Trust
Company.
“Buyer
Material Adverse Effect”
shall
mean any fact, change, event, development, effect or circumstance that,
individually or in the aggregate, (a) are, or would reasonably be expected
to
be, materially adverse to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations, cash flows or
properties of Buyer and its Subsidiaries, taken as a whole, or (b) would
reasonably be expected to prevent Buyer from performing its obligations under
this Agreement or consummating the transactions contemplated by this Agreement;
provided,
however,
that
notwithstanding the foregoing, the term Buyer Material Adverse Effect shall
not
include (i) any fact, change, event, development, effect or circumstance
generally affecting banks or their holding companies generally or arising from
changes in general business or economic conditions (and not specifically
relating to or having the effect of specifically relating to or having a
materially disproportionate effect (as the context may dictate) on Buyer and
its
Subsidiaries, taken as a whole); (ii) any fact, change, event, development,
effect or circumstance resulting from any change in law, GAAP or regulatory
accounting, which affects generally entities such as Buyer and its Subsidiaries,
taken as a whole (and not specifically relating to or having the effect of
specifically relating to or having a materially disproportionate effect (as
the
context may dictate) on Buyer and its Subsidiaries taken as a whole); (iii)
actions and omissions of Buyer and its Subsidiaries taken with the prior written
consent of the Company in furtherance of the transactions contemplated hereby
or
otherwise permitted to be taken by Buyer under this Agreement; and (iv) any
fact, change, event, development, effect or circumstance resulting from the
announcement or pendency of the transactions contemplated by this
Agreement.
51
“Company
Material Adverse Effect”
shall
mean any fact, change, event, development, effect or circumstance that,
individually or in the aggregate, (a) are, or would reasonably be expected
to
be, materially adverse to the business, operations, assets, liabilities,
condition (financial or otherwise), results of operations, cash flows or
properties of the Company and its Subsidiaries, taken as a whole, or (b) would
reasonably be expected to prevent the Company from performing its obligations
under this Agreement or consummating the transactions contemplated by this
Agreement; provided,
however,
that
notwithstanding the foregoing, the term Company Material Adverse Effect shall
not include (i) any fact, change, event, development, effect or circumstance
generally affecting banks or their holding companies generally or arising from
changes in general business or economic conditions (and not specifically
relating to or having the effect of specifically relating to or having a
materially disproportionate effect (as the context may dictate) on the Company
and its Subsidiaries, taken as a whole); (ii) any fact, change, event,
development, effect or circumstance resulting from any change in law, GAAP
or
regulatory accounting, which affects generally entities such as the Company
and
its Subsidiaries, taken as a whole (and not specifically relating to or having
the effect of specifically relating to or having a materially disproportionate
effect (as the context may dictate) on the Company and its Subsidiaries taken
as
a whole); (iii) actions and omissions of the Company and its Subsidiaries taken
with the prior written consent of Buyer in furtherance of the transactions
contemplated hereby or otherwise permitted to be taken by the Company under
this
Agreement; and (iv) any fact, change, event, development, effect or circumstance
resulting from the announcement or pendency of the transactions contemplated
by
this Agreement.
“Confidentiality
Agreement”
shall
mean the Confidentiality Agreement, dated as of January 5, 2007, by and between
Buyer and the Company.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
“GAAP”
shall
mean generally accepted accounting principles in the United States.
“Governmental
Authority”
shall
mean any U.S. or foreign federal, state or local governmental commission, board,
body, bureau or other regulatory authority or agency, including, without
limitation, courts and other judicial bodies, bank regulators, applicable state
securities authorities, the SEC, or any self-regulatory body or authority,
including any instrumentality or entity designed to act for or on behalf of
the
foregoing.
“Person”
or
“person”
shall
mean any individual, bank, corporation, partnership, limited liability company,
association, joint-stock company, business trust or unincorporated
organization.
“Regulatory
Approvals”
shall
mean (a) the approval (or waiver) of the FRB, (b) the approval of the Maine
Superintendent of Banks, (c) notification to the Vermont Department of Banking,
Insurance, Securities and Healthcare Administration, and (d) the approval of
the
Massachusetts Board of Bank Incorporation.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
52
“Subsidiary”
shall
mean, when used with reference to a party, any corporation or organization,
whether incorporated or unincorporated, of which such party or any other
Subsidiary of such party is a general partner or serves in a similar capacity,
or with respect to such corporation or other organization, at least twenty
percent (20%) of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions is directly or indirectly owned or controlled
by
such party or by any one of more of its Subsidiaries, or by such party and
one
or more of its Subsidiaries.
“Tax
Returns”
shall
mean any return, declaration, report, claim for refund, or information return
or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Taxes”
shall
mean (i) all taxes, charges, fees, levies or other assessments, including,
without limitation, all net income, gross income, gross receipts, sales, use,
ad
valorem, goods and services, capital, transfer, franchise, profits, license,
withholding, payroll, employment, employer health, excise, estimated, severance,
stamp, occupation, property or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority; and
(ii)
any liability for the payment of amounts with respect to payments of a type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation under
any tax sharing arrangement or tax indemnity agreement.
“Treasury
Stock”
shall
mean shares of Company Common Stock held (i) in the Company’s treasury or (ii)
by the Company or any of its Subsidiaries or by Buyer or any of its
Subsidiaries, in each case other than in a fiduciary capacity (including
custodial or agency).
(b) The
following terms are defined elsewhere in this Agreement, as indicated below:
“409A
Plan”
shall
have the meaning set forth in Section 3.14(i).
“Acquisition
Proposal”
shall
have the meaning set forth in Section 6.6(a).
“Acquisition
Transaction”
shall
have the meaning set forth in Section 6.6(a).
“Agreement”
shall
have the meaning set forth in the preamble to this Agreement.
“BHCA”
shall
have the meaning set forth in Section 3.2.
“Burdensome
Conditions”
shall
have the meaning set forth in Section 6.10.
“Buyer”
shall
have the meaning set forth in the preamble to this Agreement.
“Buyer
2005 Form 10-K”
shall
have the meaning set forth in Section 4.11(a).
“Buyer
Board”
shall
have the meaning set forth in Section 4.5.
“Buyer
Common Stock”
shall
have the meaning set forth in Section 2.1(a).
53
“Buyer
Disclosure Schedule”
shall
have the meaning set forth in Section 4.1(b).
“Buyer
Representatives”
shall
have the meaning set forth in Section 6.5(a).
“Buyer
SEC Documents”
shall
have the meaning set forth in Section 4.11(a).
“Cash
Consideration”
shall
have the meaning set forth in Section 2.1(c).
“Cash
Election”
shall
have the meaning set forth in Section 2.4(a).
“Cash
Election Shares”
shall
have the meaning set forth in Section 2.4(a).
“Certificate”
shall
have the meaning set forth in Section 2.2.
“Classified
Loans”
shall
have the meaning set forth in Section 3.23(b).
“Closing”
shall
have the meaning set forth in Section 1.4.
“Closing
Date”
shall
have the meaning set forth in Section 1.4.
“Code”
shall
have the meaning set forth in the recitals to this Agreement.
“Company”
shall
have the meaning set forth in the preamble to this Agreement.
“Company
2005 Form 10-K”
shall
have the meaning set forth in Section 3.11(a).
“Company
Balance Sheet”
shall
have the meaning set forth in Section 3.11(a).
“Company
Bank”
shall
have the meaning set forth in Section 1.8.
“Company
Board”
shall
have the meaning set forth in Section 3.6.
“Company
Common Stock”
shall
have the meaning set forth in the recitals to this Agreement.
“Company
Disclosure Schedule”
shall
have the meaning set forth in Section 3.1(b).
“Company
Employees”
shall
have the meaning set forth in Section 6.12(a).
“Company
Intellectual Property”
shall
have the meaning set forth in Section 3.18.
“Company
Material Contract”
shall
have the meaning set forth in Section 3.19(a).
“Company
Meeting”
shall
have the meaning set forth in Section 6.2(a).
“Company
Option Plan”
shall
have the meaning set forth in Section 2.7.
“Company
Property”
shall
have the meaning set forth in Section 3.17(a).
“Company
Recommendation”
shall
have the meaning set forth in Section 6.2(c).
54
“Company
Representatives”
shall
have the meaning set forth in Section 6.6(a).
“Company
SEC Documents”
shall
have the meaning set forth in Section 3.11(a).
“Company
Subsequent Determination”
shall
have the meaning set forth in Section 6.6(e).
“Derivative
Transactions”
shall
have the meaning set forth in Section 3.26.
“Effective
Time”
shall
have the meaning set forth in Section 1.2.
“Election
Deadline”
shall
have the meaning set forth in Section 2.4(b).
“Election
Form”
shall
have the meaning set forth in Section 2.4(a).
“Employee
Program”
shall
have the meaning set forth in Section 3.14(j)(i).
“Employee
Retention Amount”
shall
have the meaning set forth in Section 6.12(c).
“Environment”
shall
have the meaning set forth in Section 3.17(g).
“ERISA”
shall
have the meaning set forth in Section 3.14(c).
“ERISA
Affiliate”
shall
have the meaning set forth in Section 3.14(j)(iii).
“Exchange
Agent”
shall
have the meaning set forth in Section 2.4(a).
“Exchange
Fund”
shall
have the meaning set forth in Section 2.5(a).
“Exchange
Ratio”
shall
have the meaning set forth in Section 2.1(c).
“FDIA”
shall
have the meaning set forth in Section 3.28.
“FDIC”
shall
have the meaning set forth in Section 3.10(b).
“Finance
Laws”
shall
have the meaning set forth in Section 3.9(d).
“Financial
Advisor”
shall
have the meaning set forth in Section 3.31.
“FRB”
shall
have the meaning set forth in Section 3.2.
“Hazardous
Material”
shall
have the meaning set forth in Section 3.17(g).
“Indemnified
Parties”
shall
have the meaning set forth in Section 6.11(a).
“IRS”
shall
have the meaning set forth in Section 3.13(b).
“Liens”
shall
have the meaning set forth in Section 3.4(a).
“Loan
Property”
shall
have the meaning set forth in Section 3.17(g).
55
“Loans”
shall
have the meaning set forth in Section 3.23(a).
“Mailing
Date”
shall
have the meaning set forth in Section 2.4(a).
“maintains”
shall
have the meaning set forth in Section 3.14(j)(ii).
“MBCA”
shall
have the meaning set forth in Section 1.1.
“Merger”
shall
have the meaning set forth in the recitals to this Agreement.
“Merger
Consideration”
shall
have the meaning set forth in Section 2.1(c).
“Multiemployer
Plan”
shall
have the meaning set forth in Section 3.14(j)(iv).
“New
Certificates”
shall
have the meaning set forth in Section 2.5(a).
“Non-Election”
shall
have the meaning set forth in Section 2.4(a).
“Non-Election
Shares”
shall
have the meaning set forth in Section 2.4(a).
“Notice
of Superior Proposal”
shall
have the meaning set forth in Section 6.6(e).
“NYSE”
shall
have the meaning set forth in Section 2.3.
“Oil”
shall
have the meaning set forth in Section 3.17(g).
“Options”
shall
have the meaning set forth in Section 2.7.
“Participation
Facility”
shall
have the meaning set forth in Section 3.17(g).
“Premium
Limit”
shall
have the meaning set forth in Section 6.11(b).
“Proxy
Statement/Prospectus”
shall
have the meaning set forth in Section 6.3(a).
“Registration
Statement”
shall
have the meaning set forth in Section 6.3(a).
“Xxxxxxxx-Xxxxx”
shall
have the meaning set forth in Section 3.11(b).
“SEC”
shall
have the meaning set forth in Section 3.11(a).
“Settlement
Agreement”
shall
have the meaning set forth in Secion 6.2(e).
“Shortfall
Number”
shall
have the meaning set forth in Section 2.4(c)(ii).
“Stock
Consideration”
shall
have the meaning set forth in Section 2.1(c).
“Stock
Conversion Number”
shall
have the meaning set forth in Section 2.4(a).
“Stock
Election”
shall
have the meaning set forth in Section 2.4(a).
56
“Stock
Election Number”
shall
have the meaning set forth in Section 2.4(a).
“Stock
Election Shares”
shall
have the meaning set forth in Section 2.4(a).
“Superior
Proposal”
shall
have the meaning set forth in Section 6.6(b).
“Surviving
Corporation”
shall
have the meaning set forth in Section 1.1.
“Takeover
Laws”
shall
have the meaning set forth in Section 3.21.
“Termination
Fee”
shall
have the meaning set forth in Section 8.2(b).
“Trust
Business”
shall
have the meaning set forth in Section 3.24.
“USA
Patriot Act”
shall
have the meaning set forth in Section 3.29.
“VBCA”
shall
have the meaning set forth in Section 1.1.
“Voting
Agreement”
shall
have the meaning set forth in the recitals to this Agreement.
“Voting
Agreement Shareholders”
shall
have the meaning set forth in the recitals to this Agreement.
9.3 Waiver;
Amendment.
Subject
to compliance with applicable law, prior to the Effective Time, any provision
of
this Agreement may be (a) waived by the party intended to benefit by the
provision, or (b) amended or modified at any time, by an agreement in writing
between the parties hereto approved by their respective Boards of Directors
and
executed in the same manner as this Agreement; provided,
however,
that
after any approval of the transactions contemplated by this Agreement by the
shareholders of the Company, no amendment of this Agreement shall be made which
by law requires further approval of the shareholders of the Company without
obtaining such approval.
9.4 Expenses.
Each
party hereto will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, except that printing
expenses and SEC filing and registration fees shall be shared equally between
Buyer and the Company.
9.5 Notices.
All
notices, requests and other communications hereunder to a party shall be in
writing and shall be deemed given if personally delivered, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to such party at its address set forth below or such other address
as
such party may specify by notice to the other party hereto.
If
to
Buyer:
Xxxxxxxxxx
Corporation
Two
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxx 00000
Attention: Chief
Executive Officer
Facsimile:
(000) 000-0000
57
With
copies to:
Xxxxxxxxxx
Corporation
Two
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxx 00000
Attention:
General Counsel
Facsimile:(000)
000-0000
and
Xxxxxxx
Xxxxxxx XXX
Xxxxxxxx
Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx
X. Xxxxx, Esq.
Xxxx
X.
Xxxxxx, Esq.
Facsimile:
(000)
000-0000
If
to the
Company, to:
Xxxxxxx
Merchants Bancshares, Inc.
000
Xxxx
Xxxxxx
Xxxxxx,
Xxxxx 00000
Attention: Chief
Executive Officer
Facsimile:
(000) 000-0000
With
a
copy to:
Xxxxxxx
Xxxxxxxx & Wood
LLP
0000
Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
X.X. 00000
Attention: Xxxxxxx
X. Xxxxxxxx, Esq.
Facsimile: (000)
000-0000
9.6 Understanding;
No Third Party Beneficiaries.
Except
for the Confidentiality Agreement, which shall remain in effect, this Agreement
represents the entire understanding of the parties hereto with reference to
the
transactions contemplated hereby and thereby and supersedes any and all other
oral or written agreements heretofore made. Except for Section 6.11, nothing
in
this Agreement, expressed or implied, is intended to confer upon any person,
other than the parties hereto or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
9.7 Assignability;
Binding Effect.
Prior
to the Closing, this Agreement may not be assigned by Buyer without the written
consent of the Company and no such assignment shall release Buyer of its
obligations hereunder. After the Closing, Buyer’s rights and obligations
hereunder shall be freely assignable. This Agreement may not be assigned by
the
Company without the prior written consent of Buyer. This Agreement shall be
binding upon and enforceable by, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns, and except as
expressly set forth herein, is not intended to confer upon any other person
any
rights or remedies hereunder.
58
9.8 Headings;
Interpretation.
The
headings contained in this Agreement are for reference purposes only and are
not
part of this Agreement. The word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless the
context otherwise requires or unless otherwise specified. Words of number may
be
read as singular or plural, as required by context.
9.9 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to constitute an original.
9.10 Governing
Law.
This
Agreement shall be governed by, and interpreted in accordance with, the laws
of
the State of Vermont, without regard to the conflict of law principles
thereof.
[Remainder
of Page Intentionally Left Blank]
59
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
Merger to be executed in counterparts by their duly authorized officers, all
as
of the day and year first above written.
| XXXXXXXXXX CORPORATION | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxxx | |
|
Name: Xxxx X. Xxxxxxxx |
||
| Title: President, Chief Executive Officer and Chairman of the Board | ||
| XXXXXXX MERCHANTS BANCSHARES, INC. | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxx | |
|
Name: Xxxxx X. Xxxxx |
||
| Title: Chairman and Chief Executive Officer | ||
60
INDEX
OF SCHEDULES
Company
Disclosure Schedule:
|
Schedule
3.2
|
Organization,
Standing and Authority
|
|
Schedule
3.3
|
Capitalization
|
|
Schedule
3.4
|
Subsidiaries
|
|
Schedule
3.7
|
Non-Contravention
|
|
Schedule
3.10
|
Litigation;
Regulatory Action
|
|
Schedule
3.11
|
SEC
Documents; Financial Reports; and Regulatory Reports
|
|
Schedule
3.12
|
Absence
of Certain Changes or Events
|
|
Schedule
3.13
|
Taxes
and Tax Returns
|
|
Schedule
3.14(a)
|
Employee
Programs
|
|
Schedule
3.14(d)
|
Unfunded
Benefit Liabilities; Multiemployer Plans; Retiree
Programs
|
|
Schedule
3.14(f)
|
Accelerated
Payments
|
|
Schedule
3.14(i)
|
Nonqualified
Deferred Compensation Plans
|
|
Schedule
3.16
|
Insurance
|
|
Schedule
3.17
|
Environmental
Matters
|
|
Schedule
3.19
|
Material
Agreements; Defaults
|
|
Schedule
3.23
|
Loans;
Nonperforming and Classified Assets
|
|
Schedule
3.25
|
Investment
Management and Related Activities
|
|
Schedule
3.30
|
Transactions
with Affiliates
|
|
Schedule
5.1
|
Company
Forbearances
|
Buyer
Disclosure Schedule:
|
Schedule
4.4
|
Subsidiaries
|
|
Schedule
4.7
|
Non-Contravention
|
|
Schedule
4.14
|
Employee
Benefit Plans
|
|
Schedule
5.2
|
Buyer
Forbearances
|
Other:
|
Schedule
6.12(d)
|
Severance
Guidelines
|
|
Schedule
6.12(e)
|
Settlement
Agreements
|
EXHIBIT
A
January
__, 2007
Xxxxxxxxxx
Corporation
Two
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxx 00000
Ladies
and Gentlemen:
I
have
been advised that as of the date of this letter, I may be deemed to be an
“affiliate” of Xxxxxxx Merchants Bancshares, Inc., a Maine corporation (the
“Company”),
as
the term “affiliate” is defined for purposes of paragraphs (c) and (d) of Rule
145 of the rules and regulations (the “Rules
and Regulations”)
of the
Securities and Exchange Commission (the “Commission”)
under
the Securities Act of 1933, as amended (the “Act”).
Pursuant to the terms of the Agreement and Plan of Merger dated as of January
18, 2007 (the “Merger
Agreement”),
by
and between the Company and Xxxxxxxxxx Corporation, a Vermont corporation
(“Buyer”),
the
Company will be merged with and into Buyer (the “Merger”).
As a
result of the Merger, I may receive shares of common stock, par value $1.00
per
share, of Buyer (“Buyer
Common Stock”)
in
exchange for shares of common stock, par value $1.00 per share, of the Company
(“Company
Common Stock”)
owned
by me.
Accordingly,
I hereby represent, warrant and covenant to Buyer that in the event I receive
any shares of Buyer Common Stock as a result of the Merger:
| A. |
I
shall not make any sale, transfer or other disposition of any shares
of
Buyer Common Stock in violation of the Act or the Rules and
Regulations.
|
| B. |
I
have carefully read this letter and the Merger Agreement and discussed
the
requirements of such documents and other applicable limitations
upon my
ability to sell, transfer or otherwise dispose of shares of Buyer
Common
Stock to the extent I believe necessary with my counsel or counsel
for the
Company.
|
| C. |
I
have been advised that the issuance of the shares of Buyer Common
Stock to
me pursuant to the Merger will be registered with the Commission
under the
Act pursuant to a registration statement on Form S-4. However,
I have also
been advised that, because at the time the Merger will be submitted
for a
vote of the shareholders of the Company, I may be deemed to be
an
affiliate of the Company and the resale by me of the shares of
Buyer
Common Stock will not be registered under the Act, I may not sell,
transfer or otherwise dispose of any shares of Buyer Common Stock
issued
to me in the Merger unless (i) such sale, transfer or other disposition
is
subject to an effective registration statement and to the availability
of
a prospectus under the Act, (ii) such sale, transfer or other disposition
is made in conformity with Rule 145 promulgated under the Act,
(iii) a “no
action” letter has been obtained on my behalf from the staff of the
Commission indicating that it will not recommend enforcement action
to the
Commission if such sale, transfer or other disposition is not subject
to
an effective registration statement and to the availability of
a
prospectus under the Act, or (iv) Buyer has received the written
opinion
of counsel, which opinion and counsel shall be reasonably acceptable
to
Buyer, that such sale, transfer or other disposition is otherwise
exempt
from registration under the Act.
|
Xxxxxxxxxx
Corporation
January
__, 2007
Page
2
| D. |
I
understand that Buyer is under no obligation to register any sale,
transfer or other disposition of shares of Buyer Common Stock received
in
the Merger by me or on my behalf under the Act or to take any other
action
necessary in order to make compliance with an exemption from such
registration available.
|
| E. |
I
also understand that stop transfer instructions will be given to
Buyer’s
transfer agent with respect to all shares of Buyer Common Stock
issued to
me in the Merger and that there will be placed on the certificates
for
such shares of Buyer Common Stock issued to me, or any substitutions
therefor, a legend in substantially the following
form:
|
“THE
SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH
RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, APPLIES,
AND
MAY ONLY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN COMPLIANCE WITH
THE
REQUIREMENTS OF RULE 145 OR PURSUANT TO A REGISTRATION STATEMENT UNDER SAID
ACT
OR AN EXEMPTION FROM SUCH REGISTRATION.”
| F. |
I
further understand that unless the transfer by me of my shares
of Buyer
Common Stock has been registered under the Act or is a sale made
in
conformity with the provisions of Rule 145 promulgated under the
Act,
Buyer reserves the right to place a legend on the certificates
issued to
my transferee in substantially the following
form:
|
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER SAID ACT
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO,
OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF
THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT.”
| G. |
I
have set forth below the exact numbers of shares of Company Common
Stock
which I own of record only, beneficially only and of record and
beneficially. I represent and warrant to Buyer that I am the record
holder
of all shares of Company Common Stock that I beneficially own,
except for
shares of Company Common Stock that are held in “street name” for my
benefit.
|
Xxxxxxxxxx
Corporation
January
__, 2007
Page
3
| H. |
My
ownership of the shares of Company Common Stock indicated below
is free
and clear of any security interest, lien, encumbrance, charge,
equity,
claim or restriction whatsoever, except as set forth below and
as may be
imposed by reason of the Act or the Rules and
Regulations.
|
It
is
understood and agreed that the legends and stop orders referred to above
will be
removed upon my request and compliance with such procedures as Buyer or its
transfer agent may require, if Buyer has received (i) reasonably satisfactory
written evidence that the shares of Buyer Common Stock represented by any
such
certificate have been sold in compliance with Rule 145(d) promulgated under
the Act, or (ii) a written opinion of counsel, which opinion and counsel
shall
be reasonably satisfactory to Buyer, or a “no action” letter obtained by the
undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 promulgated under the Act no longer apply
to
me.
Execution
of this letter should not be considered an admission on my part that I am
an
“affiliate” of the Company as described in the first paragraph of this letter or
as a waiver of any rights I may have to object to any claim that I am such
an
affiliate on or after the date of this letter.
This
letter shall terminate upon such date and time, if any, as the Merger Agreement
shall be terminated pursuant to Article VIII thereof.
|
Very
truly yours,
_____________________________
[Name
of the Company Shareholder]
Company
Common Stock Owned
of
Record Only:________
Company
Common Stock Owned
Beneficially
Only:________
Company
Common Stock Owned
Beneficially
and of Record:________
|
Xxxxxxxxxx
Corporation
January
__, 2007
Page
4
Accepted
this ____ day of ___________, 2007:
[BUYER]
By:
____________________________
Name:
Title:
