Exhibit 2.1
Execution Copy
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AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 13, 2006
AMONG
ASSABET VALLEY BANCORP,
HUDWEST FINANCIAL SERVICES, INC.,
HUDSON SAVINGS BANK
AND
WESTBOROUGH BANCORP, MHC,
WESTBOROUGH FINANCIAL SERVICES, INC.,
AND
THE WESTBOROUGH BANK
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS; DISCLOSURE........................................... 2
1.1. CERTAIN DEFINITIONS................................................. 2
1.2. OTHER DEFINED TERMS................................................. 7
1.3. OTHER DEFINITIONAL MATTERS.......................................... 8
1.4. DISCLOSURE SCHEDULES................................................ 8
ARTICLE II. THE MERGERS...................................................... 8
2.1. THE MHC MERGER...................................................... 9
2.2. THE MID-TIER MERGER................................................. 9
2.3. THE BANK MERGER.....................................................10
2.4. AUTHORIZED CAPITAL STOCK............................................10
2.5. EFFECT OF THE MHC MERGER AND MID TIER MERGER........................10
2.6. ADDITIONAL ACTIONS..................................................11
2.7. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING..........................11
2.8. TAX CONSEQUENCES....................................................12
ARTICLE III. CONVERSION OF SHARES; CONSIDERATION; PAYMENT PROCEDURES.........13
3.1. CONVERSION OF SHARES................................................13
3.2. PAYMENT PROCEDURES..................................................13
3.3. RETURN OF EXCHANGE FUND.............................................14
3.4. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS.............................14
3.5. DISSENTING SHARES...................................................14
3.6. WITHHOLDING RIGHTS..................................................15
3.7. STOCK OPTIONS.......................................................15
ARTICLE IV. ACTIONS PENDING MERGER...........................................15
4.1. AGREEMENTS OF WESTBOROUGH...........................................15
4.2. AGREEMENTS OF ASSABET...............................................21
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF WESTBOROUGH.....................24
5.1. ORGANIZATION, STANDING AND AUTHORITY................................25
5.2. WESTBOROUGH FINANCIAL CAPITAL STOCK.................................26
5.3. SUBSIDIARIES........................................................27
5.4. CORPORATE POWER.....................................................28
5.5. CORPORATE AUTHORITY.................................................28
5.6. REGULATORY APPROVALS; NO DEFAULTS...................................28
5.7. FINANCIAL STATEMENTS; REPORTS.......................................29
5.8. ABSENCE OF UNDISCLOSED LIABILITIES..................................31
5.9. ABSENCE OF CERTAIN CHANGES OR EVENTS................................31
5.10. LITIGATION..........................................................32
5.11. REGULATORY MATTERS..................................................32
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5.12. COMPLIANCE WITH LAWS................................................33
5.13. MATERIAL CONTRACTS; DEFAULTS........................................33
5.14. NO BROKERS..........................................................35
5.15. EMPLOYEE BENEFIT PLANS..............................................35
5.16. LABOR MATTERS.......................................................37
5.17. ENVIRONMENTAL MATTERS...............................................37
5.18. TAX MATTERS.........................................................38
5.19. RISK MANAGEMENT INSTRUMENTS.........................................40
5.20. INVESTMENT SECURITIES...............................................41
5.21. LOANS; NONPERFORMING AND CLASSIFIED ASSETS..........................41
5.22. BANK OWNED LIFE INSURANCE...........................................42
5.23. PROPERTIES..........................................................42
5.24. INTELLECTUAL PROPERTY...............................................42
5.25. FIDUCIARY ACCOUNTS..................................................43
5.26. CAPITALIZATION......................................................43
5.27. COMMUNITY REINVESTMENT ACT, BANK SECRECY, ANTI-MONEY LAUNDERING AND
CUSTOMER INFORMATION SECURITY......................................43
5.28. BOOKS AND RECORDS...................................................43
5.29. INSURANCE...........................................................44
5.30. ALLOWANCE FOR LOAN LOSSES...........................................44
5.31. CREDIT CARD ACCOUNTS................................................44
5.32. MERCHANT PROCESSING.................................................44
5.33. TRANSACTIONS WITH AFFILIATES........................................44
5.34. REQUIRED VOTE; ANTITAKEOVER PROVISIONS..............................44
5.35. FAIRNESS OPINION....................................................45
5.36. TRANSACTIONS IN SECURITIES..........................................45
5.37. PROXY STATEMENT.....................................................45
5.38. DISCLOSURE..........................................................46
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF ASSABET........................46
6.1. ORGANIZATION, STANDING AND AUTHORITY................................46
6.2. NO AVB STOCK........................................................47
6.3. SUBSIDIARIES........................................................47
6.4. CORPORATE POWER.....................................................48
6.5. CORPORATE AUTHORITY.................................................48
6.6. REGULATORY APPROVALS; NO DEFAULTS...................................48
6.7. FINANCIAL STATEMENTS; REPORTS.......................................49
6.8. ABSENCE OF UNDISCLOSED LIABILITIES..................................50
6.9. ABSENCE OF CERTAIN CHANGES OR EVENTS................................50
6.10. LITIGATION..........................................................51
6.11. REGULATORY MATTERS..................................................51
6.12. COMPLIANCE WITH LAWS................................................51
6.13. MATERIAL CONTRACTS; DEFAULTS........................................52
6.14. NO BROKERS..........................................................54
6.15. EMPLOYEE BENEFIT PLANS..............................................54
6.16. LABOR MATTERS.......................................................55
6.17. ENVIRONMENTAL MATTERS...............................................56
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6.18. TAX MATTERS.........................................................56
6.19. RISK MANAGEMENT INSTRUMENTS.........................................58
6.20. INVESTMENT SECURITIES...............................................59
6.21. LOANS; NONPERFORMING AND CLASSIFIED ASSETS..........................59
6.22. BANK OWNED LIFE INSURANCE...........................................60
6.23. PROPERTIES..........................................................60
6.24. INTELLECTUAL PROPERTY...............................................60
6.25. FIDUCIARY ACCOUNTS..................................................60
6.26. CAPITALIZATION......................................................61
6.27. COMMUNITY REINVESTMENT ACT, BANK SECRECY, ANTI-MONEY LAUNDERING AND
CUSTOMER INFORMATION SECURITY......................................61
6.28. BOOKS AND RECORDS...................................................61
6.29. INSURANCE...........................................................61
6.30. ALLOWANCE FOR LOAN LOSSES...........................................62
6.31. TRANSACTIONS WITH AFFILIATES........................................62
6.32. REQUIRED VOTE; ANTITAKEOVER PROVISIONS..............................62
6.33. FAIRNESS OPINION....................................................62
6.34. PROXY STATEMENT.....................................................62
6.35. OWNERSHIP OF WESTBOROUGH FINANCIAL COMMON STOCK.....................62
6.36. FINANCIAL ABILITY...................................................62
6.37. DISCLOSURE..........................................................63
ARTICLE VII. COVENANTS.......................................................63
7.1. REASONABLE BEST EFFORTS.............................................63
7.2. SHAREHOLDER APPROVAL................................................63
7.3. CORPORATOR APPROVAL.................................................64
7.4. REGULATORY FILINGS..................................................64
7.5. PRESS RELEASES......................................................64
7.6. ACCESS; INFORMATION.................................................65
7.7. ACQUISITION PROPOSALS...............................................65
7.8. CERTAIN POLICIES....................................................67
7.9. INDEMNIFICATION.....................................................67
7.10. EMPLOYMENT AND BENEFIT MATTERS......................................68
7.11. NOTIFICATION OF CERTAIN MATTERS.....................................70
7.12. PAYMENTS AND RELATED AGREEMENTS.....................................70
7.13. UPDATE OF DISCLOSURE SCHEDULES......................................70
7.14. CURRENT INFORMATION.................................................71
7.15. LOAN LOSS RESERVES..................................................71
7.16. ALCO MANAGEMENT.....................................................71
ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGERS......................72
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGERS.........72
8.2. CONDITIONS TO OBLIGATION OF WESTBOROUGH.............................72
8.3. CONDITIONS TO OBLIGATIONS OF AVB....................................73
ARTICLE IX. TERMINATION......................................................74
9.1. TERMINATION.........................................................74
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9.2. EFFECT OF TERMINATION; EXPENSES.....................................75
9.3. WESTBOROUGH SPECIAL PAYMENT.........................................76
ARTICLE X. MISCELLANEOUS.....................................................77
10.1. SURVIVAL............................................................77
10.2. WAIVER; AMENDMENT...................................................77
10.3. COUNTERPARTS AND FACSIMILE SIGNATURES...............................77
10.4. GOVERNING LAW.......................................................78
10.5. EXPENSES............................................................78
10.6. NOTICES.............................................................78
10.7. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES..................78
10.8. SEVERABILITY........................................................79
10.9. ENFORCEMENT OF THE AGREEMENT........................................79
10.10. INTERPRETATION......................................................79
10.11. ASSIGNMENT..........................................................79
10.12. ALTERNATIVE STRUCTURE...............................................79
Annex A List of Voting Shareholders
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Annex B Form of Voting Agreement
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Annex C Officers and Directors of Surviving Corporation
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Annex D New Bank Committee Structure
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AGREEMENT AND PLAN OF MERGER
PREAMBLE
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
November 13, 2006, is by and among (i) Xxxxxx Savings Bank, a
Massachusetts-chartered savings bank ("Hudson"), HudWest Financial Services,
Inc., a Massachusetts-chartered corporation ("Merger Sub"), and Assabet Valley
Bancorp ("AVB"), a Massachusetts-chartered mutual holding company and the
parent company of Hudson and Merger Sub, and (ii) The Westborough Bank, a
Massachusetts-chartered savings bank ("Westborough Bank"), Westborough
Financial Services, Inc., a Massachusetts-chartered mid-tier holding company of
Westborough Bank ("Westborough Financial") and Westborough Bancorp, MHC, a
Massachusetts-chartered mutual holding company ("Westborough MHC"). Each of
Hudson, AVB, Merger Sub, Westborough Bank, Westborough Financial and
Westborough MHC is sometimes individually referred to in this Agreement as a
"party" and collectively as the "parties."
1. Xxxxxx is a stock savings bank, and AVB is the mutual holding company
for Hudson. Hudson and AVB both have their principal offices located in Hudson,
Massachusetts.
2. Westborough MHC owns a majority of the outstanding capital stock of
Westborough Financial, which, in turn, owns all of the outstanding capital
stock of Westborough Bank. Westborough Bank, Westborough Financial and
Westborough MHC all have their principal offices located in Westborough,
Massachusetts.
3. The respective Boards of Trustees and Directors of the parties deem it
advisable and in the best interests of the parties, as well as of the
shareholders of Westborough Financial, to consummate the following merger
transactions: (i) Westborough MHC will merge with and into AVB, with AVB as the
surviving entity (the "MHC Merger"), (ii) Westborough Financial will merge with
and into Merger Sub, with Westborough Financial as the surviving entity (the
"Mid-Tier Merger"), (iii) Westborough Bank will merge with and into Xxxxxx,
with Xxxxxx as the surviving institution (the "Bank Merger") (which is referred
to herein as "New Bank" and shall be renamed with a name that is mutually
agreeable to the parties hereto) and New Bank will remain a subsidiary of AVB,
(iv) concurrently with step (i), each outstanding share of Westborough
Financial Common Stock previously held by any shareholder other than
Westborough MHC or AVB (collectively, the "Outstanding Shares") will be
canceled and exchanged for an amount of cash per share equal to the Per Share
Merger Consideration to be paid by AVB or Merger Sub pursuant to the terms of
this Agreement, and (v) as a result of the foregoing, the interests of
Westborough Bank depositors in Westborough MHC shall cease to exist and will be
converted into interests of the same nature in AVB.
4. The parties intend each of the MHC Merger, the Mid-Tier Merger, and
the Bank Merger to qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
In view of the foregoing and for other good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I.
DEFINITIONS; DISCLOSURE
1.1. Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" shall mean (x) a bona fide proposal by any Person
(other than AVB or any Subsidiary of AVB) to Westborough or the shareholders of
Westborough Financial to engage in a Change in Control Transaction, (y) a
public statement by any Person (other than AVB or any Subsidiary of AVB) to
Westborough or the shareholders of Westborough Financial of such Person's
intention to make a proposal to engage in a Change in Control Transaction if
this Agreement terminates, or (z) the filing by any Person (other than AVB or
any Subsidiary of AVB) of an application or notice with any Governmental
Authority to engage in a Change in Control Transaction.
"Affiliate" shall mean a Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common
control with, the Person specified. For purposes of this definition, the terms
"control," "controlled by" and "under common control with" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person and, in the case of an
entity, shall require (a) in the case of a corporate entity, direct or indirect
ownership of at least a majority of the securities having the right to vote for
the election of directors, and (b) in the case of a non-corporate entity,
direct or indirect ownership of at least a majority of the Equity Interests
with the power to direct the management and policies of such non-corporate
entity.
"Aggregate Merger Consideration" shall be equal to the aggregate Per
Share Merger Consideration payable with respect to all Outstanding Shares of
Westborough Financial Common Stock pursuant to Section 3.1(c) plus the
aggregate amount payable to holders of Westborough Financial Options pursuant
to Section 3.7.
"Agreement" shall mean this Agreement, as amended or modified from time
to time in accordance with Section 10.2.
"Assabet" shall mean each of AVB, Merger Sub and Xxxxxx and the
Subsidiaries of each of the foregoing, individually and collectively.
"AVB" shall have the meaning set forth in the Preamble to this Agreement.
"AVB Board" shall mean the Board of Trustees of AVB.
"AVB Bylaws" shall mean the Bylaws of AVB.
"AVB Charter" shall mean the Amended and Restated Charter of AVB, as
amended.
"Bank Merger" shall have the meaning set forth in the Preamble to this
Agreement.
"Bank Regulator" shall mean and include any pertinent federal or state
Governmental Authority charged with the supervision of banks or bank or
financial holding companies or
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engaged in the insurance of bank deposits, including, without limitation, the
Federal Reserve Board, the FDIC, the Depositors Insurance Fund of
Massachusetts, the Massachusetts Bank Commissioner and the Massachusetts Board.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Business Day" shall mean Monday through Friday of each week, except (i)
a legal holiday recognized as such by the United States Government, or (ii) any
day on which banking institutions in The Commonwealth of Massachusetts are
authorized or obligated to close.
"Certificate" shall mean any certificate which, immediately prior to the
Mid-Tier Effective Time, represented Outstanding Shares of Westborough
Financial Common Stock.
"Change in Control Transaction" shall mean (A) a merger, reorganization,
tender or exchange offer, recapitalization, reorganization, liquidation, share
exchange, consolidation or similar transaction involving Westborough MHC or any
Subsidiary of Westborough MHC whose assets constitute more than 15% of the
consolidated assets of Westborough MHC, (B) the disposition, by sale, lease,
exchange or otherwise, of assets of Westborough MHC or any Subsidiary of
Westborough MHC representing in either case 15% or more of the consolidated
assets of Westborough MHC, or (C) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction), or the acquisition of, securities representing 15% or more of the
voting power of Westborough Financial or any Subsidiary whose assets constitute
more than 15% of the consolidated assets of Westborough Financial.
"Code" shall have the meaning set forth in the Preamble to this
Agreement.
"Community Reinvestment Act" shall mean the Community Reinvestment Act of
1977, as amended.
"Equal Credit Opportunity Act" shall mean the Equal Credit Opportunity
Act, as amended.
"Equity Interests" shall mean, with respect to any Person, capital stock
or other ownership or equity interests of such Person or any Subsidiary, and
warrants, options, rights, subscriptions, calls, commitments, convertible
securities and other arrangements or commitments of any character which call
for the Person to issue, deliver or dispose, or cause to be issued, delivered
or disposed, any of its or its Subsidiaries' capital stock or other ownership
or equity interests of such Person or any Subsidiary.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Fair Housing Act" shall mean the Fair Housing Act, as amended.
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"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Act" shall mean the Federal Reserve Act, as amended.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"GAAP" shall mean United States generally accepted accounting principles.
"Governmental Authority" shall mean any United States or foreign,
federal, state or local governmental commission, board, body, bureau, agency or
other regulatory authority (including all Bank Regulators), including courts
and other judicial bodies, or any self-regulatory body or authority, including
any instrumentality or entity designated to act for or on behalf of the
foregoing.
"Xxxxxx" shall have the meaning set forth in the Preamble to this
Agreement.
"Xxxxxx Bylaws" shall mean the Bylaws of Xxxxxx.
"Xxxxxx Charter" shall mean the Charter of Xxxxxx.
"JFM" shall mean Xxxxxx X. XxxXxxxxxx.
"Joint Venture" shall mean any corporation, limited liability company,
limited liability partnership, partnership, joint venture, trust, association
or other entity which is not a Subsidiary of Westborough or Assabet and in
which (a) Westborough or Assabet, directly or indirectly, owns or controls any
shares of any class of the outstanding voting securities or other Equity
Interests, including, without limitation, an equity investment, as such term as
of the date of this Agreement is defined in the FDIC's rules and regulations
regarding activities and investments of insured state banks at 12 C.F.R.
[SECTION] 362.2(g), or (b) Westborough or Assabet is a general partner.
"knowledge" or any words or phrases of similar effect shall mean, with
respect to any Person, the actual knowledge of such Person, after reasonable
due inquiry.
"Liens" shall mean any charge, mortgage, pledge, security interest,
restriction, option, right of first refusal, claim, lien or encumbrance.
"Loan Loss Reserves" shall mean the reserves established by Westborough
or Hudson in accordance with its customary practices with respect to Loans as
of the Closing Date.
"Massachusetts Bank Commissioner" shall mean the Commissioner of Banks of
The Commonwealth of Massachusetts.
"Massachusetts Board" shall mean the Massachusetts Board of Bank
Incorporation.
"Material Adverse Effect" shall mean, with respect to any Person, any
change or effect that (i) is or would be reasonably likely to be material and
adverse to the financial position, results of operations, business or prospects
of such Person or its Subsidiaries, or (ii) would
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materially impair the ability of any Person to perform its respective
obligations under this Agreement or the Bank Merger Agreement, or otherwise
materially impede the consummation of the Transactions; provided, however, that
"Material Adverse Effect" shall not be deemed to include the impact of (1)
changes in banking and similar laws, rules or regulations of general
applicability or interpretations thereof by Governmental Authorities, (2)
changes in GAAP or regulatory accounting requirements applicable to financial
institutions and their holding companies generally, (3) changes after the date
of this Agreement in general economic or capital market conditions affecting
financial institutions or their market prices generally and not specifically
related to Westborough or Assabet, including, but not limited to, changes in
levels of interest rates generally, (4) direct effects of compliance with this
Agreement on the operating performance of Westborough or Assabet, including
expenses incurred by Westborough or Assabet in consummating the transactions
contemplated by this Agreement, and (5) the effects of any action or omission
taken by Westborough with the prior consent of Assabet, and vice versa, or as
otherwise contemplated by this Agreement, the Bank Merger Agreement and the
Voting Agreements.
"MBCA" shall mean the Massachusetts Business Corporations Act, MGL
Chapter 156D, [SECTIONS]1 et seq., as amended.
"Merger" shall have the meaning set forth in the Preamble to this
Agreement.
"Merger Sub" shall mean the wholly owned subsidiary of AVB incorporated
under the MBCA for the purpose of being merged with and into Westborough
Financial.
"Merger Sub Charter" shall mean the Corporate Charter of Merger Sub.
"MHC Merger" shall have the meaning set forth in the Preamble to this
Agreement.
"MHPF" shall mean the Massachusetts Housing Partnership Fund.
"National Labor Relations Act" shall mean the National Labor Relations
Act, as amended.
"New Bank" shall have the meaning set forth in the Preamble to this
Agreement.
"OREO" shall mean other real estate owned.
"Outstanding Shares" shall have the meaning set forth in the Preamble to
this Agreement.
"Person" shall mean any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability company or
unincorporated organization.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
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"Subsidiary" shall have the meaning ascribed to that term in Rule 1-02 of
Regulation S-X of the SEC.
"Tax" and "Taxes" mean all federal, state, local or foreign income, gross
income, gains, gross receipts, sales, use, ad valorem, goods and services,
capital, production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental, custom
duties, unemployment or other taxes of any kind whatsoever, together with any
interest, additions or penalties thereto and any interest in respect of such
interest and penalties.
"Tax Returns" shall mean any return, declaration, report, claim for
refund, information return or other document (including any schedules or
attachments thereto) filed or required to be filed in connection with the
determination, assessment or collection of any Tax or the administration of any
laws, regulations or administrative requirements relating to any Tax.
"Tender Offer" shall mean a tender offer or exchange offer to purchase
any shares of Westborough Financial Common Stock such that, upon consummation
of such offer, the Person making such tender offer or exchange offer would own
or control 25% or more of the then Outstanding Shares of Westborough Financial
Common Stock.
"Transaction Documents" shall mean this Agreement, the Bank Merger
Agreement and the Voting Agreements.
"Transactions" shall mean the MHC Merger, the Mid-Tier Merger and the
Bank Merger.
"Voting Agreements" shall mean those certain Voting Agreements (each of
which is in the form set forth on Annex B to this Agreement) executed by the
Voting Shareholders in connection with the execution and delivery of this
Agreement.
"Voting Shareholders" shall mean the Persons listed on Annex A to this
Agreement.
"Westborough" shall mean each of Westborough Bank, Westborough Financial
and Westborough MHC and the Subsidiaries of each of the foregoing, individually
and collectively.
"Westborough Bank" shall have the meaning set forth in the Preamble to
this Agreement.
"Westborough Financial" shall have the meaning set forth in the Preamble
to this Agreement.
"Westborough Financial Board" shall mean the Board of Directors of
Westborough Financial.
"Westborough Financial Bylaws" shall mean the Bylaws of Westborough
Financial.
"Westborough Financial Charter" shall mean the Articles of Organization
of Westborough Financial.
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"Westborough Financial Common Stock" shall mean the common stock, $0.01
par value per share, of Westborough Financial.
"Westborough Financial Options" shall mean the options to acquire
Westborough Financial Common Stock issued under the Westborough Financial Stock
Option Plan.
"Westborough Financial Preferred Stock" shall mean the serial preferred
stock, par value $0.01 per share, of Westborough Financial.
"Westborough Financial Stock" shall mean, collectively, Westborough
Financial Common Stock and Westborough Financial Preferred Stock.
"Westborough Financial Stock Option Plan" shall mean the Westborough
Financial Services, Inc. 2001 Stock Option Plan.
1.2. Other Defined Terms. Definitions of the defined terms listed below
are contained in the Section set forth opposite the defined term in the table
below:
Defined Term Section of Agreement
Articles of Merger Section 2.7(a)
Assabet Benefit Plan Section 6.15(a)
Assabet Employees Section 6.15(a)
Assabet Loan Property Section 6.17(b)
Assabet Regulatory Authorities Section 6.11(a)
Assabet Reports Section 6.7(b)
AVB Benefit Plans Section 7.10(a)
AVB's Financial Statements Section 6.7(a)
Bank Effective Time Section 2.3(a)
Bank Merger Agreement Section 2.3(a)
BOLI Section 5.22
Closing and Closing Date Section 2.7(c)
Derivatives Contract Section 5.19
Disclosure Schedules Section 1.4
Dissenting Shares Section 3.5
Effective Date Section 2.7(a)
Employment Agreement Section 7.12
Environmental Laws Section 5.17
ERISA Affiliate Section 5.15(d)
ESOP Section 7.10(f)
Expenses Section 9.2(b)
Expiration Date Section 9.1(b)
Hazardous Substance Section 5.17
Indemnified Party, Indemnified Parties Section 7.9(a)
and Indemnifying Party
Insurance Amount Section 7.9(c)
Insurance Policies Section 5.29
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Loans Section 5.21(a)
Material Contract Section 5.13(a)
Merger Sub Common Stock Section 3.1(b)
MHC Effective Time Section 2.7(a)
Mid-Tier Effective Time Section 2.7(b)
Paying Agent Section 3.2(a)
Pension Plan Section 5.15(b)
Per Share Merger Consideration Section 3.1(c)
Proxy Statement Section 5.37
Representatives Section 7.7
SEC Documents Section 5.7(a)
Surviving Corporation Section 2.2
Unperfected Dissenting Shares Section 3.5
USA Patriot Act Section 5.27
Welfare Plan Section 5.15(f)
Westborough Benefit Plans Section 5.15(a)
Westborough Employees Section 5.15(a)
Westborough Financial Board Recommendation Section 7.2(b)
Westborough Financial Loan Property Section 5.17(b)
Westborough Financial Meeting Section 7.2(b)
Westborough Regulatory Authorities Section 5.11(a)
Westborough Reports Section 5.7(c)
Westborough Special Payment Section 9.3
1.3. Other Definitional Matters. Unless the context otherwise requires, a
term defined anywhere in this Agreement has the same meaning throughout; all
references to "the Agreement" or "this Agreement" are to this Agreement as
modified, supplemented or amended from time to time, and terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa.
1.4. Disclosure Schedules. On or prior to the date of this Agreement, AVB
has delivered to Westborough a schedule and Westborough has delivered to AVB a
schedule (respectively, its "Disclosure Schedules") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more representations or warranties contained in
Article V or Article VI or to one or more of its covenants contained in Article
IV. The mere inclusion of a fact, circumstance or event in a Disclosure
Schedule shall not be deemed an admission by a party that such item represents
a material exception or that such item is reasonably likely to result in a
Material Adverse Effect. Any matter disclosed pursuant to one section of a
party's Disclosure Schedules shall be deemed disclosed for all purposes of such
party's Disclosure Schedules, but only to the extent that it is reasonably
apparent from a reading of the disclosure that it also qualifies or applies to
other sections of the Agreement and the corresponding Disclosure Schedule.
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ARTICLE II.
THE MERGERS
2.1. The MHC Merger.
(a) Surviving MHC. Subject to the terms and conditions of this
Agreement, at the MHC Effective Time, Westborough MHC shall merge with and
into AVB in accordance with Massachusetts law, the separate corporate
existence of Westborough MHC shall cease and AVB shall survive and
continue to exist as a mutual holding company incorporated under the laws
of The Commonwealth of Massachusetts (AVB, as the surviving corporation in
the MHC Merger, is sometimes referred to in this Agreement as "Surviving
MHC").
(b) Name. The name of Surviving MHC shall be "Assabet Valley
Bancorp."
(c) Corporate Charter and Bylaws. The corporate charter and bylaws
of Surviving MHC immediately after the MHC Merger shall be AVB's Charter
and Bylaws as in effect immediately prior to the MHC Merger, as amended as
set forth in Section 2.1(c) of Westborough's Disclosure Schedules or as
otherwise mutually agreed upon. The purpose of Surviving MHC shall be to
engage in activities permitted to bank holding companies under the BHCA
and the laws of The Commonwealth of Massachusetts.
(d) Trustees, Corporators and Officers of Surviving MHC. Effective
as of the MHC Effective Time, (i) all of the trustees and corporators of
Westborough MHC as of the date immediately prior to the Effective Date
shall be elected or appointed to the Surviving MHC Board of Trustees and
Board of Corporators, and (ii) the officers of the Surviving MHC shall be
the persons serving as officers of AVB immediately prior to the Effective
Date, plus JFM, who shall be elected or appointed as President and Chief
Executive Officer of the Surviving MHC.
2.2. The Mid-Tier Merger.
(a) Surviving Corporation. Subject to the terms and conditions of
this Agreement, effective at the Mid-Tier Effective Time, Merger Sub shall
merge with and into Westborough Financial in accordance with the MBCA, the
separate corporate existence of Merger Sub shall cease and Westborough
Financial shall survive and continue to exist as a corporation
incorporated under the laws of The Commonwealth of Massachusetts
(Westborough Financial, as the surviving corporation in the Mid-Tier
Merger, is sometimes referred to in this Agreement as "Surviving
Corporation").
(b) Name. The name of Surviving Corporation shall be "HudWest
Financial Services, Inc."
(c) Corporate Charter and Bylaws. The corporate charter and bylaws
of Surviving Corporation immediately after the Mid-Tier Merger shall be
the Merger Sub Charter and the Merger Sub Bylaws as in effect immediately
prior to the Mid-Tier Merger. The purpose of Surviving Corporation shall
be to engage in activities permitted to bank holding companies under the
BHCA and the laws of The Commonwealth of Massachusetts.
(d) Directors and Officers of Surviving Corporation. Effective as of
the Mid-Tier Effective Time, the individuals specified on Annex C hereto
shall be elected or appointed to Surviving Corporation's Board of
Directors, and the officers of Surviving Corporation shall be those
individuals, in such capacities, as are specified on such Annex C. To the
extent not specified
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on such Annex C, Assabet and Westborough agree prior to the Mid-Tier
Effective Time to appoint or elect such officers and/or directors as
mutually agreed upon. In any event, JFM shall be the President and CEO of
Surviving Corporation and a member of its Board of Directors.
2.3. The Bank Merger.
(a) Assabet and Westborough agree to take all action necessary and
appropriate to carry out the Bank Merger, including causing the entering
into of an appropriate merger agreement (the "Bank Merger Agreement"), to
cause Westborough Bank to merge, either directly or indirectly, by use of
one or more interim corporations, with and into Xxxxxx in accordance with
applicable laws and regulations and the terms of the Bank Merger Agreement
and as soon as practicable after consummation of the MHC Merger and the
Mid-Tier Merger. The Bylaws of Xxxxxx shall be amended as set forth in
Section 2.3(a) of Westborough's Disclosure Schedules or as otherwise
mutually agreed upon.
(b) Effective as of the effective time of the Bank Merger (the "Bank
Effective Time"), nine of the directors of Westborough Financial who are
in office as of the date immediately prior to the Effective Date (to be
chosen by Westborough in consultation with Xxxxxx, but one of whom shall
be JFM) shall be elected or appointed to New Bank's Board of Directors.
The remaining directors of New Bank shall be fifteen of the Persons (to be
chosen by AVB in consultation with Westborough) who are serving as
directors of Xxxxxx immediately prior to the Effective Date.
(c) As of the Bank Effective Time, the committees of New Bank's
Board of Directors shall be reconstituted so that such committees shall be
comprised a number of directors from Westborough Financial and a number of
directors from Xxxxxx as specified on Annex D hereto. To the extent not
specified on Annex D, Assabet and Westborough shall mutually agree prior
to the Bank Effective Time to reconstitute the committees of New Bank's
Board of Directors, taking into account to the extent practicable the
specific skills, education and experience of the various designees, and
taking into account a desire to divide among the committees the former
directors of Westborough Financial who are joining New Bank's Board of
Directors. Effective as of the Mid-Tier Effective Time, all officers of
Westborough Bank except for those who have entered into Payments and
Waiver Agreements in accordance with Section 7.12 will be offered jobs as
officers of New Bank at a rate of pay equal to or exceeding the rate of
pay at Westborough Bank.
(d) As of the Bank Effective Time, JFM shall be elected or appointed
as an Executive Vice President and a member of the Board of Directors of
New Bank and a member of New Bank's Executive Committee.
2.4. Authorized Capital Stock. The authorized capital stock of Surviving
Corporation upon consummation of the Mid-Tier Merger shall be as set forth in
the Merger Sub Charter immediately prior to the Mid-Tier Merger. The total
authorized capital stock of Surviving Corporation shall be one thousand (1,000)
shares of common stock, $0.01 par value.
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2.5. Effect of the MHC Merger and Mid Tier Merger.
(a) At the MHC Effective Time, the effect of the MHC Merger shall be
as provided in this Agreement and in the applicable provisions of the laws
of The Commonwealth of Massachusetts. Without limiting the generality of
the foregoing, and subject thereto, at the MHC Effective Time, all the
property, rights, privileges, powers and franchises of Westborough MHC and
AVB shall vest in Surviving MHC, and all debts, liabilities, obligations,
restrictions, disabilities and duties of Westborough MHC and AVB shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of Surviving MHC.
(b) At the Mid-Tier Effective Time, the effect of the Mid-Tier
Merger shall be as provided in this Agreement and in the applicable
provisions of the laws of The Commonwealth of Massachusetts. Without
limiting the generality of the foregoing, and subject thereto, at the
Mid-Tier Effective Time, all the property, rights, privileges, powers and
franchises of Westborough Financial and Merger Sub shall vest in Surviving
Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of Westborough Financial and Merger Sub shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of Surviving Corporation.
2.6. Additional Actions.
(a) If, at any time after the MHC Effective Time, Surviving MHC
shall consider that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect or confirm, of
record or otherwise, in Surviving MHC its right, title or interest in, to
or under any of the rights, properties or assets of Westborough MHC and
AVB acquired or to be acquired by Surviving MHC as a result of, or in
connection with, the MHC Merger, or (ii) otherwise carry out the purposes
of this Agreement, Westborough MHC and AVB, and its proper officers and
directors, shall be deemed to have granted to Surviving MHC an irrevocable
power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper
to vest, perfect or confirm title to and possession of such rights,
properties or assets in Surviving MHC and otherwise to carry out the
purposes of this Agreement, and the proper officers and directors of
Surviving Corporation MHC are fully authorized in the name of Surviving
MHC or otherwise to take any and all such action.
(b) If, at any time after the Mid-Tier Effective Time, Surviving
Corporation, shall consider that any further assignments or assurances in
law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in Surviving Corporation its right, title
or interest in, to or under any of the rights, properties or assets of
Westborough Financial and Merger Sub acquired or to be acquired by
Surviving Corporation as a result of, or in connection with, the Mid-Tier
Merger, or (ii) otherwise carry out the purposes of this Agreement,
Westborough Financial and Merger Sub, and its proper officers and
directors, shall be deemed to have granted to Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper
deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in Surviving Corporation and otherwise to carry out
the purposes of this Agreement, and the proper officers and directors of
Surviving Corporation are fully authorized in the name of Surviving
Corporation or otherwise to take any and all such action.
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2.7. Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in Article VIII (other than those conditions that by their nature
are to be satisfied at the consummation of the MHC Merger, but subject to
the fulfillment or waiver of those conditions), the parties shall cause
articles of merger relating to the MHC Merger (the "MHC Articles of
Merger") to be filed with the Secretary of State of The Commonwealth of
Massachusetts pursuant to the applicable provisions of Massachusetts Law
on (i) a date selected by AVB after such satisfaction or waiver which is
no later than seven Business Days after such satisfaction or waiver, or
(ii) such other date to which the parties may agree in writing. The MHC
Merger provided for in this Agreement shall become effective upon such
filing or on such date as may be specified therein. The date of such
filing or such later effective date is in this Agreement called the
"Effective Date." The "MHC Effective Time" shall be the time of such
filings or as set forth in such filings. The filing of the MHC Articles of
Merger shall be made on the Closing Date.
(b) Subject to the satisfaction or waiver of the conditions set
forth in Article VIII (other than those conditions that by their nature
are to be satisfied at the consummation of the Mid-Tier Merger, but
subject to the fulfillment or waiver of those conditions), the parties
shall cause articles of merger relating to the Mid-Tier Merger (the
"Mid-Tier Articles of Merger") to be filed with the Secretary of State of
The Commonwealth of Massachusetts pursuant to the MBCA on the Effective
Date. The Mid-Tier Merger provided for in this Agreement shall become
effective upon such filing or on such date as may be specified therein.
The "Mid-Tier Effective Time" shall be the time of such filings or as set
forth in such filings, which shall be immediately after the MHC Effective
Time. The filing of the Mid-Tier Articles of Merger shall be made on the
Closing Date.
(c) A closing (the "Closing") shall take place on the date on which
the MHC Articles of Merger and the Mid-Tier Articles of Merger are to be
filed at 10:00 a.m. Eastern Time at the principal offices of Xxxxx Xxxx
LLP, Boston, Massachusetts, or at such other place, at such other time, or
on such other date as the parties may mutually agree upon (such date, the
"Closing Date"). At the Closing, there shall be delivered to AVB and
Westborough Financial the opinions, certificates and other documents
required to be delivered under Article VIII hereof.
2.8. Tax Consequences. It is intended that each of the MHC Merger, the
Mid-Tier Merger, and the Bank Merger shall qualify as a reorganization within
the meaning of Section 368(a) of the Code, and that this Agreement shall
constitute a "plan of reorganization" as that term is used in Sections 354 and
361 of the Code. From and after the date of this Agreement and until the Closing
Date, each party hereto shall use its reasonable best efforts to cause the MHC
Merger to qualify, and will not knowingly take any action, cause any action to
be taken, fail to take any action or cause any action to fail to be taken which
action or failure could prevent the MHC Merger from qualifying as a
reorganization under Section 368(a) of the Code. Following the Closing, no party
hereto shall knowingly take any action, cause any action to be taken, fail to
take any action or cause any action to fail to be taken, which action or failure
to act could cause any of the MHC Merger, the Mid-Tier Merger or the Bank Merger
to fail to qualify as a reorganization under Section 368(a) of the Code.
Westborough MHC and AVB each hereby agree to deliver certificates substantially
in compliance with Internal Revenue Service published advance ruling guidelines,
with customary exceptions and modifications thereto, to enable counsel to
deliver the legal opinions contemplated by Section 8.1(e), which certificates
shall be effective as of the date of such opinions.
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ARTICLE III.
CONVERSION OF SHARES; CONSIDERATION; PAYMENT PROCEDURES
3.1. Conversion of Shares. At the Mid-Tier Effective Time, by virtue of
the Mid-Tier Merger and without any action on the part of a holder of Equity
Interests of Westborough Financial or Merger Sub:
(a) Each share of Westborough Financial Common Stock held of record
immediately prior to the Mid-Tier Effective Time by Westborough MHC,
Westborough Financial, Merger Sub, AVB or any Subsidiary of Westborough
Financial or of AVB shall be canceled and retired at the Mid-Tier
Effective Time and no consideration shall be issued in exchange therefor.
(b) Each share of common stock of Merger Sub (the "Merger Sub Common
Stock") issued and outstanding immediately prior to the Mid-Tier Effective
Time shall be canceled and retired at the Mid-Tier Effective Time and
automatically converted into one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value, of Surviving
Corporation. Each certificate evidencing ownership of a number of shares
of Merger Sub Common Stock shall be deemed to evidence ownership of the
same number of shares of common stock, $0.01 par value, of Surviving
Corporation.
(c) Subject to Sections 3.2 and 3.5, each of the Outstanding Shares
(other than shares to be canceled in accordance with Section 3.1(a)) shall
be converted into the right to receive cash in the amount of $35.00 (the
"Per Share Merger Consideration").
3.2. Payment Procedures.
(a) Immediately prior to the Mid-Tier Effective Time, AVB shall
deposit, or shall cause to be deposited, with Registrar and Transfer
Company (the "Paying Agent"), for the benefit of the holders of
Outstanding Shares, for exchange in accordance with this Section 3.2, cash
in an amount equal to the Aggregate Merger Consideration (such cash shall
hereinafter be referred to as the "Exchange Fund").
(b) As soon as practicable after the Mid-Tier Effective Time, and in
no event later than five Business Days thereafter (which date shall be
referred to as the "Mailing Date"), AVB shall cause the Paying Agent to
mail to each holder of record of a Certificate or Certificates at the
Mid-Tier Effective Time, a form letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent) (the "Transmittal Form") containing instructions for use in
effecting the surrender of the Certificates. Westborough Financial shall
have the right to approve the Transmittal Form.
(c) Each Transmittal Form shall permit the holder (or in the case of
nominee record holders, the beneficial owner through appropriate and
customary documentation and instructions) to receive the Per Share Merger
Consideration for each share of Westborough Financial Common Stock. A
Transmittal Form shall be deemed properly completed only if accompanied by
one or more Certificates representing all shares of Westborough Financial
Common Stock covered by such Transmittal Form, together with duly executed
transmittal materials included with the
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Transmittal Form. Neither AVB nor the Paying Agent shall be under any
obligation to notify any Person of any defect in a Transmittal Form.
(d) Upon surrender of a Certificate for exchange and cancellation to
the Paying Agent, together with the Transmittal Form, duly executed, the
holder of such Certificates shall be entitled to receive in exchange
therefor a check representing the amount of cash which such holder has the
right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article III.
(e) At and after the Mid-Tier Effective Time, there shall be no
transfers on the stock transfer books of Westborough Financial of the
shares of Westborough Financial Common Stock which were outstanding
immediately prior to the Mid-Tier Effective Time and if, after the
Mid-Tier Effective Time, Certificates are presented for transfer, they
shall be canceled against delivery of the Per Share Merger Consideration
as herein provided.
(f) The provisions of this Article III assume that there will be
598,171 shares of Westborough Financial Common Stock that are Outstanding
Shares or are issuable upon the exercise of Equity Interests through
options or warrants or otherwise, at the Mid-Tier Effective Time. If there
is any change in this number as of the Mid-Tier Effective Time, the
provisions of this Article III, including the Aggregate Merger
Consideration and the Per Share Merger Consideration, will be
appropriately adjusted.
3.3. Return of Exchange Fund. Any portion of the Exchange Fund that
remains unclaimed by the former shareholders of Westborough Financial six months
after the Mid-Tier Effective Time shall be delivered to AVB. Any former
shareholders of Westborough Financial who have not theretofore complied with
this Article III shall thereafter look only to AVB for payment of any
consideration payable as a result of the Mid-Tier Merger pursuant to this
Agreement, without any interest thereon. None of AVB, Westborough Financial, the
Paying Agent or any other Person shall be liable to any former holder of shares
of Westborough Financial Common Stock for any shares of stock or cash properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
3.4. Rights as Shareholders; Stock Transfers. At the Mid-Tier Effective
Time, holders of Westborough Financial Stock shall cease to be, and shall have
no rights as, shareholders of Westborough Financial other than to receive the
consideration provided under this Article III. After the Mid-Tier Effective
Time, there shall be no transfers on the stock transfer books of Westborough
Financial or Surviving Corporation of shares of Westborough Financial Stock.
3.5. Dissenting Shares. Each outstanding share of Westborough Financial
Common Stock, the holder of which has perfected his right to dissent under the
MBCA and has not effectively withdrawn or lost such right as of the Mid-Tier
Effective Time (the "Dissenting Shares"), shall not be converted into or
represent a right to receive Per Share Merger Consideration. Rather, the holder
thereof shall be entitled only such rights as are granted in accordance with the
provisions of [SECTIONS]13.01 - 13.31, inclusive, of the MBCA. Westborough
Financial shall give AVB (i) prompt notice of any demands filed pursuant to
[SECTIONS]13.01 - 13.31, inclusive, of the MBCA received by Westborough
Financial, withdrawals of such demands, and any other instruments served in
connection with such demands pursuant to the MBCA and
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received by Westborough Financial, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to demands under the MBCA,
consistent with the obligations of Westborough Financial thereunder. Westborough
Financial shall not, except with the prior written consent of AVB, (x) make any
payment with respect to, or to any Person making, any such demand, (y) offer to
settle or settle any such demand, or (z) waive any failure to timely deliver a
written demand in accordance with the MBCA. If any holder of Dissenting Shares
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent (which shares are referred to as "Unperfected Dissenting Shares") at any
time, the Unperfected Dissenting Shares held by such holder shall be converted
on a share-by-share basis into the right to receive the Per Share Merger
Consideration in accordance with the applicable provisions of this Agreement, as
AVB or the Paying Agent shall determine, without any interest thereon. Any
payments made in respect of Dissenting Shares shall be made by Surviving
Corporation.
3.6. Withholding Rights. AVB (through the Paying Agent, if applicable)
shall be entitled to deduct and withhold from any amounts otherwise payable
pursuant to this Agreement, to any holder of Westborough Financial Equity
Interests, such amounts as AVB is required under the Code or any state, local or
foreign tax law or regulation thereunder to deduct and withhold with respect to
the making of such payment, if any. Any amounts so withheld shall be treated for
all purposes of this Agreement as having been paid to the holder of Westborough
Financial Equity Interests in respect of which such deduction and withholding
was made by AVB.
3.7. Stock Options. Prior to the Mid-Tier Effective Time, Westborough
Financial shall, in accordance with the terms of the Westborough Financial Stock
Option Plan, provide written notice to each holder of a Westborough Financial
Option (whether or not such stock option is then vested or exercisable), that
such Westborough Financial Option shall be, as at the date of such notice,
exercisable in full and that such Westborough Financial Option will be
automatically cancelled at the Mid-Tier Effective Time, and that, if such
Westborough Financial Option is not exercised or otherwise terminated before the
Mid-Tier Effective Time, such holder shall be entitled to receive, in
cancellation of such Westborough Financial Option, a cash payment from
Westborough Financial at the Closing in an amount equal to the excess of the Per
Share Merger Consideration over the per share exercise price of such Westborough
Financial Option, multiplied by the number of shares of Westborough Financial
Common Stock covered by such Westborough Financial Option, subject to any
required withholding of taxes. Subject to the foregoing, the Westborough
Financial Stock Option Plan and all options issued and outstanding thereunder
shall terminate at the Mid-Tier Effective Time. Westborough Financial hereby
represents and warrants to AVB that the maximum number of shares subject to
issuance pursuant to the exercise of stock options issued and outstanding under
the Westborough Financial Stock Option Plan or otherwise is not and shall not
be, at or prior to the Mid-Tier Effective Time, more than 30,290.
ARTICLE IV.
ACTIONS PENDING MERGER
4.1. Agreements of Westborough.
(a) Westborough covenants and agrees that, except as expressly
contemplated by this Agreement, between the date of this Agreement and the
Mid-Tier Effective Time, unless AVB
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shall otherwise agree in writing, (i) the business of Westborough shall be
conducted only in, and Westborough shall not take any action except in,
the usual, regular and ordinary course of business and in a manner
consistent with prudent banking practice and generally to conduct its
business in substantially the same way as heretofore conducted, and
without limiting the foregoing, to continue to operate in the same
geographic markets serving the same market segments and maintain its
current loan, deposit, banking products and service programs on
substantially the same terms and conditions, (ii) Westborough shall use
its reasonable best efforts to preserve the business organization of
Westborough, to keep available the present services of the officers,
employees and consultants of Westborough and to preserve the current
relationships and goodwill of Westborough with customers, suppliers and
other Persons with which Westborough has business relationships, and (iii)
Westborough shall take no action which would materially adversely affect
or materially delay the ability of Westborough to obtain any necessary
approvals of any Governmental Authority required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement or the Bank Merger Agreement.
(b) By way of amplification and not limitation of Section 4.1(a)
above, except as expressly contemplated by this Agreement, Westborough
shall not do, nor shall Westborough permit any of its Affiliates, between
the date of this Agreement and the Mid-Tier Effective Time, directly or
indirectly, to do, or publicly announce an intention to do, any of the
following without the prior written consent of AVB through its
representative, its Chief Executive Officer (which consent shall not be
unreasonably withheld):
(i) Capital Stock. Other than pursuant to the Equity Interests
set forth in Section 5.2 of Westborough's Disclosure Schedules and
outstanding on the date of this Agreement, (i) issue, sell or
otherwise permit to become outstanding, or authorize the creation
of, any additional shares of Westborough Financial Stock or any
other Equity Interests in Westborough, or (ii) permit any additional
shares of Westborough Financial Stock or other Equity Interests in
Westborough to become subject to grants of employee or director
stock options or other Equity Interests.
(ii) Dividends; Etc. (i) Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any
distribution on any shares of Westborough Financial Stock, other
than regular, quarterly cash dividends at a rate not in excess of
$0.06 per share on Westborough Financial Common Stock, declared and
paid in accordance with past practice (including with respect to the
timing of such declaration and payment), or (ii) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, or issue any other securities in respect of, in
lieu of, or in substitution for, any shares of its capital stock or
any securities or obligations convertible into or exchangeable for
any shares of its capital stock (other than pursuant to the Equity
Interests set forth in Section 5.2 of Westborough's Disclosure
Schedules and outstanding on the date of this Agreement).
(iii) Contracts. Except as set forth in Section 4.1(b)(iii) of
Westborough's Disclosure Schedules, or except in the ordinary course
of business consistent with past practice, as required by law, as
expressly contemplated by this Agreement or as otherwise permitted
under this Section 4.1, enter into or terminate any Material
Contract or amend or modify any of its existing Material Contracts.
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(iv) Hiring. Hire any Person as an employee of Westborough or
promote any employee, except (i) to satisfy contractual obligations
existing as of the date of this Agreement and set forth in Section
4.1(b)(iv) of Westborough's Disclosure Schedules, and (ii) Persons
hired to fill any vacancies arising after the date of this Agreement
and whose employment is terminable at the will of Westborough,
provided that Westborough shall not in any event hire any Person who
would have a base salary, including any guaranteed bonus or any
similar bonus, considered on an annual basis of more than $75,000.
(v) Benefit Plans. Enter into, establish, adopt, renew or
amend (except (i) as may be required by applicable law including,
but not limited to, Section 409A of the Code, (ii) to satisfy
contractual obligations existing as of the date of this Agreement
and set forth in Section 4.1(b)(v) of Westborough's Disclosure
Schedules, or (iii) as otherwise expressly contemplated by this
Agreement) 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 (or similar
arrangement) related thereto, in respect of any director, officer or
employee of Westborough (provided, however, that the restrictions
contained in this Section 4.1(b)(v) concerning renewals shall apply
only to those Benefit Plans with a term greater than one (1) year)
or take any action to accelerate the vesting or exercisability of
stock options, restricted stock or other compensation or benefits
payable thereunder except pursuant to this Agreement.
(vi) Dispositions. Sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits,
business or properties, or cancel or release any indebtedness of a
Person or any claims held by any Person, except in the ordinary
course of business consistent with past practice.
(vii) Compensation; Employment Agreements. Except as
contemplated by this Agreement or by Section 4.1(b)(vii) of
Westborough's Disclosure Schedules, enter into or amend or renew any
employment, consulting, severance or similar agreements or
arrangements with any trustee, director, officer or employee of
Westborough or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments), except for
(i) normal individual increases in compensation to employees in the
ordinary course of business consistent with past practice, provided
that such increases shall not result in an annual adjustment in
total compensation of more than 4% for any individual or 4% in the
aggregate for all employees of Westborough, (ii) other changes that
are required by applicable law, including, but not limited to,
Section 409A of the Code, (iii) bonuses payable pursuant to the
bonus plan for Westborough set forth (and not exceeding in the
aggregate the amount set forth) in Section 4.1(b)(vii) of
Westborough's Disclosure Schedules, and (iv) payments pursuant to
Section 7.10(g) hereof.
(viii) Environmental. Foreclose upon or take a deed or title
to any commercial real estate without first conducting a Phase I
environmental assessment of the property or foreclose upon any
commercial real estate if such environmental assessment
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indicates the presence of Hazardous Substance in amounts which, if
such foreclosure were to occur, could be material.
(ix) Insurance. Renew, amend or permit to expire, lapse or
terminate, or knowingly take any action reasonably likely to result
in the creation, renewal, amendment, expiration, lapse or
termination of any insurance policies referred to in Section 5.29
hereof; provided, however, that the restrictions contained in this
Section 4.1(b)(ix) concerning renewal shall apply only to those
insurance policies with a term greater than one (1) year or for
which a fully earned premium has been or will be or is required to
be paid at the commencement of the coverage period (or such renewal
coverage period).
(x) Parachute Payments.
(A) The provisions of this Section 4.1(b)(x)(A) shall
apply to payments to or for the benefit of Persons other than
JFM, Xxxx X. Xxxxxxxxxx and Xxxxxx X. Xxxxxxx. Notwithstanding
anything to the contrary contained in this Agreement, in no
event shall Westborough or any of its Subsidiaries take any
action or make any payments that could result, in the
reasonable opinion of AVB, Westborough and their professional
advisors, either individually or in the aggregate, in the
payment of an "excess parachute payment" within the meaning of
Section 280G of the Code or that could result, in the
reasonable opinion of Assabet or its professional advisors,
either individually or in the aggregate, in payments that
would be nondeductible pursuant to Section 162(m) of the Code;
(B) In no event shall Westborough or any of its
Subsidiaries pay (or agree to pay) to or for the benefit of
JFM, Xxxx X. Xxxxxxxxxx or Xxxxxx X. Xxxxxxx any amount that
could be deemed to be in the nature of compensation other
than (i) regular incremental payments of his or her salary,
management bonus and fringe benefits of general applicability
at the rates and under the programs now in effect and
disclosed in Section 4.1(b)(x) of Westborough's Disclosure
Schedules, (ii) reimbursement of his or her business expenses
in the ordinary course consistent with past practices, and
(iii) payments required to be made to such individual under
the applicable Payments and Waiver Agreement (including
payments under all "Permitted Arrangements" as defined under
the applicable Payments and Waiver Agreements).
(xi) 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) all or
any portion of the assets, business, deposits or properties of any
other entity, including by merging or consolidating with, or by
purchasing an Equity Interest in or a portion of the assets of, or
by any other manner, any business or any corporation, partnership,
joint venture, other business organization or any division thereof,
or any material amount of assets, other than in the ordinary course
of business consistent with past practice.
(xii) Investments. Make (i) any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, (ii) any material purchase
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of any property or assets of any other Person, or (iii) any
commitment to make such an investment or purchase other than in the
ordinary course of business consistent with past practice.
(xiii) Capital Expenditures. Other than as set forth in
Section 4.1(b)(xiii) of Westborough's Disclosure Schedules, make
any capital expenditures other than capital expenditures in the
ordinary course of business consistent with past practice in
amounts not exceeding $25,000 individually or $100,000 in the
aggregate.
(xiv) Governing Documents. Amend the Westborough Financial
Charter or Westborough Financial Bylaws or the corporate charter or
bylaws (or equivalent documents) of any other Westborough entity.
(xv) 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 GAAP.
(xvi) Claims. Other than as set forth in Section 4.1(b)(xvi)
of Westborough's Disclosure Schedules, enter into any settlement or
similar agreement with respect to any action, suit, proceeding,
order or investigation to which Westborough is or becomes a party
after the date of this Agreement, which settlement, agreement or
action involves payment by Westborough of an amount which exceeds
$25,000 individually or $100,000 in the aggregate and/or would
impose any material restriction on the business of Westborough.
(xvii) Derivatives Contracts. Enter into any Derivatives
Contract.
(xviii) Indebtedness. Incur any indebtedness for borrowed
money (other than deposits, federal funds purchased, cash
management accounts, borrowings from the Federal Home Loan Bank of
Boston and securities sold under agreements to repurchase, in each
case in the ordinary course of business consistent with past
practice), including issuing any debt securities, or assume,
guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other Person, or renewals
thereof, other than in the ordinary course of business consistent
with past practice.
(xix) Taxes. Other than as set forth in Section 4.1(b)(xix)
of Westborough's Disclosure Schedules, or with the cooperation of
and in consultation with AVB, make or change any material Tax
election, file any material amended Tax Return, enter into any
material closing agreement, settle or compromise any material
liability with respect to Taxes, agree to any material adjustment
of any Tax attribute, file any claim for a material refund of
Taxes, or consent to any extension or waiver of the limitation
period applicable to any material Tax claim or assessment;
provided, that, for purposes of this subparagraph (xix), "material"
shall mean affecting or relating to $250,000 of taxable income.
(xx) Lending. Make (i) any commercial or commercial real
estate loan that exceeds (or causes the total loans to one borrower
or related group of borrowers to
-19-
exceed) $1,000,000, (ii) any unsecured loan that exceeds $100,000,
(iii) any residential loan that exceeds $1,000,000, or (iv) any
other loan that exceeds $1,000,000.
(xxi) Charitable Foundation. Make any contributions to the
Westborough Savings Charitable Foundation, Inc.
(xxii) Investment Securities Portfolio. Other than in the
ordinary course of business, restructure or materially change its
investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the portfolio
is classified or reported.
(xxiii) Real Estate. Make any new or additional equity
investment in real estate or commitment to make any such investment
or in any real estate development project, other than (i) in
connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of
business consistent with past practice, or (ii) as required by
agreements or instruments in effect as of the date of this
Agreement.
(xxiv) Loan and Investment Policies. Change in any material
respect its loan or investment policies and procedures, except as
required by regulatory authorities.
(xxv) Leases. Enter into or renew, amend or terminate, or
give notice of a proposed renewal, amendment or termination of, or
make any commitment with respect to (i) any lease, license,
contract, agreement or commitment for office space, operations
space or branch space, regardless of where located or to be
located, to which Westborough is, or may be, a party or by which
Westborough or any Westborough property is bound, other than in the
ordinary course and consistent with past practices, or (ii)
regardless of whether in the ordinary course or consistent with
past practices, any such lease, license, contract, agreement or
commitment involving an aggregate payment by or to Westborough of
more than $25,000 or having a term of one year or more from the
date of execution.
(xxvi) Defaults. Commit any act or omission which constitutes
a material breach or default by Westborough under any agreement
with any Governmental Authority or under any material contract or
material license to which Westborough is a party or by which any of
Westborough's properties is bound.
(xxvii) Adverse Actions. 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 at or prior to the Mid-Tier
Effective Time, (y) any of the conditions to the MHC Merger and the
Mid-Tier Merger set forth in Article VIII not being satisfied, or
(z) a material violation of any provision of this Agreement or the
Bank Merger Agreement, except, in each case, as may be required by
applicable law or regulation.
(xxviii) Commitments. Enter into any contract with respect
to, or otherwise agree or commit to do, any of actions addressed to
in Article IV.
-20-
4.2. Agreements of Assabet.
(a) Assabet covenants and agrees that, except as expressly
contemplated by this Agreement, between the date of this Agreement and
the Mid-Tier Effective Time, unless Westborough Financial shall otherwise
agree in writing, (i) the business of Assabet shall be conducted only in,
and Assabet shall not take any action except in, the usual, regular and
ordinary course of business and in a manner consistent with prudent
banking practice and generally to conduct its business in substantially
the same way as heretofore conducted, and without limiting the foregoing,
to continue to operate in the same geographic markets serving the same
market segments and maintain its current loan, deposit, banking products
and service programs on substantially the same terms and conditions, (ii)
Assabet shall use its reasonable best efforts to preserve the business
organization of Assabet, to keep available the present services of the
officers, employees and consultants of Assabet and to preserve the
current relationships and goodwill of Assabet with customers, suppliers
and other Persons with which Assabet has business relationships, and
(iii) Assabet shall take no action which would materially adversely
affect or materially delay the ability of Assabet to obtain any necessary
approvals of any Governmental Authority required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement or the Bank Merger Agreement.
(b) By way of amplification and not limitation of Section 4.2(a)
above, except as expressly contemplated by this Agreement, Assabet shall
not do, nor shall Assabet permit any of its Affiliates, between the date
of this Agreement and the Mid-Tier Effective Time, directly or
indirectly, to do, or publicly announce an intention to do, any of the
following without the prior written consent of Westborough Financial
through its representative, its Chief Executive Officer (which consent
shall not be unreasonably withheld):
(i) Contracts. Except in the ordinary course of business
consistent with past practice, as required by law, as expressly
contemplated by this Agreement or as otherwise permitted under this
Section 4.2, enter into or terminate any Material Contract (as
defined in Section 5.13) or amend or modify any of its existing
Material Contracts.
(ii) Hiring. Hire any Person as an employee of Assabet or
promote any employee, except (i) to satisfy contractual obligations
existing as of the date of this Agreement and set forth in Section
4.2(b)(ii) of Assabet's Disclosure Schedules, and (ii) Persons
hired to fill any vacancies arising after the date of this
Agreement and whose employment is terminable at the will of
Assabet, provided that Assabet shall not in any event hire any
Person who would have a base salary, including any guaranteed bonus
or any similar bonus, considered on an annual basis of more than
$75,000.
(iii) Benefit Plans. Enter into, establish, adopt, renew or
amend (except (i) as may be required by applicable law including,
but not limited to, Section 409A of the Code, (ii) to satisfy
contractual obligations existing as of the date of this Agreement
and set forth in Section 4.2(b)(iii) of Assabet's Disclosure
Schedules, or (iii) as otherwise expressly contemplated by this
Agreement) 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 (or similar
arrangement) related thereto, in respect of any director,
-21-
officer or employee of Assabet (provided, however, that the
restrictions contained in this Section 4.2(b)(iii) concerning
renewals shall apply only to those Assabet Benefit Plans with a
term greater than one (1) year) or take any action to accelerate
the vesting or payment of any other compensation or benefits
payable thereunder except pursuant to this Agreement.
(iv) Dispositions. Sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits,
business or properties, or cancel or release any indebtedness of a
Person or any claims held by any Person, except in the ordinary
course of business consistent with past practice.
(v) Compensation; Employment Agreements. Except as
contemplated by this Agreement or by Section 4.2(b)(v) of Assabet's
Disclosure Schedules, enter into or amend or renew any employment,
consulting, severance or similar agreements or arrangements with
any trustee, director, officer or employee of Assabet or grant any
salary or wage increase or increase any employee benefit (including
incentive or bonus payments), except for (i) normal individual
increases in compensation to employees in the ordinary course of
business consistent with past practice, provided that other than as
set forth in Section 4.2(b)(v) of Assabet's Disclosure Schedules,
such increases shall not result in an annual adjustment in total
compensation of more than 4% for any individual or 4% in the
aggregate for all employees of Assabet, (ii) other changes that are
required by applicable law, including, but not limited to, Section
409A of the Code, or (iii) bonus payments in the ordinary course of
business consistent with past practices.
(vi) Environmental. Foreclose upon or take a deed or title to
any commercial real estate without first conducting a Phase I
environmental assessment of the property or foreclose upon any
commercial real estate if such environmental assessment indicates
the presence of Hazardous Substance in amounts which, if such
foreclosure were to occur, could be material.
(vii) Insurance. Amend or permit to expire, lapse or
terminate, or knowingly take any action reasonably likely to result
in the creation, renewal, amendment, expiration, lapse or
termination of any insurance policies referred to in Section 6.29
hereof.
(viii) 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) all or any portion of the assets, business, deposits or
properties of any other entity, including by merging or
consolidating with, or by purchasing an Equity Interest in or a
portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, other business
organization or any division thereof, or any material amount of
assets, other than in the ordinary course of business consistent
with past practice.
(ix) Investments. Make (i) any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, (ii) any material purchase of any property or assets of
any other Person, or (iii) any commitment to make such an
-22-
investment or purchase other than in the ordinary course of
business consistent with past practice.
(x) Securities. Purchase any securities except securities
rated "A" or higher by either Standard & Poor's Ratings Services or
Xxxxx'x Investors Service and otherwise in the ordinary course of
business consistent with past practice.
(xi) Capital Expenditures. Other than as set forth in Section
4.2(b)(xi) of Assabet's Disclosure Schedules, make any capital
expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding
$25,000 individually or $200,000 in the aggregate.
(xii) Governing Documents. Amend the AVB Charter or AVB
Bylaws or the corporate charter or bylaws (or equivalent documents)
of any other Assabet entity.
(xiii) 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 GAAP.
(xiv) Claims. Enter into any settlement or similar agreement
with respect to any action, suit, proceeding, order or
investigation to which Assabet is or becomes a party after the date
of this Agreement, which settlement, agreement or action involves
payment by Assabet of an amount which exceeds $50,000 individually
or $200,000 in the aggregate and/or would impose any material
restriction on the business of Assabet.
(xv) Derivatives Contracts. Enter into any Derivatives
Contract.
(xvi) Indebtedness. Incur any indebtedness for borrowed money
(other than deposits, federal funds purchased, cash management
accounts, borrowings from the Federal Home Loan Bank of Boston and
securities sold under agreements to repurchase, in each case in the
ordinary course of business consistent with past practice),
including issuing any debt securities, or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other Person, or renewals thereof, other than in
the ordinary course of business consistent with past practice.
(xvii) Taxes. Other than as set forth in Section 4.2(b)(xvii)
of Assabet's Disclosure Schedules, other than with the cooperation
of and in consultation with Westborough, make or change any
material Tax election, file any material amended Tax Return, enter
into any material closing agreement, settle or compromise any
material liability with respect to Taxes, agree to any material
adjustment of any Tax attribute, file any claim for a material
refund of Taxes, or consent to any extension or waiver of the
limitation period applicable to any material Tax claim or
assessment; provided, that, for purposes of this subparagraph
(xvii), "material" shall mean affecting or relating to $250,000 of
taxable income.
(xviii) Lending. Make (i) any commercial or commercial real
estate loan that exceeds (or causes the total loans to one borrower
or related group of borrowers to
-23-
exceed) $2,000,000, (ii) any unsecured loan that exceeds $200,000,
(iii) any residential loan that exceeds $2,000,000, or (iv) any
other loan that exceeds $2,000,000.
(xix) Charitable Foundation. Make any contributions to the
Xxxxxx Savings Charitable Foundation, Inc.
(xx) Investment Securities Portfolio. Other than in the
ordinary course of business, restructure or materially change its
investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the portfolio
is classified or reported.
(xxi) Real Estate. Make any new or additional equity
investment in real estate or commitment to make any such investment
or in any real estate development project, other than (i) in
connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of
business consistent with past practice, or (ii) as required by
agreements or instruments in effect as of the date of this
Agreement.
(xxii) Loan and Investment Policies. Change in any material
respect its loan or investment policies and procedures, except as
required by regulatory authorities.
(xxiii) Leases. Enter into or renew, amend or terminate, or
give notice of a proposed renewal, amendment or termination of, or
make any commitment with respect to (i) any lease, license,
contract, agreement or commitment for office space, operations
space or branch space, regardless of where located or to be
located, to which Assabet is, or may be, a party or by which
Assabet is or any Assabet is property is bound, other than in the
ordinary course and consistent with past practices.
(xxiv) Defaults. Commit any act or omission which constitutes
a material breach or default by Assabet under any agreement with
any Governmental Authority or under any material contract or
material license to which Assabet is a party or by which any of
Assabet's properties is bound.
(xxv) Adverse Actions. 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 at or prior to the Mid-Tier
Effective Time, (y) any of the conditions to the MHC Merger or the
Mid-Tier Merger set forth in Article VIII not being satisfied, or
(z) a material violation of any provision of this Agreement or the
Bank Merger Agreement, except, in each case, as may be required by
applicable law or regulation.
(xxvi) Commitments. Enter into any contract with respect to,
or otherwise agree or commit to do, any actions addressed in
Article IV.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF WESTBOROUGH
-24-
As a material inducement to AVB, Xxxxxx and Merger Sub to enter into this
Agreement, and with the understanding that AVB, Xxxxxx and Merger Sub will be
relying thereon in consummating the Transactions, the Westborough parties,
jointly and severally, hereby represent and warrant to AVB, Xxxxxx and Merger
Sub that except as set forth in Westborough's Disclosure Schedules delivered by
Westborough to AVB on the date of this Agreement, the statements contained in
this Article V are true and correct as of the date of this Agreement and shall
be true and correct as of the Closing Date, except for representations and
warranties made as of a specific time, which shall be true and correct as of
such time. Westborough's Disclosure Schedules are arranged in sections
corresponding to the sections and subsections of this Article V, and disclosure
in one section of Westborough's Disclosure Schedules shall constitute
disclosure for all sections of Westborough's Disclosure Schedules only to the
extent to which the applicability of such disclosure is reasonably apparent.
5.1. Organization, Standing and Authority.
(a) Westborough Financial. Westborough Financial is a corporation
duly organized, validly existing and in good standing under the laws of
The Commonwealth of Massachusetts. Westborough Financial is duly
qualified to do business and is in corporate good standing in each
jurisdiction where its ownership or leasing of property or assets, or the
conduct of its business, requires it to be so qualified, except when the
failure to be so licensed or in good standing would not result in a
Material Adverse Effect. Westborough Financial has in full force and
effect all federal, state, local and foreign governmental authorizations
necessary for it to own, operate or lease its properties and assets and
to carry on its business as now conducted. Westborough Financial is a
bank holding company registered with the Federal Reserve Board under the
BHCA. The Westborough Financial Charter and Westborough Financial Bylaws,
copies of which have previously been made available to AVB, are true,
complete and correct copies of such documents in effect as of the date of
this Agreement. Westborough Financial is not in violation of any
provision of the Westborough Financial Charter or Westborough Financial
Bylaws. The minute books of Westborough Financial contain, in all
material respects, true and accurate records of all meetings held and
corporate actions taken since January 1, 2003 of Westborough Financial's
shareholders and the Westborough Financial Board (including committees of
the Westborough Financial Board), other than minutes which have not been
prepared as of the date of this Agreement.
(b) Westborough MHC. Westborough MHC is a mutual holding company
duly organized, validly existing and in good standing under the laws of
The Commonwealth of Massachusetts. Westborough MHC is duly qualified to
do business and is in corporate good standing in each jurisdiction where
its ownership or leasing of property or assets, or the conduct of its
business, requires it to be so qualified, except when the failure to be
so licensed or in good standing would not result in a Material Adverse
Effect. Westborough MHC has in full force and effect all federal, state,
local and foreign governmental authorizations necessary for it to own,
operate or lease its properties and assets and to carry on its business
as now conducted. Westborough MHC is a bank holding company registered
with the Federal Reserve Board under the BHCA. The Westborough MHC
Charter and Westborough MHC Bylaws, copies of which have previously been
made available to AVB, are true, complete and correct copies of such
documents in effect as of the date of this Agreement. Westborough MHC is
not in violation of any provision of the Westborough MHC Charter or
Westborough MHC Bylaws. The minute books of
-00-
Xxxxxxxxxxx XXX contain, in all material respects, true and accurate
records of all meetings held and corporate actions taken since January 1,
2003 of Westborough MHC's shareholders and the Westborough MHC Board of
Trustees (including committees of the Westborough MHC Board of Trustees),
other than minutes which have not been prepared as of the date of this
Agreement.
(c) Westborough Bank. Westborough Bank is a stock form savings bank
duly organized and validly existing under the laws of The Commonwealth of
Massachusetts. Westborough Bank is duly qualified to do business and is
in corporate good standing in each jurisdiction where its ownership or
leasing of property or assets, or the conduct of its business, requires
it to be so qualified, except when the failure to be so licensed or in
good standing would not result in a Material Adverse Effect. Westborough
Bank has in full force and effect all federal, state, local and foreign
governmental authorizations necessary for it to own, operate or lease its
properties and assets and to carry on its business as now conducted. The
Westborough Bank Charter and Westborough Bank Bylaws, copies of which
have previously been made available to AVB, are true, complete and
correct copies of such documents in effect as of the date of this
Agreement. Westborough Bank is not in violation of any provision of the
Westborough Bank Charter or Westborough Bank Bylaws. The minute books of
Westborough Bank contain, in all material respects, true and accurate
records of all meetings held and corporate actions taken since January 1,
2003 of Westborough Bank's shareholders and the Westborough Bank Board of
Directors (including committees of the Westborough Bank Board of
Directors), other than minutes which have not been prepared as of the
date of this Agreement. The deposit accounts of Westborough Bank are
insured by the Deposit Insurance Fund maintained by the FDIC and the
Deposit Insurance Fund of the Depositors Insurance Fund of Massachusetts
in the manner and to the maximum extent provided by applicable law, and
Westborough Bank has paid all deposit insurance premiums and assessments
required by applicable laws and regulations. Westborough Bank is not
obligated to make any payments for premiums and assessments and it has
filed all reports required by the FDIC. No proceedings for the revocation
or termination of such deposit insurance are pending or, to the best
knowledge of Westborough, threatened.
5.2. Westborough Financial Capital Stock. Westborough MHC is a mutual
holding company and has no authorized capital stock. The authorized capital
stock of Westborough Financial consists solely of 5,000,000 shares of
Westborough Financial Common Stock, of which 1,027,893 shares are held by
Westborough MHC and 567,881 shares are Outstanding Shares as of the date of
this Agreement, and 1,000,000 shares of Westborough Financial Preferred Stock,
of which no shares are outstanding. As of the date of this Agreement, no shares
of Westborough Financial Common Stock were held in treasury by Westborough
Financial. No shares of Westborough Financial Stock are held by Westborough
Financial's Subsidiaries. The outstanding shares of Westborough Financial Stock
have been duly authorized and validly issued and are fully paid and
non-assessable, and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and none of the outstanding shares of
Westborough Financial Stock have been issued in violation of the preemptive
rights of any Person. Section 5.2 of Westborough's Disclosure Schedules sets
forth, for each Westborough Financial Option, the name of the grantee, the date
of the grant, the status of the option grant as qualified or non-qualified
under Section 422 of the Code, the number of shares of Westborough Financial
Common Stock subject to each option, the number of shares of Westborough
Financial Common Stock subject to options that are currently exercisable and
the exercise price per share. Except as set forth in the preceding two
sentence(s), there are no shares of Westborough Financial Stock
-26-
reserved for issuance, Westborough Financial does not have any options,
warrants or other Equity Interests issued or outstanding, and Westborough
Financial does not have any commitment to authorize, issue or sell any
Westborough Financial Stock or other Equity Interests in Westborough Financial.
There are no outstanding contractual obligations of Westborough Financial to
repurchase, redeem or otherwise acquire any shares of capital stock of, or
other Equity Interests in, Westborough Financial or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary of Westborough Financial. Except for restricted shares
issued pursuant to the Westborough Financial Services, Inc. 2001 Recognition
and Retention Plan, all of which vest upon a change of control, there are no
shares of Westborough Financial Common Stock outstanding which are subject to
vesting over time or upon the satisfaction of any condition precedent, or which
are otherwise subject to any right or obligation of repurchase or redemption on
the part of Westborough Financial.
5.3. Subsidiaries.
(a) (1) Westborough MHC has disclosed in Section 5.3(a) of
Westborough's Disclosure Schedules a list of all of its Subsidiaries,
together with the jurisdiction of organization of each such Subsidiary
and the percentage and type of equity security owned or controlled by
Westborough MHC, (2) Westborough MHC owns approximately 64.5% of the
issued and outstanding shares of Westborough Financial, and Westborough
Financial owns, directly or indirectly, all the issued and outstanding
equity securities of each of its Subsidiaries (including Westborough
Bank), and all of such equity securities are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof, (3) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to Westborough Financial) by reason of any Equity
Interest or otherwise, (4) there are no contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or may
be bound to sell or otherwise transfer any of its equity securities
(other than to Westborough Financial or any of its wholly-owned
Subsidiaries), (5) there are no contracts, commitments, understandings,
or arrangements relating to Westborough Financial's rights to vote or to
dispose of such securities, (6) all the equity securities of Westborough
Financial's Subsidiaries held by Westborough Financial or its
Subsidiaries are fully paid and nonassessable and are owned by
Westborough Financial or its Subsidiaries free and clear of any Liens,
and (7) there are no outstanding contractual obligations of any
Subsidiary of Westborough Financial to repurchase, redeem or otherwise
acquire any shares of capital stock of, or other Equity Interests in,
Westborough Financial or any such Subsidiary or to provide funds to, or
make any investment (in the form of a loan, capital contribution or
otherwise) in, any such Subsidiary of Westborough Financial.
(b) Except for securities and other interests held in a fiduciary
capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted, Westborough Financial does
not own 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 other than Westborough Bank and its Subsidiaries and
stock in the Federal Home Loan Bank of Boston.
(c) Each of Westborough Bank's Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the
jurisdiction of its organization and is duly qualified
-27-
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, except when the failure to be so licensed or in
good standing would not result in a Material Adverse Effect.
(d) The corporate charter and bylaws, or equivalent organizational
documents, of each of Westborough Bank's Subsidiaries, copies of which
have previously been made available to AVB, are true, correct and
complete copies of such documents in effect. No Westborough Bank
Subsidiary is in violation of any provision of its corporate charter,
bylaws or equivalent organizational documents. The minute books of each
of Westborough Bank's Subsidiaries contain, in all material respects,
true and accurate records of all meetings held and corporate actions
taken since January 1, 2003 of its shareholders and Board of Directors
(including committees of its Board of Directors), other than minutes
which have not been prepared as of the date of this Agreement.
5.4. Corporate Power. Westborough has the requisite corporate power and
authority to carry on its business as it is now being conducted and to own,
lease or operate all its properties and assets; and Westborough has the
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby, subject to (i) receipt of all necessary approvals of
Governmental Authorities, (ii) the approval of this Agreement by the holders of
two-thirds of the outstanding shares of Westborough Financial Common Stock,
(iii) the approval of this Agreement by a two-thirds vote of the corporators of
Westborough MHC, and (iv) any other approvals set forth in Section 5.4 of
Westborough's Disclosure Schedules.
5.5. Corporate Authority. Subject to (i) the approval of this Agreement
by the holders of two-thirds of the outstanding shares of Westborough Financial
Common Stock, (ii) the approval of this Agreement by two-thirds of the
corporators of Westborough MHC, and (iii) any other approvals set forth in
Section 5.4 of Westborough's Disclosure Schedules, this Agreement and the
transactions contemplated hereby have been authorized by all necessary
corporate action of Westborough. The execution and delivery of this Agreement
and the other Transaction Documents, and the consummation of the transactions
contemplated hereby and thereby, have been declared advisable by, and have been
duly and validly approved by the requisite vote of, the Westborough MHC Board
of Trustees and the Westborough Financial Board. The Westborough Financial
Board (i) has directed that this Agreement and the transactions contemplated
hereby, including the Mid-Tier Merger, be submitted to the shareholders of
Westborough Financial for approval at a meeting of such shareholders, and (ii)
has recommended that the shareholders of Westborough Financial approve this
Agreement and the transactions contemplated hereby. The Westborough parties
have duly executed and delivered this Agreement and, assuming due
authorization, execution and delivery by AVB, Xxxxxx and Merger Sub, this
Agreement is a valid and legally binding obligation of the Westborough parties,
enforceable in accordance with its terms (except as 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 equity principles).
5.6. Regulatory Approvals; No Defaults.
(a) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party
are required to be made or obtained by
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Xxxxxxxxxxx in connection with the execution, delivery or performance by
the Westborough parties of this Agreement or the Bank Merger Agreement,
as applicable, or to consummate the Transactions and the other
transactions contemplated hereby and thereby, except for (A) filings of
applications or notices with, and approvals or waivers by, the Federal
Reserve Board, the FDIC, the Massachusetts Bank Commissioner, the
Depositors Insurance Fund of Massachusetts, the Massachusetts Board and
the MHPF, as required, (B) filings with the SEC and state securities
authorities in connection with the solicitation of proxies from
Westborough Financial's shareholders for approval of the Mid-Tier Merger,
(C) the filing of Articles of Merger with the Secretary of State of The
Commonwealth of Massachusetts pursuant to the MBCA, (D) the approval of
this Agreement by the holders of two-thirds of the outstanding shares of
Westborough Financial Common Stock, and (E) such corporate approvals and
such consents or approvals of, or waivers by, or filings or registrations
with, certain of the foregoing federal and state banking agencies in
connection with the MHC Merger and the Bank Merger. As of the date of
this Agreement, Westborough is not aware of any reason why the approvals
set forth above and referred to in Section 8.1(c) will not be received in
a timely manner and without the imposition of a condition, restriction or
requirement of the type described in Section 8.1(c), or that the
requisite approval of Westborough Financial's shareholders will not be
obtained.
(b) Subject to receipt of the approvals referred to in Section
5.6(a), and the expiration of related waiting periods, the execution,
delivery and performance of this Agreement and the Bank Merger Agreement,
as applicable, by the Westborough parties, and the consummation of the
Transactions and the other transactions contemplated hereby and thereby
do not and will not (A) constitute a breach or violation of, or a default
under (or, with notice or lapse of time, or both, would constitute a
default under), or give rise to any Lien, any acceleration of remedies or
performance or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture, note, bond, mortgage, deed of trust,
lease or instrument of Westborough, or to which Westborough or any of its
properties or assets is subject, affected or bound (whether as issuer,
guarantor, obligor or otherwise), (B) constitute a breach or violation
of, or a default under, the corporate charter or bylaws (or similar
governing documents) of Westborough, or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture, note, bond,
mortgage, deed of trust, lease or instrument.
5.7. Financial Statements; Reports.
(a) SEC Reports. Westborough Financial's Annual Reports on Form
10-KSB for the fiscal years ended September 30, 2005, September 30, 2004
and September 30, 2003 and all other reports (including reports on Form
10-QSB and Form 8-K), registration statements, definitive proxy
statements or information statements filed or to be filed by it
subsequent to September 30, 2003 with the SEC (collectively, Westborough
Financial's "SEC Documents"), as of the date filed or to be filed and as
amended prior to the date of this Agreement, (A) complied or will comply
in all material respects as to form with the applicable requirements
under the Securities Act or the Exchange Act, as the case may be, and (B)
did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that information as of a
later date shall be deemed to modify information as of an earlier date,
and (C) each of the balance sheets contained in or incorporated by
reference into any such
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SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated financial position of
Westborough Financial and its Subsidiaries as of its date, and (D) each
of the consolidated statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such SEC Documents
(including any related notes and schedules thereto) fairly presents, or
will fairly present, the consolidated results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of
Westborough Financial and its Subsidiaries for the periods to which they
relate, in each case in accordance with GAAP consistently applied during
the periods involved (subject, in the case of unaudited interim
statements, to normal fiscal year-end adjustments). Each of the
consolidated financial statements of Westborough Financial and its
Subsidiaries, including, in each case, the notes thereto, contained in
the Westborough Financial SEC Documents comply, and the financial
statements to be filed with the SEC by Westborough Financial after the
date of this Agreement will comply, with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. The books and records of Westborough Financial and its
Subsidiaries have been, and are being, maintained in accordance with GAAP
and applicable legal and regulatory requirements. None of Westborough
Financial's Subsidiaries is required to file any form, report or other
document with the SEC.
(b) Westborough MHC Financial Statements. The audited balance
sheets of Westborough MHC at September 30, 2005, 2004 and 2003, and the
related statements of operations, changes in retained earnings and cash
flows (along with the report of the independent auditors and notes
thereto), and the unaudited balance sheet and statements of operations,
changes in retained earnings and cash flows as of and for the nine months
ended June 30, 2006, in each case included in Section 5.7(b) of
Westborough's Disclosure Schedules, fairly present the financial position
of Westborough MHC as at such dates and the results of its operations for
the periods then ended in accordance with GAAP, subject, in the case of
the unaudited financial statements, to normal recurring year-end audit
adjustments (none of which will be material) and the absence of
footnotes.
(c) Westborough Reports. Except as set forth in Section 5.7(c) of
Westborough's Disclosure Schedules, since January 1, 2003, Westborough
MHC, Westborough Financial and their Subsidiaries have timely filed, and
subsequent to the date of this Agreement will timely file, all reports,
registrations and statements, together with any amendments required to be
made with respect thereto, that were and are required to be filed with
(i) the Federal Reserve Board, (ii) the FDIC, and (iii) any applicable
state securities or banking authorities (except, in the case of state
securities authorities, no such representation is made as to filings
which are not material) (all such reports, registrations and statements,
together with any amendments thereto and the Westborough Financial SEC
Documents, are collectively referred to in this Agreement as the
"Westborough Reports") and have paid all fees and assessments due and
payable in connection with any of the foregoing. As of the date filed or
to be filed and as amended prior to the date of this Agreement, the
Westborough Reports complied and, with respect to filings made after the
date of this Agreement, will at the date of filing comply, in all
material respects with all of the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they were
filed. Westborough Financial has made available to AVB true and complete
copies of all amendments and modifications that have not been filed by
Westborough Financial with the SEC to all agreements, documents and other
instruments that previously had been filed by Westborough Financial with
the SEC and are currently in effect. Except for normal periodic
examinations
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conducted by a Bank Regulator in the regular course of the business of
Westborough MHC, Westborough Financial and their Subsidiaries, since
January 1, 2000, no Bank Regulator has initiated any proceeding or, to
the best knowledge of Westborough, investigation into the business or
operations of Westborough MHC, Westborough Financial or any of their
Subsidiaries. Except as set forth in Section 5.7(c) of Westborough's
Disclosure Schedules, Westborough MHC, Westborough Financial and their
Subsidiaries have resolved all material violations, criticisms or
exceptions by any Bank Regulator with respect to any such normal periodic
examination.
(d) Disclosure Controls and Procedures. Westborough Financial has
established and maintains disclosure controls and procedures as required
by Rule 13a-15 under the Exchange Act. As of the end of the period
covered by each applicable SEC Document, Westborough Financial has
conducted an evaluation under the supervision and with the participation
of its management, including Westborough Financial's Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design
and operation of its disclosure controls and procedures, and has
concluded that its disclosure controls and procedures are effective to
ensure that information required to be disclosed in its SEC Document is
made known to them by others within Westborough Financial on a timely
basis, and in accordance with the requirements of the SEC's rules,
regulations and forms. There are no significant deficiencies in the
design or operation of Westborough Financial's internal controls, there
are no material weaknesses in Westborough Financial's internal controls,
and there has been no fraud, whether or not material, that involved
management of Westborough Financial or any of its Subsidiaries who have a
significant role in Westborough Financial's internal controls.
5.8. Absence of Undisclosed Liabilities. Except for those liabilities set
forth in Section 5.8 of Westborough's Disclosure Schedules or those liabilities
that are appropriately reflected or reserved against in the balance sheets of
Westborough Financial's SEC Documents, and for liabilities incurred in the
ordinary course of business consistent with past practice or in connection with
this Agreement, or the transactions contemplated hereby, since January 1, 2003,
none of Westborough MHC, Westborough Financial nor any of their Subsidiaries
has incurred any obligation or liability (contingent or otherwise) that, either
alone or when combined with all similar liabilities, has had, or could
reasonably be expected to have, a Material Adverse Effect on Westborough.
5.9. Absence of Certain Changes or Events. Since September 30, 2005,
except as set forth in Section 5.9 of Westborough's Disclosure Schedules or
reflected in Westborough Financial's SEC Documents, there has not been (a)
either individually or in the aggregate, any Material Adverse Effect and, to
the best knowledge of Westborough, no fact or condition exists which is
reasonably likely to cause such a Material Adverse Effect in the future, (b)
any material damage, destruction or loss with respect to any property or asset
of Westborough, (c) any change by Westborough in its accounting methods,
principles or practices, other than changes required by applicable law or GAAP
or regulatory accounting as concurred in by Westborough independent
accountants, (d) any revaluation by Westborough of any asset, including,
without limitation, writing off of notes or accounts receivable, other than in
the ordinary course of business consistent with past practice, (e) any entry by
Westborough into any contract or commitment (other than with respect to Loans,
as hereinafter defined) of more than $30,000 or with a term of more than one
(1) year that is not terminable without penalty, (f) any declaration, setting
aside or payment of any dividend or distribution in respect of any capital
stock of
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Westborough or any redemption, purchase or other acquisition of any of its
securities, (g) 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 trustees, directors or
officers of Westborough, 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 other material
action not in the ordinary course of business with respect to the compensation
or employment of trustees, directors, officers or employees of Westborough, (h)
any strike, work stoppage, slowdown or other labor disturbance, (i) any
material election made by Westborough for federal or state income tax purposes,
(j) any change in the credit policies or procedures of Westborough, the effect
of which was or is to make any such policy or procedure materially less
restrictive in any material respect, (k) any material liability or obligation
of any nature (whether accrued, absolute, contingent or otherwise and whether
due or to become due), including, without limiting the generality of the
foregoing, liabilities as guarantor under any guarantees or liabilities for
taxes, other than in the ordinary course of business consistent with past
practice, (l) any forgiveness or cancellation of any indebtedness or
contractual obligation other than in the ordinary course of business consistent
with past practice, (m) except with respect to funds borrowed by Westborough
from the Federal Home Loan Bank, any mortgage, pledge, lien or lease of any
assets, tangible or intangible, of Westborough with a value in excess of
$25,000 in the aggregate, (n) any acquisition or disposition of any assets or
properties having a value in excess of $25,000, or any contract for any such
acquisition or disposition entered into other than loans and investment
securities, or (o) any 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.
5.10. Litigation. Except as set forth in Section 5.10 of Westborough's
Disclosure Schedules, there is no claim, suit, hearing, arbitration, action,
proceeding (public or private) or investigation of any nature pending or, to
the knowledge of Westborough, threatened, against Westborough or challenging
the validity or propriety of the transactions contemplated by this Agreement,
nor is there any judgment, decree, injunction, rule, award or order of any
legal or administrative body or arbitrator outstanding against Westborough
having, or which insofar as reasonably can be foreseen, in the future could
have, any such effect or restricting, or which could restrict, its ability to
conduct business in any material respect in any area. Westborough is not aware
of any facts which could reasonably give rise to any such claim, suit, action,
investigation or other proceeding.
5.11. Regulatory Matters.
(a) Westborough is not a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, order to cease and
desist with, or extraordinary supervisory letter from, any federal or
state governmental agency or authority charged with the supervision or
regulation of financial institutions or issuers of securities, or engaged
in the insurance of deposits or the supervision or regulation of it
(collectively, the "Westborough Regulatory Authorities"). No Westborough
Regulatory Authority has either issued any order or directive
specifically naming or referring to
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Westborough or required Westborough to adopt any board resolution, which
order, directive or board resolution is currently in effect and restricts
materially the conduct of Westborough's business, or in any manner
relates to its capital adequacy, loan loss allowances or reserves, credit
policies, management or overall safety and soundness or its ability to
perform its obligations hereunder. Except as set forth in Section 5.11(a)
of Westborough's Disclosure Schedules, Westborough is not a party to any
agreement or arrangement entered into in connection with the consummation
of a federally assisted acquisition of a depository institution pursuant
to which Westborough is entitled to receive financial assistance or
indemnification from any Governmental Authority. Westborough has paid all
assessments made or imposed by any Westborough Regulatory Authority.
(b) Westborough has not been advised by, and has no knowledge of
facts which would reasonably be expected to give rise to an advisory
notice by, any Westborough Regulatory Authority that such Westborough
Regulatory Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, cease and desist order,
extraordinary supervisory letter, order, directive or board resolution
referred to in Section 5.11(a).
5.12. Compliance with Laws. Westborough:
(a) is in material compliance with all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
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, franchises, authorizations, orders
and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in
order to permit Westborough to own or lease its properties and to conduct
its business as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to Westborough's knowledge, no suspension or cancellation of
any of them is threatened; and
(c) has received, since December 31, 2000, no notification or
communication from any Governmental Authority (A) asserting that
Westborough is not in material compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Westborough's knowledge, do any grounds for any of
the foregoing exist).
5.13. Material Contracts; Defaults.
(a) Except for documents listed in Section 5.13 of Westborough's
Disclosure Schedules or listed as exhibits to Westborough Financial's
Annual Report on Form 10-KSB for the year ended September 30, 2005 or
filed with Westborough Financial's Quarterly Report on Form 10-QSB for
the quarters ended December 31, 2005, March 31, 2006 or June 30, 2006, or
filed with any Westborough Financial Form 8-K that was filed with the SEC
since September 30, 2005, none of Westborough MHC, Westborough Bank or
Westborough Financial is a party to, bound by or
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subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral):
(i) that is a "Material Contract" within the meaning of Item
601(b)(10) of the SEC's Regulation S-K (whether or not filed as an
exhibit to an SEC document);
(ii) that materially restricts the conduct of business by
Westborough;
(iii) that is material to the financial condition, results of
operations or business of Westborough;
(iv) that provides for the lease of real property;
(v) relating to the employment, including, without
limitation, employment as a consultant, of any Person, or the
election or retention in office, or severance of any present or
former trustee, director or officer of Westborough;
(vi) with any labor union, or other employee representative
or group of employees of Westborough;
(vii) by and between Westborough and/or any Affiliate
thereof;
(viii) which, upon the consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement will
result in any payment (whether of severance pay or otherwise)
becoming due from Westborough to any officer or employee thereof;
(ix) requiring that a particular line of business be
maintained;
(x) 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 more than
$50,000 per annum;
(xi) except for Westborough Financial Stock Option 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 Bank Merger
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 or the Bank Merger Agreement;
(xii) which purports to limit in any respect, the ability of
Westborough or its businesses to solicit customers or the manner in
which, or the localities in which, all or any substantial portion
of the business of Westborough, taken as a whole, or, following
consummation of the transactions contemplated by this Agreement or
the Bank Merger Agreement, AVB and its Subsidiaries, is or would be
conducted;
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(xiii) providing for the indemnification by Westborough of
any Person, other than customary agreements relating to the
indemnity of directors, officers and employees of Westborough;
(xiv) that is a Joint Venture, acquisition or partnership
agreement;
(xv) that grants any right of first refusal or right of first
offer or similar right, or that limits (or purports to limit) the
ability of Westborough to own, operate, sell, transfer, pledge or
otherwise dispose of any material amount of assets or business;
(xvi) providing for any material future payments that are
conditioned, in whole or in part, on a change of control of
Westborough;
(xvii) that contains a "most favored nation" clause;
(xviii) pertaining to the use of, or granting any right to
use or practice any rights under, any Westborough intellectual
property assets, whether Westborough is the licensee or licensor
thereunder; or
(xix) that is an investment management, or investment
advisory or sub-advisory, or any other contract for the provision
of financial planning, brokerage (including, without limitation,
insurance brokerage) or similar services not terminable on sixty
(60) days or less notice.
(b) Westborough is not in material default under any material
contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its respective assets,
business or operations may be bound or affected, or under which it or its
respective assets, business or operations receives benefits, and there
has not occurred any event that, with the lapse of time or the giving of
notice or both, would constitute such a default. No power of attorney or
similar authorization given directly or indirectly by Westborough is
currently outstanding.
5.14. No Brokers. Excluding the arrangement disclosed in Section 5.14 of
Westborough's Disclosure Schedules with a fee paid or payable to RBC Capital
Markets Corporation ("RBC"), neither Westborough nor any of its officers,
directors, employees, Affiliates or agents has employed any broker, finder or
financial advisor, or incurred any liability for any fees or commissions, in
connection with any of the transactions contemplated by this Agreement except
for legal, accounting and other professional fees payable in connection with
the Mid-Tier Merger and the other Transactions. Westborough will be responsible
for the payment of all such fees. The fee payable to RBC in connection with the
transactions contemplated by this Agreement is as described in an engagement
letter between Westborough Financial and RBC, a true and complete copy of which
has heretofore been furnished to AVB.
5.15. Employee Benefit Plans.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of Westborough (the
"Westborough Employees") and current or former directors of Westborough
including, but not limited to, "employee benefit plans" within the
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meaning of Section 3(3) of ERISA, and deferred compensation, stock
option, stock purchase, stock appreciation rights, stock based, incentive
and bonus plans (the "Westborough Benefit Plans"), are disclosed in
Section 5.15(a) of Westborough's Disclosure Schedules. True and complete
copies of all Westborough Benefit Plans including, but not limited to,
any trust instruments and insurance contracts forming a part of any
Westborough Benefit Plans and all amendments thereto have been provided
or made available to AVB.
(b) All Westborough Benefit Plans are in substantial compliance
with ERISA in all material respects. Each Westborough Benefit Plan which
is an "employee pension benefit plan" within the meaning of Section 3(2)
of ERISA ("Pension Plan") and which is intended to be qualified under
Section 401(a) of the Code, has received a favorable determination letter
from the Internal Revenue Service, and Westborough is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter or the loss of the qualification of such Pension
Plan under Section 401(a) of the Code. There is no material pending or,
to Westborough's knowledge, threatened litigation relating to the
Westborough Benefit Plans. Westborough has not engaged in a transaction
with respect to any Westborough Benefit Plan or Pension Plan that,
assuming the taxable period of such transaction expired as of the date of
this Agreement, could subject Westborough to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an amount
which would be material.
(c) All contributions required to be made under the terms of any
Westborough Benefit Plan have been timely made or have been reflected on
the financial statements of Westborough Financial included in Westborough
Financial's SEC Documents.
(d) Neither Westborough, nor any entity which is considered one
employer with Westborough under Section 4001(a)(15) or Section 414 of the
Code (an "ERISA Affiliate"), has incurred any liability under Title IV of
ERISA which will not have been paid in full prior to the Closing. Other
than as disclosed in Section 5.15(d) of Westborough's Disclosure
Schedules, neither Westborough nor any ERISA Affiliate has ever
maintained a Multiemployer Plan.
(e) There are no pending or, to the knowledge of Westborough,
threatened claims by or on behalf of any Westborough Benefit Plans, or by
or on behalf of any individual participants or beneficiaries of any
Westborough Benefit Plans, alleging any breach of fiduciary duty on the
part of Westborough or any of its officers, directors or employees under
ERISA or any other applicable regulations, or claiming benefit payments
for which Westborough may be liable (other than those made in the
ordinary operation of such plans), nor is there, to the knowledge of
Westborough, any basis for such claim. The Westborough Benefit Plans are
not the subject of any pending (or to the knowledge of Westborough, any
threatened) investigation or audit by the Internal Revenue Service, the
Department of Labor or the Pension Benefit Guaranty Corporation.
(f) With respect to any Westborough Benefit Plan that is an
employee welfare benefit plan (within the meaning of Section 3(1) of
ERISA) (a "Welfare Plan") and except as disclosed in Section 5.15(f) of
Westborough's Disclosure Schedules, to Westborough's knowledge, (i) each
Welfare Plan for which contributions are claimed by Westborough as
deductions under any provision of the Code is in material compliance with
all applicable requirements pertaining to such deduction, (ii) with
respect to any welfare benefit fund (within the meaning of Section 419 of
the Code) related to a Welfare Plan, there is no disqualified benefit
(within the meaning of Section
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4976(b) of the Code) that would result in the imposition of a tax under
Section 4976(a) of the Code, (iii) any Westborough Benefit Plan that is a
group health plan (within the meaning of Section 4980B(g)(2) of the Code)
complies, and in each and every case has complied, with all of the
applicable material requirements of Section 4980B of the Code, ERISA,
Title XXII of the Public Health Service Act and the Social Security Act,
and (iv) all Welfare Plans may be amended or terminated at any time on or
after the Closing Date without incurring any liability thereunder.
(g) Except as disclosed in Section 5.15(g) of Westborough's
Disclosure Schedules, Westborough has no obligations for retiree health
and life benefits under any Westborough Benefit Plan, other than coverage
as may be required under Section 4980B of the Code or Part 6 of Title I
of ERISA, or under the continuation of coverage provisions of the laws of
any state or locality.
(h) Except as set forth in Section 5.15(h) of Westborough's
Disclosure Schedules, neither the execution of this Agreement, nor
shareholder approval of this Agreement, nor consummation of the
Transactions will (i) entitle any employees of Westborough to severance
pay or any increase in severance pay upon any termination of employment
after the date of this Agreement, (ii) accelerate the time of payment or
vesting or trigger any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of the
Westborough Benefit Plans, (iii) result in any breach or violation of, or
a default under, any of the Westborough Benefit Plans, (iv) result in any
payment that would be a "parachute payment" to a "disqualified
individual," as those terms are defined in Section 280G of the Code,
without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future, or (v)
result in any payment that would be nondeductible pursuant to Section
162(m) of the Code.
5.16. Labor Matters. Westborough is not 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 Westborough the subject of a
proceeding asserting that it has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel Westborough
to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike, work stoppage or other labor dispute, arbitration,
lawsuit or administrative proceeding involving it pending or, to Westborough's
knowledge, threatened, nor is Westborough aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity. No employees of Westborough are represented by any
labor union.
5.17. Environmental Matters. Except as set forth in Section 5.17 of
Westborough's Disclosure Schedules:
(a) To Westborough's knowledge, Westborough is in material
compliance with applicable Environmental Laws;
(b) To Westborough's knowledge, no real property (including
buildings or other structures) currently or formerly owned or operated by
Westborough, or any property in which Westborough has held a security
interest, Lien or a fiduciary or official management role within the past
five (5) years ("Westborough Loan Property"), has been contaminated with,
or has had any release of, any Hazardous Substance except in compliance
with Environmental Laws;
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(c) To Westborough's knowledge, Westborough has not participated in
the management regarding Hazardous Substances of any Westborough Loan
Property which has been contaminated with any Hazardous Substance except
in compliance with Environmental Laws;
(d) To Westborough's knowledge, Westborough has no present material
liability for any Hazardous Substance contamination on any third party
property;
(e) Westborough has not received any notice, demand letter, claim
or request for information alleging any violation of, or liability under,
any Environmental Law;
(f) To Westborough's knowledge, Westborough is not subject to any
order, decree, injunction or other agreement with any Governmental
Authority or any third party relating to any Environmental Law;
(g) To Westborough's knowledge, there are no existing conditions
involving Westborough, any currently or formerly owned or operated
property, or any Westborough Loan Property, that could reasonably be
expected to result in any material claims, or liability against
Westborough, or result in any restrictions on the ownership, use or
transfer of any currently owned property pursuant to any Environmental
Law; and
(h) To Westborough's knowledge, Westborough has delivered or made
available to AVB copies of all environmental reports, studies, sampling
data, correspondence, filings and other environmental information
concerning known environmental conditions in its possession, or
reasonably available to it, relating to Westborough and any currently or
formerly owned or operated property or any Westborough Loan Property.
As used in this Agreement, the term "Environmental Laws" shall mean any
federal, state or local law, regulation, order, decree, permit, authorization,
or agency requirement in effect at or prior to the date of this Agreement
relating to: (A) the protection or restoration of the environment, health, or
natural resources, (B) the handling, use, disposal, or release of any Hazardous
Substance, or (C) wetlands, indoor air, pollution, contamination or any
material injury to Persons or property in connection with any Hazardous
Substance; and the term "Hazardous Substance" shall mean any substance that is:
(A) listed, classified or regulated pursuant to any Environmental Law, (B) any
petroleum product or by-product, asbestos-containing material, polychlorinated
biphenyls, radioactive materials, or (C) any other substance which is the
subject of regulatory action by any Governmental Authority in connection with
any Environmental Law but, excluding substances of kinds and in amounts
ordinarily and customarily used or stored for the purpose of cleaning or other
maintenance operations and otherwise in compliance with Environmental Law.
5.18. Tax Matters.
(a) For the taxable periods ended September 30, 2005, 2004 and
2003, Westborough has filed all Tax Returns that it was required to file
under applicable laws and regulations. All such Tax Returns were correct
and complete in all material respects and have been prepared in
substantial compliance with all applicable laws and regulations. All
Taxes due and owing by Westborough (whether or not shown on any Tax
Return) have been paid other than Taxes (i) which are not yet due, (ii)
which are being contested in good faith as described in Section 5.18 of
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Westborough's Disclosure Schedules, or (iii) for which adequate reserves
have been accrued in the balance sheets contained on Westborough
Financial's SEC Documents. Westborough is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where Westborough does not
file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens for Taxes (other than Taxes not yet due
and payable) upon any of the assets of Westborough.
(b) Westborough has withheld and paid all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other
third party.
(c) No foreign, federal, state, or local tax audits or
administrative or judicial Tax proceedings are pending or being conducted
with respect to Westborough. Westborough has not received from any
foreign, federal, state, or local taxing authority (including
jurisdictions where Westborough has not filed Tax Returns) any (i) notice
indicating an intent to open an audit or other review, (ii) request for
information related to Tax matters, or (iii) notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or assessed
by any taxing authority against Westborough.
(d) Westborough has provided AVB with true and complete copies of
the United States federal, state, local, and foreign income Tax Returns
filed with respect to Westborough for taxable periods ended September 30,
2005, 2004 and 2003. Westborough has disclosed in Section 5.18 of
Westborough's Disclosure Schedules those Tax Returns that have been
audited during the last three years, and those Tax Returns that currently
are the subject of an audit. Westborough has delivered to AVB correct and
complete copies of all examination reports, and statements of
deficiencies assessed against or agreed to by Westborough, filed for the
years ended September 30, 2005, 2004 and 2003. Westborough has timely and
properly taken such actions in response to, and in compliance with,
notices Westborough has received from the Internal Revenue Service in
respect of information reporting and backup and nonresident withholding
as are required by law, including the notation in their records of any B
notices or C notices received with respect to any depositors, customer,
shareholders or payees.
(e) Westborough has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(f) Westborough has not filed a consent under Code Section 341(f)
concerning collapsible corporations. Except as set forth in Section
5.18(f) or Westborough's Disclosure Schedules, Westborough is not a party
to any agreement, contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in the payment of (i) any
"excess parachute payment" within the meaning of Code Section 280G (or
any corresponding provision of state, local or foreign Tax law), or (ii)
any amount that will not be fully deductible as a result of Code Section
162(m) (or any corresponding provision of state, local or foreign Tax
law). Westborough Financial has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii).
Westborough has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. Westborough
is not a party to or bound by any Tax allocation or sharing agreement.
Westborough
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(i) has not been a member of an Affiliated Group filing a consolidated
federal income Tax Return (other than a group, the common parent of which
was Westborough Financial), and (ii) has no liability for the Taxes of
any Person (other than Westborough) under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) The unpaid Taxes of Westborough (i) did not, as of the end of
the most recent period covered by Westborough Financial's SEC Documents
filed on or prior to the date of this Agreement, exceed the reserve for
Tax liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the
face of the financial statements included in Westborough Financial's SEC
Documents filed on or prior to the date of this Agreement (rather than in
any notes thereto), and (ii) do not exceed that reserve as adjusted for
the passage of time through the Closing Date in accordance with the past
custom and practice of Westborough in filing its Tax Returns. Since the
end of the most recent period covered by Westborough Financial's SEC
Documents filed prior to the date of this Agreement, Westborough has not
incurred any liability for Taxes arising from extraordinary gains or
losses, as that term is used in GAAP, outside the ordinary course of
business consistent with past custom and practice.
(h) Westborough will not 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: (i) change in method of accounting for a taxable period ending on or
prior to the Closing Date, (ii) "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,
(iii) 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), (iv)
installment sale or open transaction disposition made on or prior to the
Closing Date, or (v) prepaid amount received on or prior to the Closing
Date.
5.19. Risk Management Instruments. Westborough is not a party, nor has it
agreed to enter into an exchange traded or over-the-counter equity, interest
rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is not included on the balance sheet and is a
derivatives contract (including various combinations thereof) (each, a
"Derivatives Contract") or owns securities that (i) are referred to generically
as "structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives," or (ii) are likely to
have changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business, consistent with safe and sound banking practices and regulatory
guidance. All of such Derivatives Contracts or other instruments are legal,
valid and binding obligations of Westborough, enforceable in accordance with
their terms (except as enforcement may be limited by general principles of
equity, whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally), and are in full force and effect. Westborough has duly
performed, in all material respects, all of their material obligations
thereunder to the extent that such obligations to perform have accrued; and, to
Westborough's knowledge, there are no breaches, violations or defaults, or
allegations or assertions of such, by any party
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thereunder which would have, or would reasonably be expected to have, a
Material Adverse Effect on Westborough.
5.20. Investment Securities. Except for pledges to secure public and
trust deposits, Federal Reserve borrowings, Federal Home Loan Bank advances,
repurchase agreements and reverse repurchase agreements entered into in
arms'-length transactions pursuant to normal commercial terms and conditions
and other pledges required by law, none of the investments reflected in the
balance sheet of Westborough Financial contained in its most recent Form 10-KSB
filed with the SEC, and none of the material investments made by Westborough
since October 1, 2005, is subject to any restriction (contractual, statutory or
otherwise) that would materially impair the ability of the entity holding such
investment freely to dispose of such investment at any time. The information
(including electronic information and information contained on tapes and
computer disks) with respect to all investment securities (including
mortgaged-backed securities) of Westborough furnished to AVB by Westborough is,
as of the respective dates indicated therein, true and correct in all material
respects.
5.21. Loans; Nonperforming and Classified Assets.
(a) Each loan agreement, note or borrowing arrangement (whether
written or oral), including, without limitation, portions of outstanding
lines of credit, loan commitments, leases, credit enhancements and
guarantees (collectively, "Loans"), on the books and records of
Westborough (i) was made and has been serviced in all material respects
in accordance with customary lending standards in the ordinary course of
business, (ii) is evidenced in all material respects by appropriate and
sufficient documentation, and (iii) to the knowledge of Westborough,
constitutes the legal, valid and binding obligation of the obligor named
therein, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditor's rights or by general equity principles. The
information (including electronic information and information contained
on tapes and computer disks) with respect to all Loans of Westborough
furnished to AVB by Westborough is, as of the respective dates indicated
therein, true and correct in all material respects. To the best knowledge
of Westborough, all Loans originated, directly or through third party
mortgage brokers, have been originated in compliance with all federal,
state and local laws, including, without limitation, the Real Estate
Settlement Procedures Act of 1974, as amended.
(b) Westborough has disclosed in Section 5.21(b) of Westborough's
Disclosure Schedules, as of the latest practicable date: (i) any written
or oral Loan under the terms of which the obligor is 60 or more days
delinquent in payment of principal or interest, or to Westborough's
knowledge, in default of any other material provision thereof, (ii) each
Loan which has been classified as "substandard," "doubtful," "loss" or
"special mention" (or words of similar import) by Westborough or an
applicable regulatory authority (it being understood that no
representation is being made that FDIC or Staff of the Massachusetts Bank
Commissioner would agree with the loan classifications established by
Westborough), (iii) a listing of the OREO acquired by foreclosure or by
deed-in-lieu thereof, including the book value thereof, and (iv) each
Loan with any director, executive officer or five percent or greater
shareholder of Westborough, or to the knowledge of Westborough, any
Person controlling, controlled by or under common control with any of the
foregoing.
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(c) No agreement, pursuant to which any Loans or other assets have
been or shall be sold by Westborough, entitled the buyer of such Loans or
other assets, unless there is material breach of a representation or
covenant by Westborough, to cause Westborough to repurchase such Loan or
other asset, or the buyer to pursue any other form of recourse against
Westborough.
5.22. Bank Owned Life Insurance. Westborough has disclosed in Section
5.22 of Westborough's Disclosure Schedules a true, correct and complete
description of all Bank Owned Life Insurance ("BOLI") owned by Westborough.
Except as set forth in Section 5.22 of Westborough's Disclosure Schedules, the
value of such BOLI, as of the date of this Agreement, is fairly and accurately
reflected on Westborough Financial's balance sheet contained in Westborough
Financial's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006
in accordance with GAAP. Except as set forth in Section 5.22 of Westborough's
Disclosure Schedules, all life insurance policies on the lives of any of the
current and former officers and directors of Westborough that are maintained by
Westborough and are otherwise included as assets on the books of Westborough
are, or will at the Mid-Tier Effective Time be, owned by Westborough, free and
clear of any claims thereon by the officers or members of their families,
except with respect to the death benefits thereunder, as to which Westborough
agrees that there will not be an amendment prior to the Mid-Tier Effective Time
without the consent of AVB.
5.23. Properties. The real and material personal property owned by
Westborough or presently used by Westborough in its business is in an adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on its
business in the ordinary course of business consistent with its past practices.
Westborough has good and marketable title, free and clear of all Liens, to all
of the real and material personal properties and assets reflected on the
consolidated statement of financial condition of Westborough Financial as of
September 30, 2005, included in Westborough Financial's SEC Documents or
acquired after such date, other than properties sold by Westborough in the
ordinary course of business, except (i) Liens for current taxes and assessments
not yet due or payable, (ii) pledges to secure deposits and other Liens
incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not,
individually or in the aggregate, material in character, amount or extent, and
(iv) as reflected on the consolidated statement of financial condition of
Westborough Financial as of September 30, 2005, included in Westborough
Financial's SEC Documents. All real and personal property which is material to
Westborough's business on a consolidated basis and leased or licensed by
Westborough is held pursuant to leases or licenses which are valid and
enforceable in accordance with their respective terms, and such leases will not
terminate or lapse prior to the Mid-Tier Effective Time, and there exists no
material default under any such leases or licenses by Westborough nor, to the
knowledge of Westborough and except as set forth in Section 5.23 of
Westborough's Disclosure Schedules, any event which, with notice or lapse of
time or both, would constitute a material default thereunder by Westborough,
except for such defaults which, individually, or in the aggregate, would not
result in the forfeiture of the use or occupancy of the property covered by
such lease or in a material liability to Westborough.
5.24. Intellectual Property. Westborough owns or possesses valid and
binding licenses and other rights to use, without payment of any material
amount, all material patents, copyrights, trade secrets, trade names, service
marks and trademarks used in its businesses, all of which have been disclosed
in Section 5.24 of Westborough's Disclosure Schedules, and Westborough has
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not received any notice of conflict with respect thereto that asserts the right
of others. Westborough has performed, in all material respects, all the
obligations required to be performed by it and is not in default under any
contract, agreement, arrangement or commitment relating to any of the
foregoing.
5.25. Fiduciary Accounts. Westborough does not engage in any trust
business, nor does it administer or maintain accounts for which it acts as a
fiduciary (other than individual retirement accounts and Xxxxx accounts),
including, but not limited to, accounts for which it serves as a trustee,
agent, custodian, personal representative, guardian, conservator or investment
advisor.
5.26. Capitalization. Westborough has elected to qualify as a "financial
holding company" under the Xxxxx-Xxxxx-Xxxxxx Act of 1999. Westborough Bank is
"well capitalized," as such term is defined in the rules and regulations
promulgated by the FDIC. Westborough Bank would be "well capitalized," as such
term is defined in the rules and regulations promulgated by the Federal Reserve
Board if Westborough Bank were a state-chartered member bank.
5.27. Community Reinvestment Act, Bank Secrecy, Anti-Money Laundering and
Customer Information Security. Westborough is not aware of, has not been
advised of, and has no reason to believe that any facts or circumstances exist
which would cause Westborough Bank: (i) to be deemed not to be in satisfactory
compliance in any material respect 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 in any
material respect of the 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 (the "USA Patriot Act"), and the regulations promulgated thereunder, 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 in any material respect with the applicable
privacy of customer information requirements contained in any applicable
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 Westborough Bank pursuant to 12 C.F.R. Part 364. Furthermore, the
Board of Directors of Westborough Bank has adopted, and Westborough Bank has
implemented, an anti-money laundering program that contains adequate and
appropriate customer identification verification procedures that have not been
deemed ineffective in any material respects by any Bank Regulators and that
meet the requirements in all material respects of Section 352 of the USA
Patriot Act and the regulations thereunder.
5.28. Books and Records. The books and records of Westborough are being
maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect, in all material
respects, all dealings and transactions in respect of the business, assets,
liabilities and affairs of Westborough.
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5.29. Insurance. Westborough has disclosed in Section 5.29 of
Westborough's Disclosure Schedules all of the material insurance policies,
binders or bonds currently maintained by Westborough ("Insurance Policies").
Westborough is insured with reputable insurers against such risks and in such
amounts as the management of Westborough reasonably has determined to be
prudent in accordance with industry practices. All the Insurance Policies are
in full force and effect; Westborough is not in material default thereunder and
has not received any notice of non-renewal or cancellation with respect
thereto; and all claims thereunder have been filed in due and timely fashion,
and Westborough has timely provided such insurers with due notice of all
matters which may reasonably become a claim or otherwise constitute a basis for
seeking recovery under the Insurance Policies. There is no claim pending under
any Insurance Policy as to which coverage has been questioned, denied or
disputed by the underwriter of such policy.
5.30. Allowance for Loan Losses. Westborough's allowance for loan losses
is in compliance with Westborough's existing methodology for determining the
adequacy of its allowance for loan losses and, to the knowledge of Westborough,
the standards established by applicable Governmental Authorities and the
Financial Accounting Standards Board and is adequate under all such standards.
5.31. Credit Card Accounts. Except as set forth in Section 5.31 of
Westborough's Disclosure Schedules, Westborough does not originate, maintain or
administer credit card accounts.
5.32. Merchant Processing. Except as set forth in Section 5.32 of
Westborough's Disclosure Schedules, Westborough does not provide, and has not
provided, merchant credit card processing services to any merchants.
5.33. Transactions with Affiliates. All "covered transactions" between
Westborough Bank and an "affiliate," within the meaning of Sections 23A and 23B
of the Federal Reserve Act, have been in compliance with such provisions and
the provisions of Federal Reserve Board Regulation W.
5.34. Required Vote; Antitakeover Provisions.
(a) The affirmative vote of the holders of two-thirds of the issued
and outstanding shares of Westborough Financial Common Stock eligible to
vote at the Westborough Financial Meeting is necessary to approve this
Agreement and the Transactions on behalf of Westborough Financial. Except
as set forth in Section 5.4 of Westborough's Disclosure Schedules, no
other vote of the shareholders of Westborough Financial is required by
law, the Westborough Financial Charter, Westborough Financial Bylaws or
otherwise to approve this Agreement and the Transactions.
(b) The affirmative vote of two-thirds of the trustees of
Westborough MHC and at least two-thirds of the corporators of Westborough
MHC at a special meeting called to consider the subject is necessary to
approve the MHC Merger on behalf of Westborough MHC. No other vote of the
trustees or corporators of Westborough MHC is required by law, the
Westborough MHC
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Charter, the Westborough MHC Bylaws or otherwise to approve this
Agreement and the Transactions.
(c) Assuming the accuracy of the representation and warranty of AVB
and Merger Sub contained in Section 6.35, no "control share acquisition,"
"business combination moratorium," "fair price" or other form of
antitakeover statute or regulation, including, without limitation, MGL
Chapter 110F, is applicable to this Agreement and the transactions
contemplated hereby.
(d) Westborough Financial (including its Board of Directors) does
not have in place, and has not ever adopted, a shareholder rights or
similar plan pursuant to which, subject to the occurrence of specified
triggering events, Westborough Financial shareholders would be permitted
to purchase at a discount shares of Westborough Financial Common Stock or
other Equity Interests or property of Westborough Financial, with the
intention and/or effect of diluting the value or voting power of
Westborough Financial Common Stock with respect to any stockholder, or
any other arrangement designed to have a similar intention and/or effect
(including any plan commonly referred to as a "poison pill").
5.35. Fairness Opinion. The Westborough Financial Board has received the
oral opinion of RBC, which opinion will be promptly confirmed in writing and
dated as of the date of this Agreement, to the effect that as of the date of
this Agreement, the Per Share Merger Consideration is fair to the holders of
Westborough Financial Common Stock from a financial point of view.
5.36. Transactions in Securities. Westborough has questioned its
trustees, directors and executive officers concerning known stock transfers
since September 30, 2002, and based upon that investigation, Westborough has
not, and to Westborough's knowledge (a) no trustee, director or officer of
Westborough, (b) no Person related to any such trustee, director or officer by
blood, marriage or adoption and residing in the same household, and (c) no
Person who has been knowingly provided material nonpublic information by any
one or more of these Persons, has purchased or sold, or caused to be purchased
or sold, any shares of Westborough Financial Common Stock or other securities
issued by Westborough Financial (i) during any period when Westborough
Financial was in possession of material nonpublic information, or (ii) in
violation of any applicable provision of the Exchange Act.
5.37. Proxy Statement. The information contained in the proxy statement
to be sent to the shareholders of Westborough Financial in connection with the
Westborough Financial Meeting (the "Proxy Statement") will not, on the date the
Proxy Statement (or any amendment or supplement thereto) is first mailed to
shareholders of Westborough Financial or at the time of the Westborough
Financial Meeting, contain any statement which, at such time and in light of
the circumstances under which it is made, is false or misleading with respect
to any material fact, or omits to state any material fact required to be stated
therein, or necessary in order to make the statements therein, not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Westborough Financial
Meeting which shall have become false or misleading. Notwithstanding the
foregoing, Westborough Financial makes no representation or warranty with
respect to any information to be supplied by Assabet which is contained in any
of the foregoing documents. The Proxy Statement will
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comply in all material respects as to form and content with the requirements of
the Exchange Act.
5.38. Disclosure. The representations and warranties contained in this
Article V, when considered as a whole, together with any certificate, list or
other writing, including, but not limited to, Westborough's Disclosure
Schedules, specifically required to be furnished to AVB, Merger Sub or Xxxxxx
pursuant to the provisions hereof, do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this Agreement and therein not
misleading.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF ASSABET
As a material inducement to the Westborough parties to enter into this
Agreement, and with the understanding that Westborough will be relying thereon
in consummating the Transactions, AVB, Merger Sub and Xxxxxx, jointly and
severally, hereby represent and warrant to Westborough that, except as set
forth in Assabet's Disclosure Schedules delivered by Assabet to Westborough on
the date of this Agreement, the statements contained in this Article VI are
true and correct as of the date of this Agreement and shall be true and correct
as of the Closing Date, except for representations and warranties made as of a
specific time, which shall be true and correct as of such time. Assabet's
Disclosure Schedules are arranged in sections corresponding to the sections and
subsections of this Article VI, and disclosure in one section of Assabet's
Disclosure Schedules shall constitute disclosure for all sections of Assabet's
Disclosure Schedules only to the extent to which the applicability of such
disclosure is reasonably apparent.
6.1. Organization, Standing and Authority.
(a) AVB. AVB is a mutual holding company duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts. AVB is duly qualified to do business and is in corporate
good standing in each jurisdiction where its ownership or leasing of
property or assets, or the conduct of its business, requires it to be so
qualified, except when the failure to be so licensed or in good standing
would not result in a Material Adverse Effect. AVB has in full force and
effect all federal, state, local and foreign governmental authorizations
necessary for it to own, operate or lease its properties and assets and
to carry on its business as now conducted. AVB is a bank holding company
registered with the Federal Reserve Board under the BHCA. The AVB Charter
and AVB By-Laws, copies of which have previously been made available to
Westborough, are true, complete and correct copies of such documents in
effect as of the date of this Agreement. AVB is not in violation of any
provision of the AVB Charter or AVB Bylaws. The minute books of AVB
contain, in all material respects, true and accurate records of all
meetings held and corporate actions taken since January 1, 2000 of AVB's
corporators and the AVB Board (including committees of the AVB Board),
other than minutes which have not been prepared as of the date of this
Agreement.
(b) Xxxxxx. Xxxxxx is a stock form savings bank duly organized and
validly existing under the laws of The Commonwealth of Massachusetts.
Xxxxxx is duly qualified to do business and is in corporate good standing
in each jurisdiction where its ownership or leasing of
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property or assets, or the conduct of its business, requires it to be so
qualified, except when the failure to be so licensed or in good standing
would not result in a Material Adverse Effect. Xxxxxx has in full force
and effect all federal, state, local and foreign governmental
authorizations necessary for it to own, operate or lease its properties
and assets and to carry on its business as now conducted. The Xxxxxx
Charter and Xxxxxx Bylaws, copies of which have previously been made
available to Westborough, are true, complete and correct copies of such
documents in effect as of the date of this Agreement. Xxxxxx is not in
violation of any provision of the Xxxxxx Charter or Xxxxxx Bylaws. The
minute books of Xxxxxx contain, in all material respects, true and
accurate records of all meetings held and corporate actions taken since
January 1, 2003 of Xxxxxx'x stockholder and the Xxxxxx Board (including
committees of the Xxxxxx Board), other than minutes which have not been
prepared as of the date of this Agreement. The deposit accounts of Xxxxxx
are insured by the Deposit Insurance Fund maintained by the FDIC and the
Deposit Insurance Fund of the Depositors Insurance Fund of Massachusetts
in the manner and to the maximum extent provided by applicable law, and
Xxxxxx has paid all deposit insurance premiums and assessments required
by applicable laws and regulations. Xxxxxx is not obligated to make any
payments for premiums and assessments and it has filed all reports
required by the FDIC. No proceedings for the revocation or termination of
such deposit insurance are pending or, to the best knowledge of Assabet,
threatened.
6.2. No AVB Stock. AVB is a mutual holding company and has no authorized
capital stock.
6.3. Subsidiaries.
(a) (1) Assabet has disclosed in Section 6.3 of Assabet's
Disclosure Schedules a list of all of AVB's Subsidiaries, together with
the jurisdiction of organization of each such Subsidiary and the
percentage and type of equity security owned or controlled by AVB, (2)
AVB owns, directly or indirectly, all the issued and outstanding equity
securities of each of its Subsidiaries (including Xxxxxx), and all of
such equity securities are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof, (3) no equity securities of any of
its Subsidiaries are or may become required to be issued (other than to
AVB) by reason of any Equity Interest or otherwise, (4) there are no
contracts, commitments, understandings or arrangements by which any of
its Subsidiaries is or may be bound to sell or otherwise transfer any of
its equity securities (other than to AVB or any of its wholly-owned
Subsidiaries), (5) there are no contracts, commitments, understandings,
or arrangements relating to AVB's rights to vote or to dispose of such
securities, (6) all the equity securities of AVB's Subsidiaries held by
AVB or its Subsidiaries are fully paid and nonassessable and are owned by
AVB or its Subsidiaries free and clear of any Liens, and (7) there are no
outstanding contractual obligations of any Subsidiary of AVB to
repurchase, redeem or otherwise acquire any shares of capital stock of,
or other Equity Interests in, any such Subsidiary or to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any such Subsidiary of AVB.
(b) Except for securities and other interests held in a fiduciary
capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted, AVB does not own
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 other than its Subsidiaries, stock
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in the Federal Home Loan Bank of Boston and stock in the Savings Bank
Life Insurance Company of Massachusetts.
(c) Each of AVB's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of
its organization and 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, except
when the failure to be so licensed or in good standing would not result
in a Material Adverse Effect.
(d) The corporate charter and bylaws, or equivalent organizational
documents, of each of AVB's Subsidiaries, copies of which have previously
been made available to Westborough, are true, correct and complete copies
of such documents in effect. Neither AVB nor any of its Subsidiaries is
in violation of any provision of its corporate charter, bylaws or
equivalent organizational documents. The minute books of each of AVB's
Subsidiaries contain, in all material respects, true and accurate records
of all meetings held and corporate actions taken since January 1, 2000 of
its shareholders and Board of Directors (including committees of its
Board of Directors), other than minutes which have not been prepared as
of the date of this Agreement.
6.4. Corporate Power. Assabet has the requisite corporate power and
authority to carry on its business as it is now being conducted and to own,
lease or operate all its properties and assets; and Assabet has the requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby,
subject to receipt of all necessary approvals of Governmental Authorities and
the approval of this Agreement by two-thirds of the corporators of AVB.
6.5. Corporate Authority. Subject to the approval of this Agreement by
two thirds of the corporators of AVB, this Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
Assabet. The execution and delivery of this Agreement and the other Transaction
Documents, and the consummation of the transactions contemplated hereby and
thereby, have been declared advisable by, and have been duly and validly
approved by the requisite vote of, the AVB Board. The AVB Board (i) has
directed that this Agreement and the transactions contemplated hereby,
including the MHC Merger, be submitted to the corporators of AVB for approval
at a meeting of such corporators, and (ii) has recommended that the corporators
of AVB approve this Agreement and the transactions contemplated hereby. Assabet
has duly executed and delivered this Agreement and, assuming due authorization,
execution and delivery by Westborough, this Agreement is a valid and legally
binding obligation of Assabet, enforceable in accordance with its terms (except
as 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 equity
principles).
6.6. Regulatory Approvals; No Defaults.
(a) No consents or approvals of, or waivers by, or filings or
registrations with, any Governmental Authority or with any third party
are required to be made or obtained by Assabet in connection with the
execution, delivery or performance by Assabet of this Agreement or the
Bank Merger Agreement, as applicable, or to consummate the Transactions
and the other transactions
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contemplated hereby and thereby, except for (A) filings of applications
or notices with, and approvals or waivers by, the Federal Reserve Board,
the FDIC, the Massachusetts Bank Commissioner, the Depositors Insurance
Fund of Massachusetts, the Massachusetts Board and the MHPF, as required,
(B) the filing of Articles of Merger with the Secretary of State of The
Commonwealth of Massachusetts pursuant to the MBCA, (C) the approval of
this Agreement by two-thirds of the corporators of AVB, and (D) such
corporate approvals and such consents or approvals of, or waivers by, or
filings or registrations with, certain of the foregoing federal and state
banking agencies in connection with the MHC Merger and the Bank Merger.
As of the date of this Agreement, Assabet is not aware of any reason why
the approvals set forth above and referred to in Section 8.1(c) will not
be received in a timely manner and without the imposition of a condition,
restriction or requirement of the type described in Section 8.1(c), or
that the requisite approval of AVB's corporators will not be obtained.
(b) Subject to receipt of the approvals referred to in Section
6.6(b), and the expiration of related waiting periods, the execution,
delivery and performance of this Agreement and the Bank Merger Agreement,
as applicable, by Assabet, and the consummation of the Transactions and
the other transactions contemplated hereby and thereby do not and will
not (A) constitute a breach or violation of, or a default under (or, with
notice or lapse of time, or both, would constitute a default under), or
give rise to any Lien, any acceleration of remedies or performance or any
right of termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture,
note, bond, mortgage, deed of trust, lease or instrument of Assabet, or
to which Assabet or any of the Assabet respective properties or assets is
subject, affected or bound (whether as issuer, guarantor, obligor or
otherwise), (B) constitute a breach or violation of, or a default under,
the corporate charter or bylaws (or similar governing documents) of
Assabet, or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license,
agreement, indenture, note, bond, mortgage, deed of trust, lease or
instrument.
6.7. Financial Statements; Reports.
(a) AVB Financial Statements. The audited balance sheets of AVB at
December 31, 2005, 2004 and 2003, and the related statements of
operations, changes in retained earnings and cash flows (along with the
report of the independent auditors and notes thereto), and the unaudited
balance sheet and statements of operations, changes in retained earnings
and cash flows as of and for the six months ended June 30, 2006, in each
case included in Section 6.7(a) of Assabet's Disclosure Schedules
(collectively, "AVB's Financial Statements"), fairly present the
financial position of AVB as at such dates and the results of its
operations for the periods then ended in accordance with GAAP, subject,
in the case of the unaudited financial statements, to normal recurring
year-end audit adjustments (none of which will be material) and the
absence of footnotes.
(b) Assabet Reports. Since January 1, 2003, AVB, Xxxxxx and their
Subsidiaries have timely filed, and subsequent to the date of this
Agreement will timely file, all reports, registrations and statements,
together with any amendments required to be made with respect thereto,
that were and are required to be filed with (i) the Federal Reserve
Board, (ii) the FDIC, and (iii) any applicable state securities or
banking authorities (all such reports, registrations and statements,
together with any amendments thereto, are collectively referred to in
this Agreement as the "Assabet Reports") and have paid all fees and
assessments due and payable in connection with
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any of the foregoing. As of the date filed or to be filed and as amended
prior to the date of this Agreement, the Assabet Reports complied and,
with respect to filings made after the date of this Agreement, will at
the date of filing comply, in all material respects with all of the
statutes, rules and regulations enforced or promulgated by the regulatory
authority with which they were filed. Except for normal periodic
examinations conducted by a Bank Regulator in the regular course of the
business of AVB, Xxxxxx and their Subsidiaries, since January 1, 2000, no
Bank Regulator has initiated any proceeding or, to the best knowledge of
Assabet, investigation into the business or operations of AVB or any of
its Subsidiaries. Except as set forth in Section 6.7(b) of Assabet's
Disclosure Schedules, AVB and its Subsidiaries have resolved all material
violations, criticisms or exceptions by any Bank Regulator with respect
to any such normal periodic examination.
6.8. Absence of Undisclosed Liabilities. Except for those liabilities
that are appropriately reflected or reserved against in the balance sheets of
the Assabet Reports, and for liabilities incurred in the ordinary course of
business consistent with past practice or in connection with this Agreement, or
the transactions contemplated hereby, since January 1, 2003, none of AVB,
Xxxxxx nor any of their Subsidiaries has incurred any obligation or liability
(contingent or otherwise) that, either alone or when combined with all similar
liabilities, has had, or could reasonably be expected to have, a Material
Adverse Effect on Assabet.
6.9. Absence of Certain Changes or Events. Since December 31, 2005,
except as set forth in Section 6.9 of Assabet's Disclosure Schedules or
reflected in AVB's Financial Statements, there has not been (a) either
individually or in the aggregate, any Material Adverse Effect and, to the best
knowledge of Assabet, no fact or condition exists which is reasonably likely to
cause such a Material Adverse Effect in the future, (b) any material damage,
destruction or loss with respect to any property or asset of Assabet, (c) any
change by Assabet in its accounting methods, principles or practices, other
than changes required by applicable law or GAAP or regulatory accounting as
concurred in by Assabet independent accountants, (d) any revaluation by Assabet
of any asset, including, without limitation, writing off of notes or accounts
receivable, other than in the ordinary course of business consistent with past
practice, (e) any entry by Assabet into any contract or commitment (other than
with respect to Loans, as hereinafter defined) of more than $30,000 or with a
term of more than one (1) year that is not terminable without penalty, (f) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing or other employee benefit
plan, or any other increase in the compensation payable or to become payable to
any trustees, directors or officers of Assabet, 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 other material action not in the ordinary course of business with respect
to the compensation or employment of trustees, directors, officers or employees
of Assabet, (g) any strike, work stoppage, slowdown or other labor disturbance,
(i) any material election made by Assabet for federal or state income tax
purposes, (h) any change in the credit policies or procedures of Assabet, the
effect of which was or is to make any such policy or procedure materially less
restrictive in any material respect, (i) any material liability or obligation
of any nature (whether accrued, absolute, contingent or otherwise and whether
due or to become due), including, without limiting the generality of the
foregoing, liabilities as guarantor under any guarantees or liabilities for
taxes, other than in the ordinary course of business consistent with past
practice, (j) any forgiveness or cancellation of any indebtedness or
contractual obligation other than in the ordinary course of business consistent
with past practice,
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(k) except with respect to funds borrowed by Assabet from the Federal Home Loan
Bank, any mortgage, pledge, lien or lease of any assets, tangible or
intangible, of Assabet with a value in excess of $25,000 in the aggregate, (l)
any acquisition or disposition of any assets or properties having a value in
excess of $25,000, or any contract for any such acquisition or disposition
entered into other than loans and investment securities, or (m) any 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.
6.10. Litigation. Except as set forth in Section 6.10 of Assabet's
Disclosure Schedules, there is no claim, suit, hearing, arbitration, action,
proceeding (public or private) or investigation of any nature pending or, to
the knowledge of Assabet, threatened, against Assabet or challenging the
validity or propriety of the transactions contemplated by this Agreement, nor
is there any judgment, decree, injunction, rule, award or order of any legal or
administrative body or arbitrator outstanding against Assabet having, or which
insofar as reasonably can be foreseen, in the future could have, any such
effect or restricting, or which could restrict, its ability to conduct business
in any material respect in any area. Assabet is not aware of any facts which
could reasonably give rise to any such claim, suit, action, investigation or
other proceeding.
6.11. Regulatory Matters.
(a) Assabet is not a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, order to cease and desist
with, or extraordinary supervisory letter from, any federal or state
governmental agency or authority charged with the supervision or
regulation of financial institutions, or engaged in the insurance of
deposits or the supervision or regulation of it (collectively, the
"Assabet Regulatory Authorities"). No Assabet Regulatory Authority has
either issued any order or directive specifically naming or referring to
Assabet or required Assabet to adopt any board resolution, which order,
directive or board resolution is currently in effect and restricts
materially the conduct of Assabet's business, or in any manner relates to
its capital adequacy, loan loss allowances or reserves, credit policies,
management or overall safety and soundness or its ability to perform its
obligations hereunder. Except as set forth in Section 6.11(b) of
Assabet's Disclosure Schedules, Assabet is not a party to any agreement
or arrangement entered into in connection with the consummation of a
federally assisted acquisition of a depository institution pursuant to
which Assabet is entitled to receive financial assistance or
indemnification from any Governmental Authority. Assabet has paid all
assessments made or imposed by any Assabet Regulatory Authority.
(b) Assabet has not been advised by, and has no knowledge of facts
which would reasonably be expected to give rise to an advisory notice by,
any Assabet Regulatory Authority that such Assabet Regulatory Authority
is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, cease and desist order,
extraordinary supervisory letter, order, directive or board resolution
referred to in Section 6.11(a).
6.12. Compliance with Laws. Assabet:
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(a) is in material compliance with all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
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, franchises, authorizations, orders
and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in
order to permit Assabet to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect and, to
Assabet's knowledge, no suspension or cancellation of any of them is
threatened; and
(c) has received, since December 31, 2000, no notification or
communication from any Governmental Authority (A) asserting that Assabet
is not in material compliance with any of the statutes, regulations or
ordinances which such Governmental Authority enforces or (B) threatening
to revoke any license, franchise, permit or governmental authorization
(nor, to Assabet's knowledge, do any grounds for any of the foregoing
exist).
6.13. Material Contracts; Defaults.
(a) Except for documents listed in Section 6.13(a) of Assabet's
Disclosure Schedules or that have previously been made available to
Westborough, Assabet is not a party to, bound by or subject to any
agreement, contract, arrangement, commitment or understanding (whether
written or oral):
(i) that is a "Material Contract" within the meaning of Item
601(b)(10) of the SEC's Regulation S-K;
(ii) that materially restricts the conduct of business by
Assabet;
(iii) that is material to the financial condition, results of
operations or business of Assabet;
(iv) that provides for the lease of real property;
(v) relating to the employment, including, without
limitation, employment as a consultant, of any Person, or the
election or retention in office, or severance of any present or
former trustee, director or officer of Assabet;
(vi) with any labor union, or other employee representative
or group of employees of BSR;
(vii) by and between Assabet and/or any Affiliate thereof;
(viii) which, upon the consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement will
result in any payment (whether of
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severance pay or otherwise) becoming due from Assabet to any
officer or employee thereof;
(ix) requiring that a particular line of business be
maintained;
(x) 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 more than
$50,000 per annum;
(xi) 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 Bank Merger 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 or the Bank Merger
Agreement;
(xii) which purports to limit in any respect, the ability of
Assabet or its businesses to solicit customers or the manner in
which, or the localities in which, all or any substantial portion
of the business of Assabet, taken as a whole, or, following
consummation of the transactions contemplated by this Agreement or
the Bank Merger Agreement, AVB and its Subsidiaries, is or would be
conducted;
(xiii) providing for the indemnification by Assabet of any
Person, other than customary agreements relating to the indemnity
of directors, officers and employees of Assabet;
(xiv) that is a Joint Venture, acquisition or partnership
agreement;
(xv) that grants any right of first refusal or right of first
offer or similar right, or that limits (or purports to limit) the
ability of Assabet to own, operate, sell, transfer, pledge or
otherwise dispose of any material amount of assets or business;
(xvi) providing for any material future payments that are
conditioned, in whole or in part, on a change of control of
Assabet;
(xvii) that contains a "most favored nation" clause;
(xviii) pertaining to the use of, or granting any right to
use or practice any rights under, any Assabet intellectual property
assets, whether Assabet is the licensee or licensor thereunder; or
(xix) that is an investment management, or investment
advisory or sub-advisory, or any other contract for the provision
of financial planning, brokerage (including, without limitation,
insurance brokerage) or similar services not terminable on sixty
(60) days or less notice.
(b) Assabet is not in material default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its
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respective assets, business or operations may be bound or affected, or
under which it or its respective assets, business or operations receives
benefits, and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a default. No
power of attorney or similar authorization given directly or indirectly
by Assabet is currently outstanding.
6.14. No Brokers. Excluding an arrangement disclosed in Section 6.14 of
Assabet's Disclosure Schedules with a fee paid or payable to Xxxxx, Xxxxxxxx &
Xxxxx ("KBW"), neither Assabet nor any of its officers, directors, employees,
Affiliates or agents has employed any broker, finder or financial advisor, or
incurred any liability for any fees or commissions, in connection with any of
the transactions contemplated by this Agreement except for legal, accounting
and other professional fees payable in connection with the Mid-Tier Merger and
the other Transactions. Assabet will be responsible for the payment of all such
fees. The fee payable to KBW in connection with the transactions contemplated
by this Agreement is as described in an engagement letter between Assabet and
KBW, a true and complete copy of which has heretofore been furnished to
Westborough.
6.15. Employee Benefit Plans.
(a) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of Assabet (the
"Assabet Employees") and current or former trustees or directors of
Assabet including, but not limited to, "employee benefit plans" within
the meaning of Section 3(3) of ERISA, and deferred compensation,
incentive and bonus plans (the "Assabet Benefit Plans"), are disclosed in
Section 6.15(a) of Assabet's Disclosure Schedules. True and complete
copies of all Assabet Benefit Plans including, but not limited to, any
trust instruments and insurance contracts forming a part of any Assabet
Benefit Plans and all amendments thereto have been provided or made
available to Westborough.
(b) All Assabet Benefit Plans are in substantial compliance with
ERISA in all material respects. Each Assabet Benefit Plan which is a
Pension Plan and which is intended to be qualified under Section 401(a)
of the Code, has received a favorable determination letter from the
Internal Revenue Service, and Assabet is not aware of any circumstances
likely to result in revocation of any such favorable determination letter
or the loss of the qualification of such Pension Plan under Section
401(a) of the Code. There is no material pending or, to Assabet's
knowledge, threatened litigation relating to the Assabet Benefit Plans.
Assabet has not engaged in a transaction with respect to any Assabet
Benefit Plan or Pension Plan that, assuming the taxable period of such
transaction expired as of the date of this Agreement, could subject
Assabet to a tax or penalty imposed by either Section 4975 of the Code or
Section 502(i) of ERISA in an amount which would be material.
(c) All contributions required to be made under the terms of any
Assabet Benefit Plan have been timely made or have been reflected on the
financial statements of AVB included in the Assabet Reports.
(d) Neither Assabet, nor any entity which is an ERISA Affiliate,
has incurred any liability under Title IV of ERISA which will not have
been paid in full prior to the Closing. Neither Assabet nor any ERISA
Affiliate currently maintains any Pension Plan subject to Code
-54-
Section 412 or ERISA Section 302, and Assabet has received approval from
the Pension Benefit Guaranty Corporation with regard to the termination
of its defined benefit Pension Plan. Neither Assabet nor any ERISA
Affiliate has ever maintained a Multiemployer Plan.
(e) There are no pending or, to the knowledge of Assabet,
threatened claims by or on behalf of any Assabet Benefit Plans, or by or
on behalf of any individual participants or beneficiaries of any Assabet
Benefit Plans, alleging any breach of fiduciary duty on the part of
Assabet or any of its officers, directors or employees under ERISA or any
other applicable regulations, or claiming benefit payments for which
Assabet may be liable (other than those made in the ordinary operation of
such plans), nor is there, to the knowledge of Assabet, any basis for
such claim. The Assabet Benefit Plans are not the subject of any pending
(or to the knowledge of Assabet, any threatened) investigation or audit
by the Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation.
(f) With respect to any Assabet Benefit Plan that is a Welfare Plan
and except as disclosed in Section 6.15(f) of Assabet's Disclosure
Schedules, (i) each Welfare Plan for which contributions are claimed by
Assabet as deductions under any provision of the Code is in material
compliance with all applicable requirements pertaining to such deduction,
(ii) with respect to any welfare benefit fund (within the meaning of
Section 419 of the Code) related to a Welfare Plan, there is no
disqualified benefit (within the meaning of Section 4976(b) of the Code)
that would result in the imposition of a tax under Section 4976(a) of the
Code, (iii) any Assabet Benefit Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and
every case has complied, with all of the applicable material requirements
of Section 4980B of the Code, ERISA, Title XXII of the Public Health
Service Act and the Social Security Act, and (iv) all Welfare Plans may
be amended or terminated at any time on or after the Closing Date without
incurring any liability thereunder.
(g) Assabet has no obligations for retiree health and life benefits
under any Assabet Benefit Plan, other than coverage as may be required
under Section 4980B of the Code or Part 6 of Title I of ERISA, or under
the continuation of coverage provisions of the laws of any state or
locality.
(h) Neither the execution of this Agreement, nor shareholder
approval of this Agreement, nor consummation of the Transactions will (i)
entitle any employees of Assabet to severance pay or any increase in
severance pay upon any termination of employment after the date of this
Agreement, (ii) accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation
or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Assabet Benefit Plans, (iii)
result in any breach or violation of, or a default under, any of the
Assabet Benefit Plans, (iv) result in any payment that would be a
"parachute payment" to a "disqualified individual," as those terms are
defined in Section 280G of the Code, without regard to whether such
payment is reasonable compensation for personal services performed or to
be performed in the future, or (v) result in any payment that would be
nondeductible pursuant to Section 162(m) of the Code.
6.16. Labor Matters. Assabet is not 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 Assabet the subject of a proceeding
asserting that it has committed an unfair
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labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel Assabet to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike, work stoppage or other labor
dispute, arbitration, lawsuit or administrative proceeding involving it pending
or, to Assabet's knowledge, threatened, nor is Assabet aware of any activity
involving its employees seeking to certify a collective bargaining unit or
engaging in other organizational activity. No Assabet Employees are represented
by any labor union.
6.17. Environmental Matters. Except as set forth in Section 6.17 of
Assabet's Disclosure Schedules:
(a) To Assabet's knowledge, Assabet is in material compliance with
applicable Environmental Laws;
(b) To Assabet's knowledge, no real property (including buildings
or other structures) currently or formerly owned or operated by Assabet,
or any property in which Assabet has held a security interest, Lien or a
fiduciary or official management role within the past five (5) years
("Assabet Loan Property"), has been contaminated with, or has had any
release of, any Hazardous Substance except in compliance with
Environmental Laws;
(c) To Assabet's knowledge, Assabet has not participated in the
management regarding Hazardous Substances of any Assabet Loan Property
which has been contaminated with any Hazardous Substance except in
compliance with Environmental Laws;
(d) To Assabet's knowledge, Assabet has no present material
liability for any Hazardous Substance contamination on any third party
property;
(e) Assabet has not received any notice, demand letter, claim or
request for information alleging any violation of, or liability under,
any Environmental Law;
(f) To Assabet's knowledge, Assabet is not subject to any order,
decree, injunction or other agreement with any Governmental Authority or
any third party relating to any Environmental Law;
(g) To Assabet's knowledge, there are no existing conditions
involving Assabet, any currently or formerly owned or operated property,
or any Assabet Loan Property, that could reasonably be expected to result
in any material claims, or liability against Assabet, or result in any
restrictions on the ownership, use or transfer of any currently owned
property pursuant to any Environmental Law; and
(h) To Assabet's knowledge, Assabet has delivered or made available
to AVB copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information concerning
known environmental conditions in its possession, or reasonably available
to it, relating to Assabet and any currently or formerly owned or
operated property or any Assabet Loan Property.
6.18. Tax Matters.
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(a) For the taxable periods ended December 31, 2005, 2004, 2003,
2002, 2001 and 2000, Assabet has filed all Tax Returns that it was
required to file under applicable laws and regulations. All such Tax
Returns were correct and complete in all material respects and have been
prepared in substantial compliance with all applicable laws and
regulations. All Taxes due and owing by Assabet (whether or not shown on
any Tax Return) have been paid. Assabet is not the beneficiary of any
extension of time within which to file any Tax Return. No claim has ever
been made by an authority in a jurisdiction where Assabet does not file
Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens for Taxes (other than Taxes not yet due
and payable) upon any of the assets of Assabet.
(b) Assabet has withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
(c) No foreign, federal, state, or local tax audits or
administrative or judicial Tax proceedings are pending or being conducted
with respect to Assabet. Assabet has not received from any foreign,
federal, state, or local taxing authority (including jurisdictions where
Assabet has not filed Tax Returns) any (i) notice indicating an intent to
open an audit or other review, (ii) request for information related to
Tax matters, or (iii) notice of deficiency or proposed adjustment for any
amount of Tax proposed, asserted, or assessed by any taxing authority
against Assabet.
(d) Assabet has provided Westborough with true and complete copies
of the United States federal, state, local, and foreign income Tax
Returns filed with respect to Assabet for taxable periods ended December
31, 2005, 2004 and 2003. Assabet has disclosed in Section 6.18(d) of
Assabet's Disclosure Schedules those Tax Returns that have been audited
during the last three years, and those Tax Returns that currently are the
subject of an audit. Assabet has delivered to Westborough correct and
complete copies of all examination reports, and statements of
deficiencies assessed against or agreed to by Assabet, filed for the
years ended December 31, 2005, 2004 and 2003. Assabet has timely and
properly taken such actions in response to, and in compliance with,
notices Assabet has received from the Internal Revenue Service in respect
of information reporting and backup and nonresident withholding as are
required by law, including the notation in their records of any B notices
or C notices received with respect to any depositors, customer,
shareholders or payees.
(e) Assabet has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment
or deficiency.
(f) Assabet has not filed a consent under Code Section 341(f)
concerning collapsible corporations. Assabet is not a party to any
agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in the payment of (i) any "excess
parachute payment" within the meaning of Code Section 280G (or any
corresponding provision of state, local or foreign Tax law), or (ii) any
amount that will not be fully deductible as a result of Code Section
162(m) (or any corresponding provision of state, local or foreign Tax
law). AVB has not been a United States real property holding corporation
within the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii). Assabet has disclosed on its
federal income Tax Returns all positions taken therein that could give
rise to a substantial
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understatement of federal income Tax within the meaning of Code Section
6662. Assabet is not a party to or bound by any Tax allocation or sharing
agreement. Assabet (i) has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group, the
common parent of which was AVB), and (ii) has no liability for the Taxes
of any Person (other than Assabet) under Reg. Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) The unpaid Taxes of Assabet (i) did not, as of the end of the
most recent period covered by the Assabet Reports filed on or prior to
the date of this Agreement, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the
financial statements included in the Assabet Reports filed on or prior to
the date of this Agreement (rather than in any notes thereto), and (ii)
do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of
Assabet in filing its Tax Returns. Since the end of the most recent
period covered by the Assabet Reports filed prior to the date of this
Agreement, Assabet has not incurred any liability for Taxes arising from
extraordinary gains or losses, as that term is used in GAAP, outside the
ordinary course of business consistent with past custom and practice.
(h) Assabet will not 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: (i) change in method of accounting for a taxable period ending on or
prior to the Closing Date, (ii) "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,
(iii) 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), (iv)
installment sale or open transaction disposition made on or prior to the
Closing Date, or (v) prepaid amount received on or prior to the Closing
Date.
6.19. Risk Management Instruments. Assabet is not a party, nor has it
agreed to enter into any Derivatives Contract nor does it own securities that
(i) are referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate mortgage
derivatives," or (ii) are likely to have changes in value as a result of
interest or exchange rate changes that significantly exceed normal changes in
value attributable to interest or exchange rate changes, except for those
Derivatives Contracts and other instruments legally purchased or entered into
in the ordinary course of business, consistent with safe and sound banking
practices and regulatory guidance. All of such Derivatives Contracts or other
instruments are legal, valid and binding obligations of Assabet, enforceable in
accordance with their terms (except as enforcement may be limited by general
principles of equity, whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally), and are in full force and effect. Assabet has duly
performed, in all material respects, all of their material obligations
thereunder to the extent that such obligations to perform have accrued; and, to
Assabet's knowledge, there are no breaches, violations or defaults, or
allegations or assertions of such, by any party thereunder which would have, or
would reasonably be expected to have, a Material Adverse Effect on Assabet.
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6.20. Investment Securities. Except for pledges to secure public and
trust deposits, Federal Reserve borrowings, Federal Home Loan Bank advances,
repurchase agreements and reverse repurchase agreements entered into in
arms'-length transactions pursuant to normal commercial terms and conditions
and other pledges required by law, none of the investments reflected in the
balance sheet of AVB contained in the Assabet Reports, and none of the material
investments made by Assabet since January 1, 2006, is subject to any
restriction (contractual, statutory or otherwise) that would materially impair
the ability of the entity holding such investment freely to dispose of such
investment at any time. The information (including electronic information and
information contained on tapes and computer disks) with respect to all
investment securities (including mortgaged-backed securities) of Assabet
furnished to Westborough by Assabet is, as of the respective dates indicated
therein, true and correct in all material respects.
6.21. Loans; Nonperforming and Classified Assets.
(a) Each Loan on the books and records of Assabet (i) was made and
has been serviced in all material respects in accordance with customary
lending standards in the ordinary course of business, (ii) is evidenced
in all material respects by appropriate and sufficient documentation, and
(iii) to the knowledge of Assabet, constitutes the legal, valid and
binding obligation of the obligor named therein, subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditor's rights
or by general equity principles. The information (including electronic
information and information contained on tapes and computer disks) with
respect to all Loans of Assabet furnished to Westborough by Assabet is,
as of the respective dates indicated therein, true and correct in all
material respects. To the best knowledge of Assabet, all Loans
originated, directly or through third party mortgage brokers, have been
originated in compliance with all federal, state and local laws,
including, without limitation, the Real Estate Settlement Procedures Act
of 1974, as amended.
(b) Assabet has disclosed in Section 6.21(b) of Assabet's
disclosure Schedules, as of the latest practicable date: (i) any written
or oral Loan under the terms of which the obligor is 60 or more days
delinquent in payment of principal or interest, or to Assabet's
knowledge, in default of any other material provision thereof, (ii) each
Loan which has been classified as "substandard," "doubtful," "loss" or
"special mention" (or words of similar import) by Assabet or an
applicable regulatory authority (it being understood that no
representation is being made that FDIC or the Staff of the Massachusetts
Bank Commissioner would agree with the loan classifications established
by Assabet), (iii) a listing of the OREO acquired by foreclosure or by
deed-in-lieu thereof, including the book value thereof, and (iv) each
Loan with any director, executive officer or five percent or greater
shareholder of Assabet, or to the knowledge of Assabet, any Person
controlling, controlled by or under common control with any of the
foregoing.
(c) No agreement, pursuant to which any Loans or other assets have
been or shall be sold by Assabet, entitled the buyer of such Loans or
other assets, unless there is material breach of a representation or
covenant by Assabet, to cause Assabet to repurchase such Loan or other
asset, or the buyer to pursue any other form of recourse against Assabet.
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6.22. Bank Owned Life Insurance. Assabet has disclosed in Section 6.22 of
Assabet's Disclosure Schedules a true, correct and complete description of all
BOLI owned by Assabet. The value of such BOLI, as of the date of this
Agreement, is fairly and accurately reflected on AVB's balance sheet contained
in the Assabet Reports in accordance with GAAP. Except as set forth in Section
6.22 of Assabet's Disclosure Schedules, all life insurance policies on the
lives of any of the current and former officers and directors of Assabet that
are maintained by Assabet and are otherwise included as assets on the books of
Assabet are, or will at the Mid-Tier Effective Time be, owned by Assabet, free
and clear of any claims thereon by the officers or members of their families,
except with respect to the death benefits thereunder, as to which Assabet
agrees that there will not be an amendment prior to the Mid-Tier Effective Time
without the consent of Westborough.
6.23. Properties. The real and material personal property owned by
Assabet or presently used by Assabet in its business is in an adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on its
business in the ordinary course of business consistent with its past practices.
Assabet has good and marketable title, free and clear of all Liens, to all of
the real and material personal properties and assets reflected on the
consolidated statement of financial condition of AVB as of December 31, 2005,
included in the Assabet Reports or acquired after such date, other than
properties sold by Assabet in the ordinary course of business, except (i) Liens
for current taxes and assessments not yet due or payable, (ii) pledges to
secure deposits and other Liens incurred in the ordinary course of its banking
business, (iii) such imperfections of title, easements and encumbrances, if
any, as are not, individually or in the aggregate, material in character,
amount or extent, and (iv) as reflected on the consolidated statement of
financial condition of AVB as of December 31, 2005, included in the Assabet
Reports. All real and personal property which is material to Assabet's business
on a consolidated basis and leased or licensed by Assabet or a Subsidiary of
Assabet is held pursuant to leases or licenses which are valid and enforceable
in accordance with their respective terms, and such leases will not terminate
or lapse prior to the Mid-Tier Effective Time, and there exists no material
default under any such leases or licenses by Assabet nor, to the knowledge of
Assabet and except as set forth in Section 6.23 of Assabet's Disclosure
Schedules, any event which, with notice or lapse of time or both, would
constitute a material default thereunder by Assabet, except for such defaults
which, individually, or in the aggregate, would not result in the forfeiture of
the use or occupancy of the property covered by such lease or in a material
liability to Assabet.
6.24. Intellectual Property. Assabet owns or possesses valid and binding
licenses and other rights to use, without payment of any material amount, all
material patents, copyrights, trade secrets, trade names, service marks and
trademarks used in its businesses, all of which have been disclosed in Section
6.24 of Assabet's Disclosure Schedules, and Assabet has not received any notice
of conflict with respect thereto that asserts the right of others. Assabet has
performed, in all material respects, all the obligations required to be
performed by it and is not in default under any contract, agreement,
arrangement or commitment relating to any of the foregoing.
6.25. Fiduciary Accounts. Xxxxxx has performed all of its duties in a
"fiduciary capacity" in a fashion that complied with all applicable laws,
regulations, orders, agreements, xxxxx, instruments, and common law standards
in effect at that time. Xxxxxx has not received notice of any claim,
allegation, or complaint from any person that Xxxxxx failed to perform these
duties in a manner that complied with all applicable laws, regulations, orders,
agreements, xxxxx,
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instruments, and common law standards, except for notices involving matters
that have been resolved and any cost of such resolution is reflected in AVB's
Financial Statements.
6.26. Capitalization. Assabet is qualified to elect "financial holding
company" status under the Xxxxx-Xxxxx-Xxxxxx Act of 1999 if it so chooses.
Xxxxxx is "well capitalized," as such term is defined in the rules and
regulations promulgated by the FDIC. Xxxxxx would be "well capitalized," as
such term is defined in the rules and regulations promulgated by the Federal
Reserve Board if Xxxxxx were a state-chartered member bank.
6.27. Community Reinvestment Act, Bank Secrecy, Anti-Money Laundering and
Customer Information Security. Assabet is not aware of, has not been advised
of, and has no reason to believe that any facts or circumstances exist which
would cause Xxxxxx: (i) to be deemed not to be in satisfactory compliance in
any material respect 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 in any material respect of
the Federal Bank Secrecy Act, as amended, and its implementing regulations (31
C.F.R. Part 103), the USA Patriot Act, and the regulations promulgated
thereunder, 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 in any material respect 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 Xxxxxx pursuant to 12 C.F.R. Part 364. Furthermore, the Board of
Directors of Xxxxxx has adopted, and Xxxxxx has implemented, an anti-money
laundering program that contains adequate and appropriate customer
identification verification procedures that have not been deemed ineffective in
any material respects by any Bank Regulators and that meet the requirements in
all material respects of Section 352 of the USA Patriot Act and the regulations
thereunder.
6.28. Books and Records. The books and records of Assabet are being
maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect, in all material
respects, all dealings and transactions in respect of the business, assets,
liabilities and affairs of Assabet.
6.29. Insurance. Assabet has disclosed in Section 6.29 of Assabet's
Disclosure Schedules all of the Insurance Policies currently maintained by
Assabet. Assabet is insured with reputable insurers against such risks and in
such amounts as the management of Assabet reasonably has determined to be
prudent in accordance with industry practices. All the Insurance Policies are
in full force and effect; Assabet is not in material default thereunder and has
not received any notice of non-renewal or cancellation with respect thereto;
and all claims thereunder have been filed in due and timely fashion, and
Assabet has timely provided such insurers with due notice of all matters which
may reasonably become a claim or otherwise constitute a basis for seeking
recovery under the Insurance Policies. There is no claim pending under any
Insurance Policy as to which coverage has been questioned, denied or disputed
by the underwriter of such policy.
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6.30. Allowance for Loan Losses. Assabet's allowance for loan losses is
in compliance with Assabet's existing methodology for determining the adequacy
of its allowance for loan losses and, to the knowledge of Assabet, the
standards established by applicable Governmental Authorities and the Financial
Accounting Standards Board and is adequate under all such standards.
6.31. Transactions with Affiliates. All "covered transactions" between
Xxxxxx and an "affiliate," within the meaning of Sections 23A and 23B of the
Federal Reserve Act, have been in compliance with such provisions and the
provisions of Federal Reserve Board Regulation W.
6.32. Required Vote; Antitakeover Provisions. The affirmative vote of
two-thirds of the trustees of AVB and two-thirds of the corporators of AVB at a
special meeting called to consider the subject is necessary to approve this
Agreement and the MHC Merger on behalf of AVB. No other vote of the trustees or
corporators of AVB is required by law, AVB Charter, AVB Bylaws or otherwise to
approve this Agreement and the Transactions.
6.33. Fairness Opinion. The AVB Board has received the oral opinion of
KBW, which opinion will be promptly confirmed in writing and dated as of the
date of this Agreement, to the effect that as of the date of this Agreement,
the Aggregate Merger Consideration is fair.
6.34. Proxy Statement. The information to be supplied by Assabet for
inclusion in the proxy statement to be sent to the shareholders of Westborough
Financial in connection with the Westborough Financial Meeting (the "Proxy
Statement") will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to shareholders of Westborough Financial or
at the time of the Westborough Financial Meeting, contain any statement which,
at such time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact, or omits to state any material
fact required to be stated therein, or necessary in order to make the
statements therein, not false or misleading.
6.35. Ownership of Westborough Financial Common Stock. None of AVB,
Merger Sub or any of AVB's Subsidiaries, or to Assabet's knowledge, any of its
other affiliates or associates (as such terms are defined under the Exchange
Act), owns beneficially or of record, directly or indirectly, or is a party to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, shares of Westborough Financial Common Stock
(other than shares held in a fiduciary capacity that are beneficially owned by
third parties or as a result of debts previously contracted) which in the
aggregate represent 5% or more of the outstanding Westborough Financial Common
Stock.
6.36. Financial Ability. At the Mid-Tier Effective Time, AVB or Xxxxxx
will have available to it sources of capital and financing sufficient to
fulfill its cash obligations hereunder to pay the Aggregate Merger
Consideration to holders of Westborough Financial Common Stock pursuant to
Section 3.1(c) hereof. The consummation of the transactions contemplated by
this Agreement are not subject, to or otherwise conditioned upon, AVB or Xxxxxx
obtaining financing of any kind from any source. Immediately following
completion of the Transactions, New Bank will be "well capitalized," as such
term is defined in the rules and regulations promulgated by the FDIC. If Xxxxxx
were a state-chartered member bank, AVB would be, as of the date of this
Agreement, and would continue to be immediately following completion of the
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Transactions, "well capitalized," as such term is defined in the rules and
regulations promulgated by the Federal Reserve Board.
6.37. Disclosure. The representations and warranties contained in this
Article VI, when considered as a whole, together with any certificate, list or
other writing, including, but not limited to, Assabet's Disclosure Schedules,
specifically required to be furnished to Westborough pursuant to the provisions
hereof, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this Agreement and therein not misleading.
ARTICLE VII.
COVENANTS
7.1. Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Westborough, Merger Sub, Xxxxxx and AVB agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Transactions as promptly as practicable and otherwise to enable
consummation of the Transactions, including the satisfaction of the conditions
set forth in Article VIII hereof, and shall cooperate fully with the other
party hereto to that end.
7.2. Shareholder Approval.
(a) Westborough Financial shall promptly prepare and file with the
SEC the Proxy Statement. Westborough Financial shall make the draft Proxy
Statement available to AVB for review promptly after preparation thereof,
and shall give AVB an opportunity to comment and suggest revisions to
such Proxy Statement prior to filing with the SEC. Promptly after the
Proxy Statement is cleared by the SEC, Westborough Financial shall mail
the Proxy Statement to its shareholders.
(b) The trustees of Westborough MHC, as the majority stockholder of
Westborough Financial, have approved this Agreement and any other matters
required to be approved by Westborough Financial's shareholders for
consummation of the Transactions. Westborough Financial agrees to take,
in accordance with applicable law and the Westborough Financial Charter
and Bylaws, all action necessary to call, give notice of, convene, and
hold as soon as reasonably practicable a meeting of its shareholders to
consider and vote upon the approval of this Agreement and any other
matters required to be approved by Westborough Financial's shareholders
for consummation of the Transactions (including any adjournment or
postponement, the "Westborough Financial Meeting"). Except with the prior
approval of AVB, no other matters (except for routine annual meeting
matters and matters required by the federal securities laws, in the event
the Westborough Financial Meeting is an annual meeting) shall be
submitted for the approval of Westborough Financial shareholders at the
Westborough Financial Meeting. Subject to Section 7.7, the Westborough
Financial Board shall, at all times prior to and during such meeting,
recommend such approval (the "Westborough Financial Board
Recommendation") and shall take all reasonable lawful action to solicit
such approval by its shareholders. Nothing contained in Section 7.7 shall
affect or otherwise limit the obligation of Westborough Financial to
call, give notice of, convene, and hold the Westborough Financial
Meeting. AVB, as the sole stockholder of
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Merger Sub, has approved this Agreement and any other matters required to
be approved by Merger Sub's shareholders for consummation of the
Transactions.
7.3. Corporator Approval. Westborough MHC and AVB each agree to take, in
accordance with applicable law their respective charters and bylaws, all action
necessary to call, give notice of, convene, and hold as soon as reasonably
practicable meetings of their corporators to consider and vote upon the
approval of this Agreement and any other matters required to be approved by
Westborough MHC's corporators or AVB's corporators for consummation of the
Transactions.
7.4. Regulatory Filings.
(a) Each of AVB and Westborough and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to
promptly prepare all documentation, to effect all filings and to obtain
all permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
Transactions and any other transactions contemplated by this Agreement
and the Bank Merger Agreement, and to comply with the terms and
conditions of all such permits, consents, approvals and authorizations of
all such Governmental Authorities; and any initial filings with
Governmental Authorities (other than the Proxy Statement) shall be made
by AVB as soon as reasonably practicable after the execution hereof. Each
of AVB and Westborough shall have a reasonable time to review such
filings in advance, and to the extent practicable, each shall consult
with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all 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 such parties agrees to act reasonably and as
promptly as practicable. Each party hereto agrees that it shall consult
with the other parties hereto with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and the Bank Merger
Agreement, and each party shall keep the other parties apprised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other parties
with all information concerning itself, its Subsidiaries, directors,
trustees, officers and shareholders, and such other matters as may be
reasonably necessary or advisable in connection with any filing, notice
or application made by or on behalf of such other parties or any of their
respective Subsidiaries to any third party or Governmental Authority.
7.5. Press Releases. Westborough and AVB shall consult with each other
before issuing any press release with respect to the Transactions or this
Agreement and shall not issue any such press release or make any such public
statements without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party (but after such consultation, to the extent
practicable in the circumstances), issue such press release or make such public
statements as may, upon the advice of outside counsel, be required by law or
the rules or regulations of NASDAQ or other regulatory authority. Westborough
and AVB shall cooperate to develop all public announcement
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materials and make appropriate management available at presentations related to
the Transactions as reasonably requested by the other party.
7.6. Access; Information.
(a) Westborough and Assabet agree that upon reasonable notice and
subject to applicable laws relating to the exchange of information,
Westborough shall afford AVB and AVB's officers, employees, counsel,
accountants and other authorized representatives, and AVB shall afford
Westborough and Westborough's officers, employees, counsel, accountants
and other authorized representatives, such access during normal business
hours throughout the period prior to the Mid-Tier Effective Time to the
books, records (including, without limitation, Tax Returns and work
papers of independent auditors), properties and personnel, and to such
other information as AVB or Westborough may reasonably request and,
during such period, Westborough shall furnish promptly to AVB, and AVB
shall furnish promptly to Westborough, all information concerning its
business, properties and personnel as AVB or Westborough, as the case may
be, may reasonably request. Representatives of Westborough Financial's
senior management will meet periodically with representatives of AVB's
senior management to coordinate post-closing integration planning,
including working toward conforming Westborough Financial's and AVB's
asset/liability management, lending practice, credit review and
administrative and related policies and practices.
(b) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this
Section 7.6 (as well as any other information obtained prior to the date
of this Agreement in connection with the entering into of this Agreement)
for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of law, each
party shall keep confidential, and shall cause its representatives to
keep confidential, all information and documents obtained pursuant to
this Section 7.6 (as well as any other information obtained prior to the
date of this Agreement in connection with the entering into of this
Agreement), unless such information (i) was already known to such party,
(ii) becomes available to such party from other sources not known by such
party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the party to which such information
pertains, or (iv) is or becomes readily ascertainable from publicly
available sources. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or
extracts thereof containing information and data as to another party
hereto to be returned to the party which furnished the same. No
investigation by any party of the business and affairs of any other party
shall affect or be deemed to modify or waive any representation,
warranty, covenant or agreement in this Agreement, or the conditions to
any party's obligation to consummate the transactions contemplated by
this Agreement.
7.7. Acquisition Proposals. Westborough agrees that neither it nor any of
its officers, trustees, or directors shall, and that Westborough shall use its
reasonable best efforts to cause its employees, agents and representatives
(together with Westborough's officers, directors and trustees, the
"Representatives") not to, directly or indirectly, initiate, solicit, encourage
or otherwise facilitate (including, without limitation, by way of furnishing
confidential information or data) any inquiries regarding, or the making of,
any Acquisition Proposal (other than by AVB). Westborough further agrees that
neither it nor any of its officers, directors or trustees shall, directly or
indirectly, and that Westborough shall use its reasonable best efforts to cause
its
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Representatives not to, engage in any negotiations concerning, or provide any
confidential information or data to or have any discussions with, any Person
relating to an Acquisition Proposal, or enter into any definitive agreement,
arrangement or understanding with respect to an Acquisition Proposal or
requiring it (or conditioned upon requiring it) to abandon, terminate or fail
to consummate the MHC Merger, the Mid-Tier Merger or any other transactions
contemplated by this Agreement; provided, however, that nothing contained in
this Agreement shall prevent Westborough Financial or the Westborough Financial
Board, between the date of this Agreement and prior to the date of Westborough
Financial Meeting, from (A) providing information in response to a request
therefor by a Person who has made an unsolicited bona fide written Acquisition
Proposal if the Westborough Financial Board receives from the Person so
requesting such information an executed confidentiality agreement no less
favorable to it than the Confidentiality Agreement entered into on May 12, 2006
by AVB and Westborough Financial (and Westborough Financial shall enforce and
not waive any provision of any confidentiality agreement entered into with any
such Person contemplated by this Section 7.7); (B) engaging in any negotiations
or discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal; or (C) recommending such an Acquisition Proposal to the
shareholders of Westborough Financial, if and only to the extent that, (i) in
each such case referred to in clause (A), (B) or (C) above, the Westborough
Financial Board determines in good faith (after consultation with outside legal
counsel) and by a majority vote of the entire Westborough Financial Board that
such action would be required in order for its directors to comply with their
respective fiduciary duties under applicable law, (ii) in each such case
referred to in clause (A) or (B) above, the Westborough Financial Board also
determines in good faith (after consultation with its financial advisor) that
such Acquisition Proposal, if accepted, is reasonably likely to lead to a
Superior Proposal (as hereinafter defined), and (iii) in the case referred to
in clause (C) above, (w) the Westborough Financial Board also determines in
good faith (after consultation with its financial advisor) and by a majority of
the entire Westborough Financial Board that such Acquisition Proposal is a
Superior Proposal, (x) Westborough Financial Board has given AVB five (5)
Business Days' prior written notice of its intention to recommend such
Acquisition Proposal to the shareholders of Westborough Financial, (y) the
Westborough Financial Board has considered any changes to the Aggregate Merger
Consideration, Per Share Merger Consideration or to this Agreement (if any)
proposed by AVB, and (z) Westborough Financial Board has determined in good
faith and by a majority vote of the entire Westborough Financial Board, after
consultation with Westborough Financial's outside legal counsel and after
consultation with its financial advisor, that such unsolicited proposal remains
a Superior Proposal even after the changes proposed by AVB. A "Superior
Proposal" shall be a bona fide Acquisition Proposal for 100% of the outstanding
securities of Westborough Financial that is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal and, if consummated, is
reasonably likely to result in a transaction more favorable to Westborough MHC
and to Westborough Financial's shareholders from a financial point of view than
the Mid-Tier Merger. Nothing contained in this Agreement shall prevent
Westborough Financial or the Westborough Financial Board from complying with
its disclosure obligations under Rule 14d-9 or 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal (it being understood that
if any such disclosure constitutes or contemplates (i) a withholding,
withdrawing, modification, amendment or qualification to the Westborough
Financial Board Recommendation
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that is adverse to AVB or (ii) recommendation of an Acquisition Proposal,
Westborough Financial shall comply with all provisions of this Section 7.7).
Westborough agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposals and
shall request the return or destruction of all confidential information
provided to any such parties prior to the date of this Agreement. Westborough
Financial agrees that it will notify AVB immediately if any inquiries,
proposals or offers are received by, any such information is requested from, or
any discussions or negotiations are sought to be initiated or continued with,
any of its Representatives relating to an Acquisition Proposal. Westborough
will promptly (within one Business Day) advise AVB following receipt of any
Acquisition Proposal and the substance thereof (including the identity of the
Person making such Acquisition Proposal), and will keep AVB apprised of any
related developments, discussions and negotiations (including the terms and
conditions (and any amendments or modifications thereto) of the Acquisition
Proposal) on a current basis. Westborough Financial will use its best efforts
to enforce (and will not waive any provisions of) any confidentiality or
similar agreement entered into by it or on its behalf by RBC or otherwise
relating to a potential Acquisition Proposal.
7.8. Certain Policies. Prior to the Effective Date, Westborough shall,
consistent with GAAP, the rules and regulations of the SEC and applicable
banking laws and regulations, modify or change its loan, OREO, accrual,
reserve, tax, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) so as to be applied on
a basis that is consistent with that of AVB; provided, however, that no such
modifications or changes need be made prior to the satisfaction of all of the
conditions set forth in Article VIII; and further provided that in any event,
no accrual or reserve made by Westborough Financial or any of its Subsidiaries
pursuant to this Section 7.8 shall constitute or be deemed to be a breach,
violation of or failure to satisfy any representation, warranty, covenant,
agreement, condition or other provision of this Agreement or otherwise be
considered in determining whether any such breach, violation or failure to
satisfy shall have occurred. The recording of any such adjustments shall not be
deemed to imply any misstatement of previously furnished financial statements
or information and shall not be construed as concurrence of Westborough
Financial or its management with any such adjustments.
7.9. Indemnification.
(a) From and after the MHC Effective Time, AVB (the "Indemnifying
Party") shall indemnify and hold harmless each present and former
director, officer and employee of Westborough, determined as of the MHC
Effective Time (each an "Indemnified Party" and collectively the
"Indemnified Parties") against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior
to the MHC Effective Time, whether asserted or claimed prior to, at or
after the MHC Effective Time, arising in whole or in part out of, or
pertaining to the fact that he or she was a trustee, director, officer or
employee of Westborough or is or was serving at the request of
Westborough as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, including, without
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limitation, matters related to the negotiation, execution and performance
of this Agreement or any of the transactions contemplated hereby, to the
fullest extent which such Indemnified Parties would be entitled under the
Westborough Financial Charter and Westborough Financial Bylaws as in
effect as of the date of this Agreement.
(b) Any Indemnified Party wishing to claim indemnification under
this Section 7.9, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Indemnifying
Party, but the failure to so notify shall not relieve the Indemnifying
Party of any liability it may have to such Indemnified Party if such
failure does not actually prejudice the Indemnifying Party. In the event
of any such claim, action, suit, proceeding or investigation (whether
arising before or after the MHC Effective Time), (i) the Indemnifying
Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently
incurred by such Indemnified Parties in connection with the defense
thereof, except that if the Indemnifying Party elects not to assume such
defense, or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between the Indemnifying Party
and the Indemnified Parties, the Indemnified Parties may retain counsel
which is reasonably satisfactory to the Indemnifying Party, and the
Indemnifying Party shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties (which may not exceed one firm for
all Indemnified Parties, unless the proposed counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues
which raise conflicts of interest among such parties, in which case the
Indemnifying Party shall pay the reasonable fees and expenses of one
additional counsel to the extent necessary to avoid such conflict), (ii)
the Indemnified Parties will cooperate in the defense of any such matter,
(iii) the Indemnifying Party shall not be liable for any settlement
effected without its prior written consent, and (iv) the Indemnifying
Party shall have no obligation hereunder in the event that a federal or
state banking agency or a court of competent jurisdiction shall determine
that indemnification of an Indemnified Party by the Indemnifying Party in
the manner contemplated hereby is prohibited by applicable laws and
regulations.
(c) Prior the MHC Effective Time, AVB shall purchase an extended
reporting period endorsement under Westborough Financial's existing
directors' and officers' liability insurance coverage for Westborough
Financial's directors and officers in a form reasonably acceptable to
Westborough Financial which shall provide such directors and officers
with coverage for six years following the MHC Effective Time of not less
than the existing coverage under, and have other terms no materially less
favorable on the whole to the insured Persons than the directors' and
officers' liability insurance coverage presently maintained by
Westborough Financial.
(d) If AVB or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or
surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any other entity, then and in each
case, proper provision shall be made so that the successors and assigns
of AVB shall assume the obligations set forth in this Section 7.9.
7.10. Employment and Benefit Matters.
(a) As soon as administratively practicable after the Mid-Tier
Effective Time, AVB shall take all reasonable action so that employees of
Westborough (i) shall receive employee
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benefits which are no less favorable than those generally afforded to
other employees of AVB or its Subsidiaries holding similar positions, and
(ii) shall be entitled to participate in each employee benefit plan,
program or arrangement of AVB of general applicability (the "AVB Benefit
Plans") to the same extent as similarly-situated employees of AVB and its
Subsidiaries (it being understood that inclusion of the employees of
Westborough in the AVB Benefit Plans may occur at different times with
respect to different plans). AVB shall cause each AVB Benefit Plan in
which employees of Westborough are eligible to participate to recognize,
for purposes of determining eligibility to participate in, the vesting of
benefits and for all other purposes (but not for accrual or amount of
benefits) under the AVB Benefit Plans, the service of such employees with
Westborough to the same extent as such service was credited for such
purpose by Westborough. Westborough Employees will be given credit for
past service with Westborough for purposes of AVB's vacation policy.
(b) Notwithstanding anything to the contrary contained in this
Agreement, AVB 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 Westborough. To the extent amounts
are distributable under Westborough Benefit Plans and constitute
"eligible rollover distributions" (as defined in Section 402(f)(2)(A) of
the Code), said amounts may be rolled over to any tax-qualified AVB
Benefit Plan that accepts rollover distributions or to any eligible
individual retirement account.
(c) Except as otherwise expressly provided in this Agreement, AVB
shall honor, and Surviving Corporation shall continue to be obligated to
perform, in accordance with their terms, all benefit obligations to, and
contractual rights of, current and former employees of Westborough
existing as of the Effective Date, as well as all employment, severance,
deferred compensation or "change-in-control" agreements, plans or
policies of Westborough, but only to the extent that such obligations are
set forth in Sections 4.1(b)(v) or 5.15(a) of Westborough's Disclosure
Schedules. AVB acknowledges that the consummation of the MHC Merger will
constitute a "change-in-control" of Westborough for purposes of any
employee benefit plans, agreements and arrangements of Westborough.
(d) If employees of Westborough become eligible to participate in a
medical, dental or health plan of AVB, AVB shall cause each such plan to
(i) waive any preexisting condition limitations to the extent such
conditions are covered under the applicable medical, health or dental
plans of AVB, (ii) waive any waiting period limitation or evidence of
insurability requirement which would otherwise be applicable to such
employee on or after the Mid-Tier Effective Time to the extent such
employee had satisfied any similar limitation or requirement under an
analogous Westborough Benefit Plan prior to the Mid-Tier Effective Time,
and (iii) provide full credit under such plans for any deductibles,
co-payments and out-of-pocket expenses incurred by the employees and
their beneficiaries during the portion of the calendar year prior to such
participation.
(e) Subject to Section 7.12(ii) hereof, neither AVB nor any AVB
Subsidiary shall have any obligation to continue the employment of any
employee of Westborough, and nothing contained in this Agreement shall
give any such Person the right to continued employment with AVB or a AVB
Subsidiary after the Mid-Tier Effective Time. An employee of Westborough
(other than an employee who is party to an employment agreement, a
severance agreement or a special termination agreement), shall be
entitled to receive severance payments in accordance with, and to
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the extent provided in, Westborough's merger severance benefit program
disclosed in Section 5.15(a) of Westborough's Disclosure Schedules.
(f) Westborough Financial maintains a tax-qualified employee stock
ownership plan for the benefit of employees of Westborough (the "ESOP").
The ESOP shall be terminated as of the Mid-Tier Effective Time pursuant
to the terms of the ESOP. As soon as practicable following the Mid-Tier
Effective Time, AVB shall file, or cause to be filed, all necessary
documents with the Internal Revenue Service for a favorable determination
letter for termination of the ESOP as of the Mid-Tier Effective Time. As
soon as practicable after the receipt of a favorable determination letter
for termination from the Internal Revenue Service, the account balances
in the ESOP shall be distributed to participants and beneficiaries in
accordance with applicable law and the ESOP. Prior to the Mid-Tier
Effective Time, contributions to, and payments on the loan of, the ESOP
shall be made consistent with past practices on the regularly scheduled
payment dates.
(g) Certain employees of Westborough jointly designated in writing
by Westborough and Assabet shall be entitled to receive a "retention"
bonus from Westborough or Assabet, as the case may be, in the event such
employee remains an employee of Westborough or Assabet, as applicable,
until the Effective Date (or in certain cases, through a post-closing
transition period, including systems conversion, if applicable), provided
that such employee satisfactorily fulfills the duties and
responsibilities of the position of such employee through the Effective
Date or thereafter, if applicable. The aggregate amount of such retention
bonuses shall be within the range set forth in Section 7.10(g) of
Assabet's Disclosure Schedules, and the employees entitled to receive
retention bonuses and the amount and timing of each such bonus shall be
mutually agreed upon in writing by the Chief Executive Officer of
Westborough Financial and the Chief Executive Officer of AVB. Retention
bonuses shall not be payable to any employee of Westborough who is a
party to an employment or other agreement that provides severance
benefits in the event of a change in control of Westborough.
7.11. Notification of Certain Matters. Each of Westborough and AVB shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) if it had been known as of the date of this Agreement, would have been
required to have been included in that party's Disclosure Schedules, (ii) is
reasonably likely, individually or taken together with all other facts, events
and circumstances known to it, to result in any Material Adverse Effect with
respect to it, or (iii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained in this
Agreement.
7.12. Payments and Related Agreements. Concurrently with the execution of
this Agreement by Westborough and Assabet, (i) Assabet and Westborough have
entered into a Payments and Waiver Agreement with each of JFM, Xxxx X.
Xxxxxxxxxx and Xxxxxx X. Xxxxxxx in a form that has been Previously Disclosed
(the "Payments Agreements"), and (ii) AVB has entered into an Employment
Agreement with JFM in a form that has been Previously Disclosed (the
"Employment Agreement"). Subject to the terms of such Employment Agreement, JFM
will remain an operating officer of AVB and New Bank until his retirement.
7.13. Update of Disclosure Schedules. From time to time prior to the MHC
Effective Time, Westborough and Assabet will promptly supplement or amend their
respective Disclosure Schedules in writing to reflect any matter which, if
existing, occurring or known at the date of
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this Agreement, would have been required to be set forth or described in their
Disclosure Schedules or which is necessary to correct any information in their
Disclosure Schedules which has been rendered inaccurate thereby. In addition,
at or prior to the MHC Effective Time, Westborough shall provide Assabet, and
Assabet shall provide Westborough, with a complete written copy of their
respective Disclosure Schedules, marked to show any and all such supplements
and amendments, and/or, if no such supplements or amendments were made to a
particular Section of their Disclosure Schedules, Westborough shall provide
Assabet, and Assabet shall provide Westborough with a certificate signed on
behalf of them by a duly authorized officer to such effect. No supplement or
amendment to Westborough's or Assabet's Disclosure Schedules shall have any
effect for the purpose of determining satisfaction of the conditions set forth
in Section 8.2(a) or Section 8.3(a) hereof or compliance by Westborough or
Assabet with the covenants set forth in Article VII hereof.
7.14. Current Information.
(a) As soon as practicable, Westborough will furnish to Assabet,
and Assabet shall furnish to Westborough, copies of all such financial
statements and reports as it shall send to its shareholders, the SEC or
any other Governmental Authority, to the extent any such reports
furnished to any such Governmental Authority are not confidential and
except as legally prohibited thereby, and Westborough will furnish to
Assabet, and Assabet will furnish to Westborough, such additional
financial data as Assabet or Westborough may reasonably request.
(b) Promptly upon receipt thereof, Westborough will furnish to
Assabet, and Assabet will furnish to Westborough, copies of all internal
control reports submitted to Westborough and Assabet, respectively, by
independent auditors in connection with each annual, interim or special
audit of the books of Westborough and Assabet, respectively, made by such
auditors.
(c) Westborough will promptly notify Assabet, and Assabet will
promptly notify Westborough, of any material change in the normal course
of business or in the operation of the properties of Westborough or
Assabet, respectively, and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material litigation
involving Westborough or Assabet, respectively, and will keep each other
reasonably informed of such events.
7.15. Loan Loss Reserves. During the period from the date of this
Agreement to the MHC Effective Time, Westborough Bank shall provide Xxxxxx, and
Xxxxxx shall provide Westborough Bank, with any information Xxxxxx or
Westborough Bank shall reasonably request regarding each other's Loan Loss
Reserves.
7.16. ALCO Management. Westborough Bank and Xxxxxx agree to manage their
assets and liabilities in accordance with their asset and liability management
policies as in effect on the date of this Agreement, unless otherwise agreed by
the parties. Neither Westborough Bank nor Xxxxxx shall amend or modify such
policy without the express written consent of the other party. Westborough Bank
and Xxxxxx agree to consult on investment programs to be administered by
Westborough Bank and Xxxxxx, respectively.
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ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGERS
8.1. Conditions to Each Party's Obligation to Effect the Mergers. The
respective obligations of each of the parties hereto to consummate the MHC
Merger and the Mid-Tier Merger is subject to the fulfillment, where permitted
by law, or written waiver by the parties hereto prior to the Closing Date of
each of the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by holders of not less than two-thirds of the outstanding
Westborough Financial Common Stock entitled to vote at the Westborough
Financial Meeting and any other approvals set forth in Section 5.4 of
Westborough's Disclosure Schedules shall have been received.
(b) Corporator Approvals. This Agreement shall have been duly
approved by not less than two-thirds of the corporators of Westborough
MHC and not less than two-thirds of the corporators of AVB at meetings
duly held for that purpose.
(c) Regulatory Approvals. All regulatory approvals required to
consummate the Transactions shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect
thereof shall have expired, and no such approval shall contain any
conditions, restrictions or requirements which the AVB Board or the
Westborough Financial Board reasonably determines in good faith would,
individually or in the aggregate, materially reduce the benefits of the
Transactions to such a degree that AVB or Westborough Financial would not
have entered into this Agreement had such conditions, restrictions or
requirements been known at the date of this Agreement.
(d) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect
and prohibits consummation of the Transactions.
(e) Tax Opinions. AVB and Merger Sub shall have received a letter
setting forth the written opinion of Xxxxx Xxxx LLP, in form and
substance reasonably satisfactory to AVB and Merger Sub, dated as of the
Closing Date, and Westborough shall have received a letter setting forth
the written opinion of Xxxxxxx Xxxxxxxx & Wood LLP, in form and substance
reasonably satisfactory to Westborough, dated as of the Closing Date, in
each case substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such letter, the MHC Merger
will qualify as a tax-free reorganization described in Section 368(a) of
the Code, and neither the Mid-Tier Merger nor the Bank Merger will
adversely affect such qualification.
8.2. Conditions to Obligation of Westborough. The obligation of
Westborough to consummate the MHC Merger and the Mid-Tier Merger is also
subject to the fulfillment or written waiver by Westborough prior to the
Closing Date of each of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Assabet in this Agreement that is qualified as to
materiality shall be true and correct and each such representation or
warranty that is not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement, as
applicable, and (except to the extent such
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representations and warranties speak as of an earlier date, with respect
to which such representations and warranties shall be true and correct in
all material respects as of such earlier date) as of the Closing Date as
though made on and as of the Closing Date, and Westborough shall have
received a certificate, dated the Effective Date, signed by the Chief
Executive Officer and the Chief Financial Officer of AVB and Merger Sub
to such effect.
(b) Performance of Obligations of Assabet. Assabet shall have
performed all obligations required to be performed by it under this
Agreement at or prior to the MHC Effective Time and the Mid-Tier
Effective Time, and Westborough shall have received a certificate, dated
the Effective Date, to such effect signed by the Chief Executive Officer
and Chief Financial Officer of AVB, Xxxxxx and Merger Sub.
(c) Absence of Assabet Changes. From the date of this Agreement
through the Closing Date, there shall not have occurred any change that
individually or in the aggregate has or could reasonably be expected to
have a Material Adverse Effect on Assabet.
(d) Other Actions. AVB and Merger Sub shall have furnished
Westborough with such certificates of its respective officers or others
and such other documents to evidence fulfillment of the conditions set
forth in Sections 8.1 and 8.2 as Westborough may reasonably request.
8.3. Conditions to Obligations of AVB. The obligations of AVB and Merger
Sub to consummate the MHC Merger and the Mid-Tier Merger are also subject to
the fulfillment or written waiver by AVB and Merger Sub prior to the Closing
Date of each of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Westborough in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or
warranty that is not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement, and
(except to the extent such representations and warranties speak as of an
earlier date, with respect to which such representations and warranties
shall be true and correct in all material respects as of such earlier
date) as of the Closing Date as though made on and as of the Closing
Date. AVB and Merger Sub shall have received a certificate, dated the
Effective Date, signed by the Chief Executive Officer and the Chief
Financial Officer of Westborough to such effect.
(b) Performance of Obligations of Westborough. Westborough shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the MHC Effective Time and the Mid-Tier
Effective Time, and AVB and Merger Sub shall have received a certificate,
dated the Effective Date, to such effect signed by the Chief Executive
Officer and Chief Financial Officer of Westborough MHC, Westborough
Financial and Westborough Bank.
(c) No Parachute Payments. Westborough shall not have taken any
action or made any payments that would result, either individually or in
the aggregate, in any violation of the requirements set forth in Section
4.1(b)(x).
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(d) Absence of Westborough Changes. From the date of this Agreement
through the Closing Date, there shall not have occurred any change that
individually or in the aggregate has or could reasonably be expected to
have a Material Adverse Effect on Westborough.
(e) Other Actions. Westborough shall have furnished AVB and Merger
Sub with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in Sections
8.1 and 8.3 as AVB or Merger Sub may reasonably request.
ARTICLE IX.
TERMINATION
9.1. Termination. This Agreement may be terminated and the MHC Merger,
the Mid-Tier Merger and the other transactions contemplated by this Agreement
may be abandoned at any time prior to the MHC Effective Time, notwithstanding
any requisite approval and adoption of this Agreement and the transactions
contemplated in this Agreement by the shareholders of Westborough Financial:
(a) Mutual Consent. By mutual consent of AVB and Westborough, if
the Board of Directors of each so determines by vote of a majority of the
members of its entire Board.
(b) Delay. By either AVB or Westborough (if its Board of Directors
so determines by vote of a majority of the members of its entire Board)
if the MHC Effective Time shall not have occurred on or before June 30,
2007 or such later date as the parties may have agreed upon in writing
(the "Expiration Date"), except to the extent that the failure of the MHC
Merger then to be consummated arises out of or results from the knowing
action or inaction of (i) the party seeking to terminate pursuant to this
Section 9.1(b), or (ii) any of the Voting Shareholders (if Westborough is
the party seeking to terminate), which action or inaction is in violation
of its obligations under this Agreement or his, her or its obligations
under the relevant Voting Agreement.
(c) No Approval. By Westborough or AVB, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board,
in the event the approval of any Governmental Authority required for
consummation of the MHC Merger, the Mid-Tier Merger or the Bank Merger
and the other transactions contemplated by this Agreement shall have been
denied by final nonappealable action of such Governmental Authority or an
application therefor shall have been permanently withdrawn at the request
of a Governmental Authority.
(d) Breach. At any time prior to the MHC Effective Time, by AVB or
Westborough (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement
contained in this Agreement) if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of:
(i) a material breach by AVB or Westborough, as the case may be, of any
representation or warranty contained in this Agreement, which breach
would constitute, if occurring or continuing on the Closing Date, the
failure of the conditions set forth in Section 8.2(a) or 8.3(a), as the
case may be, and which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party or parties of
such breach; or (ii) a material breach by AVB or Westborough, as the case
may be, of any of the covenants or agreements contained in this
Agreement, which breach
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cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party or parties of such breach.
(e) No Shareholder or Corporator Approval. By either AVB or
Westborough (provided that the terminating party shall not be in material
breach of any of its obligations under Section 7.2 or 7.3 ) if (i) any
approval of the shareholders of Westborough Financial required for the
consummation of the Mid-Tier Merger shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting
of Westborough Financial's shareholders or at any adjournment or
postponement thereof, or, if such meeting of shareholders shall not have
been held or shall have been canceled prior to the Expiration Date; (ii)
any approval of the corporators of Westborough MHC required for the
consummation of the MHC Merger shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
Westborough MHC's corporators or at any adjournment or postponement
thereof, or, if such meeting of corporators shall not have been held or
shall have been canceled prior to the Expiration Date; or (iii) any
approval of the corporators of AVB required for the consummation of the
MHC Merger shall not have been obtained by reason of the failure to
obtain the required vote at a duly held meeting of AVB's corporators or
at any adjournment or postponement thereof, or, if such meeting of
corporators shall not have been held or shall have been canceled prior to
the Expiration Date.
(f) Westborough Failure to Recommend. By AVB (A) if, at any time
prior to the Westborough Financial Meeting, (i) Westborough shall have
materially breached Section 7.7, (ii) Westborough Financial Board shall
have failed to make its recommendation referred to in Section 7.2,
withdrawn such recommendation or modified or changed such recommendation
in a manner adverse in any respect to the interests of AVB (including,
without limitation, recommending an Acquisition Proposal in compliance
with Section 7.7), or (iii) Westborough shall have materially breached
its obligations to call, give notice of, convene and hold the Westborough
Financial Meeting in accordance with Section 7.2, or (B) if Westborough
MHC shall have (i) failed to recommend (or withdraws such recommendation
or modifies or changes such recommendation in a manner adverse in any
respect to the interests of Assabet) that Westborough MHC's corporators
approve the MHC Merger, or (ii) materially breached its obligation to
call, give notice of, convene and hold a meeting of corporators to
approve the MHC Merger.
(g) Certain Tender Offers or other Transactions. By AVB, (A) if a
Tender Offer is commenced, other than by AVB or a Subsidiary thereof, and
the Westborough Financial Board recommends (in compliance with Section
7.7) that the shareholders of Westborough Financial tender their shares
in such Tender Offer or otherwise fails to recommend that such
shareholders reject such Tender Offer within the 10 Business Day period
specified in Rule 14e-2(a) under the Exchange Act, or (B) if Westborough
enters into an agreement to effect a Change in Control Transaction.
(h) AVB Failure to Recommend. By Westborough if (i) AVB shall have
failed to recommend (or withdraws such recommendation or modifies or
changes such recommendation in a manner adverse in any respect to the
interests of Westborough) that AVB's corporators approve the MHC Merger,
or (ii) AVB shall have materially breached its obligations to call, give
notice of, convene and hold a meeting of corporators to approve the MHC
Merger.
9.2. Effect of Termination; Expenses.
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(a) In the event of the termination of this Agreement pursuant to
Section 9.1, this Agreement shall forthwith become void (except as set
forth in Section 10.1), subject to Section 9.3, and there shall be no
liability on the part of any party hereto, except (i) each party shall
remain liable in any action at law or otherwise for any liabilities or
damages arising out of its gross negligence or willful breach of any
provision of this Agreement, and (ii) as otherwise provided in this
Section 9.2.
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by
the gross negligence or willful or intentional breach of a party hereto,
such party shall be liable to the other party for all out-of-pocket costs
and expenses, including, without limitation, the reasonable fees and
expenses of lawyers, accountants and investment bankers, incurred by such
other party in connection with the entering into of this Agreement and
the carrying out of any and all acts contemplated hereunder ("Expenses");
provided, however, that the maximum amount any party shall be liable to
the other party for Expenses pursuant to this Section 9.2(b) shall be
$500,000. The payment of Expenses is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto
(whether at law or in equity) arising out of the gross negligence of a
party or willful breach of any provision of this Agreement or under this
Agreement.
9.3. Westborough Special Payment. As a condition of AVB's willingness,
and in order to induce AVB, to enter into this Agreement and to reimburse AVB
for incurring the damages, costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this Agreement,
Westborough will pay to AVB an amount equal to 5% of Aggregate Merger
Consideration (as such amount may be adjusted pursuant to Section 9.3(d)), the
"Westborough Special Payment"), as follows:
(a) If this Agreement shall have been terminated by AVB pursuant to
Section 9.1(f) or 9.1(g), then Westborough shall pay the Westborough
Special Payment.
(b) If this Agreement shall have been terminated
(i) by AVB pursuant to Section 9.1(d) because of
Westborough's willful breach of any representation, warranty,
covenant or agreement under this Agreement;
(ii) by AVB or Westborough pursuant to Section 9.1(e)(i);
(iii) by AVB or Westborough pursuant to Section 9.1(b)
without a vote of the shareholders of Westborough contemplated by
this Agreement having occurred, and in any such case an Acquisition
Proposal shall have been publicly announced or otherwise
communicated or made known to the senior management or the
Westborough Financial Board (or any Person shall have publicly
announced, communicated or made known an intention, whether or not
conditional, to make an Acquisition Proposal) at any time after the
date of this Agreement and on or prior to the date of the meeting
of Westborough Financial shareholders to approve the Mid-Tier
Merger, in the case of clause (ii), or the date of termination, in
the case of clauses (i) or (iii), then if and only if within 12
months after such termination Westborough enters into a definitive
agreement with respect to a Change in Control Transaction, or a
Change in Control Transaction is
-76-
consummated, then Westborough shall pay the Westborough Special
Payment payable to AVB.
(c) Exclusivity of Remedy. Notwithstanding anything to the contrary
set forth in this Agreement, if Westborough pays or causes to be paid to
AVB or to Xxxxxx the Westborough Special Payment, Westborough will not
have any further obligations or liabilities to AVB or Xxxxxx with respect
to this Agreement or the transactions contemplated by this Agreement.
(d) Adjustment to Amount of Westborough Special Payment. The amount
of Westborough Special Payment shall be reduced by the amount of any
Expenses paid by Westborough to AVB pursuant to Section 9.2(b).
(e) Effect on Standstill Arrangements. In the event Westborough
pays to AVB the Westborough Special Payment, any standstill provisions
contained in the Confidentiality Agreement referred to in Section 7.7
shall terminate.
(f) Payment Required. Any payment required under this Section 9.3
will be payable by Westborough to AVB (by wire transfer of immediately
available funds to an account designated by AVB) within five Business
Days after demand by AVB.
ARTICLE X.
MISCELLANEOUS
10.1. Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the MHC Effective Time (other than
agreements or covenants contained in this Agreement that by their express terms
are to be performed after the MHC Effective Time). If this Agreement is
terminated prior to the MHC Effective Time, no representations, warranties,
agreements or covenants contained in this Agreement shall survive such
termination (other than Sections 7.6(b) and 9.3, and this Article X, all of
which (other than Section 10.12) shall survive any such termination). The
Voting Agreements shall terminate in accordance with the terms thereof.
10.2. Waiver; Amendment. Prior to the MHC Effective Time, any provision
of this Agreement may be (i) waived by the party benefited by the provision or
(ii) amended or modified at any time, by an agreement in writing among the
parties hereto executed in the same manner as this Agreement, except that after
the Westborough Financial Meeting, no amendment shall be made which changes in
kind or reduces in amount the Aggregate Merger Consideration without the
further approval of Westborough Financial's shareholders.
10.3. Counterparts and Facsimile Signatures. This Agreement may be
executed and delivered in any number of counterparts. When each party has
signed and delivered at least one counterpart to all other parties, each
counterpart shall be deemed an original and all counterparts, taken together,
shall constitute one and the same agreement, which shall be binding and
effective on the parties hereto. This Agreement shall not become binding on the
parties hereto unless it has been executed by authorized representatives of all
parties. Facsimile execution and delivery of this Agreement and any Exhibits,
Schedules and Appendices by any of the parties shall be legal, valid and
binding execution and delivery of such document for all purposes.
-77-
10.4. Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of The Commonwealth of Massachusetts that are
applicable to contracts made and to be performed entirely within such state.
10.5. Expenses. Except as otherwise provided in Section 9.2, each party
hereto will bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby, including fees and expenses of its
own financial consultants, accountants and counsel.
10.6. Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Westborough to:
Westborough Financial Services, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President & Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxx & Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
If to AVB, Hudson or Merger Sub to:
Assabet Valley Bancorp
00 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President & Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxx LLP
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx and Xxxxx Xxxxxxxxx Xxxxx
Fax: (000) 000-0000
10.7. Entire Understanding; No Third Party Beneficiaries. This Agreement,
the Bank Merger Agreement and the Voting Agreements represent the entire
understanding of the parties hereto and thereto with reference to the
transactions contemplated hereby and thereby, and this
-78-
Agreement, the Bank Merger Agreement and the Voting Agreements supersede any
and all other oral or written agreements heretofore made. Except for the
Indemnified Parties' right to enforce AVB's obligation under Section 7.9, which
are expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each Indemnified Party and his or her heirs and
representatives, and the severance benefits contemplated by Section 7.10(e),
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.
10.8. Severability. Except to the extent that application of this Section
10.8 would have a Material Adverse Effect on Westborough or AVB, any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. In all such cases, the parties shall use their reasonable best
efforts to substitute a valid, legal and enforceable provision which, insofar
as practicable, implements the original purposes and intents of this Agreement.
10.9. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.10. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." References to sections include
subsections which are part of the related sections (e.g., a section numbered
"Section 5.5(a)" would be part of "Section 5.5" and references to "Section 5.5"
would also refer to material contained in the subsection described as "Section
5.5(a)").
10.11. Assignment. No party may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
10.12. Alternative Structure. Notwithstanding any provision of this
Agreement to the contrary, the parties may at any time modify the structure of
the acquisition of Westborough set forth in this Agreement, subject to the
prior written consent of both parties, which consent shall not be unreasonably
withheld or delayed, provided that (i) the Aggregate Merger Consideration
-79-
to be paid to the holders of Westborough Financial Common Stock is not thereby
changed in kind or reduced in amount as a result of such modification, (ii)
such modification will not adversely affect the tax treatment of Westborough
Financial's shareholders as a result of receiving the Aggregate Merger
Consideration, and (iii) such modification will not materially delay or
jeopardize receipt of any required approvals of Governmental Authorities.
[Remainder of page has intentionally been left blank]
-80-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
ASSABET VALLEY BANCORP
By: /s/ Xxxxxx X. Xxxxx, Xx.
---------------------------------------------
Name: Xxxxxx X. Xxxxx Xx.
Title: President
By: /s/ Xxxx X. X'Xxxxxxx
---------------------------------------------
Name: Xxxx X. X'Xxxxxxx
Title: Treasurer
HUDWEST FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. X'Xxxxxxx
---------------------------------------------
Name: Xxxx X. X'Xxxxxxx
Title: President and Chief Executive Officer
By: /s/Xxxxxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Treasurer
XXXXXX SAVINGS BANK
By: /s/ Xxxx X. X'Xxxxxxx
---------------------------------------------
Name: Xxxx X. X'Xxxxxxx
Title: President and Chief Executive Officer
By: /s/ Xxxxxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Treasurer
AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
WESTBOROUGH MHC
By: /s/Xxxxxx X. XxxXxxxxxx
---------------------------------------------
Name: Xxxxxx X. XxxXxxxxxx
Title: President & Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Treasurer
WESTBOROUGH FINANCIAL SERVICES, INC.
By: /s/ Xxxxxx X. XxxXxxxxxx
---------------------------------------------
Name: Xxxxxx X. XxxXxxxxxx
Title: President & Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Treasurer
THE WESTBOROUGH BANK
By: /s/ Xxxxxx X. XxxXxxxxxx
---------------------------------------------
Name: Xxxxxx X. XxxXxxxxxx
Title: President & Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Treasurer
AGREEMENT AND PLAN OF MERGER SIGNATURE PAGE
ANNEX A
VOTING SHAREHOLDERS
-------------------------------------------------------------------
Shareholder Shares Options
-------------------------------------------------------------------
Xxxxx X. Xxxx 1,150* 930**
-------------------------------------------------------------------
Xxxxxx X. Xxxx 450 1,000
-------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxx 3,450 1,000
-------------------------------------------------------------------
Xxxxx X. Xxxxxxx 650* 930**
-------------------------------------------------------------------
Xxxxx X. Xxxxxxxxx 3,350 600
-------------------------------------------------------------------
Xxxx X. Xxxxxxxxxx 2,402 2,700
-------------------------------------------------------------------
Xxxxxxxx X. Xxxxxxxx, Xx. 490* 930**
-------------------------------------------------------------------
Xxxxxx X. Xxxxxxx 2,450 1,000
-------------------------------------------------------------------
Xxxxxxx X. Xxxxxx 600 0
-------------------------------------------------------------------
Xxxxxx X. XxxXxxxxxx 12,384 9,600
-------------------------------------------------------------------
Xxxx X. XxXxxxx 5,450 400
-------------------------------------------------------------------
Xxxxxxxxx X. Xxxxxxx 2,140 900
-------------------------------------------------------------------
Xxxxxxx X. Xxxxx 3,100 0
-------------------------------------------------------------------
Xxxxx X Xxxxxxxx 3,450 1,000
-------------------------------------------------------------------
Westborough Bancorp, MHC 1,027,893 0
-------------------------------------------------------------------
* Includes 450 shares of unvested restricted stock.
** Includes 930 shares of unvested stock options.
ANNEX B
-------
FORM OF VOTING AGREEMENT
VOTING AGREEMENT ("Agreement"), dated as of November ____, 2006, by and
among Assabet Valley Bancorp, a Massachusetts mutual holding company ("AVB"),
Westborough Financial Services, Inc., a Massachusetts corporation ("Company"),
and the undersigned holder ("Company Shareholder") of capital stock of the
Company ("Company Stock").
WHEREAS, AVB, the Company and certain others are about to enter into an
Agreement and Plan of Merger, dated as of the date hereof (as such agreement
may be subsequently amended or modified, the "Agreement and Plan of Merger"),
providing for the merger of Company with a specially-formed, wholly-owned
subsidiary of AVB (the "Mid-Tier Merger");
WHEREAS, Company Shareholder beneficially owns and has sole or shared
voting power with respect to the number of shares of Company Stock, and holds
stock options or other rights to acquire the number of Shareholder Equity
Interests (as defined in Section 3), opposite such Company Shareholder's name
on Schedule 1 attached hereto;
WHEREAS, AVB has informed Company Shareholder that it is a condition to
AVB's entering into the Agreement and Plan of Merger that Company Shareholder
execute and deliver this Agreement on the date hereof; and
WHEREAS, all capitalized terms used in this Agreement without definition
herein shall have the meanings ascribed to them in the Agreement and Plan of
Merger.
NOW, THEREFORE, in consideration of, and as a condition to, AVB entering
into the Agreement and Plan of Merger and proceeding with the transactions
contemplated thereby, and in consideration of the expenses incurred and to be
incurred by AVB in connection therewith, Company Shareholder and AVB agree as
follows:
1. Agreement to Vote Shareholder Equity Interests. Company Shareholder
agrees that, from the date hereof until the Expiration Date (as defined in
Section 2), at any meeting of the stockholders of Company, or in connection
with any written consent of the stockholders of Company, with respect to the
Mid-Tier Merger, the Agreement and Plan of Merger, or any Acquisition Proposal
or any Unsanctioned Agreement (as such term is defined in Section 1(b)) or any
adjournment of any such meeting, Company Shareholder shall:
(a) Appear at such meeting or otherwise cause any Shareholder
Equity Interests to be counted as present thereat for purposes of
calculating a quorum; and
(b) From and after the date hereof until the Expiration Date, vote
(or cause to be voted) or deliver a written consent (or cause a written
consent to be delivered) covering all of the Shareholder Equity Interests
that such Company Shareholder shall be entitled to so vote, whether such
Shareholder Equity Interests are beneficially owned by such Company
Shareholder on the date of this Agreement or are subsequently acquired,
(i) in favor of adoption and approval of the Agreement and Plan of Merger
and the transactions
contemplated thereby, including the Mid-Tier Merger; (ii) against any
action or agreement that would result in a breach in any material respect
of any covenant, representation, or warranty or any other obligation or
agreement of Company contained in the Agreement and Plan of Merger or of
Company Shareholder contained in this Agreement; and (iii) against any
Acquisition Proposal or any agreement or transaction that is intended, or
could reasonably be expected, to materially impede, interfere with,
delay, postpone, discourage or materially and adversely affect the
consummation of the Mid-Tier Merger or any of the transactions
contemplated by the Agreement and Plan of Merger ("Unsanctioned
Agreement").
2. Expiration Date. As used in this Agreement, the term "Expiration Date"
shall mean the earlier of (i) the consummation of the Mid-Tier Merger and (ii)
the termination of the Agreement and Plan of Merger in accordance with Article
IX thereof. Upon termination or expiration of this Agreement, no party shall
have any further obligations or liabilities under this Agreement; provided,
however, that such termination or expiration shall not relieve any party from
liability for any willful breach of this Agreement prior to termination hereof.
3. Agreement to Retain Shareholder Equity Interests. From and after the
date hereof until the Expiration Date, Company Shareholder shall not, except as
contemplated by this Agreement or the Agreement and Plan of Merger, directly or
indirectly, sell, assign, transfer or otherwise dispose of (including, without
limitation, by the voluntary creation of a Lien (as defined in Section 4(c))),
or enter into any contract, option, commitment or other arrangement or
understanding with respect to the sale, transfer, assignment or other
disposition of, any Company Stock or option or right to obtain Company Stock or
any interest convertible into, or exercisable for, Company Stock or the right
to obtain Company Stock or such rights that may at any time be owned (or could
be acquired) by Company Shareholder (collectively, the "Shareholder Equity
Interests"), whether such Shareholder Equity Interests are held by Company
Shareholder on the date of this Agreement or are subsequently acquired prior to
any meeting (or written consent in lieu thereof) of stockholders of the Company
prior to the Expiration Date, whether by the exercise of any option or right to
obtain Shareholder Equity Interests or otherwise. Notwithstanding the
foregoing, Company Shareholder may make (a) transfers by will, or by operation
of law, in which case this Agreement shall bind the transferee, (b) transfers
to any transferee that has agreed in writing to be bound by the terms of, and
perform the obligations of Company Shareholder under, this Agreement, and (c)
as AVB may otherwise agree in writing in its sole discretion.
4. Representations and Warranties of Company Shareholder. Company
Shareholder hereby represents and warrants to AVB as follows:
(a) Company Shareholder has the complete and unrestricted power and
the unqualified right to enter into and perform the terms of this
Agreement;
(b) This Agreement (assuming this Agreement constitutes a valid and
binding agreement of AVB) is a valid and legally binding agreement with
respect to Company Shareholder, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent
B-2
transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles);
(c) Company Shareholder beneficially owns the number of Shareholder
Equity Interests indicated opposite such Company Shareholder's name on
Schedule 1, free and clear of any liens, claims, charges or other
encumbrances or restrictions of any kind whatsoever ("Liens"), and has
sole or shared, and otherwise unrestricted, voting power with respect to
such Shareholder Equity Interests;
(d) Company Shareholder understands that at the Effective Time of
the Mid-Tier Merger, each outstanding Shareholder Equity Interest listed
on Schedule 1 shall be cancelled and converted into the right to receive
a cash amount to be determined in accordance with the terms and
provisions of the Agreement and Plan of Merger;
(e) The execution and delivery of this Agreement by Company
Shareholder does not, and the performance by Company Shareholder of his,
her or its obligations hereunder and the consummation by Company
Shareholder of the transactions contemplated hereby will not, violate or
conflict with, or constitute a default under, any agreement, instrument,
contract or other obligation or any order, arbitration award, judgment or
decree to which Company Shareholder is a party or by which Company
Shareholder is bound, or any statute, rule or regulation to which Company
Shareholder is subject or, in the event that Company Shareholder is a
corporation, partnership, trust or other entity, any by-law or other
organizational document of Company Shareholder; and
(f) Company Shareholder has no claim (or any basis therefor), in
Company Shareholder's capacity as a stockholder or former stockholder, or
option holder or former option holder, of Company, in any way arising out
of or based upon: (i) ownership or rights to ownership of any Shareholder
Equity Interests, other than Company Shareholder's right to receive the
consideration to be paid to Company Shareholder under the Agreement and
Plan of Merger with respect to the Shareholder Equity Interests listed on
Schedule 1; (ii) any rights to obtain additional Shareholder Equity
Interests; or (iii) any claim that any Shareholder Equity Interests were
wrongfully repurchased by Company.
5. Irrevocable Proxy. Subject to the last sentence of this Section 5, by
execution of this Agreement, Company Shareholder does hereby appoint AVB with
full power of substitution and resubstitution, as Company Shareholder's true
and lawful attorney and irrevocable proxy, to the full extent of the
undersigned's rights with respect to the Shareholder Equity Interests, to vote,
if Company Shareholder is unable to perform his, her or its obligations under
this Agreement, each of such Shareholder Equity Interests solely with respect
to the matters and in the manner set forth in Section 1 hereof. Company
Shareholder intends this proxy to be irrevocable and coupled with an interest
hereafter until the Expiration Date and hereby revokes any proxy previously
granted by Company Shareholder with respect to the Shareholder Equity
Interests. Notwithstanding anything contained herein to the contrary, this
irrevocable proxy shall automatically terminate upon the Expiration Date of
this Agreement.
B-3
6. No Solicitation. From and after the date hereof until the Expiration
Date, Company Shareholder, in his, her or its capacity as a stockholder of
Company, shall not, nor to the extent applicable to Company Shareholder, shall
he, she or it permit any of his, her or its affiliates to, nor shall he, she or
it authorize any partner, officer, director, advisor or representative of
Company Shareholder or any of its affiliates to (a) solicit, initiate,
knowingly encourage or knowingly facilitate any inquiries with respect to, or
the making, submission or announcement of, any offer or proposal for an
Acquisition Proposal or any Unsanctioned Agreement, (b) participate in any
discussions or negotiations regarding, or furnish to any Person any nonpublic
information with respect to, any Acquisition Proposal or Unsanctioned
Agreement, (c) engage in any discussions with any Person with respect to any
Acquisition Proposal or Unsanctioned Agreement, except as to the existence of
these provisions, (d) approve, endorse or recommend any Acquisition Proposal or
Unsanctioned Agreement (except to the extent specifically permitted in the
Agreement and Plan of Merger) or (e) enter into any letter of intent or similar
document or any Contract contemplating any Acquisition Proposal or transaction
contemplated thereby (other than the Agreement and Plan of Merger) or any
Unsanctioned Agreement.
7. Specific Enforcement. Company Shareholder has signed this Agreement
intending to be legally bound thereby. Company Shareholder expressly agrees
that this Agreement shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against Company Shareholder. All of
the covenants and agreements contained in this Agreement shall be binding upon,
and inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
8. Counterparts and Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which will be deemed an original but all
of which together shall constitute one and the same instrument. Facsimile
execution and delivery of this Agreement by any of the parties shall be legal,
valid and binding execution and delivery of this Agreement for all purposes.
9. No Waivers. No waivers of any breach of this Agreement extended by AVB
to Company Shareholder shall be construed as a waiver of any rights or remedies
of AVB with respect to any other stockholder of Company who has executed an
agreement substantially in the form of this Agreement with respect to Company
Stock (or options or other rights to obtain Company Stock) held or subsequently
held by such stockholder, or with respect to any subsequent breach of Company
Shareholder or any other such stockholder of Company. No waiver of any
provisions hereof by either party shall be deemed a waiver of any other
provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
10. Miscellaneous. This Agreement is to be governed by the laws of The
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of laws thereof. If any provision hereof is deemed unenforceable, the
enforceability of the other provisions hereof shall not be affected.
B-4
11. Capacity as Company Shareholder. Company Shareholder signs this
Agreement solely in Company Shareholder's capacity as the owner of the
Shareholder Equity Interests, and not in Company Shareholder's capacity as a
director, officer or employee of Company or any of its subsidiaries or in
Company Shareholder's capacity as a trustee or fiduciary of any ERISA plan or
trust. Notwithstanding anything herein to the contrary, nothing herein shall in
any way restrict a director and/or officer of Company in the exercise of his or
her fiduciary duties, consistent with the terms of the Agreement and Plan of
Merger, as a director and/or officer of Company or in his or her capacity as a
trustee or fiduciary of any ERISA plan or trust, or prevent or be construed to
create any obligation on the part of any director and/or officer of Company or
any trustee or fiduciary of any ERISA plan or trust from taking any action in
his or her capacity as a director of Company.
12. No Agreement Until Agreement and Plan of Merger Executed.
Irrespective of negotiations among the parties or the exchanging of drafts of
this Agreement, this Agreement shall not constitute or be deemed to evidence a
contract, agreement, arrangement or understanding among the parties hereto
unless and until the Agreement and Plan of Merger is executed by all parties
thereto and this Agreement is executed by the parties whose names are set forth
on the signature page hereof.
13. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by each party hereto.
[SIGNATURE PAGES FOLLOW]
B-5
EXECUTED as of the date first above written.
ASSABET VALLEY BANCORP
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
WESTBOROUGH FINANCIAL SERVICES, INC.
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
SIGNATURE PAGE TO VOTING AGREEMENT
EXECUTED as of the date first above written.
COMPANY SHAREHOLDER
By:______________________________________________
Name:____________________________________________
Title:___________________________________________
SIGNATURE PAGE TO VOTING AGREEMENT
SCHEDULE 1
Company Shareholder Shareholder Equity Interests Options
------------------- ---------------------------- -------
ANNEX C
OFFICERS AND DIRECTORS OF SURVIVING CORPORATION
President: Xxxxxx XxxXxxxxxx
Treasurer: Xxxx X'Xxxxxxx
Secretary: Xxxxx Xxxxxx
Directors: Xxxxxx XxxXxxxxxx
Xxxx X'Xxxxxxx
Xxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxxxx
ANNEX D
NEW BANK COMMITTEE STRUCTURE
Executive (7) Lending Review (6)
------------- ------------------
5 HSB - Chair 4 HSB - Chair
2 WB 2 WB
Personnel (6) Trust/NDIP (6)
------------- --------------
4 HSB 3 HSB
2 WB - Chair 3 WB - Chair
CRA (6) ALCO (6)
------- --------
3 HSB - Chair 3 HSB - Chair
3 WB 3 WB
Audit (6) Nominating (6)
--------- --------------
4 HSB 3 HSB
2 WB - Chair 3 WB - Chair
In addition, those directors of Westborough Financial who (by reason of the
initial limitation that only nine directors of Westborough Financial will serve
on New Bank's Board of Directors) continue in service only as Trustees of
Assabet Valley Bancorp shall be appointed or elected, if qualified, to fill any
vacancy on New Bank's Board of Directors occurring within five years of the
Closing Date and created as a result of the death, retirement or resignation of
any initial director of New Bank who is a Westborough Financial director
immediately prior to the Effective Date.
