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Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 11, 2001
BETWEEN
BANKNORTH GROUP, INC.,
AND
ANDOVER BANCORP, INC.
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TABLE OF CONTENTS
RECITALS
ARTICLE I
CERTAIN DEFINITIONS
Page No.
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1.01. Certain Definitions................................................................1
ARTICLE II
THE MERGER
2.01. The Merger.........................................................................8
2.02. Effective Date and Effective Time; Closing.........................................9
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Merger Consideration...............................................................9
3.02. Rights as Shareholders; Stock Transfers...........................................10
3.03. Fractional Shares.................................................................10
3.04. Exchange Procedures...............................................................10
3.05. Anti-Dilution Provisions..........................................................11
3.06. Company Options; Stock Units......................................................11
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forbearances of the Company.......................................................12
4.02. Forbearances of Parent............................................................15
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules..............................................................16
5.02. Standard..........................................................................16
5.03. Representations and Warranties of the Company.....................................16
5.04. Representations and Warranties of Parent..........................................28
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ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts...........................................................33
6.02. Shareholder Approval..............................................................33
6.03. Registration Statement............................................................33
6.04. Regulatory Filings................................................................34
6.05. Press Releases....................................................................35
6.06. Access; Information...............................................................35
6.07. Affiliates........................................................................36
6.08. Acquisition Proposals.............................................................36
6.09. Certain Policies..................................................................37
6.10. Nasdaq Listing....................................................................37
6.11. Indemnification...................................................................37
6.12. Benefit Plans.....................................................................39
6.13. Directors.........................................................................40
6.14. Bank Mergers......................................................................40
6.15. Consulting Agreement..............................................................41
6.16. Company Rights Agreement..........................................................41
6.17. Notification of Certain Matters...................................................41
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the Merger........................42
7.02. Conditions to Obligation of the Company...........................................43
7.03. Conditions to Obligations of Parent...............................................43
ARTICLE VIII
TERMINATION
8.01. Termination.......................................................................44
8.02. Effect of Termination and Abandonment.............................................45
ARTICLE IX
MISCELLANEOUS
9.01. Survival..........................................................................46
9.02. Waiver; Amendment.................................................................46
9.03. Counterparts......................................................................46
9.04. Governing Law.....................................................................46
9.05. Expenses..........................................................................46
9.06. Notices...........................................................................46
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9.07. Entire Understanding; No Third Party Beneficiaries................................47
9.08. Severability......................................................................48
9.09. Enforcement of the Agreement......................................................48
9.10. Interpretation....................................................................48
9.11. Assignment........................................................................48
9.12. Alternative Structure.............................................................48
EXHIBIT A Form of Shareholder Agreement
EXHIBIT B Form of Stock Option Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of June 11, 2001 (this
"Agreement"), between Banknorth Group, Inc. ("Parent") and Andover Bancorp, Inc.
(the "Company").
RECITALS
A. The Company. The Company is a Delaware corporation, having its
principal place of business in Andover, Massachusetts.
B. Parent. Parent is a Maine corporation, having its principal
place of business in Portland, Maine.
C. Intention of the Parties. It is the intention of the parties to
this Agreement that the Merger provided for herein be treated as a
"reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
D. Board Action. The respective Boards of Directors of each of
Parent and the Company have determined that it is in the best interests of their
respective companies and their shareholders to consummate the Merger provided
for herein.
E. Shareholder Agreements. As a material inducement to Parent to
enter into this Agreement, and simultaneously with, the execution of this
Agreement, each Shareholder (as defined herein) is entering into an agreement,
in the form of Exhibit A hereto (collectively, the "Shareholder Agreements")
pursuant to which they have agreed, among other things, to vote their shares of
Company Common Stock in favor of this Agreement.
F. Stock Option Agreement. As a material inducement to the
willingness of Parent to consummate the transactions contemplated by this
Agreement, the Company is simultaneously entering into the Stock Option
Agreement, substantially in the form of Exhibit B hereto (the "Stock Option
Agreement"), pursuant to which the Company will grant to Parent an option to
acquire shares of Company Common Stock.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, representations, warranties and agreements contained herein
the parties agree as follows:
ARTICLE I.
CERTAIN DEFINITIONS
1.01. Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" has the meaning set forth in Section 6.08.
"Agreement" means this Agreement, as amended or modified from
time to time in accordance with Section 9.02.
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"Articles of Merger" has the meaning set forth in Section 2.02.
"Bank Insurance Fund" means the Bank Insurance Fund maintained by
the FDIC.
"Bank Merger Agreements" has the meaning set forth in Section
6.14.
"Bank Mergers" has the meaning set forth in Section 6.14.
"Benefit Plans" has the meaning set forth in Section 5.03(m).
"Business Day" means Monday through Friday of each week, except a
legal holiday recognized as such by the U.S. Government or any day on
which banking institutions in the State of Maine or the Commonwealth of
Massachusetts are authorized or obligated to close.
"Certificate of Merger" has the meaning set forth in Section
2.02.
"Certificate" means any certificate which immediately prior to
the Effective Time represented shares of Company Common Stock.
"Closing" and "Closing Date" have the meanings set forth in
Section 2.02(b).
"Code" has the meaning set forth in the recitals to this
Agreement.
"Community Reinvestment Act" means the Community Reinvestment Act
of 1977, as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Affiliates" has the meaning set forth in Section 6.07.
"Company Articles" means the Certificate of Incorporation of the
Company.
"Company Banks" means Andover Bank and Gloucester Bank & Trust
Company.
"Company Board" means the Board of Directors of the Company.
"Company Bylaws" means the Bylaws of the Company.
"Company Common Stock" means the common stock, $0.10 par value
per share, of the Company and, unless the context otherwise requires,
related Company Rights.
"Company Deferred Compensation Plan" means the Deferred
Compensation Plan for Directors of the Company and its Subsidiaries.
"Company ESOP" means the Andover Bank Employees' Stock Ownership
Plan, restated as of January 1, 1997.
"Company Group" means any "affiliated group" (as defined in
Section 1504(a) of
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the Code without regard to the limitations contained in Section 1504(b)
of the Code) that includes the Company and its Subsidiaries or any
predecessor of or any successor to the Company (or to another such
predecessor or successor).
"Company Loan Property" has the meaning set forth in Section
5.03(o).
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, $0.10 per
share, of the Company.
"Company Stock" means, collectively, the Company Common Stock and
the Company Preferred Stock.
"Company Options" means the options to acquire Company Common
Stock issued under the Company Stock Option Plans.
"Company Regulatory Authorities" has the meaning set forth in
Section 5.03(i).
"Company Rights" means the rights attached to shares of Company
Common Stock pursuant to the Company Rights Agreement.
"Company Rights Agreement" means the Shareholder Rights Agreement
between the Company and FleetBoston, N.A., as Rights Agent, dated as of
January 21, 1999.
"Company Stock Option Plans" means (i) the Company Stock Option
Plan dated May 8, 1986, as amended May 22, 1986, January 29, 1987, and
November 2, 1987, (ii) the Company 1995 Stock Incentive Plan, dated
February 16, 1995 and (iii) the Company 2001 Stock Incentive Plan, dated
February 9, 2001.
"Depositors Insurance Fund" means the Depositors Insurance of
the Commonwealth of Massachusetts.
"Derivatives Contract" has the meaning set forth in Section
5.03(q).
"Determination Date" means the date on which the last required
approval of a Governmental Authority is obtained with respect to the
Transactions, without regard to any requisite waiting period.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DGCL" means the Delaware General Corporation Law, as amended.
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"Employees" has the meaning set forth in Section 5.03(m).
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"Environmental Laws" has the meaning set forth in Section
5.03(o).
"Equal Credit Opportunity Act" means the Equal Credit
Opportunity Act, as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" means an exchange agent designated by Parent.
"Exchange Ratio" means 2.27, as adjusted pursuant to Sections
3.05 and 8.01(f) hereof.
"Executive" has the meaning set forth in Section 6.15.
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Act" means the Federal Reserve Act, as amended.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, state or local court,
administrative agency or commission or other governmental authority or
instrumentality.
"Hazardous Substance" has the meaning set forth in Section
5.03(o).
"Indemnified Party" and "Indemnifying Party" have the meanings
set forth in Section 6.11(a).
"Index Ratio" has the meaning set forth in Section 8.01(f).
"Insurance Amount" has the meaning set forth in Section 6.11(c).
"Insurance Policies" has the meaning set forth in Section
5.03(w).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Loans" has the meaning set forth in Section 5.03(r).
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"Maine Superintendent" means the Superintendent of the Bureau of
Banking of the State of Maine.
"Massachusetts Bank Commissioner" means the Commissioner of
Banks of the Commonwealth of Massachusetts.
"Massachusetts Board" means the Massachusetts Board of Bank
Incorporation.
"Material Adverse Effect" means, with respect to Parent or the
Company any effect that (i) is material and adverse to the financial
position, results of operations or business of Parent and its
Subsidiaries taken as a whole or the Company and its Subsidiaries taken
as a whole, as the case may be or (ii) would materially impair the
ability of any of Parent and its Subsidiaries or the Company and its
Subsidiaries to perform their respective obligations under this
Agreement or the Bank Merger Agreements or otherwise materially impede
the consummation of the Transactions; provided, however, that Material
Adverse Effect shall not be deemed to include the impact of (a) changes
in banking and similar laws of general applicability or interpretations
thereof by Governmental Authorities, (b) changes in GAAP or regulatory
accounting requirements applicable to banks and their holding companies
generally, (c) changes in general economic conditions affecting banks
and their holding companies generally, (d) any modifications or changes
to valuation policies and practices, or expenses incurred, in connection
with the Transactions or restructuring charges taken in connection with
the Transactions, in each case in accordance with GAAP, and (e) with
respect to the Company, the effects of any action or omission taken with
the prior consent of Parent or as otherwise contemplated by the
Agreement.
"MBCA" means the Maine Business Corporation Act, as amended.
"Merger" has the meaning set forth in Section 2.01(a).
"MHPF" means the Massachusetts Housing Partnership Fund.
"Nasdaq" means The Nasdaq Stock Market, Inc.'s National Market.
"Nasdaq Bank Average Index" means the average of the Nasdaq Bank
Index for the ten consecutive trading days ending on the Determination
Date.
"Nasdaq Bank Index," on a given date, means the Nasdaq Bank
Index, as such index value is reported by Bloomberg News Service on such
date.
"Nasdaq Bank Starting Index" means $2,004.17, the closing price
of the Nasdaq Bank Index on May 30, 2001.
"National Bank Act" means the National Bank Act, as amended.
"National Labor Relations Act" means the National Labor
Relations Act, as amended.
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"OCC" means the Office of the Comptroller of the Currency.
"OREO" means other real estate owned.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Articles" means the Amended and Restated Articles of
Incorporation of Parent, as amended.
"Parent Benefits Plans" has the meaning set forth in Section
6.12(a).
"Parent Board" means the Board of Directors of Parent.
"Parent Bylaws" means the Bylaws of Parent.
"Parent Closing Average" means the average of the last sales
price per share for Parent Common Stock for the ten consecutive Nasdaq
trading day period ending on the Determination Date.
"Parent Common Stock" means the common stock, $0.01 par value per
share, of Parent and, unless the context otherwise requires, related
Parent Rights.
"Parent Massachusetts Bank" means First Massachusetts Bank,
National Association and any successor thereto.
"Parent Preferred Stock" means the preferred stock, $0.01 par
value per share, of Parent.
"Parent Ratio" has the meaning set forth in Section 8.01(f).
"Parent Rights" means the rights attached to shares of Parent
Common Stock pursuant to the Parent Rights Agreement.
"Parent Rights Agreement" means the Stockholder Rights Agreement,
dated as of September 12, 1989 and amended and restated as of July 27,
1999 and as of July 25, 2000, between Parent and American Stock Transfer
& Trust Company, as Rights Agent.
"Parent Regulatory Authorities" has the meaning set forth in
Section 5.04(k).
"Pension Plan" has the meaning set forth in Section 5.03(m)(ii).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability
company or unincorporated organization.
"Previously Disclosed" by a party shall mean information set
forth in a section of its Disclosure Schedule corresponding to the
section of this Agreement where such term is used.
"Proxy Statement" has the meaning set forth in Section 6.03(a).
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"Registration Statement" has the meaning set forth in Section
6.03(a).
"Rights" means, with respect to any Person, warrants, options,
rights, convertible securities and other arrangements or commitments
which obligate the Person to issue or dispose of any of its capital
stock or other ownership interests.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Sections 5.03(g) and
5.04(g) in the case of the Company and Parent, respectively.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Shareholder Agreements" has the meaning set forth in the
recitals to this Agreement.
"Shareholders" means each director of the Company.
"Subsidiary" and "Significant Subsidiary" have the meanings
ascribed to those terms in Rule 1-02 of Regulation S-X of the SEC.
"Starting Price" means $20.05, the closing price of a share of
Parent Common Stock on May 30, 2001.
"Stock Option Agreement" has the meaning set forth in the
recitals to this Agreement.
"Surviving Corporation" has the meaning set forth in Section
2.01(a).
"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" means any return, declaration or other report
(including elections, declarations, schedules, estimates and information
returns) with respect to any Taxes.
"Transactions" means the Merger and the Bank Mergers.
"Treasury Stock" means shares of Company Stock held by the
Company or any of its Subsidiaries or by Parent or any of its
Subsidiaries, in each case other than in a fiduciary (including
custodial or agency) capacity or as a result of debts previously
contracted in good faith.
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ARTICLE II
THE MERGER
2.01. The Merger.
(a) The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall merge with and into Parent
in accordance with the applicable provisions of the MBCA and the DGCL (the
"Merger"), the separate corporate existence of the Company shall cease and
Parent shall survive and continue to exist as a corporation incorporated under
the MBCA (Parent, as the surviving corporation in the Merger, sometimes being
referred to herein as the "Surviving Corporation").
(b) Name. The name of the Surviving Corporation shall be "Banknorth
Group, Inc."
(c) Articles and Bylaws. The articles of incorporation and bylaws of
Parent immediately after the Merger shall be the Parent Articles and the Parent
Bylaws as in effect immediately prior to the Merger.
(d) Directors and Officers of the Surviving Corporation. Except as
provided in Section 6.13 hereof, the directors and officers of Parent
immediately after the Merger shall be the directors and officers of Parent
immediately prior to the Merger, until such time as their successors shall be
duly elected and qualified.
(e) Authorized Capital Stock. The authorized capital stock of the
Surviving Corporation upon consummation of the Merger shall be as set forth in
the Parent Articles immediately prior to the Merger.
(f) Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in Section 905 of the MBCA and Sections 259-61 of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
(g) Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider that any further assignments or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its right, title
or interest in, to or under any of the rights, properties or assets of the
Company acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger, or (ii) otherwise carry out the purposes of
this Agreement, the Company, and its proper officers and directors, shall be
deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and the proper officers and directors of the Surviving
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Corporation are fully authorized in the name of the Surviving Corporation or
otherwise to take any and all such action.
2.02 Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the consummation of the Merger, but subject to the fulfillment or
waiver of those conditions), the parties shall cause articles of merger relating
to the Merger (the "Articles of Merger') to be filed with the Secretary of State
of the State of Maine pursuant to the MBCA and a certificate of merger relating
to the Merger (the "Certificate of Merger") to be filed with the Secretary of
State of the State of Delaware pursuant to the DGCL on (i) a date selected by
Parent after such satisfaction or waiver which is no later than the later of (A)
five Business Days after such satisfaction or waiver or (B) the first month end
following such satisfaction or waiver, or (ii) such other date to which the
parties may agree in writing. The Merger provided for herein shall become
effective upon such filings or on such date as may be specified therein. The
date of such filings or such later effective date is herein called the
"Effective Date." The "Effective Time" of the Merger shall be the time of such
filings or as set forth in such filings.
(b) A closing (the "Closing") shall take place immediately prior to
the Effective Time at 10:00 a.m., Eastern Time, at the principal offices of
Parent in Portland, Maine, 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 Parent and the Company the
opinions, certificates and other documents required to be delivered under
Article VII hereof.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Merger Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) Outstanding Company Common Stock. Each share of Company Common
Stock, excluding Treasury Stock, issued and outstanding immediately prior to the
Effective Time shall become and be converted into that number of shares of
Parent Common Stock equal to the Exchange Ratio.
(b) Outstanding Parent Common Stock. Each share of Parent Common
stock issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and shall be unaffected by the Merger.
(c) Treasury Stock. Each share of Company Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
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3.02. Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
shareholders of the Company other than to receive the consideration provided
under this Article III. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company or the Surviving Corporation of shares
of Company Stock.
3.03. Fractional Shares.
(a) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of a Certificate or
Certificates, and such fractional share interests shall not entitle the owner
thereof to vote or to any other rights as a stockholder of the Surviving
Corporation.
(b) Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock converted into shares of Parent Common
Stock pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Parent Common Stock (after taking into account all
Certificates delivered by such holder) shall, at the time of surrender of the
Certificate or Certificates representing such holder's shares of Company Common
Stock, receive an amount of cash (without interest) equal to the product arrived
at by multiplying such fraction of a share of Parent Common Stock by the closing
price of a share of Parent Common Stock on the Nasdaq Stock Market's National
Market on the business day preceding the Effective Time (as reported in The Wall
Street Journal, or if not reported therein, in another authoritative source),
rounded to the nearest whole cent.
3.04 Exchange Procedures.
(a) At or after the Effective Time, each holder of a Certificate or
Certificates, upon surrender of the same to the Exchange Agent, shall be
entitled to receive in exchange therefor a certificate or certificates
representing the number of whole shares of Parent Common Stock into which the
shares of Company Common Stock theretofore represented by the Certificate or
Certificates so surrendered shall have been converted as provided in Section
3.01(a) hereof. As promptly as practicable after the Effective Time, but in no
event later than five Business Days after the Company's transfer agent delivers
a certified shareholders' list to the Exchange Agent, the Exchange Agent shall
mail to each holder of record of an outstanding Certificate which is to be
exchanged for Parent Common Stock as provided in Section 3.01(a) hereof, a form
of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to such Certificate shall pass, only upon delivery of
such Certificate to the Exchange Agent) advising such holder of the terms of the
exchange effected by the Merger and of the procedure for surrendering to the
Exchange Agent such Certificate in exchange for a certificate or certificates
evidencing Parent Common Stock or cash in lieu of any fractional share interest.
Notwithstanding anything in this Agreement to the contrary, Certificates
surrendered for exchange by any Company Affiliate shall not be exchanged for
certificates representing shares of Parent Common Stock in accordance with the
terms of this Agreement until Parent has received a written agreement from such
person as specified in Section 6.07.
(b) No holder of a Certificate shall be entitled to receive any
dividends in respect of the Parent Common Stock into which such shares shall
have been converted by virtue of the
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Merger until the certificate representing such shares is surrendered in exchange
for a certificate or certificates representing shares of Parent Common Stock. In
the event that dividends are declared and paid by Parent in respect of Parent
Common Stock after the Effective Time but prior to any holder's surrender of
Certificates, dividends payable to such holder in respect of shares of Parent
Common Stock not then issued shall accrue (without interest). Any such dividends
shall be paid (without interest) upon surrender of the Certificates. Parent
shall be entitled, after the Effective Time, to treat Certificates as evidencing
ownership of the number of whole shares of Parent Common Stock into which the
shares of Company Common Stock represented by such Certificates shall have been
converted pursuant to this Agreement, notwithstanding the failure on the part of
the holder thereof to surrender such Certificates.
(c) Parent shall not be obligated to deliver a certificate or
certificates representing shares of Parent Common Stock to which a holder of
Company Common Stock would otherwise be entitled as a result of the Merger until
such holder surrenders a Certificate or Certificates for exchange as provided in
this Section 3.04, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond in an amount as may be reasonably required in
each case by Parent. If any certificate evidencing shares of Parent Common Stock
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a certificate for shares of Parent Common Stock in any name
other than that of the registered holder of the Certificate surrendered or
otherwise establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
3.05. Anti-Dilution Provisions. If, between the date hereof and the
Effective Time, the shares of Parent Common Stock shall be changed into a
different number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date within said
period, the Exchange Ratio shall be adjusted accordingly.
3.06. Company Options; Stock Units.
(a) At the Effective Time, each Company Option which is then
outstanding, whether or not exercisable, shall cease to represent a right to
acquire shares of Company Common Stock and shall be converted automatically into
an option to purchase shares of Parent Common Stock, and Parent shall assume
each Company Option, in accordance with the terms of the applicable Company
Stock Option Plan and stock option or other agreement by which it is evidenced,
except that from and after the Effective Time, (i) Parent and the Human
Resources Committee of its Board of Directors shall be substituted for the
Company and the committee of the Company's Board of Directors (including, if
applicable, the entire Board of Directors of the Company) administering such
Company Stock Option Plan, (ii) each Company Option assumed by Parent may be
exercised solely for shares of Parent Common Stock, (iii) the number of shares
of Parent Common Stock subject to such Company Option shall be equal to the
number of shares of Company Common Stock subject to such Company Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
provided that any fractional shares of Parent Common
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Stock resulting from such multiplication shall be rounded down to the nearest
share, and (iv) the per share exercise price under each such Company Option
shall be adjusted by dividing the per share exercise price under each such
Company Option by the Exchange Ratio, provided that such exercise price shall be
rounded up to the nearest cent. Notwithstanding clauses (iii) and (iv) of the
preceding sentence, each Company Option which is an "incentive stock option"
shall be adjusted as required by Section 424 of the Code, and the regulations
promulgated thereunder, so as not to constitute a modification, extension or
renewal of the option within the meaning of Section 424(h) of the Code. Parent
and the Company agree to take all necessary steps to effect the foregoing
provisions of this Section 3.06.
(b) At the Effective Time, each stock unit which is then outstanding
under the Company Deferred Compensation Plan shall cease to represent a right to
receive a share of Company Common Stock and shall be converted automatically
into a stock unit with a right to receive that number of shares of Parent Common
Stock equal to the Exchange Ratio, and Parent shall continue to maintain the
Company Deferred Compensation Plan unless and until it is merged or otherwise
combined with a comparable Parent plan or terminated in accordance with its
terms (in each case, subject to the right of plan participants to receive
distribution of their deferred compensation accounts in accordance with their
elections), except that from and after the Effective Time, (i) Parent shall be
substituted for the Company and (ii) units shall be payable in shares of Parent
Common Stock in accordance to the terms of the Company Deferred Compensation
Plan.
(c) Within five Business Days after the Effective Time, Parent shall
file a registration statement on Form S-3 or Form S-8, as the case may be (or
any successor or other appropriate forms), with respect to the shares of Parent
Common Stock subject to the options referred to in paragraph (a) of this Section
3.06 and the stock units payable in shares of Parent Common Stock referred to in
paragraph (b) of this Section 3.06 and shall use its reasonable efforts to
maintain the current status of the prospectus or prospectuses contained therein
for so long as such options and stock units remain outstanding in the case of a
Form S-8 or, in the case of a Form S-3, until the shares subject to such options
and stock units may be sold without a further holding period under Rule 144
under the Securities Act.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forbearances of the Company. From the date hereof until the
Effective Time, except as expressly contemplated or permitted by this Agreement
or as Previously Disclosed, without the prior written consent of Parent, the
Company will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct its business other than in the ordinary
and usual course consistent with past practice or fail to use reasonable best
efforts to preserve its business organization, keep available the present
services of its employees and preserve for itself and Parent the goodwill of the
customers of the Company and its Subsidiaries and others with whom business
relations exist.
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(b) Capital Stock. Other than pursuant to the Stock Option Agreement
and Rights set forth on Schedule 4.01(b) of the Company's Disclosure Schedule
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of stock
or any Rights or (ii) permit any additional shares of stock to become subject to
grants of employee or director stock options or other Rights.
(c) Dividends; Etc. (a) 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 Company Stock, other than (A) regular quarterly cash dividends at a
rate not in excess of $ 0.27 per share on the Company Common Stock, and (B)
dividends from wholly-owned Subsidiaries to the Company or another wholly-owned
Subsidiary of the Company or (b) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of the Company or its
Subsidiaries or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, provided that no such increase shall
result in an annual adjustment of more than 5%, (ii) for other changes that are
required by applicable law, (iii) to satisfy contractual obligations existing as
of the date hereof and set forth in Schedule 4.01(d) of the Company's Disclosure
Schedule or (iv) for grants of awards to newly-hired employees consistent with
past practice. Notwithstanding anything to the contrary set forth in this
Agreement, prior to the Closing Date, the Company and its Subsidiaries shall be
permitted (i) to pay bonuses to employees of the Company and its Subsidiaries
for its 2001 fiscal year to the extent earned in the ordinary course of business
and accrued in accordance with GAAP and (ii) to make cash contributions to the
Company ESOP for the 2001 fiscal year in the ordinary course of business as long
as the total cash contributions to the Company ESOP for the 2001 fiscal year do
not exceed $350,000 in the aggregate. In addition, the Company may pay retention
bonuses to such employees of the Company and its Subsidiaries and in such
amounts as may be mutually agreeable to the Company and Parent.
(e) Hiring. Hire any person as an employee of the Company or any of
its Subsidiaries or promote any employee, except (i) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule 4.01(e) of
the Company's Disclosure Schedule and (ii) persons hired to fill any vacancies
arising after the date hereof and whose employment is terminable at the will of
the Company or a Subsidiary of the Company, as applicable, other than any person
to be hired who would have a base salary, including any guaranteed bonus or any
similar bonus, considered on an annual basis of more than $50,000.
(f) Benefit Plans. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy contractual obligations
existing as of the date hereof and set forth on Schedule 4.01(f) of the
Company's Disclosure Schedule) 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 the Company or its
Subsidiaries or take any action to accelerate
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the vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(g) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or properties
except in the ordinary course of business consistent with past practice and in a
transaction that, together with all other such transactions, is not material to
the Company and its Subsidiaries taken as a whole.
(h) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of
the assets, business, deposits or properties of any other entity.
(i) Capital Expenditures. Make any capital expenditures other than
capital expenditures in the ordinary course of business consistent with past
practice in amounts not exceeding $100,000 individually or $250,000 in the
aggregate.
(j) Governing Documents. Amend the Company Articles or Company
Bylaws or the articles of incorporation or bylaws (or equivalent documents) of
any Subsidiary of the Company.
(k) 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.
(l) Contracts. Except in the ordinary course of business consistent
with past practice or as otherwise permitted under this Section 4.01, enter into
or terminate any Material Contract (as defined in Section 5.03(k)) or amend or
modify in any material respect any of its existing Material Contracts.
(m) Claims. Enter into any settlement or similar agreement with
respect to any action, suit, proceeding, order or investigation to which the
Company or any of its Subsidiaries is or becomes a party after the date of this
Agreement, which settlement, agreement or action involves payment by the Company
and its Subsidiaries of an amount which exceeds $50,000 and/or would impose any
material restriction on the business of the Company or create precedent for
claims that are reasonably likely to be material to the Company and its
Subsidiaries taken as a whole.
(n) Banking Operations. Enter into any new material line of business
or change its material lending, investment, underwriting, risk and asset
liability management and other material banking and operating policies, except
as required by applicable law, regulation or policies imposed by any
Governmental Authority.
(o) Derivatives Contracts. Enter into any Derivatives Contract,
except in the ordinary course of business consistent with past practice.
(p) 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
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course of business consistent with past practice) or assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of any
other Person, other than in the ordinary course of business consistent with past
practice.
(q) Adverse Actions. (i) Take any action that would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code or (ii) 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 Effective Time, (y) any of the conditions
to the Merger set forth in Article VII not being satisfied or (z) a material
violation of any provision of this Agreement, the Bank Merger Agreements or the
Stock Option Agreement except, in each case, as may be required by applicable
law or regulation.
(r) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.02. Forbearances of Parent. From the date hereof until the Effective
Time, except as expressly contemplated or permitted by this Agreement, without
the prior written consent of the Company, Parent will not, and will cause each
of its Subsidiaries not to:
(a) Articles and Bylaws. Amend the Parent Articles or Parent Bylaws
or the equivalent documents of Parent Massachusetts Bank in a manner which would
adversely affect in any manner the terms of the Parent Common Stock or the
ability of Parent or Parent Massachusetts Bank to consummate the Transactions.
(b) Acquisitions. Make any acquisition (including acquisitions of
branch offices and related deposit liabilities), other than the proposed
acquisition of MetroWest Bank on terms not materially different than those
publicly announced on the date hereof, that individually or in the aggregate
could result in the Merger not being consummated or otherwise materially
adversely affect the ability of Parent to consummate the Transactions and the
other transactions contemplated hereby in a reasonably timely manner.
(c) Adverse Actions. (i) Take any action that would, or is reasonably
likely to, prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code, provided, however, that
nothing contained herein shall limit the ability of Parent to exercise its
rights under the Stock Option Agreement, or (ii) 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 Effective Time, (y) any of the conditions
to the Merger set forth in Article VII not being satisfied or (z) a material
violation of any provision of this Agreement, the Bank Merger Agreements or the
Stock Option Agreement except, in each case, as may be required by applicable
law or regulation.
(d) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, Parent has
delivered to the Company a schedule and the Company has delivered to Parent a
schedule (respectively, its "Disclosure Schedule") 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
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
provided, however, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02 and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that, absent such inclusion in the Disclosure Schedule, such
item is or would be reasonably likely to result in a Material Adverse Effect.
5.02. Standard. No representation or warranty of the Company or Parent
contained in Sections 5.03 or 5.04, respectively, shall be deemed untrue or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, event or
circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Section 5.03 or 5.04, has had or is
reasonably likely to have a Material Adverse Effect on the party making such
representation or warranty.
5.03. Representations and Warranties of the Company. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed, the Company hereby
represents and warrants to Parent:
(a) Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is duly qualified to do business and is in 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. The Company has in
effect all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted.
(b) Company Capital Stock. The authorized capital stock of the
Company consists solely of 15,000,000 shares of Company Common Stock, of which
6,705,744 shares were outstanding as of the date hereof, and 3,000,000 shares of
Company Preferred Stock, of which no shares are outstanding. As of the date
hereof, 131,389 shares of the Company Common Stock were held in treasury by the
Company or otherwise directly or indirectly owned by the Company. The
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, and none of the outstanding shares
of Company Common Stock have been issued in violation of the preemptive rights
of any Person. Section 5.03(b) of the Company's Disclosure Schedule sets forth
for each Company Stock Option the name of the grantee, the date of the grant,
the type of grant, the status of the option grant as
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qualified or non-qualified under Section 422 of the Code, the number of shares
of Company Common Stock subject to each option, the number of shares of Company
Common Stock subject to options that are currently exercisable and the exercise
price per share. Except as set forth in the preceding sentence and other than
pursuant to the Stock Option Agreement, there are no shares of Company Stock
authorized and reserved for issuance, the Company does not have any Rights
issued or outstanding with respect to Company Stock (other than Company Rights),
and the Company does not have any commitment to authorize, issue or sell any
Company Stock or Rights, except pursuant to this Agreement.
(c) Subsidiaries.
(i) (A) The Company has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) the Company owns, directly or indirectly, all
the issued and outstanding equity securities of each of its
Subsidiaries, (C) no equity securities of any of its Subsidiaries are or
may become required to be issued (other than to the Company) by reason
of any Right or otherwise, (D) there are no contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or
may be bound to sell or otherwise transfer any of its equity securities
(other than to the Company or any of its wholly-owned Subsidiaries), (E)
there are no contracts, commitments, understandings, or arrangements
relating to the Company's rights to vote or to dispose of such
securities and (F) all the equity securities of the Company's
Subsidiaries held by the Company or its Subsidiaries are fully paid and
nonassessable and are owned by the Company or its Subsidiaries free and
clear of any Liens.
(ii) 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, the Company 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 and stock in the Federal
Home Loan Bank of Boston.
(iii) Each of the Company'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 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.
(iv) The deposit accounts of each of the Company Banks are
insured by the Bank Insurance Fund, and in the case of the Andover-based
Company Bank the Depositors Insurance Fund, in the manner and to the
maximum extent provided by applicable law, and each Company Bank has
paid all deposit insurance premiums and assessments required by
applicable laws and regulations.
(d) Corporate Power. Each of the Company and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Stock Option Agreement and to
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consummate the transactions contemplated hereby and thereby, subject to receipt
of all necessary approvals of Governmental Authorities and the approval of the
Company's shareholders of this Agreement.
(e) Corporate Authority. Subject to the approval of this Agreement by
the holders of the outstanding Company Common Stock, this Agreement and the
Stock Option Agreement and the transactions contemplated hereby and thereby have
been authorized by all necessary corporate action of the Company and the Company
Board on or prior to the date hereof. The Company has duly executed and
delivered this Agreement and the Stock Option Agreement and, assuming due
authorization, execution and delivery by Parent, each of this Agreement and the
Stock Option Agreement is a valid and legally binding obligation of the Company,
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).
(f) Regulatory Approvals; No Defaults.
(i) 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 the Company or any of its
Subsidiaries in connection with the execution, delivery or performance
by the Company or the Company Banks of this Agreement, the Bank Merger
Agreements and the Stock Option 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 OCC, the Massachusetts Bank Commissioner, the Depositors Insurance
Fund, the Maine Superintendent, the Massachusetts Board and the MHPF, as
required, (B) filings with the SEC and state securities authorities in
connection with the issuance of Parent Common Stock in the Merger, (C)
the filing of Articles of Merger with the Secretary of State of the
State of Maine pursuant to the MBCA and a Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the DGCL, (D)
the approval of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock and (E) such corporate
approvals and such consents or approvals of, or waivers by, or filings
or registrations with, federal and state banking agencies in connection
with the Bank Mergers. As of the date hereof, the Company is not aware
of any reason why the approvals set forth above and referred to in
Section 7.01(b) will not be received in a timely manner and without the
imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to receipt of the approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, the
execution, delivery and performance of this Agreement, the Bank Merger
Agreements and the Stock Option Agreement by the Company and the Company
Banks, as applicable, 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 give
rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of the Company or any of its Subsidiaries or to which the
Company or any of
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its Subsidiaries or any of their respective properties is subject or
bound, (B) constitute a breach or violation of, or a default under, the
articles of association or bylaws (or similar governing documents) of
the Company or any of its Subsidiaries or (C) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) Financial Reports; Undisclosed Liabilities.
(i) The Company's Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000, December 31, 1999 and December 31, 1998
and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it
subsequent to December 31, 1998 with the SEC (collectively, the
Company's "SEC Documents"), as of the date filed or to be filed and as
amended prior to the date hereof, (A) complied or will comply in all
material respects as to form with the applicable securities regulations
of the SEC 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; and each of the balance sheets contained in any such SEC
Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated financial position of
the Company and its Subsidiaries as of its date, and 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
the Company and its Subsidiaries for the periods to which they relate,
in each case in accordance with GAAP consistently applied during the
periods involved, except in each case as may be noted therein.
(ii) Since March 31, 2001, neither the Company nor any of its
Subsidiaries has incurred any liability other than in the ordinary
course of business consistent with past practice (excluding the
incurrence of expenses related to this Agreement and the transactions
contemplated hereby).
(iii) Since March 31, 2001, (A) the Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual
course consistent with past practice (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and
events (described in any paragraph of this Section 5.03 or otherwise),
is reasonably likely to have a Material Adverse Effect with respect to
the Company.
(iv) No agreement pursuant to which any loans or other assets
have been or shall be sold by the Company or its Subsidiaries entitled
the buyer of such loans or other assets, unless there is material breach
of a representation or covenant by the Company or its Subsidiaries, to
cause the Company or its Subsidiaries to repurchase such loan or other
asset or the buyer to pursue any other form of recourse against the
Company or its
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Subsidiaries. Except for regular quarterly cash dividends at the rate of
$0.10 per share on the Company Common Stock, since December 31, 1999, no
cash, stock or other dividend or any other distribution with respect to
the stock of the Company or any of its Subsidiaries have been declared,
set aside or paid. No shares of the stock of the Company have been
purchased, redeemed or otherwise acquired, directly or indirectly, by
the Company since March 31, 2001, and no agreements have been made to do
the foregoing.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against the Company or any of its
Subsidiaries and, to the Company's knowledge, no such litigation, claim or other
proceeding has been threatened and there are no facts which could reasonably
give rise to such litigation, claim or other proceeding.
(i) Regulatory Matters.
(i) Neither the Company nor any of its Subsidiaries nor any of
any of their respective properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, 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 "Company Regulatory Authorities"). The Company and
its Subsidiaries have paid all assessments made or imposed by any
Company Regulatory Authority.
(ii) Neither the Company nor any its Subsidiaries has been
advised by, and does not have any knowledge of facts which could give
rise to an advisory notice by, any Company Regulatory Authority that
such Company Regulatory Authority is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(j) Compliance With Laws. Each of the Company and its Subsidiaries:
(i) is in material compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting 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;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force
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and effect and, to the Company's knowledge, no suspension or
cancellation of any of them is threatened; and
(iii) has received, since December 31, 1999, no notification or
communication from any Governmental Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit or
governmental authorization (nor, to the Company's knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for documents listed as
exhibits to the SEC Documents, neither the Company nor any of its Subsidiaries
is 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 or
(ii) that materially restricts the conduct of business by the Company or by any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in
material default under any 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 the Company or any of its
Subsidiaries is currently outstanding.
(l) No Brokers. No action has been taken by the Company or any of
its Subsidiaries that would give rise to any valid claim against any party
hereto for a brokerage commission, finder's fee or other like payment with
respect to the transactions contemplated by this Agreement and the Stock Option
Agreement, excluding a Previously Disclosed fee to be paid to Xxxxxxx Xxxxx &
Co.
(m) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current or former employees of the Company and its
Subsidiaries (the "Employees") and current or former directors of the
Company including, but not limited to, "employee benefit plans" within
the meaning of Section 3(3) of ERISA, and deferred compensation, stock
option, stock purchase, stock appreciation rights, stock based,
incentive and bonus plans (the "Benefits Plans"), are Previously
Disclosed in the Disclosure Schedule. True and complete copies of all
Benefit Plans including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans and all
amendments thereto have been provided or made available to Parent.
(ii) All Benefits Plans other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees, to the
extent subject to ERISA, are in substantial compliance with ERISA. Each
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
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determination letter from the Internal Revenue Service, and the Company
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 the Company's knowledge, threatened litigation relating
to the Benefits Plans. Neither the Company nor any of its Subsidiaries
has engaged in a transaction with respect to any Benefit Plan or Pension
Plan that, assuming the taxable period of such transaction expired as of
the date hereof, could subject the Company or any of its Subsidiaries 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.
(iii) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither the Company nor any of its Subsidiaries has
incurred, and neither expects to incur, any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will
be required to be filed in connection with the transactions contemplated
by this Agreement.
(iv) All contributions required to be made under the terms of
any Benefit Plan have been timely made or have been reflected on the
financial statements of the Company included in the Company's SEC
Documents. Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and no ERISA Affiliate has an outstanding funding waiver. Neither
the Company nor any of its Subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) All Pension Plans subject to Title IV of ERISA have been
terminated prior to the date hereof.
(vi) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan.
The Company or any of its Subsidiaries may amend or terminate any such
Benefit Plan at any time without incurring any liability thereunder.
(vii) None of the execution of this Agreement, shareholder
approval of this Agreement or consummation of the transactions
contemplated by this Agreement will (A) entitle any employees of the
Company or any of its Subsidiaries to severance pay or any increase in
severance pay upon any termination of employment after the date hereof,
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(B) 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 Benefit Plans, (C) result in
any breach or violation of, or a default under, any of the Benefit Plans
or (D) 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.
(n) Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of a proceeding asserting
that it has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel the Company or any of its
Subsidiaries to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving it or any
of its Subsidiaries pending or, to the Company's knowledge, threatened, nor is
the Company or any of its Subsidiaries aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) Environmental Matters.
(i) The Company and its Subsidiaries are in compliance with
applicable Environmental Laws; (ii) to the Company's knowledge, no real
property (including buildings or other structures) currently or formerly
owned or operated by the Company or any of its Subsidiaries, or any
property in which the Company or any of its Subsidiaries has held a
security interest, Lien or a fiduciary or management role ("Company Loan
Property"), has been contaminated with, or has had any release of, any
Hazardous Substance except in compliance with Environmental Laws; (iii)
neither the Company nor any of its Subsidiaries could be deemed the
owner or operator of, or has participated in the management regarding
Hazardous Substances of, any Company Loan Property which has been
contaminated with, or has had any release of, any Hazardous Substance;
(iv) neither the Company nor any of its Subsidiaries has any liability
for any Hazardous Substance disposal or contamination on any third party
property; (v) neither the Company nor any of its Subsidiaries has
received any notice, demand letter, claim or request for information
alleging any violation of, or liability under, any Environmental Law;
(vi) neither the Company nor any of its Subsidiaries is subject to any
order, decree, injunction or other agreement with any Governmental
Authority or any third party relating to any Environmental Law; (vii) to
the Company's knowledge, there are no circumstances or conditions
(including the presence of asbestos, underground storage tanks, lead
products, polychlorinated biphenyls, prior manufacturing operations,
dry-cleaning, or automotive services) involving the Company or any of
its Subsidiaries, any currently or formerly owned or operated property,
or any Company Loan Property, that could reasonably be expected to
result in any claims, liability or investigations against the Company or
any of its Subsidiaries, result in any restrictions on the ownership,
use, or transfer of any property pursuant to any Environmental Law, or
adversely affect the value of any Company Loan Property; and (viii) the
Company has delivered to Parent copies of all
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environmental reports, studies, sampling data, correspondence, filings
and other environmental information in its possession or reasonably
available to it relating to the Company, its Subsidiaries and any
currently or formerly owned or operated property or any Company Loan
Property.
As used herein, the term "Environmental Laws" means any federal,
state or local law, regulation, order, decree, permit, authorization,
opinion or agency requirement relating to: (A) the protection or
restoration of the environment, health, safety, or natural resources,
(B) the handling, use, presence, disposal, release or threatened release
of any Hazardous Substance or (C) wetlands, indoor air, pollution,
contamination or any injury or threat of injury to persons or property
in connection with any Hazardous Substance; and the term "Hazardous
Substance" means any substance that is: (A) listed, classified or
regulated pursuant to any Environmental Law, (B) any petroleum product
or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon or
(C) any other substance which is the subject of regulatory action by any
Governmental Authority in connection with any Environmental Law.
(p) Tax Matters.
(i)(A) All Tax Returns that are required to be filed on or
before the Effective Date (taking into account any extensions of time
within which to file which have not expired) by or with respect to the
Company Group, including the Company and its Subsidiaries, have been or
will be timely filed on or before the Effective Date, (B) all such Tax
Returns are or will be true and complete in all material respects, (C)
all Taxes shown to be due on the Tax Returns referred to in clause (A)
have been or will be timely paid in full, (D) the Tax Returns referred
to in clause (A) have been examined by the Internal Revenue Service or
the appropriate Tax authority or the period for assessment of the Taxes
in respect of which such Tax Returns were required to be filed has
expired, (E) all deficiencies asserted or assessments made as a result
of such examinations have been paid in full, (F) no issues that have
been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (A) are
currently pending and (G) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Company or any of
its Subsidiaries.
(ii) The Company has made available to Parent true and correct
copies of the United States federal income Tax Returns filed by the
Company and its Subsidiaries for each of the three most recent fiscal
years ended on or before December 31, 2000.
(iii) Neither the Company nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that
accrued on or before the end of the most recent period covered by the
Company's SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in the Company's SEC Documents filed on or prior to
the date hereof.
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(iv) Neither the Company nor any of its Subsidiaries is a
party to any Tax allocation or sharing agreement, is or has been a
member of an affiliated group filing consolidated or combined Tax
Returns (other than a group the common parent of which is or was the
Company) or otherwise has any liability for the Taxes of any Person
(other than the Company and its Subsidiaries).
(v) No closing agreements, private letter rulings, technical
advice memoranda or similar agreement or rulings have been entered into
or issued by any taxing authority with respect to the Company and its
Subsidiaries.
(vi) Neither the Company nor any of its Subsidiaries maintains
any compensation plans, programs or arrangements the payments under
which would not reasonably be expected to be deductible as a result of
the limitations under Section 162(m) of the Code and the regulations
issued thereunder.
(vii) As of the date hereof, the Company has no reason to
believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(viii) (A) No Tax is required to be withheld pursuant to Section
1445 of the Code as a result of the Transactions and (B) all Taxes that
the Company or any of its Subsidiaries is or was required by law to
withhold or collect have been duly withheld or collected and, to the
extent required by applicable law, have been paid to the proper
Governmental Authority or other Person.
(q) Risk Management Instruments. Neither the Company nor any of its
Subsidiaries is a party or has 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 the Company or any of its
Subsidiaries 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. The
Company and its Subsidiaries have duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations to
perform have accrued; and, to the Company'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 the Company.
(r) Loans; Nonperforming and Classified Assets.
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(i) Each loan agreement, note or borrowing arrangement,
including without limitation portions of outstanding lines of credit and
loan commitments (collectively, "Loans"), on the books and records of
the Company and its Subsidiaries, was made and has been serviced in all
material respects in accordance with customary lending standards in the
ordinary course of business, is evidenced in all material respects by
appropriate documentation and, to the knowledge of the Company,
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.
(ii) The Company has Previously Disclosed as to the Company
and each Company Subsidiary as of the latest practicable date: (i) any
written or, to the Company's knowledge, oral Loan under the terms of
which the obligor is 60 or more days delinquent in payment of principal
or interest, or to the Company'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 the Company, a Company Subsidiary or an applicable
regulatory authority; (iii) a listing of the real estate owned 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 the Company or a Company Subsidiary,
or to the best knowledge of the Company, any Person controlling,
controlled by or under common control with any of the foregoing.
(s) Properties. All real and personal property owned by the Company
or a Subsidiary of the Company or presently used by any of them in its
respective business is in an adequate condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with its past practices. The Company has good and marketable
title free and clear of all Liens to all of the material properties and assets,
real and personal, reflected on the consolidated statement of financial
condition of the Company as of March 31, 2001 included in the Company's SEC
Documents or acquired after such date, other than properties sold by the Company
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 material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Company as of March 31, 2001 included in
the Company's SEC Documents. All real and personal property which is material to
the Company's business on a consolidated basis and leased or licensed by the
Company or a Subsidiary of the Company is held pursuant to leases or licenses
which are valid and enforceable in accordance with their respective terms and
such leases will not terminate or lapse prior to the Effective Time.
(t) Intellectual Property. The Company and each Subsidiary of the
Company 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 Previously Disclosed by the Company, and none of the Company
or any of its Subsidiaries has received any notice of conflict with respect
thereto
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that asserts the right of others. The Company and each of its Subsidiaries have
performed in all material respects all the obligations required to be performed
by them and are not in default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
(u) Fiduciary Accounts. The Company and each of its Subsidiaries has
properly administered all accounts for which it acts as a fiduciary, including
but not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in
accordance with the terms of the governing documents and applicable laws and
regulations. Neither the Company nor any of its Subsidiaries, nor any of their
respective directors, officers or employees, has committed any breach of trust
with respect to any fiduciary account and the records for each such fiduciary
account are true and correct and accurately reflect the assets of such fiduciary
account.
(v) Books and Records. The books and records of the Company and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of the Company and its Subsidiaries.
(w) Insurance. The Company has Previously Disclosed all of the
material insurance policies, binders, or bonds currently maintained by the
Company or any of its Subsidiaries ("Insurance Policies"). The Company and its
Subsidiaries are insured with reputable insurers against such risks and in such
amounts as the management of the Company reasonably has determined to be prudent
in accordance with industry practices. All the Insurance Policies are in full
force and effect; the Company and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely fashion.
(x) Allowance For Loan Losses. The Company's allowance for loan
losses is, and shall be as of the Effective Date, in compliance with the
Company's existing methodology for determining the adequacy of its allowance for
loan losses as well as the standards established by applicable Governmental
Authorities and the Financial Accounting Standards Board and is and shall be
adequate under all such standards.
(y) Transactions With Affiliates. All "covered transactions" between
a Company Bank and an "affiliate" within the meaning of Sections 23A and 23B of
the Federal Reserve Act have been in compliance with such provisions.
(z) Required Vote; Antitakeover Provisions.
(i) The affirmative vote of the holders of a majority of the
issued and outstanding shares of Company Common Stock is necessary to
approve this Agreement and the Transactions on behalf of the Company.
(ii) Based on the representation and warranty of Parent
contained in Section 5.04(m), no "control share acquisition," "business
combination moratorium," "fair price"
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or other form of antitakeover statute or regulation is applicable to
this Agreement or the Stock Option Agreement and the transactions
contemplated hereby and thereby. Without limiting the foregoing, the
Board of Directors of the Company has approved the transactions
contemplated by this Agreement and the Stock Option Agreement and taken
all other requisite action such that the provisions of Section 203 of
the DGCL and the provisions of the Company Articles relating to special
voting requirements for certain business combinations will not apply to
this Agreement or the Stock Option Agreement or any of the transactions
contemplated hereby or thereby.
(iii) On a prior to the date hereof, the Company and the
Rights Agent have entered into an amendment to the Company Rights
Agreement, which amendment has been duly authorized by the Company and
duly executed and delivered by the Company and the Rights Agent under
the Company Rights Agreement, so that the entering into this Agreement
and the Stock Option Agreement and the consummation of the transactions
contemplated by the Stock Option Agreement do not and will not enable or
require the Company Rights to be exercised, distributed or triggered by
any Person. There is no Acquiring Person, and neither a Distribution
Date nor a Stock Acquisition Date has occurred, in each case as such
terms are defined in the Company Rights Agreement.
(aa) Fairness Opinion. The Company Board has received the written
opinion of Xxxxxxx Xxxxx & Co. to the effect that as of the date hereof the
Exchange Ratio is fair to the holders of Company Common Stock from a financial
point of view.
(bb) Disclosure. The representations and warranties contained in this
Section 5.03, when considered as a whole, 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 Section 5.03 not misleading.
5.04. Representations and Warranties of Parent. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed, Parent hereby represents and
warrants to the Company as follows:
(a) Organization, Standing and Authority. Parent is duly organized,
validly existing and in good standing under the laws of the State of Maine.
Parent is duly qualified to do business and is in 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. Parent has in effect all
federal, state, local and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now conducted.
(b) Parent Stock.
(i) As of the date hereof, the authorized capital stock of
Parent consists solely of 400,000,000 shares of Parent Common Stock, of
which no more than 137,026,185 shares were outstanding as of the date
hereof, and 5,000,000 shares of Parent Preferred Stock, of which no
shares were outstanding as of the date hereof. The outstanding shares of
Parent Common Stock have been duly authorized and validly issued and are
fully paid and non-assessable, and none of the shares of Parent Common
Stock have been issued in
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violation of the preemptive rights of any Person. As of the date hereof,
there are no Rights authorized, issued or outstanding with respect to
the capital stock of Parent, except for (i) shares of Parent Common
Stock issuable pursuant to the Parent Benefits Plans, (ii) shares of
Parent Common Stock and/or Parent Preferred Stock issuable upon the
exercise of Parent Rights and (iii) by virtue of this Agreement.
(ii) The shares of Parent Common Stock to be issued in
exchange for shares of Company Common Stock in the Merger, when issued
in accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and the issuance thereof is
not subject to any preemptive right.
(c) Subsidiaries.
(ii) Each of Parent's Significant 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 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 and it owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Significant Subsidiaries.
Each banking subsidiary of Parent is duly licensed by the OCC and the
deposits of each depository banking subsidiary of Parent are insured by
the FDIC in the manner and to the maximum extent provided by law.
(iii) As of the date hereof, (A) Parent owns, directly or
indirectly, all the issued and outstanding equity securities of each of
its Significant Subsidiaries, (B) no equity securities of any of the
Significant Subsidiaries of Parent are or may become required to be
issued (other than to Parent) by reason of any Right or otherwise, (C)
there are no contracts, commitments, understandings or arrangements by
which any of Parent's Significant Subsidiaries is or may be bound to
sell or otherwise transfer any of its equity securities (other than to
Parent or any of its wholly-owned Subsidiaries) and (D) there are no
contracts, commitments, understandings, or arrangements relating to
Parent's rights to vote or to dispose of such securities.
(d) Corporate Power. Parent and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets. Parent has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject to the receipt of all
necessary approvals of Governmental Authorities.
(e) Corporate Authority. This Agreement and the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of Parent and the Parent Board.
This Agreement has been duly executed and delivered by Parent and, assuming due
authorization, execution and delivery by the Company, this Agreement is a valid
and legally binding agreement of Parent enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization,
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moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity principles).
(f) Regulatory Approvals; No Defaults
(i) 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 Parent or any of its
Subsidiaries in connection with the execution, delivery or performance
by Parent and the Parent Massachusetts Bank of this Agreement, the Bank
Merger Agreements and the Stock Option 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 OCC, the Massachusetts Bank Commissioner, the Depositors Insurance
Fund, the Maine Superintendent, the Massachusetts Board and the MHPF, as
required, (B) filings with the SEC and state securities authorities in
connection with the issuance of Parent Common Stock in the Merger, (C)
the approval of the listing on Nasdaq of the Parent Common Stock to be
issued in the Merger, (D) the filing of Articles of Merger with the
Secretary of State of the State of Maine pursuant to the MBCA and a
Certificate of Merger with the Secretary of State of the State of
Delaware pursuant to the DGCL and (E) such corporate approvals and such
consents or approvals of, or waivers by, or filings or registrations
with, federal and state banking agencies in connection with the Bank
Mergers. As of the date hereof, Parent is not aware of any reason why
the approvals set forth above and referred to in Section 7.01(b) will
not be received in a timely manner and without the imposition of a
condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt, or the making, of the consents,
approvals and filings referred to in the preceding paragraph and
expiration of the related waiting periods, the execution, delivery and
performance of this Agreement, the Bank Merger Agreements and the Stock
Option Agreement by Parent and the Parent Massachusetts Bank, as
applicable, 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 give rise to
any Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or Agreement, indenture or instrument of
Parent or of any of its Subsidiaries or to which Parent or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach
or violation of, or a default under, the articles of incorporation or
bylaws (or similar governing documents) of Parent or any of its
Subsidiaries or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect.
(i) Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 and all other reports, registration statements,
definitive proxy statements or information statements filed or to be
filed by it subsequent to December 31, 1998 under
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the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act in the form filed or to be filed (collectively, Parent's
"SEC Documents") with the SEC, as of the date filed or to be filed, (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;
and each of the balance sheets contained in or incorporated by reference
into any such SEC Document (including the related notes and schedules
thereto) fairly presents, or will fairly present, the financial position
of Parent and its Subsidiaries as of its date, and each of the
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 results of operations, changes in shareholders' equity and changes
in cash flows, as the case may be, of Parent and its Subsidiaries for
the periods to which they relate, in each case in accordance with GAAP
consistently applied during the periods involved, except in each case as
may be noted therein.
(ii) Since March 31, 2001, no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of this
Section 5.04 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to Parent.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Parent or its Subsidiaries and,
to Parent's knowledge, no such litigation, claim or other proceeding has been
threatened and there are no facts which could reasonably give rise to such
litigation, claim or other proceeding.
(i) No Brokers. Except as set forth in the Parent Disclosure
Schedule, no action has been taken by Parent or its Subsidiaries that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions contemplated
by this Agreement and the Stock Option Agreement.
(j) Tax Matters. As of the date hereof, Parent does not have any
reason to believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
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(k) Regulatory Matters.
(i) Neither Parent nor any of its Subsidiaries nor any of
any of their respective properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, 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 "Parent Regulatory Authorities"). Parent and its
Subsidiaries have paid all assessments made or imposed by any Parent
Regulatory Authority.
(ii) Neither Parent nor any its Subsidiaries has been advised
by, and does not have any knowledge of facts which could give rise to an
advisory notice by, any Parent Regulatory Authority that such Parent
Regulatory Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(l) Compliance With Laws. Each of Parent and its Subsidiaries:
(i) is in material compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting 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;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
Parent's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1999, no notification
or communication from any Governmental Authority (A) asserting that
Parent or any of its Subsidiaries is not in 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 Parent's knowledge, do any grounds
for any of the foregoing exist).
(m) Ownership of Company Common Stock. Except for the Stock Option
Agreement, none of Parent or any of its Subsidiaries, or to Parent's knowledge,
any of its other affiliates or associates (as such terms are defined under the
Exchange Act), owns beneficially or
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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 Company 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
Company Common Stock.
(n) Disclosure. The representations and warranties contained in this
Section 5.04, when considered as a whole, 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 Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of the Company and Parent 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 VII hereof, and shall
cooperate fully with the other party hereto to that end.
6.02. Shareholder Approval. The Company agrees to take, in accordance
with applicable law and the Company Articles and Company Bylaws, all action
necessary to convene 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 the Company's shareholders for
consummation of the Transactions (including any adjournment or postponement, the
"Company Meeting"). Except with the prior approval of Parent, no other matters
shall be submitted for the approval of the Company shareholders. The Company
Board shall at all times prior to and during such meeting recommend such
approval and shall take all reasonable lawful action to solicit such approval by
its shareholders; provided that nothing in this Agreement shall prevent the
Company Board from withholding, withdrawing, amending or modifying its
recommendation if the Company Board determines, after consultation with its
outside counsel, that such action is legally required in order for the directors
to comply with their fiduciary duties to the Company shareholders under
applicable law; provided, further, that Section 6.08 shall govern the
withholding, withdrawing, amending or modifying of such recommendation in the
circumstances described therein.
6.03. Registration Statement.
(a) Parent agrees to prepare a registration statement on Form S-4 or
other applicable form (the "Registration Statement") to be filed by Parent with
the SEC in connection with the issuance of Parent Common Stock in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of the Company constituting a part thereof (the "Proxy Statement") and
all related documents). The Company shall prepare and furnish such
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information relating to it and its directors, officers and shareholders as may
be reasonably required in connection with the above referenced documents based
on its knowledge of and access to the information required for said documents,
and the Company, and its legal, financial and accounting advisors, shall have
the right to review in advance such Registration Statement prior to its filing.
The Company agrees to cooperate with Parent and Parent's counsel and accountants
in requesting and obtaining appropriate opinions, consents and letters from its
financial advisor and independent auditor in connection with the Registration
Statement and the Proxy Statement. Provided that the Company has cooperated as
described above, Parent agrees to file, or cause to be filed, the Registration
Statement and the Proxy Statement with the SEC as promptly as reasonably
practicable. Each of the Company and Parent agrees to use its reasonable best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after the filing thereof.
Parent also agrees to use its reasonable best efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement. After the Registration
Statement is declared effective under the Securities Act, the Company shall
promptly mail at its expense the Proxy Statement to its shareholders.
(b) Each of the Company and Parent agrees that none of the
information supplied or to be supplied by it for inclusion or incorporation by
reference in (i) the Registration Statement shall, at the time the Registration
Statement and each amendment or supplement thereto, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) the Proxy Statement and any
amendment or supplement thereto shall, at the date(s) of mailing to shareholders
and at the time of the Company Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. Each of the Company
and Parent further agrees that if such party shall become aware prior to the
Effective Date of any information furnished by such party that would cause any
of the statements in the Registration Statement or the Proxy Statement to be
false or misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or misleading,
to promptly inform the other parties thereof and to take the necessary steps to
correct the Registration Statement or the Proxy Statement.
(c) Parent agrees to advise the Company, promptly after Parent
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Parent Common Stock for
offering or sale in any jurisdiction, of the initiation or, to the extent Parent
is aware thereof, threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration Statement
or for additional information.
6.04. Regulatory Filings.
(a) Each of Parent and the Company and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the Transactions and any other transactions
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contemplated by this Agreement (including the consolidation of any Company
branches with Parent Massachusetts Bank branches or branches of any other
Subsidiary of Parent or the closure of any Company branches, in each case as
Parent in its sole discretion shall deem necessary; provided, however, that in
no event shall such branch closures or consolidations be deemed a condition to
Parent's obligation hereunder to consummate the Merger), the Bank Merger
Agreements and the Stock Option Agreement; and any initial filings with
Governmental Authorities (other than the Proxy Statement) shall be made by
Parent as soon as reasonably practicable after the execution hereof. Each of
Parent and the Company shall have the right to review 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 and the Stock
Option 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, the Bank Merger Agreements and the Stock Option
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, 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.
6.05. Press Releases. The Company and Parent 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. The Company and Parent shall cooperate to
develop all public announcement materials and make appropriate management
available at presentations related to the Transactions as reasonably requested
by the other party.
6.06. Access; Information.
(a) The Company agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford Parent
and Parent's officers, employees, counsel, accountants and other authorized
representatives such access during normal business hours throughout the period
prior to the 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 Parent may reasonably request and,
during such period, it shall furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request.
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(b) Parent agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford the
Company and its authorized representatives such access to Parent's personnel as
the Company may reasonably request.
(c) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.06 (as well as any other information obtained prior to the date hereof 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 6.06 (as well as any other information obtained prior
to the date hereof 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.
6.07. Affiliates. The Company shall use its reasonable best efforts to
identify those persons who may be deemed to be "affiliates" of the Company
within the meaning of Rule 145 promulgated by the SEC under the Securities Act
(the "Company Affiliates") and to cause each person so identified to deliver to
Parent as soon as practicable, and in any event prior to the date of the Company
Meeting, a written agreement to comply with the requirements of Rule 145 under
the Securities Act in connection with the sale or other transfer of Parent
Common Stock received in the Merger, which agreement shall be in a form
reasonably satisfactory to the Company.
6.08. Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries nor any of their respective officers or directors shall,
and that it shall direct and use its reasonable best efforts to cause its and
each such Subsidiary's employees, agents and representatives not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation or similar transaction involving, or any purchase
of all or substantially all of the assets of the Company or more than 10% of the
outstanding equity securities of the Company or any of its Subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal"). The Company further agrees that neither the Company nor any of its
Subsidiaries nor any of their respective officers and directors shall, and that
it shall direct and use its reasonable best efforts to cause its and each such
Subsidiary's employees, agents and representatives not to, directly or
indirectly, 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 otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing contained in
this Agreement shall prevent
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the Company or the Company Board from (A) complying with its disclosure
obligations under federal or state law; (B) providing information in response to
a request therefor by a Person who has made an unsolicited bona fide written
Acquisition Proposal if the Company Board receives from the Person so requesting
such information an executed confidentiality agreement; (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal or (D) recommending such an Acquisition
Proposal to the shareholders of the Company, if and only to the extent that, (i)
in each such case referred to in clause (B), (C) or (D) above, the Company Board
determines in good faith (after consultation with outside legal counsel) that
such action would be required in order for its directors to comply with their
respective fiduciary duties under applicable law and (ii) in the case referred
to in clause (D) above, the Company Board determines in good faith (after
consultation with its financial advisor) that such Acquisition Proposal, if
accepted, 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 would, if consummated, result in a transaction more favorable to
the Company's shareholders from a financial point of view than the Merger. The
Company 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. The Company agrees that it
will notify Parent immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of its
representatives.
6.09. Certain Policies. Prior to the Effective Date, each of the
Company and its Subsidiaries 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 Parent;
provided, however, that no such modifications or changes need be made prior to
the satisfaction of the conditions set forth in Section 7.01(b); and further
provided that in any event, no accrual or reserve made by the Company or any of
its Subsidiaries pursuant to this Section 6.09 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 the Company or its
management with any such adjustments.
6.10. Nasdaq Listing. Parent agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the Nasdaq the shares of Parent Common
Stock to be issued in connection with the Merger.
6.11. Indemnification.
(a) From and after the Effective Time, Parent (the "Indemnifying
Party") shall indemnify and hold harmless each present and former director,
officer and employee of the Company or a Company Subsidiary, as applicable,
determined as of the Effective Time (the "Indemnified Parties") against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities incurred in connection with any claim,
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action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, arising in whole or in part out of, or pertaining to
(i) the fact that he or she was a director, officer, employee, fiduciary or
agent of the Company or any Company Subsidiary or is or was serving at the
request of the Company or any of the Company Subsidiaries as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, (ii) the negotiation, execution and
performance of this Agreement, the Stock Option Agreement or any of the
transactions contemplated hereby and thereby, to the fullest extent which such
Indemnified Parties would be entitled under the Company Articles and Company
Bylaws or equivalent documents of any Company Subsidiary, as applicable, or any
agreement, arrangement or understanding which has been Previously Disclosed by
the Company pursuant to this Section, in each case as in effect on the date
hereof. Without limiting the foregoing, Parent also agrees that limitations on
liability existing in favor of the Indemnified Parties as provided in the
Company Articles and Company Bylaws or similar governing documents of the
Company Subsidiaries as in effect on the date hereof with respect to matters
occurring prior to the Effective Time shall survive the Merger and the Bank
Mergers and shall continue in full force and effect from and after the Effective
Time.
(b) Any Indemnified Party wishing to claim indemnification under
this Section 6.11, 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 Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably satisfactory to the
Indemnifying Party, and the Indemnifying Party shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction), (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 in the manner contemplated hereby is prohibited by applicable
laws and regulations.
(c) Prior the Effective Time, the Company shall purchase an extended
reporting period endorsement under the Company's existing directors' and
officers' liability insurance coverage for the Company's directors and officers
in a form acceptable to the Company which shall provide such directors and
officers with coverage for six years following the 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 the Company.
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(d) If Parent 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 Parent shall assume the
obligations set forth in this Section 6.11.
6.12 Benefit Plans.
(a) As soon as administratively practicable after the Effective
Time, Parent shall take all reasonable action so that employees of the Company
and its Subsidiaries shall be entitled to participate in each employee benefit
plan, program or arrangement of Parent of general applicability (the "Parent
Benefits Plans") to the same extent as similarly-situated employees of Parent
and its Subsidiaries (it being understood that inclusion of the employees of the
Company and its Subsidiaries in the Parent Benefits Plans may occur at different
times with respect to different plans.) Parent shall cause each Parent Benefits
Plan in which employees of the Company and its Subsidiaries 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 of
pension benefits) under the Parent Benefit Plans, as well as the severance plan
and special termination agreements of the Company, the service of such employees
with the Company and its Subsidiaries to the same extent as such service was
credited for such purpose by the Company. Nothing herein shall limit the ability
of Parent to amend or terminate any of the Company's Benefits Plans in
accordance with their terms at any time.
(b) Parent shall honor, and the 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 the
Company existing as of the Effective Date, as well as all employment, severance,
deferred compensation or "change-in-control" agreements, plans or policies of
the Company which are Previously Disclosed. Parent acknowledges that the
consummation of the Merger will constitute a "change-in-control" of the Company
for purposes of any employee benefit plans, agreements and arrangements of the
Company.
(c) If employees of the Company or any of its Subsidiaries become
eligible to participate in a medical, dental or health plan of Parent, Parent
shall cause each such plan to (i) waive any preexisting condition limitations to
the extent such conditions covered under the applicable medical, health or
dental plans of Parent, (ii) provide full credit for under such plans any
deductibles, co-payment and out-of-pocket expenses incurred by the employees and
their beneficiaries during the portion of the calendar year prior to such
participation and (iii) waive any waiting period limitation or evidence of
insurability requirement which would otherwise be applicable to such employee on
or after the Effective Time to the extent such employee had satisfied any
similar limitation or requirement under an analogous Plan prior to the Effective
Time.
(d) For a period of six months following the Effective Time, Parent
shall provide all employees of the Company and its Subsidiaries whose employment
was terminated other than for cause, disability or retirement at or following
the Effective Time, and who so desires, job counseling and outplacement
assistance services in accordance with Parent's employment policies and
practices, shall assist such employees in locating new employment and shall
notify
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all such employees who want to be so notified of opportunities for positions
with Parent or any of its Subsidiaries for which Parent reasonably believes such
persons are qualified and shall consider any application for such positions
submitted by such persons, provided, however, that any decision to offer
employment to any such person shall be made in the sole discretion of Parent.
(e) All employees of the Company or a Company Subsidiary as of the
Effective Time shall become employees of Parent or a Parent Subsidiary as of the
Effective Time, and Parent or a Parent Subsidiary will use its reasonable best
efforts to give such persons (other than any such person who is party to an
employment agreement, a severance agreement or a special termination agreement)
at least four weeks prior written notice of any job elimination after the
Effective Time for a period of 90 days following the Effective Time. Subject to
such four-week notice requirement, Parent or a Parent Subsidiary shall have no
obligation to continue the employment of any such person and nothing contained
herein shall give any employee of the Company or a Company Subsidiary the right
to continue employment with Parent or a Parent Subsidiary after the Effective
Time. An employee of the Company or a Company Subsidiary (other than an employee
who is party to an employment agreement, a severance agreement or a special
termination agreement) whose employment is involuntarily terminated other than
for cause following the Effective Time shall be entitled to receive severance
payments in accordance with, and to the extent provided in, the Company employee
severance plan, a copy of which Parent acknowledges has been provided to it by
the Company.
(f) The Company may amend the Company ESOP to provide that (i) in
the event that the Effective Time occurs prior to December 31, 2001, a
participant who is not actively employed on December 31, 2001 may nonetheless
share in allocation of contributions under the Company ESOP if such participant
was actively employed as of the Effective Time and (ii) to terminate the Company
ESOP as of the Effective Time, which provisions, in each case, shall be
reasonably satisfactory to Parent.
6.13. Directors. Parent agrees to take all action necessary to appoint
or elect, effective as of the Effective Time, one non-employee director of the
Company as of the date hereof who is designated by the Company and who both
meets the director qualification requirements set forth in the Parent Bylaws and
is otherwise reasonably acceptable to Parent as a director of Parent. Such
person shall serve until the first annual meeting of stockholders of Parent
following the Effective Time and until his or her successor is elected and
qualified. Subject to compliance with the director qualification requirements
set forth in the Parent Bylaws and the fiduciary duties of the Parent Board,
Parent shall include such person on the list of nominees for director presented
by the Parent Board and for which the Parent Board shall solicit proxies at the
first annual meeting of shareholders of Parent following the Effective Time,
which person shall be nominated for a three-year term.
6.14. Bank Mergers. Parent and the Company agree to take all action
necessary and appropriate, including causing the entering into of appropriate
merger agreements (the "Bank Merger Agreements"), to cause each of the Company
Banks to merge with and into the Parent Massachusetts Bank (individually a "Bank
Merger" and collectively the "Bank Mergers"), in each case in accordance with
applicable laws and regulations and the terms of the applicable Bank Merger
Agreement and as soon as practicable after consummation of the Merger. The
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Bank Merger Agreements shall provide that the directors of Parent Massachusetts
Bank upon consummation of the Bank Mergers shall be the directors of Parent
Massachusetts Bank immediately prior to the Bank Mergers, plus two persons
serving as a director of a Company Bank as of the date hereof designated by the
Company who both meet the director qualification requirements set forth in the
Bylaws of Parent Massachusetts Bank and are otherwise acceptable to Parent and
Parent Massachusetts Bank.
6.15. Consulting Agreement. Xxxxxx X. Xxxxxxxx (the "Executive") shall
continue to serve as President and Chief Executive Officer of the Company until
the Effective Time. Prior to the Effective Time, and provided the Executive is
so willing, Parent shall to enter into a consulting and noncompetition agreement
(the "Consulting Agreement") with the Executive which provides that (i) the
Executive shall be a consultant to Parent for a three-year period following the
Effective Time (the "Consulting Period"); (ii) in his capacity as consultant,
the Executive shall provide such consulting services to Parent as may be
reasonably requested by it; (iii) during the Consulting Period the Executive
will not, directly or indirectly, without the prior written consent of Parent,
(x) become a director, officer, employee, principal, agent or consultant of any
insured depository institution, trust company or parent holding company of any
such institution or company which has an office in Massachusetts or New
Hampshire and transacts business in any area in such states in which the Company
or any of its banking subsidiaries maintains offices, provided, however, that
this provision shall not prohibit the Executive from owning bonds, preferred
stock or up to five percent (5%) of the outstanding common stock of any such
entity if such common stock is publicly traded, (y) solicit or induce, or cause
others to solicit or induce, any employee of the Company or any of its
Subsidiaries to leave the employment of such entities or (z) solicit any
customer of the Company or any of its Subsidiaries other than in connection with
the provision of consulting services under the Consulting Agreement; and (iv)
the Executive shall receive annual compensation pursuant to the Consulting
Agreement at a rate which is equal to the base salary paid to him by the Company
as of the date hereof. The Consulting Agreement shall further provide that it
shall supersede the Employment Agreement, dated as of May 16, 1991, among the
Executive, the Company and the Andover-based banking subsidiary of the Company
and, upon payment to the Executive of the amounts required to be paid
thereunder, the Special Termination Agreement, dated as of December 17, 1992, as
amended and restated as of January 23, 1997, between the Company and the
Executive.
6.16. Company Rights Agreement. On or prior to the Effective Date, the
Company shall terminate the Company Rights Agreement in accordance with its
terms and without the payment of any consideration to the holders of the Company
Common Stock.
6.17. Notification of Certain Matters. Each of the Company and Parent
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) 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 (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the parties hereto to consummate the Merger is
subject to the fulfillment or written waiver by the parties hereto prior to the
Closing Date of each of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have
been duly approved by holders of not less than a majority of the outstanding
shares of the Company Common Stock.
(b) 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 approvals shall contain any conditions, restrictions or
requirements which the Parent Board reasonably determines in good faith would,
individually or in the aggregate, materially reduce the benefits of the
Transactions to such a degree that Parent would not have entered into this
Agreement had such conditions, restrictions or requirements been known at the
date hereof.
(c) 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.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated by the SEC and not
withdrawn.
(e) Listing. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing on the Nasdaq.
(f) Tax Opinion. Each of Parent and the Company shall have received
the written opinion of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., dated as of the
Effective Date (which shall be based on such written representations (including
without limitation the standard representations set forth in Revenue Procedure
86-42, 1986-2 C.B. 722), from Parent, the Company and others as such counsel
shall reasonably request as to factual matters) to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and to the effect that (i) except for cash received in lieu of fractional
share interests, holders of Company Common Stock who receive Parent Common Stock
in the Merger will not recognize gain or loss for federal income tax purposes,
(ii) the basis of such Parent Common Stock will equal the basis of the Company
Common Stock for which it is exchanged, reduced by any amount allocable to a
fractional share interest for which cash is received, and (iii) the holding
period of such Parent Common Stock will include the holding period of the
Company Common Stock for which it is exchanged, assuming that such stock is a
capital asset in the hands of the holder thereof at the Effective Time, or, in
the event that each of Parent and the Company shall not have received
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such written opinion from Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P. as provided
above, then in such case each of Parent and the Company shall have received the
foregoing written opinion from Xxxxxxx Procter LLP subject to the foregoing
requirements as to form and substance.
7.02. Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Closing Date of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement, subject in all cases to the
standard set forth in Section 5.02, shall be true and correct as of the date of
this Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct as of such date), and the Company shall have received a certificate,
dated the Effective Date, signed on behalf of Parent by the Chief Executive
Officer and the Chief Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Effective Time, and the Company
shall have received a certificate, dated the Effective Date, signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer of Parent
to such effect.
(c) Possible Adjustment. The time period in which the Company may be
entitled to exercise its right to terminate this Agreement pursuant to Section
8.01(f) shall have expired without the exercise by the Company of such
termination right, provided that nothing contained herein shall prevent Parent,
in the event of such exercise by the Company, from exercising its rights under
such Section
(d) Other Actions. Parent shall have furnished the Company with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 7.01 and 7.02 as
the Company may reasonably request.
7.03. Conditions to Obligations of Parent. The obligations of Parent
to consummate the Merger are also subject to the fulfillment or written waiver
by Parent prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement, subject in all cases to
the standard set forth in Section 5.02, shall be true and correct as of the date
of this Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct as of such date), and Parent shall have received a certificate, dated
the Effective Date, signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or
43
48
prior to the Effective Time, and Parent shall have received a certificate, dated
the Effective Date, signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) Other Actions. The Company shall have furnished Parent with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 7.01 and 7.03 as Parent may
reasonably request.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Transactions may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Parent and the Company if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Parent or
the Company if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of: (i) a breach by Parent or the
Company, as the case may be, of any representation or warranty contained herein
(subject to the standard set forth in Section 5.02), which breach 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 breach by Parent or the
Company, as the case may be, of any of the covenants or agreements contained
herein, which breach 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, which
breach (whether under (i) or (ii)) would be reasonably expected, individually or
in the aggregate with other breaches, to result in a Material Adverse Effect
with respect to Parent or the Company, as the case may be.
(c) Delay. At any time prior to the Effective Time, by Parent or the
Company if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Transactions are not
consummated by March 31, 2002, except to the extent that the failure of the
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
8.01(c) or (ii) any of the Shareholders (if the Company is the party seeking to
terminate), which action or inaction is in violation of its obligations under
this Agreement or, in the case of the Shareholders, his, her or its obligations
under the relevant Shareholder Agreement.
(d) No Approval. By the Company or Parent, if its Board of Directors
so determines by a vote of a majority of the members of its entire Board, in the
event (i) the approval of any Governmental Authority required for consummation
of the Merger and the other transactions contemplated by this Agreement shall
have been denied by final nonappealable action of such Governmental Authority or
an application therefor shall have been permanently withdrawn at the
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request that it be so withdrawn by a Governmental Authority or (ii) the
shareholder approval referred to in Section 7.01(a) herein is not obtained at
the Company Meeting.
(e) Failure to Recommend. At any time prior to the Company Meeting,
by Parent if the Company shall have breached Section 6.08 or the Company Board
shall have failed to make its recommendation referred to in Section 6.02,
withdrawn such recommendation or modified or changed such recommendation in a
manner adverse in any respect to the interests of Parent.
(f) Possible Adjustment. By the Company, if the Company Board so
determines by the vote of a majority of all of its members, at any time during
the five-day period commencing with the Determination Date, if both the
following conditions are satisfied:
(1) The Parent Closing Average shall be less than 82.5% of the
Starting Price; and
(2) (i) the number obtained by dividing the Parent Closing
Average by the Starting Price (such number being referred to herein as the
"Parent Ratio") shall be less than (ii) the number obtained by dividing the
Nasdaq Bank Average Index by the Nasdaq Bank Starting Index and multiplying the
quotient in this clause by 0.825 (such number being referred to herein as the
"Index Ratio");
subject, however, to the following three sentences. If the Company elects to
exercise its termination right pursuant to the immediately preceding sentence,
it shall give written notice to Parent (provided that such notice of election to
terminate may be withdrawn at any time within the aforementioned five-day
period). During the five-day period commencing with its receipt of such notice,
Parent shall have the option of increasing the consideration to be received by
the holders of Company Common Stock hereunder by adjusting the Exchange Ratio to
equal the lesser of (i) a number equal to a quotient (rounded to the nearest one
ten-thousandth), the numerator of which is the product of the Starting Price,
0.825, and the Exchange Ratio (as then in effect) and the denominator of which
is the Parent Closing Average, and (ii) a number equal to a quotient (rounded to
the nearest one ten-thousandth), the numerator of which is the Index Ratio
multiplied by the Exchange Ratio (as then in effect) and the denominator of
which is the Parent Ratio. If Parent makes an election contemplated by the
preceding sentence within such five-day period, it shall give prompt written
notice to the Company of such election and the revised Exchange Ratio, whereupon
no termination shall have occurred pursuant to this Section 8.01(f) and this
Agreement shall remain in effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 8.01(f).
8.02. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in Section 9.01
and (ii) that termination will not relieve a breaching party from liability for
any willful breach of any covenant, agreement, representation or warranty of
this Agreement giving rise to such termination
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ARTICLE IX
MISCELLANEOUS
9.01. Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than agreements or covenants contained herein that by their express terms are to
be performed after the Effective Time, and the Stock Option Agreement, which
shall terminate in accordance with the terms thereof) or the termination of this
Agreement if this Agreement is terminated prior to the Effective Time (other
than Sections 6.06(c), 8.02 and, excepting Section 9.12 hereof, this Article IX,
which shall survive any such termination, and the Stock Option Agreement, which
shall terminate in accordance with the terms thereof). Notwithstanding anything
in the foregoing to the contrary, no representations, warranties, agreements and
covenants contained in this Agreement shall be deemed to be terminated or
extinguished so as to deprive a party hereto or any of its affiliates of any
defense at law or in equity which otherwise would be available against the
claims of any Person, including without limitation any shareholder or former
shareholder.
9.02. Waiver; Amendment. Prior to the 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
Company Meeting no amendment shall be made which by law requires further
approval by the shareholders of the Company without obtaining such approval.
9.03. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Maine applicable to
contracts made and to be performed entirely within such State.
9.05 Expenses. 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, except that expenses of printing the Registration Statement and the
registration fee to be paid to the SEC in connection therewith shall be shared
equally between the Company and Parent, and provided further that nothing
contained herein shall limit either party's rights to recover any liabilities or
damages arising out of the other party's willful breach of any provision of this
Agreement.
9.06. 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.
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51
If to the Company to:
Andover Bancorp, Inc.
00 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Procter LLP
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
If to Parent to:
Banknorth Group, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Chairman, President
and Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
12th Floor, The Xxxxxx Building
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
9.07. Entire Understanding; No Third Party Beneficiaries. This
Agreement, the Shareholder Agreements and the Stock Option Agreement represent
the entire understanding of the parties hereto and thereto with reference to the
transactions contemplated hereby and thereby and this Agreement, the Shareholder
Agreements and the Stock Option Agreement supersede any and all other oral or
written agreements heretofore made. Except for the Indemnified Parties' right to
enforce Parent's obligation under Section 6.11, nothing in this Agreement,
expressed or implied, is intended to confer upon any Person, other than the
parties hereto or their
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respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.08. Severability. Except to the extent that application of this
Section 9.08 would have a Material Adverse Effect on the Company or Parent, 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.
9.09. 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.
9.10. 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."
9.11. 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 party. 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.
9.12. Alternative Structure. Notwithstanding any provision of this
Agreement to the contrary, Parent may at any time modify the structure of the
acquisition of the Company set forth herein, subject to the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed, provided that (i) the Merger Consideration to be paid to the holders of
Company 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 the Company's shareholders as a result of receiving the
Merger Consideration and (iii) such modification will not materially delay or
jeopardize receipt of any required approvals of Governmental Authorities.
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53
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.
BANKNORTH GROUP, INC.
By:/s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Operating Officer
and Chief Executive Officer
ANDOVER BANCORP, INC.
By:/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
49
54
EXHIBIT A
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement"), dated as of June 11, 2001, by
and among (i) _________, a shareholder ("Shareholder") of Andover Bancorp, Inc.,
a Delaware corporation (the "Company"), and (ii) Banknorth Group, Inc., a Maine
corporation ("Parent"). All terms used herein and not defined herein shall have
the meanings assigned thereto in the Merger Agreement (defined below).
WHEREAS, Parent and the Company have entered into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"), providing for
the business combination transaction contemplated therein, pursuant to which the
Company will merge with and into Parent pursuant to the terms and conditions of
the Merger Agreement (the "Merger") and Parent will pay consideration to the
shareholders of the Company in the form of Parent Common Stock; and
WHEREAS, Shareholder owns the shares of Company Common Stock identified
on Annex I hereto (such shares, together with all shares of Company Common Stock
subsequently acquired by Shareholder during the term of this Agreement, being
referred to as the "Shares"); and
WHEREAS, in order to induce Parent to enter into the Merger Agreement,
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company and not in any other capacity, has agreed to enter into and perform this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. Shareholder shall vote or cause
to be voted, or execute a written consent with respect to, the Shares,
to the extent such Shares are entitled to vote, in favor of approval
and adoption of (i) the Merger Agreement and all transactions
contemplated thereby at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment
thereof and in connection with every proposal to take action by written
consent with respect thereto and (ii) any amendment to the Company
Articles and/or the Company Bylaws required to be made to effect any of
the transactions contemplated by the Merger Agreement at every meeting
of the shareholders of the Company at which such matters are considered
and at every adjournment thereof and in connection with every proposal
to take action by written consent with respect thereto.
2. No Voting Trusts. Shareholder agrees that Shareholder will
not, nor will Shareholder permit any entity under Shareholder's control
to, deposit any Shares in a voting trust or subject the Shares to any
agreement, arrangement or understanding with respect to the voting of
the Shares inconsistent with this Agreement, except to the extent
55
that such Shares are currently subject to any such voting trust
agreement, arrangement or understanding.
3. Representations and Warranties of Shareholder. Shareholder
represents and warrants to and agrees with Parent as follows:
A. Capacity. Shareholder has all requisite capacity and
authority to enter into and perform his, her or its obligations under
this Agreement.
B. Binding Agreement. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
C. Non-Contravention. The execution and delivery of this
Agreement by Shareholder does not, and the performance by Shareholder
of his, her or its obligations hereunder and the consummation by
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 Shareholder is a party or by which
Shareholder is bound, or any statute, rule or regulation to which
Shareholder is subject or, in the event that Shareholder is a
corporation, partnership, trust or other entity, any charter, bylaw or
other organizational document of Shareholder.
D. Ownership of Shares. Shareholder has good title to all of
the Shares as of the date hereof, and, except as set forth on Annex II
hereto, the Shares are so owned free and clear of any liens, security
interests, charges or other encumbrances.
4. Specific Performance and Remedies. Shareholder acknowledges that it
will be impossible to measure in money the damage to Parent if Shareholder fails
to comply with the obligations imposed by this Agreement and that, in the event
of any such failure, Parent will not have an adequate remedy at law or in
equity. Accordingly, Shareholder agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or in damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that Parent has an adequate remedy at law. Shareholder
agrees that Shareholder will not seek, and agrees to waive any requirement for,
the securing or posting of a bond in connection with Parent's seeking or
obtaining such equitable relief. In addition, after discussing the matter with
Shareholder, Parent shall have the right to inform any third party that Parent
reasonably believes to be, or to be contemplating, participating with
Shareholder or receiving from Shareholder assistance in violation of this
Agreement, of the terms of this Agreement and of the rights of Parent hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Parent set forth in this Agreement may
give rise to claims by Parent against such third party.
2
56
5. Term of Agreement; Termination.
A. The term of this Agreement shall commence on the date
hereof.
B. This Agreement shall terminate upon the date, if any, of
termination of the Merger Agreement in accordance with its terms. Upon
such termination, no party shall have any further obligations or
liabilities hereunder; provided, however, such termination shall not
relieve any party from liability for any breach of this Agreement prior
to such termination.
C. If the Merger Agreement is not terminated prior in
accordance with its terms, this Agreement (except for the provisions of
Section 8, which shall survive the Effective Time) shall terminate upon
the Effective Time. Upon such termination, no party shall have any
further obligations or liabilities under this Agreement; provided,
however, such termination shall not relieve any party from liability
for any breach of such Section prior to such termination.
6. 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. 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.
7. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Parent:
Banknorth Group, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Chairman, President and
Chief Executive Officer
Fax: (000) 000-0000
3
57
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to Shareholder:
------------------------
------------------------
------------------------
With a copy to:
Xxxxxxx Xxxxxxx LLP
Xxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
8. Miscellaneous.
A. Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be
held invalid or unenforceable by a court of competent jurisdiction,
such provision or application shall be unenforceable only to the extent
of such invalidity or unenforceability, and the remainder of the
provision held invalid or unenforceable and the application of such
provision to persons or circumstances, other than the party as to which
it is held invalid, and the remainder of this Agreement, shall not be
affected.
B. Capacity. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the
Company, and no covenant contained herein shall apply to Shareholder in
his or her capacity as a director, officer or employee of the Company
or in any other capacity. Nothing contained in this Agreement shall be
deemed to apply to, or limit in any manner, the obligations of the
Shareholder to comply with his or her fiduciary duties as a director of
the Company.
C. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
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58
D. Headings. All Section headings herein are for convenience
of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
E. CHOICE OF LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT
MADE UNDER, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF MAINE, WITHOUT REFERENCE TO ITS CONFLICTS OF
LAW PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF MAINE.
5
59
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
BANKNORTH GROUP, INC.
By:
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President,
Chief Operating Officer and
Chief Executive Officer
[SHAREHOLDER]
------------------------------------------
(Signature)
6
60
ANNEX I
SHAREHOLDER AGREEMENT
Number of Shares Owned:
7
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EXHIBIT B
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of June 11, 2001, between Banknorth
Group, Inc., a Maine corporation ("Grantee"), and Andover Bancorp, Inc., a
Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), providing for, among
other things, the merger of Issuer with and into Grantee (the "Merger"); and
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 1,340,478 fully paid and nonassessable shares (the "Option
Shares") of common stock, par value $0.10 per share, of Issuer (the "Common
Stock") at a price per share equal to $37.65 (the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement and other than pursuant to an
event described in Section 5 hereof), including, without limitation, pursuant to
stock option or other employee plans or as a result of the exercise of
conversion rights, or (ii) redeemed, repurchased, retired or otherwise cease to
be outstanding after the date of this Agreement, the number of shares of Common
Stock subject to the Option shall be increased or decreased, as appropriate, so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or
Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the Exercise Notice (as hereinafter defined) within ninety (90)
days
62
following such Subsequent Triggering Event (or such later period as
provided in Section 10). Each of the following shall be an Exercise Termination
Event: (i) the Effective Time (as defined in the Merger Agreement); (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event,
except a termination by Grantee pursuant to Section 8.01(b) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of termination
was non-volitional ( a "Listed Termination")); or (iii) the passage of 12 months
(or such longer period as provided in Section 10) after termination of the
Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination, provided that if an Initial
Triggering Event continues or occurs beyond such termination and prior to the
passage of such 12-month-period, the Exercise Termination Event shall be 12
months from the expiration of the Last Triggering Event but in no event more
than 18 months after such termination. The term "Last Triggering Event" shall
mean the last Initial Triggering Event to be in effect, and the term "Holder"
shall mean the holder or holders of the Option pursuant to this Agreement.
Notwithstanding anything to the contrary contained herein, the Option may not be
exercised at any time when Grantee shall be in willful material breach of any of
its covenants or agreements contained in the Merger Agreement such that Issuer
shall be entitled to terminate the Merger Agreement pursuant to Section 8.01(b)
thereof as a result of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary (as hereinafter
defined) of Issuer (an "Issuer Subsidiary"), without having
received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder), other than Grantee or any Subsidiary of
Grantee (a "Grantee Subsidiary") or the Board of Directors of
Issuer (the "Issuer Board") shall have recommended that the
stockholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Grantee
Subsidiary. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Issuer Subsidiary,
(x) a purchase, lease or other acquisition or assumption of all
or any substantial part of the consolidated assets or
consolidated deposits of Issuer or any Issuer Subsidiary, (y) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any
Issuer Subsidiary or (z) any substantially similar transaction,
provided that in no event shall (i) any merger, consolidation,
purchase or similar transaction involving only Issuer and one or
more of its Subsidiaries, or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition Transaction,
provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement, or (ii) the
transactions contemplated by the Merger Agreement or the
entering into
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of the Merger Agreement be deemed to be an Acquisition
Transaction; and (b) "Subsidiary" shall have the meaning set
forth in Rule 12b-2 under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee
Subsidiary, shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the
outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules
and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and
failed to approve the Merger Agreement at a meeting which has
been held for that purpose or any adjournment or postponement
thereof, or such meeting shall not have been held in violation
of the Merger Agreement or shall have been cancelled prior to
termination of the Merger Agreement if, in each case prior to
such meeting (or if such meeting shall not have been held or
shall have been cancelled, prior to such termination), it shall
have been publicly announced that any person (other than Grantee
or a Grantee Subsidiary) shall have made, or publicly disclosed
an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board, without having received
Grantee's prior written consent, shall have withdrawn or
modified, or publicly announced its intention to withdraw or
modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement in
anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized,
recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee
Subsidiary shall have filed with the Securities and Exchange
Commission ("SEC") a registration statement or tender offer
materials with respect to a potential exchange offer or tender
offer that would constitute an Acquisition Transaction (or filed
a preliminary proxy statement with the SEC with respect to a
potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer);
(vi) Issuer shall have breached any covenant or
obligation contained in the Merger Agreement after a proposal is
made by any third party, other than Grantee or a Grantee
Subsidiary, to engage in an Acquisition Transaction and
following such breach (x) Grantee would be entitled to terminate
the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both) and (y) such breach shall not
have been cured prior to the Notice Date (as defined below); or
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(vii) Any person other than Grantee or a Grantee
Subsidiary, without Grantee's prior written consent, shall have
filed an application or notice with the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") or
other federal or state bank regulatory or antitrust authority,
which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of
25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in clause (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) of the
second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event") of which it has notice, it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (an "Exercise Notice," the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 60 business days from the Notice Date for the
closing of such purchase (the "Closing," the date of which being herein referred
to as the "Closing Date"); provided that if prior notification to or approval of
the Federal Reserve Board or any other regulatory or antitrust agency is
required in connection with such purchase, the Holder shall promptly file the
required notice or application for approval, shall promptly notify Issuer of
such filing and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto. The term "business day" for purposes of this Agreement
means any day, excluding Saturdays, Sundays and any other day that is a legal
holiday in the Commonwealth of Massachusetts or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized by law or
executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the
aggregate purchase price for the Option Shares purchased pursuant to the
exercise of the Option in immediately available funds by wire transfer to a bank
account designated by Issuer and (ii) present and
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surrender this Agreement to Issuer at its principal executive offices, provided
that the failure or refusal of the Issuer to designate such a bank account or
accept surrender of this Agreement shall not preclude the Holder from exercising
the Option.
(g) At a Closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of Option Shares purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the Option Shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Option Shares delivered at a Closing
hereunder may be endorsed (in the sole discretion of Issuer) with a restrictive
legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder,
which shall be set forth in a written opinion in form and substance reasonably
satisfactory to Issuer; and (iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under paragraph (e) of this
Section 2, the tender of the applicable purchase price in immediately available
funds and the tender of a copy of this Agreement to Issuer, the Holder shall be
deemed, subject to the receipt of any necessary regulatory approvals, to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and
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other charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of the Holder or
its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in
Bank Control Act of 1978, as amended, or any state or other federal banking law,
prior approval of or notice to the Federal Reserve Board or to any state or
other federal regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in connection with the preparation
of such applications or notices and providing such information to the Federal
Reserve Board or such state or other federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase
on the same terms and subject to the same conditions as are set forth herein in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or distributions in
respect of, the Common Stock by reason of stock dividend, stock split, split-up,
merger, recapitalization, stock combination, subdivision, conversion, exchange
of shares, distribution on or in respect of the Common Stock or similar
transaction, the type and number of
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Option Shares subject to the Option, and the Option Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of Option Shares or other securities or property
that Grantee would have received in respect of Option Shares if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six (6) months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option and the Option Shares, a registration statement under
the 1933 Act, and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations. Issuer shall bear
the costs of such registrations (including, but not limited to, Issuer's
attorneys' fees, printing costs and filing fees, except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Grantee's counsel related thereto). The foregoing notwithstanding, if, at the
time of any request by Grantee for registration of the Option or Option Shares
as provided above, Issuer is in registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of the Option
and/or Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of shares represented by the
Option and/or the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of shares represented by the
Option and/or the number of Option Shares to be included in such offering for
the account of the Holder shall constitute at least 25% of the total number of
shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur and
Holder shall thereafter be entitled to one additional registration and the
twelve (12) month period referred to in the first sentence of this section shall
be increased to twenty four (24) months. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any such
registration statement to be filed hereunder. If requested by any such Holder in
connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person known to Issuer
to be entitled to registration rights under this
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Section 6, in each case by promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such copies.
Notwithstanding anything to the contrary contained herein, in no event shall the
number of registrations that Issuer is obligated to effect be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, (i) at the request of any
Holder delivered prior to an Exercise Termination Event (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 90 days following such occurrence (or such
later period as provided in Section 10), Issuer (or any successor thereto) shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the greater
of (A) the Market/Offer Price and (B) the average exercise price per share paid
by the Owner for the Option Shares so designated. The term "Market/Offer Price"
shall mean the highest of (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made, (ii) the price per share
of Common Stock to be paid by any person, other than Grantee or a Grantee
Subsidiary, pursuant to an agreement with Issuer of the kind described in
Section 2(b)(i), (iii) the highest closing price for shares of Common Stock
within the six-month period immediately preceding the date of such required
repurchase of the Option or Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of Issuer's assets or deposits,
the sum of the price paid in such sale for such consolidated assets or
consolidated deposits and the current market value of the remaining assets of
Issuer as determined by a nationally-recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that such Holder
or Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering.
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(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, or as a result
of a written agreement or other binding obligation with a governmental or
regulatory body or agency, from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify each Holder and/or each Owner and
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or such Owner, as appropriate, the portion of the Option Repurchase Price
and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within two business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and Issuer
hereby undertakes to use all reasonable efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), such Holder or Owner may
revoke its notice of repurchase of the Option and/or the Option Shares either in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering with respect to Options or Option
Shares as to which the Holder or the Owner, as the case may be, has not revoked
its repurchase demand; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares of
Common Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to such Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with or merge
into any person, other than Grantee or a Grantee Subsidiary, or engage in a plan
of exchange with any person, other than Grantee or a Grantee Subsidiary, and
Issuer shall not be the continuing or surviving corporation of such
consolidation or merger or the acquiror in such plan of exchange, (ii) to permit
any person, other than Grantee or a Grantee Subsidiary, to merge into Issuer or
be acquired by Issuer in a plan of exchange and Issuer shall be the continuing
or surviving or acquiring corporation, but, in connection with such merger or
plan of exchange, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or cash or
any other property or the then outstanding shares of Common Stock shall after
such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or any Issuer
Subsidiary's consolidated assets or consolidated deposits to any person, other
than Grantee or a Grantee Subsidiary, then, and in each such case, the agreement
governing such transaction shall make proper provision so that the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or
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exchanged for, an option (the "Substitute Option"), at the election of any
Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or (y)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with
Issuer (if other than Issuer), (ii) the acquiring person in a
plan of exchange in which Issuer is acquired, (iii) Issuer in a
merger or plan of exchange in which Issuer is the continuing or
surviving or acquiring person, and (iv) the transferee of all or
a substantial part of Issuer's consolidated assets or
consolidated deposits (or the assets or deposits of an Issuer
Subsidiary).
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger, share exchange
or sale in question, but in no event higher than the closing
price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger, share exchange or sale;
provided that if Issuer is the issuer of the Substitute Option,
the Average Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall, to the extent legally
permissible, be as similar as possible to, and in no event less advantageous to
the Holder than, the terms of the Option. The issuer of the Substitute Option
also shall enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement (after giving
effect for such purpose to the provisions of Section 9), which agreement shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option was exercisable immediately prior to
the event described in the first
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sentence of Section 8(a) and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute Option is
exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than 19.9% of
the shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the shares of Substitute Common Stock outstanding prior
to exercise but for this paragraph (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this paragraph (e) over (ii) the value of the Substitute Option
after giving effect to the limitation in this paragraph (e). This difference in
value shall be determined by a nationally-recognized investment banking firm
selected by a majority in interest of the Holders and reasonably acceptable to
the Acquiring Corporation.
(f) Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder") delivered to the Substitute Option Issuer, the
Substitute Option Issuer shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of each owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the greater of (A) the Highest
Closing Price and (B) the average exercise price per share paid by the
Substitute Share Owner for the Substitute Shares so designated, multiplied by
the number of Substitute Shares so designated. The term "Highest Closing Price"
shall mean the highest closing price for shares of Substitute Common Stock
within the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within two business
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days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor, or the portion(s) thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from repurchasing
the Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to this
Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within two business days after the date on which the
Substitute Option Issuer is no longer so prohibited; provided, however, that if
the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use all reasonable efforts to
obtain all required regulatory and legal approvals as promptly as practicable in
order to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing.
10. The 90-day or six-month periods for exercise of certain rights
under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (for so long as
the Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the
case may be, is using its reasonable best efforts to obtain such regulatory
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approvals), and for the expiration of all statutory waiting periods; (ii) during
the pendency of any order, injunction or judgment that prohibits or delays
exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as
follows:
(i) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Issuer Board and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Issuer.
(ii) The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and
compliance by Issuer with any of the provisions hereof will not
(i) conflict with or result in a breach of any provision of its
Charter or Bylaws or a default (or give rise to any right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, debenture,
mortgage, indenture, license, material agreement or other
material instrument or obligation to which Issuer is a party, or
by which it or any of its properties or assets may be bound, or
(ii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Issuer or any of its properties or
assets.
(iii) Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all
times from the date hereof through the termination of this
Agreement in accordance with its terms will have reserved for
issuance upon the exercise of the Option, that number of shares
of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and
all such shares, upon issuance pursuant thereto, will be duly
authorized, validly issued, fully paid and nonassessable, and
will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any
preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this
Agreement by Grantee and the performance of its obligations
hereunder by Grantee have been duly and validly authorized by
all necessary corporate action on the part of Grantee and no
other corporate proceedings on the part of Grantee are necessary
to authorize this Agreement for Grantee to perform
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its obligations hereunder. This Agreement has been duly and
validly executed and delivered by Grantee.
(ii) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon
exercise of the Option will not be, acquired with a view to the
public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or
exempt from registration under the 1933 Act and any applicable
securities offering rules of a federal or state banking
authority.
12. Neither of the parties hereto may assign or otherwise transfer
any of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder, provided, however, that until the date 15 days following the date on
which the Federal Reserve Board approves an application by Grantee under the
BHCA to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the sole purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use all reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder and applying for listing or quotation of such shares on any exchange
or quotation system on which the Common Stock is then listed or quoted.
14. (a) Notwithstanding any other provision of this Agreement,
in no event shall the Grantee's Total Profit (as hereinafter defined) exceed
$19,700,000 (the "Maximum Profit") and, if it otherwise would exceed such
amount, the Grantee, at its sole election, shall either (i) reduce the number of
shares of Common Stock subject to this Option, (ii) deliver to the Issuer for
cancellation Option Shares previously purchased by Grantee, (iii) pay cash to
the Issuer or (iv) any combination thereof, so that Grantee's actually realized
Total Profit shall not exceed the Maximum Profit after taking into account the
foregoing actions. As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 7 hereof, (ii) (x) the amount received by Grantee pursuant
to Issuer's repurchase of the Option Shares pursuant to Section 7 hereof, less
(y) the Grantee's purchase price for such Option Shares, (iii) (x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price of such Option Shares,
(iv) any amounts
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received by Grantee on the transfer of the Option (or any portion thereof) to
any unaffiliated party and (v) any equivalent amount with respect to the
Substitute Option.
(b) Notwithstanding any other provision of this Agreement,
this Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as hereinafter defined) of more
than the Maximum Profit, provided that nothing in this sentence shall restrict
any exercise of the Option permitted hereby on any subsequent date. As used
herein, the term "Notional Total Profit" with respect to any number of shares as
to which Grantee may propose to exercise this Option shall be the Total Profit
determined as of the date of such proposed exercise assuming that this Option
were exercised on such date for such number of shares and assuming that such
shares, together with all other Option Shares held by Grantee and its affiliates
as of such date, were sold for cash at the closing market price for the Common
Stock as of the close of business on the preceding trading day (less customary
brokerage commissions).
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. In connection therewith,
both parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of Maine, without regard to the conflict of law
principles thereof.
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
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20. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ANDOVER BANCORP, INC.
By:
----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
BANKNORTH GROUP, INC.
By:
-----------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President, Chief
Operating Officer and Chief Executive Officer
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