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EXHIBIT 2.2
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 11, 2001 AND AMENDED, REDESIGNATED AND
RESTATED ON JULY 25, 2001 (AS OF JUNE 11, 2001)
BETWEEN
BANKNORTH GROUP, INC.
AND
METROWEST BANK
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TABLE OF CONTENTS
RECITALS
ARTICLE I
CERTAIN DEFINITIONS
Page No.
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1.01. Certain Definitions.....................................................................................2
ARTICLE II
THE CONVERSION MERGER, THE CONSOLIDATION AND THE BANK MERGER
2.01. The Conversion Merger...................................................................................7
2.02. The Consolidation.......................................................................................8
2.03. Effective Date and Effective Time; Closing..............................................................9
2.04. The Bank Merger.........................................................................................9
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Consolidation Consideration............................................................................10
3.02. Rights as Shareholders; Stock Transfers................................................................10
3.03. Dissenting Shares......................................................................................10
3.04. Exchange Procedures....................................................................................10
3.05. Company Options........................................................................................12
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...................................................................................15
5.02. Standard...............................................................................................15
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................................................................................31
6.02. Shareholder Approval...................................................................................31
6.03. Regulatory Filings.....................................................................................31
6.04. Press Releases.........................................................................................32
6.05. Access; Information....................................................................................32
6.06. Acquisition Proposals..................................................................................33
6.07. Certain Policies.......................................................................................33
6.08. Indemnification........................................................................................34
6.09. Benefit Plans..........................................................................................35
6.10. The Bank Merger........................................................................................36
6.11. Parent Sub and Company Sub.............................................................................37
6.12 Director of Parent.....................................................................................37
6.13. Notification of Certain Matters........................................................................37
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE CONSOLIDATION
7.01. Conditions to Obligations of the Parties to
Effect the Consolidation...............................................................................37
7.02. Conditions to Obligations of the Company and Company Sub...............................................38
7.03. Conditions to Obligations of Parent and Parent Sub.....................................................38
ARTICLE VIII
TERMINATION
8.01. Termination............................................................................................39
8.02. Effect of Termination and Abandonment..................................................................40
ARTICLE IX
MISCELLANEOUS
9.01. Survival...............................................................................................40
9.02. Waiver; Amendment......................................................................................40
9.03. Counterparts...........................................................................................41
9.04. Governing Law..........................................................................................41
9.05. Expenses...............................................................................................41
9.06 Notices................................................................................................41
9.07. Entire Understanding; No Third Party Beneficiaries.....................................................42
9.08. Severability...........................................................................................42
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9.09. Enforcement of the Agreement...........................................................................42
9.10. Interpretation.........................................................................................42
9.11 Assignment.............................................................................................43
9.12. Alternative Structure..................................................................................43
EXHIBIT A Form of Amended and Restated Shareholder Agreement
EXHIBIT B Form of Amended and Restated Stock Option Agreement
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AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION, dated as of
June 11, 2001 and amended, redesignated and restated on July 25, 2001 (as of
June 11, 2001) (the "Agreement"), between Banknorth Group, Inc. ("Parent") and
MetroWest Bank (the "Company").
RECITALS
A. The Company. The Company is a Massachusetts-chartered savings
bank, having its principal place of business in Framingham, Massachusetts.
B. Parent. Parent is a Maine corporation, having its principal
place of business in Portland, Maine.
C. Board Action. The respective Boards of Directors of Parent and
the Company have determined that it is in the best interests of their respective
companies and their shareholders to consummate the Transactions, consisting of
(a) the Conversion Merger, pursuant to which the Company shall merge with and
into Company Sub, a newly-formed national bank, thereby becoming the Converted
Company, (b) the Consolidation, pursuant to which Parent Sub, a newly-formed,
interim national bank, and the Converted Company shall consolidate and in
connection therewith each share of Converted Company Common Stock outstanding
immediately prior to the Effective Time (excluding Dissenting Shares and
Treasury Stock) shall be cancelled in exchange for the right to receive the
Consolidation Consideration and (c) the Bank Merger, pursuant to which the
Converted Company shall be merged with and into Parent Bank, it being the
intention of the parties that the Conversion Merger, the Consolidation and the
Bank Merger occur in that order substantially simultaneously.
D. Shareholder Agreements. As a material inducement to Parent to
enter into this Agreement, and simultaneously with the initial execution of this
Agreement, each Shareholder (as defined herein) entered into an agreement, in
the form of Exhibit A hereto, (collectively, as amended and restated in
connection with the amendment, redesignation and restatement of this Agreement,
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.
E. Stock Option Agreement. As a material inducement to the
willingness of Parent to consummate the transactions contemplated by this
Agreement, and simultaneously with the initial execution of this Agreement, the
Company entered into the Stock Option Agreement, substantially in the form
of Exhibit B hereto (as amended and restated in connection with the amendment,
redesignation and restatement of this Agreement the "Stock Option Agreement"),
pursuant to which the Company granted 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:
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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
6.06.
"Agreement" means this Agreement, as amended or modified from
time to time in accordance with Section 9.02.
"Bank Insurance Fund" means the Bank Insurance Fund maintained
by the FDIC.
"Bank Merger" has the meaning set forth in Section 6.10.
"Bank Merger Agreement" has the meaning set forth in Section
6.10.
"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" means any certificate which immediately prior to
the Conversion Merger represented shares of Company Common Stock and
immediately prior to the Effective Time represented shares of Converted
Company Common Stock.
"Closing" and "Closing Date" have the meanings set forth in
Section 2.03(b).
"Certificate of Consolidation" has the meaning set forth in
Section 2.03(a).
"Code" means the Internal Revenue Code of 1986, as amended (the
"Code").
"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 Articles" means the Charter of the Company, as amended.
"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.
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"Company Group" means any "affiliated group" (as defined in
Section 1504(a) of 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, or Converted Company Common Stock upon consummation of the
Conversion Merger, as the case may be, issued under the Company Stock
Option Plans.
"Company Stock Option Plans" means the Company's 2001 Stock
Option Plan, 1997 Stock Incentive Plan and 1986 Stock Option Plan, in
each case as amended as of the date hereof.
"Company Sub" means a national bank to be formed by or under the
direction of the Company to effect the Conversion Merger.
"Company Sub Common Stock" means the common stock, $1.00 par
value per share, of Company Sub.
"Consolidated Corporation" has the meaning set forth in Section
2.02(a).
"Consolidation" has the meaning set forth in Section 2.02(a).
"Consolidation Consideration" means $11.50 in cash, without
interest, for each share of Converted Company Common Stock that is
outstanding immediately prior to the Effective Time (but excluding
Dissenting Shares and Treasury Stock).
"Conversion Merger" has the meaning set forth in Section
2.01(a).
"Converted Company" has the meaning set forth in Section
2.01(a).
"Converted Company Common Stock" means the common stock, $1.00
par value per share, of Company Sub upon consummation of the Conversion
Merger.
"Derivatives Contract" has the meaning set forth in Section
5.03(q).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenting Shares" has the meaning set forth in Section 3.03.
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"Effective Date" has the meaning set forth in Section 2.03(a).
"Effective Time" has the meaning set forth in Section 2.03(a).
"Employees" has the meaning set forth in Section 5.03(m).
"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.
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FDIC Documents" has the meaning set forth in Section 5.03(g).
"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 6.08(a).
"Insurance Amount" has the meaning set forth in Section 6.08(b).
"Insurance Policies" has the meaning set forth in Section
5.03(s).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
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"Loans" has the meaning set forth in Section 5.03(r).
"Maine Superintendent" means the Superintendent of the Bureau of
Banking of the State of Maine.
"Massachusetts Board" means the Massachusetts Board of Bank
Incorporation.
"Massachusetts Commissioner" means the Commissioner of Banks of
the Commonwealth of Massachusetts.
"Material Adverse Effect" means (a) with respect to the Company,
any effect that (i) is material and adverse to the financial position,
results of operations or business of the Company and its Subsidiaries
taken as a whole, or would materially impair the ability of the Company
or Company Sub to perform their respective obligations under this
Agreement or otherwise materially impede the consummation of the
Transactions; provided, however, that Material Adverse Effect shall not
be deemed to include the impact of (i) changes in banking and similar
laws of general applicability or interpretations thereof by Governmental
Authorities, (ii) changes in GAAP or regulatory accounting requirements
applicable to banks generally, (iii) changes in general economic
conditions affecting banks generally, (iv) any modifications or changes
to valuation policies and practices in connection with the Transactions
or restructuring charges taken in connection with the Transactions, in
each case in accordance with GAAP, and (v) the effects of any action or
omission taken with the prior consent of Parent (it being understood
that Parent has consented to the actions taken by the Company and
Previously Disclosed pursuant to this Agreement); and (b) with respect
to Parent, any effect that materially impairs the ability of Parent or
Parent Bank to make payment at the Effective Time of the aggregate
Consolidation Consideration or otherwise materially impairs the ability
of Parent, Parent Bank or Parent Sub to consummate the Transactions.
"MHPF" means the Massachusetts Housing Partnership Fund.
"Nasdaq" means The Nasdaq Stock Market, Inc.'s National Market
System.
"National Bank Act" means the National Bank Act, as amended.
"National Labor Relations Act" means the National Labor
Relations Act, as amended.
"OCC" means the Office of the Comptroller of the Currency.
"Organization" means the organization of Parent Sub by Parent
and Company Sub by or under the direction of the Company.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Bank" means First Massachusetts Bank, National
Association and any successor thereto.
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"Parent Benefit Plans" has the meaning set forth in Section
6.09(a).
"Parent Bylaws" means the Bylaws of Parent.
"Parent Board" means the Board of Directors of Parent.
"Parent Sub" means an interim national bank to be formed by or
under the direction of Parent to effect the Consolidation.
"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" means the proxy statement, together with any
amendments and supplements thereto, to be delivered to holders of
Company Common Stock in connection with the solicitation of their
approval of this Agreement.
"Regulatory Authorities" has the meaning set forth in Section
5.03(i).
"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 Section 5.04(f).
"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" has the meaning ascribed to such term in Rule 1-02
of Regulation S-X of the SEC.
"Stock Option Agreement" has the meaning set forth in the
recitals to this Agreement.
"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,
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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 Organization, the Conversion Merger,
the Consolidation and the Bank Merger.
"Treasury Stock" means shares of Company Common Stock or shares
of Converted Company Common Stock held by the Company and the Converted
Company, respectively, or any of their respective 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.
ARTICLE II
THE CONVERSION MERGER, THE CONSOLIDATION AND THE BANK MERGER
2.01. The Conversion Merger.
(a) The Conversion Merger. Subject to the terms and conditions of
this Agreement, immediately prior to the Effective Time, the Company shall merge
with and into Company Sub in accordance with the provisions of Section 215a of
the National Bank Act and the regulations of the OCC thereunder and Section 34D
of Chapter 168 of the Massachusetts General Laws (the "Conversion Merger"). Upon
consummation of the Conversion Merger, the separate corporate existence of the
Company shall terminate and Company Sub shall continue as a national bank
incorporated under the laws of the United States (Company Sub, after the
Conversion Merger, sometimes being referred to herein as the "Converted
Company").
(b) Name. The name of the Converted Company shall be "MetroWest
Bank, National Association."
(c) Articles and Bylaws. The Articles of Association and Bylaws of
the Converted Company shall be the Articles of Association and Bylaws of Company
Sub as in effect immediately prior to consummation of the Conversion Merger.
(d) Directors and Officers of the Converted Company. The directors
of the Converted Company shall be the directors of the Company immediately prior
to the Conversion Merger. The executive officers of the Converted Company shall
be the executive officers of the Company immediately prior to the Conversion
Merger.
(e) Authorized Capital Stock. The authorized capital stock of the
Converted Company upon consummation of the Conversion shall be as set forth in
the Articles of Association of Company Sub immediately prior to the Conversion
Merger.
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(f) Common Stock. Subject to the provisions of this Agreement,
automatically by virtue of the Conversion Merger and without any action on the
part of any Person, (i) each share of Company Common Stock, excluding Treasury
Stock and Dissenting Shares, issued and outstanding immediately prior to the
Conversion Merger shall remain outstanding and be deemed to represent one share
of Converted Company Common Stock and (ii) each outstanding Company Option to
acquire shares of Company Common Stock shall become an option to acquire shares
of Converted Company Common Stock on a one-for-one basis. Shareholders of the
Company shall not be required or permitted to exchange certificates evidencing
Company Common Stock for certificates evidencing Converted Company Common Stock
upon consummation of the Conversion Merger.
(g) Effect of the Conversion Merger. At the Effective Time, the
effect of the Conversion Merger shall be as provided in Section 215a of the
National Bank Act and the regulations of the OCC thereunder. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of Company Sub and the
Company shall vest in the Converted Company, and all debts, liabilities,
obligations, restrictions, disabilities and duties of Company Sub and the
Company shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Converted Company.
2.02 The Consolidation.
(a) The Consolidation. Subject to the terms and conditions of this
Agreement and the prior consummation of the Organization and the Conversion
Merger, at the Effective Time, Parent Sub and the Converted Company shall
consolidate in accordance with the requirements of Section 215 of the National
Bank Act and the regulations of the OCC thereunder (the "Consolidation"). Upon
consummation of the Consolidation, the separate corporate existence of Parent
Sub shall cease and the Converted Company shall continue to exist as a national
bank incorporated under the laws of the United States (the Converted Company, as
the surviving corporation in the Consolidation, sometimes being referred to
herein as the "Consolidated Corporation").
(b) Name. The name of the Consolidated Corporation upon consummation
of the Consolidation shall be "MetroWest Bank, National Association."
(c) Articles and Bylaws. The Articles of Association and Bylaws of
the Consolidated Corporation upon consummation of the Consolidation shall be the
Articles of Association and Bylaws of the Converted Company as in effect
immediately prior to consummation of the Consolidation.
(d) Directors and Officers of the Consolidated Corporation. The
directors of the Consolidated Corporation immediately after the Consolidation
shall be the directors of Parent Bank immediately prior to the Consolidation,
plus two persons serving as a director of the Company as of the date hereof
designated by the Company who both meet the director qualification requirements
set forth in the Bylaws of Parent Bank and are otherwise acceptable to Parent
and Parent Bank. The executive officers of the Consolidated Corporation
immediately after the Consolidation shall be the executive officers of Parent
Bank immediately prior to the Consolidation. Each of the directors and executive
officers of the Consolidated Corporation immediately after the Consolidation
shall hold office until his or her successor is elected and
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qualified or otherwise in accordance with the Articles of Association and Bylaws
of the Consolidated Corporation.
(e) Authorized Capital Stock. The authorized capital stock of the
Consolidated Corporation upon consummation of the Consolidation shall be as set
forth in the Articles of Association of the Converted Company immediately prior
to the Consolidation.
(f) Effect of the Consolidation. At the Effective Time, the effect
of the Consolidation shall be as provided in Section 215 of the National Bank
Act and the regulations of the OCC thereunder. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of Parent Sub and the Converted
Company shall vest in the Consolidated Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of Parent Sub and the
Converted Company shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Consolidated Corporation.
2.03. 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 Consolidation, but subject to the
fulfillment or waiver of those conditions), the parties shall cause Parent Sub
and the Converted Company to request the OCC to issue a certificate of
consolidation (the "Certificate of Consolidation"), and in connection therewith
make such filing or filings as may be required to consummate the Consolidation
by applicable laws and regulations, on (i) a date selected by Parent after such
satisfaction or waiver which is not 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 Consolidation provided for herein shall become effective upon
the issuance of a Certificate of Consolidation by the OCC or on such date as may
be specified therein. The date of such filing or such later effective date is
herein called the "Effective Date." The "Effective Time" of the Consolidation
shall be the time of such filing or as set forth in such filing.
(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 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.
2.04. The Bank Merger. After the Consolidation, the Consolidated
Corporation shall merge with and into the Parent Bank pursuant to the Bank
Merger Agreement, as provided in Section 6.10.
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ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01. Consolidation Consideration. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Consolidation
and without any action on the part of any Person:
(a) Outstanding Converted Company Common Stock. Each share of
Converted Company Common Stock, excluding (i) Treasury Stock and (ii)
Dissenters' Shares, issued and outstanding immediately prior to the Effective
Time shall become and be converted into the right to receive the Consolidation
Consideration.
(b) Outstanding Parent Sub Common Stock. Each share of Parent Sub
common stock issued and outstanding immediately prior to the Effective Time
shall be converted into and become one share of Converted Company Common Stock.
(c) Treasury Stock. Each share of Converted Company Common 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.
3.02. Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Converted Company Common Stock shall cease to be, and shall have no
rights as, shareholders of the Converted Company other than the right 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 Converted Company
or the Consolidated Corporation of shares of Converted Company Common Stock.
3.03 Dissenting Shares Each outstanding share of Company Common Stock
the holder of which has perfected his or her right to dissent from the
Transactions under Sections 215 and 215a of the National Bank Act and has not
effectively withdrawn or lost such rights as of the Effective Time (the
"Dissenting Shares") shall not be converted into Converted Company Common Stock
or represent a right to receive the Consolidation Consideration specified in
Section 3.01(a) hereof, and the holder thereof shall be entitled only to such
rights as are granted by such provisions of the National Bank Act. If any holder
of Dissenting Shares shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the Dissenting Shares held by such holder shall
thereupon be treated as though such Dissenting Shares had been converted into
Converted Company Common Stock pursuant to Section 2.01(f) hereof and the right
to receive the aggregate Consolidation Consideration to which such holder would
be entitled pursuant to Section 3.01(a) hereof. The Company shall give Parent
prompt notice upon receipt by the Company of any such written demands for
payment of the fair value of shares of Company Common Stock and of withdrawals
of such demands and any other instruments provided pursuant to the National Bank
Act. Any payments made in respect of Dissenting Shares shall be made by the
Consolidated Corporation.
3.04. Exchange Procedures.
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(a) No later than five Business Days following the Effective Time,
Parent shall cause the Exchange Agent to mail or make available to each holder
of record of a Certificate a notice and letter of transmittal disclosing the
effectiveness of the Consolidation and the procedure for exchanging Certificates
for the Consolidation Consideration. Such letter of transmittal shall specify
that delivery shall be effected and risk of loss and title shall pass only upon
proper delivery of Certificates to the Exchange Agent.
(b) At or prior to the Effective Time, or at such other time or
times as the Exchange Agent may otherwise request, Parent shall deliver, or
cause Parent Bank to deliver, to the Exchange Agent for the benefit of the
holders of Certificates (other than the holders of Dissenting Shares and
Treasury Stock) an amount of cash equal to the aggregate Consolidation
Consideration for payment of the aggregate Consolidation Consideration to such
holders of Certificates.
(c) Each holder of any outstanding Certificate (other than holders
of Dissenting Shares and Treasury Stock) who surrenders such Certificate to the
Exchange Agent will, upon acceptance thereof by the Exchange Agent, be entitled
to the Consolidation Consideration. The Exchange Agent shall accept Certificates
upon compliance with such reasonable terms and conditions as the Exchange Agent
may impose to effect an orderly exchange in accordance with normal exchange
practices. Each outstanding Certificate which is not surrendered to the Exchange
Agent shall, except as provided in Section 3.03, evidence ownership of only the
right to receive the Consolidation Consideration without interest.
(d) The Exchange Agent shall not be obligated to deliver the
Consolidation Consideration until the holder surrenders a Certificate as
provided in this Section 3.04, or, in default thereof, an appropriate affidavit
of loss and indemnity agreement and/or a bond as may be required in each case by
the Exchange Agent or Parent. If any check is to be issued in a name other than
that in which the Certificate is registered, it shall be a condition of the
issuance thereof that the Certificate so surrendered shall be properly endorsed
or accompanied by an executed form of assignment separate from the Certificate
and otherwise in proper form for transfer and that the person requesting such
exchange pay to the Exchange Agent any transfer or other tax required by reason
of the issuance of a check in any name other than that of the registered holder
of the Certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Any portion of the cash delivered to the Exchange Agent by
Parent or Parent Bank pursuant to Section 3.04(b) that remains unclaimed by the
former shareholders of the Converted Company for six months after the Effective
Time shall be delivered by the Exchange Agent to Parent or Parent Bank, as
applicable. Any shareholders of the Converted Company who have not theretofore
complied with Section 3.04(c) shall thereafter look only to Parent for the
Consolidation Consideration. If outstanding Certificates are not surrendered or
the payment for them is not claimed prior to the date on which such payment
would otherwise escheat to or become the property of any Governmental Authority,
the unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of Parent or Parent Bank, as
applicable (and to the extent not in its possession shall be delivered to it),
free and clear of all Liens of any Person previously entitled to such property.
Neither the Exchange Agent nor any of the parties hereto shall be liable to any
holder of Converted Company Common
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Stock represented by any Certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Parent, Parent Bank and the Exchange Agent shall be entitled to rely upon the
stock transfer books of the Company to establish the identity of those persons
entitled to receive the Consolidation Consideration, which books shall be
conclusive with respect thereto.
(f) The Exchange Agent, Parent or Parent Bank shall be entitled to
deduct and withhold from the Consolidation Consideration otherwise payable
pursuant to this Agreement to any holder of Certificates such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Exchange Agent, Parent or Parent Bank, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Certificates in respect of which such deduction
and withholding was made.
3.05 Company Options. At the Effective Time, each Company Option
which is outstanding and unexercised immediately prior to the Effective Time,
whether or not then vested and exercisable, shall be terminated and each grantee
thereof shall be entitled to receive, in lieu of each share of Converted Company
Common Stock that would otherwise have been issuable upon the exercise thereof,
an amount of cash computed by multiplying (i) the difference between (x) the
Consolidation Consideration and (y) the per share exercise price applicable to
such Company Option by (ii) the number of such shares of Converted Company
Common Stock subject to such Company Option. The Company agrees to take or to
cause to be taken all action necessary to provide for such termination and
payment effective at or before the Effective Time.
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.
(b) Capital Stock. Other than pursuant to the Stock Option
Agreement, (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 or similar stock-based employee 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
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(A) regular quarterly cash dividends not in excess of $ 0.07 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; provided, however, that any dividend
under the Company's normal quarterly dividend payment schedule that has been
declared by the Company Board but not paid prior to the Effective Time shall be
paid immediately prior to the Effective Time or added to the Consolidation
Consideration.
(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 and payment of bonuses in the
ordinary course of business consistent with past practice, provided that such
increases shall not result in an annual adjustment of more than 5% in the
aggregate, (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. 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 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
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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 (except as may be required in connection with the Transactions) 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, 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) Derivative 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 the ordinary course of business consistent with past practice)
or assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other Person, other than in the ordinary
course of business consistent with past practice.
(q) Adverse Actions. Take any action that is intended or is
reasonably likely to result in (i) 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, (ii) any of the conditions to the
Consolidation set forth in Article VII not being satisfied or (iii) a material
violation of any provision of this Agreement or the Stock Option Agreement
except, in each case, as may be required by applicable law or regulation.
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(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) Acquisitions. Make any acquisition (including acquisitions of
branch offices and related deposit liabilities), other than the proposed
acquisition of Andover Bancorp, Inc. on terms not materially different than
those publicly announced on the date hereof, that individually or in the
aggregate could result in the Consolidation 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.
(b) Adverse Actions. Take any action that is intended or is
reasonably likely to result in (i) 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, (ii) any of the conditions to the
Consolidation set forth in Article VII not being satisfied or (iii) a material
violation of any provision of this Agreement or the Stock Option Agreement
except, in each case, as may be required by applicable law or regulation.
(c) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, the
Company has delivered to Parent a schedule (the "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 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 the Company that such item represents a material
exception or fact, event or circumstance or that such item is 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
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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 a
Massachusetts-chartered savings bank regulated by the Massachusetts
Commissioner. The Company's deposits are insured by the FDIC through the Bank
Insurance Fund and by the Depositors Insurance Fund in the manner and to the
fullest extent provided by applicable law. The Company is duly qualified to do
business and is in good standing in each foreign jurisdiction where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) Company Capital Stock. The authorized capital stock of the
Company consists solely of 20,000,000 shares of Company Common Stock, of which
14,330,435 shares were outstanding (excluding treasury shares) as of the date
hereof, and 2,000,000 shares of Company Preferred Stock, of which no shares are
outstanding. As of the date hereof, 180,377 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
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, and the Company does not
have any commitment to authorize, issue or sell any Company Stock or Rights,
except pursuant to this Agreement or the Stock Option 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
(except for shares of preferred stock in the Company's REIT Subsidiary),
(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.
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(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, the Savings Bank Life Insurance Company of
Massachusetts and the Federal National Mortgage Association.
(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) Upon its organization, Company Sub will be duly
organized, and validly existing in good standing under the laws of the
United States. Following the organization of Company Sub, the Company or
some or all of the directors of the Company will own all of the
outstanding equity securities of Company Sub.
(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; the Company has, and upon
its organization Company Sub will have, the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby, subject to the approval of the
Company's shareholders of this Agreement; and the Company has the corporate
power and authority to execute, deliver and perform its obligations under the
Stock Option Agreement and to consummate the transactions contemplated thereby.
(e) Corporate Authority. Subject to the approval of this Agreement
by the holders of not less than two-thirds 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. The Company has duly executed and
delivered this Agreement and the Stock Option Agreement and, assuming due
authorization, execution and delivery by Parent and Parent Sub, as applicable,
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). Following its organization, (i) this Agreement and the transactions
contemplated hereby will be authorized by all necessary corporate action of
Company Sub and the Board of Directors of Company Sub and (ii) this Agreement
will be duly executed and delivered by Company Sub and, following such execution
and delivery, assuming due authorization, execution and delivery by Parent and
Parent Sub, this Agreement will be a valid and legally binding agreement of
Company Sub 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.
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(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 Company Sub
in connection with the execution, delivery or performance by the Company
of this Agreement, the Bank Merger Agreement and the Stock Option
Agreement 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 Maine Superintendent, the Massachusetts Board and
the MHPF, as required, and (B) the approval of this Agreement by the
holders of two-thirds of the outstanding shares of the Company Common
Stock. 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 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
Agreement and the Stock Option Agreement by the Company and Company Sub,
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
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 FDIC (collectively, the
Company's "FDIC 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 FDIC 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
FDIC 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
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such FDIC 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 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 and actions taken 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 and actions taken 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 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 "Regulatory Authorities"). The Company and its Subsidiaries
have paid all assessments made or imposed by any Regulatory Authority.
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(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 Regulatory Authority that such
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 compliance in all material respects 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 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 FDIC 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.
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(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 Xxxxxxxxx
Associates, Inc.
(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 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.
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(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 FDIC 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) Under each Pension Plan which is a single-employer plan,
as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the
Pension Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such Pension Plan, and there has been no
material change in the financial condition of such Plan since the last
day of the most recent plan year.
(vi) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan
other than as may be required under Section 4980B of the Code or Part 6
of Title I of ERISA, or under the continuation of coverage provisions of
the laws of any state or locality. 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 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, (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.
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(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; (iii) neither the Company nor any of its
Subsidiaries could be deemed the owner or operator of any Company Loan
Property which such Company Loan Property has been contaminated with, or
has had any release of, any Hazardous Substance except in compliance
with Environmental Laws; (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 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.
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(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, 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 material
deficiencies asserted or assessments made as a result of examinations
conducted by any taxing authority have been paid in full, (F) no
material 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 member of the Company
Group has waived any statutes of limitation with respect to any material
Taxes.
(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) The unpaid income, franchise and similar Taxes of the
Company and its Subsidiaries did not, as of the end of the most recent
period covered by the FDIC Documents filed prior to the date hereof,
exceed by any material amount the reserve for income, franchise and
similar Tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax income)
set forth on the face of the financial statements included in the FDIC
Documents filed on or prior to the date hereof (rather than in any notes
thereto).
(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.
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(vii) All material 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.
(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 or an applicable regulatory authority (it
being understood that no representation is being made that the FDIC or
the Massachusetts Commissioner would agree with the loan classifications
established by the Company); (iii) a listing of the real estate owned
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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 FDIC 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 FDIC
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 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 are
being maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of the Company and its Subsidiaries.
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(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
the Company 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 two-thirds 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 in
Section 5.04(i), no "control share acquisition," "business combination
moratorium," "fair price" 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 Ch. 110F of the Massachusetts General Laws 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.
(aa) Proxy Statement Information. None of the information which is
included or incorporated by reference in the Proxy Statement (except for any
such information relating to Parent and its Subsidiaries expressly provided by
Parent to the Company for inclusion therein), as of the date of the Proxy
Statement and the date of the meeting of the shareholders of the Company to
which such Proxy Statement relates, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
(bb) Fairness Opinion. The Company Board has received the written
opinion of Xxxxxxxxx Associates, Inc. to the effect that as of the date hereof
the Consolidation Consideration is fair to the holders of Company Common Stock
from a financial point of view.
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(cc) 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) Subsidiaries. Parent Bank has been duly organized and is validly
existing in good standing under the laws of the United States, 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. Upon its organization, Parent Sub will be duly organized, and
validly existing in good standing under the laws of the United States. Parent
owns all of the outstanding equity securities of Parent Bank, and following the
organization of Parent Sub, Parent will own all of the outstanding equity
securities of Parent Sub.
(c) Corporate Power. Each of Parent and Parent Bank 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, and upon its
organization Parent Sub will have, the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby; and Parent has the corporate power and
authority to execute, deliver and perform its obligations under the Stock Option
Agreement and to consummate the transactions contemplated thereby.
(d) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
Parent and the Parent Board and following its organization this Agreement and
the transactions contemplated hereby will be authorized by all necessary
corporate action of Parent Sub and the Board of Directors of Parent Sub. The
Stock Option Agreement and the transactions contemplated thereby have been
authorized by all necessary corporate action of Parent and the Parent Board.
Neither the Agreement nor the consummation of any of the Transactions requires
the approval of the shareholders of Parent. 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, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles). Following its
organization, this Agreement will be duly executed and delivered by Parent Sub
and, following such execution and delivery, assuming due authorization,
execution and delivery by the Company and Company Sub, this Agreement will
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be a valid and legally binding agreement of Parent Sub 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).
(e) 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, Parent Bank or Parent Sub of this Agreement, the Bank Merger
Agreement or the Stock Option Agreement, as applicable, or to consummate
the Transactions and any other transactions contemplated hereby and
thereby, except for filings of applications or notices with and
approvals or waivers by the Federal Reserve Board, the FDIC, the OCC,
the Maine Superintendent, the Massachusetts Board and the MHPF, as
required. 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 Agreement and the Stock
Option Agreement by Parent, Parent Bank and Parent Sub, 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.
(f) 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 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
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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.
(g) Financial Ability. On the Effective Date, Parent or Parent Bank
will have all funds necessary to consummate the Consolidation and pay the
aggregate Consolidation Consideration to holders of Company Common Stock
pursuant to Section 3.01(a) hereof. Each of Parent and Parent Bank is, and
immediately following completion of the Transactions will be, in compliance with
all capital requirements applicable to it.
(h) Proxy Statement Information. None of the information relating to
Parent or its Subsidiaries which is expressly provided by Parent to the Company
for inclusion in the Proxy Statement, as of the date of the Proxy Statement and
the date of the meeting of the shareholders of the Company to which such Proxy
Statement relates, will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
(i) 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 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.
(j) 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.
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ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of the parties to the Agreement 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, 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 parties 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 6.06 shall govern the
withholding, withdrawing, amending or modifying of such recommendation in the
circumstances described therein.
6.03 Regulatory Filings.
(a) The parties shall promptly cooperate with each other in the
preparation of the Proxy Statement to be filed by the Company with the FDIC, and
after the FDIC has cleared the Proxy Statement the Company shall promptly mail
the Proxy Statement to its shareholders.
(b) 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 contemplated
by this Agreement (including the consolidation of any Company branches with
Parent 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), the Bank Merger Agreement 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 material written information submitted to any third party or
any Governmental Authority in connection
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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
material 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 Agreement 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.
(c) 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.
6.04 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.
6.05 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 its 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.
(b) Parent agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (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, Parent shall keep confidential, and shall cause its
representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (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 Company or
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(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, Parent shall promptly cause
all copies of documents or extracts thereof containing information and data as
to the Company to be returned to the Company or destroyed. No investigation by
Parent of the business and affairs of the Company shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to the obligations of Parent and Parent Sub to
consummate the Transactions.
6.06 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 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 Consolidation. 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.
6.07 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
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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 condition 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 6.07
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.
6.08 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,
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, or (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
Merger 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 6.08, 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
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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.
(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 6.08.
6.09 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 take into account for purposes of eligibility and vesting
thereunder 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 or
severance agreements, plans or policies of the Company which are Previously
Disclosed.
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(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) honor under such plans any deductible, 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
or Parent Bank 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 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 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 or a severance 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 or a
severance 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 with respect to the Transactions, a copy of which the Parent
acknowledges has been provided to it by the Company.
6.10. The Bank Merger. Parent and the Company agree to take all action
necessary and appropriate, including causing the entering into of an appropriate
merger agreement (the "Bank Merger Agreement"), to cause the Consolidated
Corporation to merge with and into Parent Bank (the "Bank Merger") in accordance
with applicable laws and regulations and the terms of the Bank Merger Agreement
immediately following consummation of the Consolidation. The Bank Merger
Agreement shall provide that the directors of Parent Bank upon consummation of
the Bank Merger shall be the directors of Parent Bank immediately prior to the
Bank Merger, plus two persons serving as a director of the Company as of the
date hereof designated by the Company who both meet the director qualification
requirements set forth in the Bylaws of Parent Bank and are otherwise acceptable
to Parent.
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6.11. Parent Sub and Company Sub.
(a) Following the organization of Parent Sub, Parent shall (i) cause
Parent Sub to execute and deliver this Agreement and take all necessary action
to complete the Consolidation, subject to the terms and conditions hereof, and
(ii) adopt and ratify this Agreement in its capacity as the sole shareholder of
Parent Sub.
(b) Following the organization of Company Sub, the Company shall (i)
cause Company Sub to execute and deliver this Agreement and take all necessary
action to complete the Conversion Merger, subject to the terms and conditions
hereof, and (ii) adopt and ratify this Agreement in its capacity as the sole
shareholder of Company Sub.
6.12 Director of Parent. 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.
6.13 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.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE CONSOLIDATION
7.01. Conditions to Obligations of the Parties to Effect the
Consolidation. The respective obligations of the Company, Company Sub, Parent
and Parent Sub to consummate the Consolidation are subject to the fulfillment or
written waiver by the parties hereto prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by holders of not less than two-thirds of the outstanding 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.
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(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 any of the Transactions.
(d) Organization and Conversion Merger. The Organization and the
Conversion Merger shall have been consummated in accordance with all applicable
requirements.
7.02. Conditions to Obligations of the Company and Company Sub. The
obligations of the Company and Company Sub to consummate the Consolidation also
are subject to the fulfillment or written waiver by the Company prior to the
Effective Time 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 and Company Sub 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 and Parent Sub. Parent and
Parent Sub 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) Other Actions. Parent and Parent Sub shall have furnished the
Company and Company Sub 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 and Company Sub may reasonably
request.
7.03. Conditions to Obligations of Parent and Parent Sub. The
obligations of Parent and Parent Sub to consummate the Consolidation also are
subject to the fulfillment or written waiver by Parent and Parent Sub prior to
the Effective Time 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 and Parent Sub 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 and Company Sub. The
Company and Company Sub shall have performed in all material respects all
obligations required to be
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performed by them under this Agreement at or prior to the Effective Time, and
Parent and Parent Sub 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) Dissenting Shares. Dissenting Shares shall not represent 10% or
more of the outstanding Company Common Stock.
(d) Other Actions. The Company shall have furnished Parent and
Parent Sub 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 and Parent Sub 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 and Parent
Sub 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; (ii) a breach
by Parent and Parent Sub or the Company and Company Sub, as the case may be, of
any of their respective 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 or (iii) in the case of
a termination by Parent, a breach by a Shareholder or Shareholders of any of the
covenants or agreements contained in the Shareholder Agreements, 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, provided that such
breach (whether under (i), (ii) or (iii)) 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
Consolidation 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), (ii) Parent Sub (if Parent is the party seeking to terminate)
or (iii) Company Sub or any of the Shareholders (if the Company is the party
seeking to terminate), which action or inaction is in violation of its
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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 any of the Transactions shall have been denied by final nonappealable action
of such Governmental Authority or an application therefor shall have been
permanently withdrawn at the request of a Governmental Authority 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 6.06 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.
8.02. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Consolidation 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.
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 6.05(b), 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.
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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.
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.
If to the Company or Company Sub to:
MetroWest Bank
00 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx, 00000-0000
Attention: Xxxx X. XxXxxxx III
Chief Executive Officer
Fax:
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
If to Parent or Parent Sub 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
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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, including without limitation the Agreement
and Plan of Consolidation, dated as of June 11, 2001 in the form originally
executed by the parties. Except for the Indemnified Parties' right to enforce
Parent's obligations under Section 6.08, nothing in this Agreement, expressed or
implied, is intended to confer upon any Person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08. 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." Whenever the words "as of the date
hereof" are used in this Agreement, they shall mean June 11, 2001, unless the
context clearly otherwise requires.
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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 Consolidation 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 and (ii) such modification will not
materially delay or jeopardize receipt of any required approvals of Governmental
Authorities.
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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
Financial Officer
METROWEST BANK
By: /s/ Xxxx X. XxXxxxx III
-----------------------------------------
Name: Xxxx X. XxXxxxx III
Title: Chief Executive Officer
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
44
49
EXHIBIT A
AMENDED AND RESTATED
SHAREHOLDER AGREEMENT
AMENDED AND RESTATED SHAREHOLDER AGREEMENT (the "Agreement"), dated as
of June 11, 2001 and amended and restated on July 25, 2001 (as of June 11,
2001), by and between _________, a shareholder ("Shareholder") of MetroWest
Bank, a Massachusetts-chartered savings bank (the "Company"), and Banknorth
Group, Inc., a Maine corporation ("Parent"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Reorganization
Agreement (defined below).
WHEREAS, Parent and the Company have entered into an Amended and
Restated Agreement and Plan of Reorganization, dated as of the date hereof (the
"Reorganization Agreement"), providing for the business combination transactions
contemplated therein, pursuant to which the Company will be combined with an
existing national bank subsidiary of Parent in a series of transactions and in
connection therewith each outstanding share of Company Common Stock (except
Dissenting Shares and Treasury Stock) shall be converted into the right to
receive $11.50, without interest; 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 Reorganization
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 Reorganization 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 Reorganization 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.
50
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 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 and Parent Bank 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
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51
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.
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 Reorganization 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 Reorganization Agreement is not terminated prior in
accordance with its terms, this Agreement (except for the provisions
of Sections 3, 8 and 9, 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, including without limitation the Shareholder Agreement,
dated as of June 11, 2001, 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):
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52
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
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:
Xxxxx Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, 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.
4
53
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.
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.
9. Attorney's Fees. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other
proceeding ("Proceeding") relating to the enforcement or interpretation
of this Agreement may recover from the unsuccessful party or parties all
fees and disbursements of counsel (including expert witness and other
consultants' fees and costs) relating to or arising out of (a) the
Proceeding (whether or not the Proceeding proceeds to judgment), and (b)
any post-judgment or post-award proceeding including, without
limitation, one to enforce or collect any judgment or award resulting
from the Proceeding. All such judgments and awards shall contain a
specific provision for the recovery of all such subsequently incurred
costs, expenses, and fees and disbursements of counsel.
5
54
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
Financial Officer
[SHAREHOLDER]
-----------------------------------------
(Signature)
6
55
ANNEX I
SHAREHOLDER AGREEMENT
Number of Shares Owned:
7
56
EXHIBIT B
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
Amended and Restated Stock Option Agreement, dated as of June 11, 2001 and
amended and restated on July 25, 2001 (as of June 11, 2001), between Banknorth
Group, Inc., a Maine corporation ("Grantee"), and MetroWest Bank, a
Massachusetts-chartered savings bank ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Amended and Restated
Agreement and Plan of Reorganization of even date herewith (the "Reorganization
Agreement"), pursuant to which the Company will be combined with an existing
national bank subsidiary of Parent in a series of transactions and in connection
therewith each outstanding share of Company Common Stock (except Dissenting
Shares and Treasury Stock) shall be converted into the right to receive the
Consolidation Consideration; and
WHEREAS, as a condition and an inducement to Grantee to enter into the
Reorganization 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 Reorganization 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 2,851,756 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 $8.76 (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
57
this Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Reorganization 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
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 Reorganization Agreement); (ii)
termination of the Reorganization 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 Reorganization 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 Reorganization 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 permitted 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
Reorganization Agreement such that Issuer shall be entitled to terminate the
Reorganization 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
2
58
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 Reorganization Agreement, or (ii) the transactions
contemplated by the Reorganization Agreement or the entering into of
the Reorganization 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) After the date hereof, 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 Reorganization 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 Reorganization
Agreement or shall have been cancelled prior to termination of the
Reorganization 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 Reorganization
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
3
59
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 Reorganization 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 Reorganization 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
(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
4
60
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 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.
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61
(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 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
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62
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 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, to the extent applicable, and/or any applicable securities
offering rules of a federal or state banking authority, 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
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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 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) Immediately prior to the occurrence of a Repurchase Event (as
described below), (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
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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.
(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.
(d) For purposes of this Agreement, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
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(ii) the consummation of any Acquisition Transaction described
in Section 2(b)(i) hereof, except that the percentage referred to in clause
(y) of the second sentence thereof shall be 50%;
provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of any Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
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 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.
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(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 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.
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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 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
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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
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
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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 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
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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
$10,000,000 (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 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
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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
Reorganization 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.
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 Reorganization
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, including
without limitation the Stock Option Agreement, dated as of June 11, 2001. 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 Reorganization 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.
METROWEST BANK
By:
-----------------------------------------
Name: Xxxx X. XxXxxxx III
Title: Chief Executive Officer
BANKNORTH GROUP, INC.
By:
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President, Chief Operating
Officer and Chief Financial Officer
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