AGREEMENT AND PLAN OF MERGER DATED AS OF JUNE 25, 2009 BY AND BETWEEN UNITED FINANCIAL BANCORP, INC. AND CNB FINANCIAL CORP.
Exhibit 2.1
AGREEMENT
AND PLAN OF MERGER
DATED AS
OF JUNE 25, 2009
BY AND
BETWEEN
UNITED
FINANCIAL BANCORP, INC.
AND
TABLE OF
CONTENTS
Page
No.
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Introductory
Statement
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1
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ARTICLE
I Definitions
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1
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ARTICLE
II The Merger
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6
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2.1
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The
Merger
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6
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2.2
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Closing
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6
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2.3
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Effective
Time
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6
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2.4
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Effects
of the Merger.
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7
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2.5
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Effect
on Outstanding Shares of CNB Financial Common Stock
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7
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2.6
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Election
and Proration Procedures
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7
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2.7
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Exchange
Procedures
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10
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2.8
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Effect
on Outstanding Shares of United Financial Bancorp Common
Stock
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12
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2.9
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Directors
of Surviving Corporation After Effective Time
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12
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2.10
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Certificate
of Incorporation and Bylaws
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13
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2.11
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Treatment
of Stock Options and Warrants
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13
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2.12
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Dissenters’
Rights
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14
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2.13
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Bank
Merger
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14
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2.14
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Alternative
Structure
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15
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2.15
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Absence
of Control
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15
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ARTICLE
III Representations and Warranties
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15
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3.1
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Disclosure
Letters
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15
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3.2
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Representations
and Warranties of CNB Financial
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15
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3.3
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Representations
and Warranties of United Financial Bancorp
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32
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ARTICLE
IV Conduct Pending the Merger
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44
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4.1
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Forbearances
by CNB Financial
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44
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4.2
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Forbearances
by United Financial Bancorp
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48
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ARTICLE
V Covenants
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48
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5.1
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Acquisition
Proposals
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48
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5.2
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Advice
of Changes
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50
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5.3
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Access
and Information
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50
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5.4
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Applications;
Consents
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51
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5.5
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Anti-takeover
Provisions
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52
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5.6
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Additional
Agreements
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52
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5.7
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Publicity
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52
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5.8
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CNB
Financial Shareholder Meeting
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52
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5.9
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Registration
of United Financial Bancorp Common Stock
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53
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5.10
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Notification
of Certain Matters
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54
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5.11
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Employee
Benefit Matters
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55
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5.12
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Indemnification
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56
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5.13
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Section
16 Matters
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57
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5.14
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Board
of Directors
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58
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5.15
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Funds
Availability
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58
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5.16
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CNB
Financial Loan Participations
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58
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5.17
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Berkshire
Hills Bancorp Termination Fee
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59
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ARTICLE
VI Conditions to Consummation
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59
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6.1
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Conditions
to Each Party’s Obligations
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59
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6.2
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Conditions
to the Obligations of United Financial Bancorp
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60
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6.3
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Conditions
to the Obligations of CNB Financial
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61
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ARTICLE
VII Termination
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61
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7.1
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Termination
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61
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7.2
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Termination
Fee
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62
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7.3
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Effect
of Termination
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63
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ARTICLE
VIII Certain Other Matters
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63
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8.1
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Interpretation
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63
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8.2
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Survival
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64
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8.3
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Waiver;
Amendment
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64
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8.4
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Counterparts
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64
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8.5
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Governing
Law
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64
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8.6
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Expenses
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64
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8.7
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Notices
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64
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8.8
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Entire
Agreement; etc.
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65
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8.9
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Successors
and Assigns; Assignment
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65
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8.10
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Specific
Performance
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65
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EXHIBITS
Exhibit
A
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Form
of Voting Agreement
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Exhibit
B
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Plan
of Bank Merger
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ii
Agreement
and Plan of Merger
This is an Agreement and Plan of Merger,
dated as of the 25th day of
June, 2009 (“Agreement”), by and between
United Financial Bancorp, Inc., a Maryland corporation (“United Financial Bancorp”),
and CNB Financial Corp. , a Massachusetts corporation (“CNB Financial”).
Introductory
Statement
The Board of Directors of each of
United Financial Bancorp and CNB Financial has determined that this Agreement
and the business combination and related transactions contemplated hereby are
advisable and in the best interests of United Financial Bancorp or CNB
Financial, as the case may be, and in the best long-term interests of the
shareholders of United Financial Bancorp or CNB Financial, as the case may
be.
The parties hereto intend that the
Merger as defined herein shall qualify as a reorganization under the provisions
of Section 368(a) of the IRC for federal income tax purposes.
United Financial Bancorp and CNB
Financial each desire to make certain representations, warranties and agreements
in connection with the business combination and related transactions provided
for herein and to prescribe various conditions to such
transactions.
As a condition and inducement to United
Financial Bancorp’s willingness to enter into this Agreement, each of the
members of the Board of Directors of CNB Financial have entered into an
agreement dated as of the date hereof in the form of Exhibit A pursuant to
which he or she will vote his or her shares of CNB Financial Common Stock in
favor of this Agreement and the transactions contemplated hereby.
In consideration of their mutual
promises and obligations hereunder, the parties hereto adopt and make this
Agreement and prescribe the terms and conditions hereof and the manner and basis
of carrying it into effect, which shall be as follows:
ARTICLE
I
Definitions
The
following terms are defined in this Agreement in the Section
indicated:
Defined
Term
|
Location of
Definition
|
Articles
of Merger
|
Section
2.3
|
Bank
Merger
|
Section
2.12
|
Berkshire
Hills Termination Fee
|
Section
5.17
|
Certificate(s)
|
Section
2.7(c)
|
Change
in Recommendation
|
Section
5.8
|
Closing
|
Section
2.2
|
1
Closing
Date
|
Section
2.2
|
CNB
Financial
|
preamble
|
CNB
Financial Employee Plans
|
Section
3.2(r)(i)
|
CNB
Financial Option
|
Section
2.10
|
CNB
Financial Pension Plan
|
Section
3.2(r)(iii)
|
CNB
Financial Qualified Plan
|
Section
3.2(r)(iv)
|
CNB
Financial’s SEC Reports
|
Section
3.2(g)
|
CNB
Financial Warrant
|
Section
2.10
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Commonwealth
National Bank
|
Section
2.12
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Continuing
Employee
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Section
5.11(a)
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Converted
Options
|
Section
2.10
|
Disclosure
Letter
|
Section
3.1
|
Dissenters’
Shares
|
Section
2.11
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Effective
Time
|
Section
2.3
|
Exchange
Agent
|
Section
2.7(c)
|
Exchange
Ratio
|
Section
2.5
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Fee
|
Section
7.2(a)
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Indemnified
Party
|
Section
5.12(a)
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Intellectual
Property
|
Section
3.2(p)
|
Letter
of Transmittal
|
Section
2.6(a)
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Maximum
Insurance Amount
|
Section
5.12(c)
|
Merger
|
Section
2.1
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Merger
Consideration
|
Section
2.5(a)
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Proxy
Statement-Prospectus
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Section
5.9(a)
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Registration
Statement
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Section
5.9(a)
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Shareholder
Meeting
|
Section
5.8
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Surviving
Corporation
|
Section
2.1
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United
Financial Bancorp
|
Section
3.3(q)
|
United
Financial Bancorp Employee Plan
|
Section
3.3(q)
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United
Financial Bancorp Pension Plan
|
preamble
|
United
Financial Bancorp Qualified Plan
|
Section
3.3(q)
|
United
Financial Bancorp’s Reports
|
Section
3.3(g)
|
In
addition, for purposes of this Agreement:
“Acquisition Proposal” means
any proposal or offer with respect to any of the following (other than the
transactions contemplated hereunder): (i) any merger, consolidation, share
exchange, business combination, or other similar transaction involving CNB
Financial or any of its Subsidiaries; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 25% or more of CNB
Financial’s consolidated assets in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 25% or more of
the outstanding shares of CNB Financial’s capital stock or the filing of a
registration statement under the Securities Act of 1933, as amended, in
connection therewith; or (iv) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in an any of
the foregoing.
2
“Agreement” means this
Agreement, as amended, modified or amended and restated from time to time in
accordance with its terms.
“Berkshire Hills Bancorp
Agreement” means the Agreement and Plan of Merger, by and between CNB
Financial and Berkshire Hills Bancorp, Inc. dated April 29, 2009, as amended on
May 21, 2009.
“BHCA” means the Bank Holding
Company Act of 1956, as amended.
“CNB Financial Common Stock”
means the common stock, par value $1.00 per share, of CNB
Financial.
“CRA” means the Community
Reinvestment Act.
“Environmental Law” means any
federal, state or local law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, order, directive, executive
or administrative order, judgment, decree, injunction, or agreement with any
Governmental Entity relating to (i) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, soil, surface land,
subsurface land, plant and animal life or any other natural resource), or to
human health or safety as it relates to Hazardous Materials, or (ii) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in
effect. The term Environmental Law includes, without limitation, the
Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976, the Federal Solid Waste Disposal
and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide
and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970 as
it relates to Hazardous Materials, the Federal Hazardous Substances
Transportation Act, the Emergency Planning and Community Right-To-Know Act, the
Safe Drinking Water Act, the Endangered Species Act, the National Environmental
Policy Act, the Rivers and Harbors Appropriation
Act or any so-called “Superfund” or “Superlien” law, each as amended and as now
in effect.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means any
entity that is considered one employer with CNB Financial under
Section 4001(b)(1) of ERISA or Section 414 of the IRC.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
3
“Excluded Shares” shall consist
of (i) Dissenters’ Shares and (ii) shares held directly or indirectly by United
Financial Bancorp (other than shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted).
“FDIC” means the Federal
Deposit Insurance Corporation.
“FRB” means the Federal
Reserve Board.
“GAAP” means generally accepted
accounting principles.
“Government Regulator” means
any federal or state governmental authority charged with the supervision or
regulation of depository institutions or depository institution holding
companies or engaged in the insurance of bank deposits.
“Governmental Entity” means any
court, administrative agency or commission or other governmental authority or
instrumentality.
“Hazardous Material” means any
substance (whether solid, liquid or gas) which is or could be detrimental to
human health or safety or to the environment, currently or hereafter listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance, oil or petroleum, or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated
biphenyl.
“HOLA” means the Home Owners’
Loan Act, as amended.
“IRC” means the Internal
Revenue Code of 1986, as amended.
“knowledge” means, with respect
to a party hereto, actual knowledge of the members of the Board of Directors of
that party or any officer of that party with the title ranking not less than
vice president.
“Lien” means any charge,
mortgage, pledge, security interest, claim, lien or encumbrance.
“Loan” means a loan, lease,
advance, credit enhancement, guarantee or other extension of
credit.
“Loan Property” means any
property in which the applicable party (or a subsidiary of it) holds a security
interest and, where required by the context, includes the owner or operator of
such property, but only with respect to such property.
4
“Material Adverse Effect” means
an effect which is material and adverse to the business, financial condition or
results of operations of CNB Financial or United Financial Bancorp, as the
context may dictate, and its Subsidiaries taken as a whole; provided, however, that any such
effect resulting from any (i) changes in laws, rules or regulations or generally
accepted accounting principles or regulatory accounting requirements or
interpretations thereof that apply to both United Financial Bancorp and CNB
Financial, or to financial and/or depository institutions generally, (ii)
changes in economic conditions affecting financial institutions generally,
including but not limited to, changes in the general level of market interest
rates, (iii) actions and omissions of United Financial Bancorp or CNB Financial
taken with the prior written consent of the other (iv) direct effects of
compliance with this Agreement on the operating performance of the parties,
including expenses incurred by the parties in consummating the transactions
contemplated by this Agreement, or (v) payment incurred in connection with CNB
Financial’s obligations under the Section 7.2(a) of the Agreement with Berkshire
Hills Bancorp, shall not be considered in determining if a Material Adverse
Effect has occurred. With respect to CNB Financial, a Material
Adverse Effect shall also be deemed to have occurred in the event that (1) the
level of non-performing assets (non-accrual, past due, other non-performing
assets and restructured loans, as such items are defined by Industry Guide 3 of
the SEC’s Securities Act Industry Guides) shall equal or exceed $8.0 million as
of the month end prior to the Closing Date or (2) CNB Financial incurs net loan
charge-offs in excess of $4.0 million subsequent to December 31,
2008.
“MBCA” shall mean the
Massachusetts Business Corporation Act, MGL Chapter 156D, Section 1, et seq.
“MGCL” means the Maryland
General Corporation Law
“OCC” means the Office of the
Comptroller of the Currency.
“OTS” means the Office of
Thrift Supervision.
“Participation Facility” means
any facility in which the applicable party (or a Subsidiary of it) participates
in the management (including all property held as trustee or in any other
fiduciary capacity) and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
“person” means an individual,
corporation, limited liability company, partnership, association, trust,
unincorporated organization or other entity.
“Securities Act” means the
Securities Act of 1933, as amended.
“Subsidiary” means a
corporation, partnership, joint venture or other entity in which CNB Financial
or United Financial Bancorp, as the case may be, has, directly or indirectly, an
equity interest representing 50% or more of any class of the capital stock
thereof or other equity interests therein.
5
“Superior Proposal” means an
unsolicited, bona fide written offer made by a third party to consummate an
Acquisition Proposal that (i) CNB Financial’s Board of Directors determines in
good faith, after consulting with its outside legal counsel and its financial
advisor, would, if consummated, result in a transaction that is more favorable
to the shareholders of CNB Financial than the transactions contemplated hereby
(taking into account all legal, financial, regulatory and other aspects of the
proposal and the entity making the proposal), (ii) is not conditioned on
obtaining financing (and with respect to which United Financial Bancorp has
received written evidence of such person’s ability to fully finance its
Acquisition Proposal), (iii) is for 100% of the outstanding shares of CNB
Financial Common Stock and (iv) is, in the written opinion of CNB Financial’s
financial advisor, more favorable to the shareholders of CNB Financial from a
financial point of view than the transactions contemplated hereby (including any
adjustments to the terms and conditions of such transactions proposed by United
Financial Bancorp in response to such Acquisition Proposal).
“Taxes” means all income,
franchise, gross receipts, real and personal property, real property transfer
and gains, wage and employment taxes.
“United Financial Bancorp Common
Stock” means the common stock, par value $0.01 per share, of United
Financial Bancorp.
ARTICLE
II
The
Merger
2.1 The Merger. Upon
the terms and subject to the conditions set forth in this Agreement, CNB
Financial will merge with and into United Financial Bancorp (the “Merger”) at the Effective
Time. At the Effective Time, the separate corporate existence of CNB
Financial shall cease. United Financial Bancorp shall be the
surviving corporation (hereinafter sometimes referred to in such capacity as the
“Surviving Corporation”)
in the Merger and shall continue to be governed by the MGCL and its name and
separate corporate existence, with all of its rights, privileges, immunities,
powers and franchises, shall continue unaffected by the Merger.
2.2 Closing. The
closing of the Merger (the “Closing”) will take place in
the offices of Xxxxx Lord Xxxxxxx & Xxxxxxx LLP, 401 9th Street, NW,
Washington, D.C., or at such other location as is agreed to by the parties
hereto, at 10:00 a.m. on the date designated by United Financial Bancorp within
thirty days following satisfaction or waiver of the conditions to Closing set
forth in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing), or such later date as the parties may otherwise agree
(the “Closing
Date”).
2.3 Effective Time. In
connection with the Closing, United Financial Bancorp shall duly execute and
deliver articles of merger (the “Articles of Merger”) to the
Maryland Secretary of State for filing pursuant to the MGCL and to the
Massachusetts Secretary of State for filing pursuant to the MBCA. The
Merger shall become effective at such time as the Articles of Merger are duly
filed with the Maryland Secretary of State and the Massachusetts Secretary of
State or at such later date or time as United Financial Bancorp and CNB
Financial agree and specify in the Articles of Merger (the date and time the
Merger becomes effective being the “Effective Time”).
6
2.4 Effects of the
Merger. The Merger will have the effects set forth in the MBCA
and the MGCL. Without limiting the generality of the foregoing, and
subject thereto, from and after the Effective Time, United Financial Bancorp
shall possess all of the properties, rights, privileges, powers and franchises
of CNB Financial and be subject to all of the debts, liabilities and obligations
of CNB Financial.
2.5 Effect on Outstanding Shares of CNB
Financial Common Stock.
(a)
Subject to the allocation and
proration procedures set forth in
Section 2.6, each share of CNB Financial Common
Stock
outstanding immediately prior to the
Effective Time, other than Excluded Shares shall
be converted into the right to receive, at the
election of the holder thereof:
(i)
0.8257 shares of United Financial Bancorp Common Stock (such number of shares of
United Financial Bancorp Common Stock, as may be adjusted
as provided herein, is hereinafter referred to as the
“Per Share Stock Consideration”);
(ii)
a cash amount equal to $10.75 (the “Per Share Cash Consideration”);
or
(iii) a
combination thereof.
Thereafter, subject to Sections 2.7,
2.11 and 2.12, each outstanding
certificate representing shares of CNB Financial Common
Stock shall represent solely the right to receive the Per Share Stock
Consideration, the Per Share Cash Consideration or a combination
thereof.
If United
Financial Bancorp declares a change in the number of shares of United Financial
Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock
dividend, recapitalization, or similar transaction with
respect to such stock, and the record date therefore (in the case of a
stock dividend) or the effective date thereof (in the case of a
stock split or similar recapitalization for which
a record date is not established) shall be at
or prior to the Effective Time, or announces a special
extraordinary cash dividend with a
record date at or prior to the Effective Time, the Per
Share Stock Consideration shall be proportionately adjusted.
2.6
Election
and Proration Procedures.
(a) An
election form in such form as United Financial Bancorp and
CNB Financial shall mutually agree (an “Election Form”)
shall be mailed to each holder of record of CNB Financial Common Stock as of the
record date for eligibility to vote on the
Merger. United Financial Bancorp shall
make available as
many Election Forms as may be
reasonably requested by all persons who
become holders of CNB Financial Shares after
the record date for eligibility to
vote on the Merger and prior to the Election Deadline (as
defined herein), and CNB
Financial shall provide to the Exchange Agent (as defined
herein) all information reasonably necessary for it to
perform its obligations as specified herein.
7
(b) Each
Election Form shall entitle the holder of shares of CNB
Financial Common Stock (or the beneficial owner
through appropriate and
customary documentation and instructions) to (i) elect to
receive the Per Share Stock Consideration for all of
such holder’s shares (a
“Stock Election”), (ii) elect to receive the
Per Share Cash Consideration for all of such holder’s
shares (a “Cash Election”), (iii) elect to receive the Per Share
Stock Consideration for a portion of such holder’s shares
as specified by such holder and the Per Share Cash Consideration for the
remainder of such holder ’s shares (a “Mixed Election”) or
(iv) make no election (a “Non-election”). Holders of
record of shares of CNB Financial Common Stock who hold
such shares as nominees, trustees or
in other representative capacity (a
“Representative”)
may submit multiple Election Forms, provided that such
Representative certifies that each such Election Form
covers all of the shares of CNB Common Stock held by
that Representative for a particular beneficial
owner. The shares of CNB Financial Common
Stock as to which a
Stock Election has been made
(including pursuant to a
Mixed Election) are referred to herein
as “Stock Election Shares” and the aggregate number
thereof is referred to herein as the “Stock Election Number.” The
shares of CNB Financial Common Stock as to which a Cash Election has been
made (including pursuant to a
Mixed Election) are referred to herein as
“Cash Election Shares” and the aggregate number
thereof is referred to as the “Cash Election Number”. Shares of CNB
Financial Common Stock as to which no election has been made are referred to as
“Non-election Shares.”
(c)
To
be effective, a properly completed Election Form must be
received by an independent agent appointed by United Financial Bancorp (the
“Exchange Agent”) on
or before 4:00 p.m., Eastern Time
on
the third business day immediately
preceding CNB Financial’s stockholders’ meeting to
consider the Merger or on such other date or time as the Parties may mutually
agree (the “Election Deadline”). An
election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by
the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or
more certificates representing all shares of
CNB Financial Common Stock covered by
such Election Form, or
the guaranteed delivery of such certificates (or
customary affidavits and, if required by United Financial Bancorp,
indemnification regarding the
loss or destruction of such certificates),
together with duly completed transmittal materials. Any CNB Financial
stockholder may at any time prior to the
Election Deadline change his or her election by written
notice received by the
Exchange Agent prior to the Election Deadline accompanied by
a properly completed and signed revised Election
Form. Any CNB Financial stockholder may, at any time prior to the
Election Deadline, revoke his or her election by written
notice received by
the Exchange Agent prior to
the Election Deadline or by withdrawal prior to the
Election Deadline of his or her certificates, or of the
guarantee of delivery of
such certificates. All elections shall
be revoked automatically if the exchange agent is notified in writing by either
Party that this Agreement has been terminated. If a stockholder
either (i) does not submit a properly completed Election Form by the
Election Deadline or (ii) revokes its Election Form prior to the
Election Deadline but does not submit a new properly executed
Election Form prior to the Election Deadline, the shares of Shares of
CNB Financial Common Stock held by such stockholder shall
be designated
as Non-election Shares. Subject to the terms of
this Agreement and the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any
election, revocation or change has been properly made and
to disregard immaterial defects in
any Election Form, and any
good faith decisions of the
Exchange Agent regarding such
matters shall be binding and conclusive.
8
(d) The
number of shares of CNB Financial Common Stock to be converted into
the right to receive the Per Share Cash Consideration shall be equal
to 50% of the number of Shares of CNB Financial Common
Stock outstanding immediately prior to the Effective Time
less the number
of Dissenting Shares (the “Aggregate Cash Limit”)
and the number of CNB Financial Shares to be converted into the right
to receive the Per Share Stock
Consideration shall be equal to
50% of the number of CNB
Financial Shares outstanding immediately prior
to
the Effective Time (the “Aggregate Stock
Limit”).
(e) Within
five business days after the later to occur of the Election Deadline
or the Effective Time, United Financial
Bancorp shall cause the Exchange Agent to
effect the allocation among holders of CNB
Financial Shares of rights to receive the Per Share
Stock Consideration or the Per Share
Cash Consideration and to distribute such as
follows:
(i) if
the Stock Election Number exceeds the
Aggregate Stock Limit, then all Cash Election Shares and
all Non-Election Shares
shall be converted into the right to receive the Per Share Cash Consideration, and
each holder of
Stock Election Shares shall
be entitled to receive (A) the Per Share
Stock Consideration in respect of that number
of Stock Election Shares equal to the product obtained by
multiplying (1) the number of
Stock Election Shares held by such holder by
(2) a fraction, the numerator of
which is the Aggregate Stock Limit and
the denominator of which is the Stock Election Number and
(B) the Per Share Cash Consideration in respect of the
remaining number of such Stock Election Shares;
(ii) if
the
Cash Election Number exceeds the Aggregate Cash Limit, then
all Stock Election Shares and
all Non-Election Shares shall
be converted into the right
to receive the
Per Share Stock Consideration, and each holder of
Cash Election Shares shall
be entitled to receive (A) the Per Share Cash Consideration in
respect of that number of Cash Election Shares equal to
the product obtained by multiplying (1) the number of Cash
Election Shares held by such holder by (2) a fraction, the
numerator of which is the Aggregate Cash Limit and
the denominator of which is the Cash Election Number and
(B) the Per Share Stock Consideration in
respect of the remaining number of such Cash Election
Shares; and
(iii) if
the Stock Election Number and the Cash
Election Number do not exceed the
Aggregate Stock Limit and the Aggregate Cash Limit,
respectively, then (i) all
Cash Election Shares shall be
converted into the right to receive the Per Share
Cash Consideration, (ii) all Stock Election
Shares shall be converted into the right to receive the Per Share
Stock Consideration, and (iii) all Non-Election Shares
shall be converted into the right
to receive a combination of the Per
Share Cash Consideration and the
Per Share Stock Consideration such that
the aggregate number of CNB
Financial Shares entitled to receive the
Per Share Cash Consideration is equal to the Aggregate
Cash Limit and the aggregate number of CNB
Financial Shares entitled to receive the
Per Share Stock Consideration is equal to the Aggregate Stock
Limit.
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(f) Notwithstanding
any other provision of this Agreement, no fraction of a share of United
Financial Bancorp Common Stock and no certificates or scrip therefor will be
issued in the Merger; instead, United Financial Bancorp shall pay to each holder
of CNB Financial Common Stock who would otherwise be entitled to a fraction of a
share of United Financial Bancorp Common Stock an amount in cash, rounded to the
nearest cent, determined by multiplying such fraction by the Per Share Cash
Consideration.
(g) As
of the Effective Time, each Excluded Share, other than Dissenters’ Shares, shall
be canceled and retired and shall cease to exist, and no exchange or payment
shall be made with respect thereto. All shares of United Financial
Bancorp Common Stock that are held by CNB Financial, if any, other than shares
held in a fiduciary capacity or in satisfaction of a debt previously contracted,
shall be canceled and shall constitute authorized but unissued shares. In
addition, no Dissenters’ Shares shall be converted into shares of United
Financial Bancorp Common Stock pursuant to this Section 2.6 but instead shall
be treated in accordance with the provisions set forth in Section 2.12 of this
Agreement.
2.7 Exchange
Procedures.
(a) As
promptly as practicable after the Effective Time, the Exchange
Agent shall send or cause to be sent to
each former holder of record
of CNB Financial Common Stock who did not
previously submit a
properly completed Election Form (other than
holders of Dissenting Shares), appropriate transmittal materials
(“Letter of
Transmittal”) in a form satisfactory to United Financial Bancorp and CNB
Financial. A Letter of Transmittal will be deemed properly completed
only if accompanied by certificates representing all shares of CNB Financial
Common Stock (“Certificate(s)”) to be converted
thereby.
(b) At
and after the Effective Time, each Certificate (except as specifically set forth
in Section 2.5) shall
represent only the right to receive the Per Share Stock Consideration or the Per
Share Cash Consideration or a combination thereof (hereinafter referred to as
the “Merger Consideration”) in accordance with this Agreement.
(c) Prior
to the Effective Time, United Financial Bancorp shall (i) reserve for issuance
with its transfer agent and registrar a sufficient number of shares of United
Financial Bancorp Common Stock to provide for payment of the Aggregate Stock
Limit and (ii) deposit, or cause to be deposited, with Registrar and Transfer
Company (the “Exchange
Agent”), for the benefit of the holders of shares of CNB Financial Common
Stock, for exchange in accordance with this Section 2.6, an amount of
cash sufficient to the Aggregate Cash Limit and any cash in lieu of fractional
shares pursuant to Section
2.6(f).
10
(d) The
Letter of Transmittal shall (i) specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent, (ii) be in a form and contain any other
provisions as United Financial Bancorp may reasonably determine and (iii)
include instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon the proper surrender of
the Certificates to the Exchange Agent, together with a properly completed and
duly executed Letter of Transmittal, the holder of such Certificates shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of United Financial Bancorp Common Stock and/or a check in the
aggregate amount representing the amount of cash that such holder has the right
to receive pursuant to Section
2.6, cash in lieu of fractional shares, if any, that such holder has the
right to receive pursuant to Section 2.6(f), and any
dividends or other distributions to which such holder is entitled pursuant to
Section
2.7(e). Certificates so surrendered shall forthwith be
canceled. As soon as practicable following receipt of the properly
completed Letter of Transmittal and any necessary accompanying documentation,
the Exchange Agent shall distribute United Financial Bancorp Common Stock and
cash as provided herein. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to the shares of United
Financial Bancorp Common Stock held by it from time to time hereunder, except
that it shall receive and hold all dividends or other distributions paid or
distributed with respect to such shares for the account of the persons entitled
thereto. If there is a transfer of ownership of any shares of CNB
Financial Common Stock not registered in the transfer records of CNB Financial,
the Merger Consideration shall be issued to the transferee thereof if the
Certificates representing such CNB Financial Common Stock are presented to the
Exchange Agent, accompanied by all documents required, in the reasonable
judgment of United Financial Bancorp and the Exchange Agent, to evidence and
effect such transfer and to evidence that any applicable stock transfer taxes
have been paid.
(e) No
dividends or other distributions declared or made after the Effective Time with
respect to United Financial Bancorp Common Stock issued pursuant to this
Agreement shall be remitted to any person entitled to receive shares of United
Financial Bancorp Common Stock hereunder until such person surrenders his or her
Certificates in accordance with this Section 2.7. Upon
the surrender of such person’s Certificates, such person shall be entitled to
receive any dividends or other distributions, without interest thereon, which
subsequent to the Effective Time had become payable but not paid with respect to
shares of United Financial Bancorp Common Stock represented by such person’s
Certificates.
(f) The
stock transfer books of CNB Financial shall be closed immediately upon the
Effective Time and from and after the Effective Time there shall be no transfers
on the stock transfer records of CNB Financial of any shares of CNB Financial
Common Stock. If, after the Effective Time, Certificates are
presented to United Financial Bancorp, they shall be canceled and exchanged for
the Per Share Stock Consideration or Per Share Cash Consideration deliverable in
respect thereof pursuant to this Agreement in accordance with the procedures set
forth in this Section
2.7.
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(g) Any
portion of the aggregate amount of cash to be paid pursuant to Section 2.6, any dividends or
other distributions to be paid pursuant to this Section 2.7 or any proceeds
from any investments thereof that remains unclaimed by the shareholders of CNB
Financial for six months after the Effective Time shall be repaid by the
Exchange Agent to United Financial Bancorp upon the written request of United
Financial Bancorp. After such request is made, any shareholders of
CNB Financial who have not theretofore complied with this Section 2.7 shall look
only to United Financial Bancorp for the Merger Consideration and cash in lieu
of fractional shares, if any, deliverable in respect of each share of CNB
Financial Common Stock such shareholder holds, as determined pursuant to Section 2.6 of this
Agreement, without any interest thereon. If outstanding Certificates
are not surrendered prior to the date on which such payments would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by any abandoned property,
escheat or other applicable laws, become the property of United Financial
Bancorp (and, to the extent not in its possession, shall be paid over to it),
free and clear of all claims or interest of any person previously entitled to
such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party to this Agreement (or any affiliate thereof) shall be liable
to any former holder of CNB Financial Common Stock for any amount delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(h) United
Financial Bancorp and the Exchange Agent shall be entitled to rely upon CNB
Financial’s stock transfer books to establish the identity of those persons
entitled to receive the Merger Consideration, which books shall be conclusive
with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, United Financial Bancorp and
the Exchange Agent shall be entitled to deposit any Merger Consideration and
cash in lieu of fractional shares, if any, represented thereby in escrow with an
independent third party and thereafter be relieved with respect to any claims
thereto.
(i) If
any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Exchange Agent or United Financial
Bancorp, the posting by such person of a bond in such amount as the Exchange
Agent may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration and cash in lieu
of fractional shares, if any, deliverable in respect thereof pursuant to Section 2.6.
2.8 Effect
on Outstanding Shares of United Financial Bancorp Common Stock.
At the
Effective Time, each share of common stock of United Financial Bancorp issued
and outstanding immediately prior to the Effective Time shall remain an issued
and outstanding share of common stock of the Surviving Corporation and shall not
be affected by the Merger.
2.9 Directors of Surviving Corporation
After Effective Time. Subject to Section 5.14, immediately
after the Effective Time, until their respective successors are duly elected or
appointed and qualified, the directors of the Surviving Corporation shall
consist of the directors of United Financial Bancorp serving immediately prior
to the Effective Time.
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2.10
Certificate of
Incorporation and Bylaws. The certificate of incorporation of
United Financial Bancorp, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law. The bylaws of
United Financial Bancorp, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
2.11
Treatment of Stock
Options and Warrants.
(a) Each
option to purchase shares of CNB Financial Common Stock issued by CNB Financial
and outstanding at the Effective Time pursuant to the CNB Financial Amended and
Restated Stock Option Plan (formerly, the Commonwealth National Bank 2001 Stock
Option Plan) or the CNB Financial Corp. 2008 Equity Incentive Plan (each, a
“CNB Financial Option”)
whose exercise price is less than $10.75 shall be cancelled, effective
immediately prior to the Effective Time, and shall be converted into cash in an
amount equal to $10.75 minus the exercise price of such option.
(b) Each
CNB Financial Option
whose exercise price is equal to or greater than $10.75 shall be converted into
an option to purchase shares of United Financial Bancorp Common Stock as
follows:
(i) The
aggregate number of shares of United Financial Bancorp Common Stock issuable
upon the exercise of the converted CNB Financial Option after the Effective Time
shall be equal to the product of 0.8257 (the “Option Exchange Ratio”) multiplied
by the number of shares of CNB Financial Common Stock issuable upon exercise of
the CNB Financial Option immediately prior to the Effective Time, such product
to be rounded to the nearest whole share of United Financial Common Stock;
and
(ii) the
exercise price per share of each converted CNB Financial Option shall be equal
to the quotient of the exercise price of such CNB Financial Option immediately
prior to the Effective Time divided by the Option Exchange Ratio, such quotient
to be rounded to the nearest whole cent; provided, however, that, in
the case of any CNB Financial Option that is intended to qualify as an incentive
stock option under Section 422 of the IRC, the number of shares of United
Financial Bancorp Common Stock issuable upon exercise of and the exercise price
per share for such converted CNB Financial Option determined in the manner
provided above shall be further adjusted in such manner as may be necessary to
conform to the requirements of Section 424(b) of the IRC.
Options
to purchase shares of United Financial Bancorp Common Stock that arise from the
operation of this Section 2.11 shall be
referred to as “Converted
Options.” All Converted Options shall be exercisable for the
same period and shall otherwise have the same terms and conditions applicable to
the CNB Financial Options that they replace.
(c) Before
the Effective Time, United Financial Bancorp will take all corporate action
necessary to reserve for future issuance a sufficient additional number of
shares of United Financial Bancorp Common Stock to provide for the satisfaction
of its obligations with respect to the Converted Options. United
Financial Bancorp agrees to file, as soon as practicable after the Effective
Time, a registration statement on Form S-8 (or any successor or other
appropriate form) and make any state filings or obtain state exemptions with
respect to the United Financial Bancorp Common Stock issuable upon exercise of
the Converted Options.
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(d) Each
member of the board of directors of CNB Financial or a CNB Financial Subsidiary
who holds outstanding warrants issued by Commonwealth National Bank on November
19, 2001 (each a “CNB Financial
Warrant”) shall agree to the cancellation of such CNB Financial Warrant,
effective immediately prior to the Effective Time, and shall receive cash equal
to the product of $10.75 minus the exercise price times the number of warrants
held by such director. All other CNB Financial Warrants shall be
converted to warrants to purchase shares of United Financial Bancorp Common
Stock on the same basis as CNB Financial Options are so converted under Section 2.11(a)
above.
2.12 Dissenters’
Rights. Notwithstanding any other provision of this Agreement
to the contrary, shares of CNB Financial Common Stock that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who properly shall have demanded payment of the fair value for such shares in
accordance with the MBCA (collectively, the “Dissenters’ Shares”) shall not
be converted into or represent the right to receive the Merger Consideration.
Such shareholders instead shall be entitled to receive payment of the fair value
of such shares held by them in accordance with the provisions of the MBCA,
except that all Dissenters’ Shares held by shareholders who shall have failed to
perfect or who effectively shall have withdrawn or otherwise lost their rights
as dissenting shareholders under the MBCA shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration
upon surrender in the manner provided in Section 2.7 of the
Certificate(s) that, immediately prior to the Effective Time, evidenced such
shares. CNB Financial shall give United Financial Bancorp (i) prompt notice of
any written demands for payment of fair value of any shares of CNB Financial
Common Stock, attempted withdrawals of such demands and any other instruments
served pursuant to the MBCA and received by CNBFinancial relating to
shareholders’ dissenters’ rights and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands under the MBCA consistent
with the obligations of CNB Financial thereunder. CNB Financial shall
not, except with the prior written consent of United Financial Bancorp, (x) make
any payment with respect to such demand, (y) offer to settle or settle any
demand for payment of fair value or (z) waive any failure to timely deliver a
written demand for payment of fair value or timely take any other action to
perfect payment of fair value rights in accordance with the MBCA.
2.13 Bank
Merger. Concurrently with or as soon as practicable after the
execution and delivery of this Agreement, United Bank, a wholly owned subsidiary
of United Financial Bancorp, and Commonwealth National Bank (“Commonwealth National Bank”),
a wholly owned subsidiary of CNB Financial, shall enter into the Plan of Bank
Merger, in the form attached hereto as Exhibit B,
pursuant to which Commonwealth National Bank will merge with and into United
Bank (the “Bank
Merger”). The parties intend that the Bank Merger will become
effective simultaneously with or immediately following the Effective
Time.
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2.14
Alternative
Structure. Notwithstanding anything to the contrary contained
in this Agreement, prior to the Effective Time, United Financial Bancorp may
specify that the structure of the transactions contemplated by this Agreement,
including whether or not to consummate the Bank Merger, be revised and the
parties shall enter into such alternative transactions as United Financial
Bancorp may reasonably determine to effect the purposes of this Agreement; provided, however, that such
revised structure shall not (i) alter or change the amount or kind of the Merger
Consideration or (ii) materially impede or delay the receipt of any
regulatory approval referred to in, or the consummation of the transactions
contemplated by, this Agreement. In the event that United Financial
Bancorp elects to make such a revision, the parties agree to execute appropriate
documents to reflect the revised structure.
2.15 Absence of
Control. Subject to any specific provisions of this Agreement,
it is the intent of the parties hereto that United Financial Bancorp by reason
of this Agreement shall not be deemed (until consummation of the transactions
contemplated hereby) to control, directly or indirectly, CNB Financial or to
exercise, directly or indirectly, a controlling influence over the management or
policies of CNB Financial.
ARTICLE
III
Representations
and Warranties
3.1 Disclosure
Letters. Prior to the execution and delivery of this
Agreement, United Financial Bancorp and CNB Financial have each delivered to the
other a letter (each, its “Disclosure Letter”) setting
forth, among other things, facts, circumstances and events the disclosure of
which is required or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more of
their respective representations and warranties (and making specific reference
to the Section of this Agreement to which they relate).
3.2 Representations and Warranties of CNB
Financial. CNB Financial represents and warrants to United
Financial Bancorp that, except as disclosed in CNB Financial’s Disclosure
Letter:
(a) Organization and
Qualification. CNB Financial is a corporation duly organized
and validly existing under the laws of the Commonwealth of Massachusetts and is
registered with the FRB as a bank holding company. CNB Financial has
all requisite corporate power and authority to own, lease and operate its
properties and to conduct the business currently being conducted by it. CNB
Financial is duly qualified or licensed as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed and in good standing would not have a Material
Adverse Effect on CNB Financial. CNB Financial engages only in
activities (and holds properties only of the types) permitted to bank holding
companies by the BHCA and the rules and regulations of the FRB promulgated
thereunder.
15
(b) Subsidiaries.
(i) CNB
Financial’s Disclosure Letter sets forth with respect to each of CNB Financial’s
Subsidiaries its name, its jurisdiction of incorporation, CNB Financial’s
percentage ownership, the number of shares of stock owned or controlled by CNB
Financial and the name and number of shares held by any other person who owns
any stock of the Subsidiary. CNB Financial owns of record and beneficially all
the capital stock of each of its Subsidiaries free and clear of any Liens. There
are no contracts, commitments, agreements or understandings relating to CNB
Financial’s right to vote or dispose of any equity securities of its
Subsidiaries. CNB Financial’s ownership interest in each of its
Subsidiaries is in compliance with all applicable laws, rules and regulations
relating to equity investments by bank holding companies or national banking
associations.
(ii) Each
of CNB Financial’s Subsidiaries is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation, has all requisite
corporate power and authority to own, lease and operate its properties and to
conduct the business currently being conducted by it and is duly qualified or
licensed as a foreign corporation to transact business and is in good standing
in each jurisdiction in which the character of the properties owned or leased by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed and
in good standing would not have a Material Adverse Effect on such
Subsidiary.
(iii) The
outstanding shares of capital stock of each Subsidiary have been validly
authorized and are validly issued, fully paid and nonassessable. No
shares of capital stock of any Subsidiary of CNB Financial are or may be
required to be issued by virtue of any options, warrants or other rights, no
securities exist that are convertible into or exchangeable for shares of such
capital stock or any other debt or equity security of any Subsidiary, and there
are no contracts, commitments, agreements or understandings of any kind for the
issuance of additional shares of capital stock or other debt or equity security
of any Subsidiary or options, warrants or other rights with respect to such
securities.
(iv) No
Subsidiary of CNB Financial other than Commonwealth National Bank is an “insured
depository institution” as defined in the Federal Deposit Insurance Act, as
amended, and the applicable regulations thereunder. Commonwealth
National Bank’s deposits are insured by the FDIC to the fullest extent permitted
by law. Commonwealth National Bank is a member in good standing of
the Federal Home Loan Bank of Boston. Commonwealth National Bank
engages only in activities (and holds properties only of the types) permitted by
the National Bank Act and the rules and regulations of the OCC promulgated
thereunder.
16
(c) Capital
Structure.
(i) The
authorized capital stock of CNB Financial consists of: (A) 10,000,000 shares of
CNB Financial Common Stock; and (B) 1,000,000 shares of preferred stock, par
value $1.00 per share.
(ii) As
of the date of this Agreement: (A) 2,283,208 shares of CNB Financial Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable and were issued in full compliance with all applicable federal
and state securities laws; (B) no shares of CNB Financial preferred stock are
issued and outstanding; (C) 356,895 shares of CNB Financial Common Stock are
reserved for issuance pursuant to outstanding CNB Financial Options; and (D)
92,500 shares of CNB Financial Common Stock are reserved for issuance pursuant
to outstanding CNB Financial Warrants.
(iii) Set
forth in CNB Financial’s Disclosure Letter is a complete and accurate list of
all outstanding CNB Financial Options and CNB Financial Warrants, including the
names of the optionees and warrant holders, dates of grant, exercise prices,
dates of vesting, dates of termination, shares subject to each grant and whether
stock appreciation, limited or other similar rights were granted in connection
with such options or warrants.
(iv) No
bonds, debentures, notes or other indebtedness having the right to vote on any
matters on which shareholders of CNB Financial may vote are issued or
outstanding.
(v) Except
as set forth in this Section
3.2(c), as of the date of this Agreement, (A) no shares of capital stock
or other voting securities of CNB Financial are issued, reserved for issuance or
outstanding and (B) neither CNB Financial nor any of its Subsidiaries has or is
bound by any outstanding subscriptions, options, warrants, calls, rights,
convertible securities, commitments or agreements of any character obligating
CNB Financial or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, any additional shares of capital stock of CNB
Financial or obligating CNB Financial or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, convertible
security, commitment or agreement. As of the date hereof, there are
no outstanding contractual obligations of CNB Financial or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of CNB Financial or any of its Subsidiaries.
(d) Authority. CNB
Financial has all requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of CNB Financial’s Board of Directors, and no other corporate
proceedings on the part of CNB Financial are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement other
than the approval and adoption of this Agreement by the affirmative vote of the
holders of two thirds of the outstanding shares of CNB Financial Common
Stock. This Agreement has been duly and validly executed and
delivered by CNB Financial and constitutes a valid and binding obligation of CNB
Financial, enforceable against CNB Financial in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
17
(e) No Violations. The
execution, delivery and performance of this Agreement by CNB Financial do not,
and the consummation of the transactions contemplated by this Agreement will
not, (i) assuming all required governmental approvals have been obtained
and the applicable waiting periods have expired, violate any law, rule or
regulation or any judgment, decree, order, governmental permit or license to
which CNB Financial or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) violate the articles of organization or bylaws of
CNB Financial or the similar organizational documents of any of its Subsidiaries
or (iii) constitute a breach or violation of, or a default under (or an
event which, with due notice or lapse of time or both, would constitute a
default under), or result in the termination of, accelerate the performance
required by, or result in the creation of any Lien upon any of the properties or
assets of CNB Financial or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which CNB Financial or
any of its Subsidiaries is a party, or to which any of their respective
properties or assets may be subject except, in the case of (iii), for any such
breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect on CNB Financial.
(f) Consents and
Approvals. No consents or approvals of, or filings or
registrations with, any Governmental Entity or any third party arerequired
to be made or obtained in connection with the execution and delivery by CNB
Financial of this Agreement or the consummation by CNB Financial of the Merger
and the other transactions contemplated by this Agreement, including the Bank
Merger, except for filings of applications and notices with, receipt of
approvals or nonobjections from, and expiration of the related waiting period
required by, federal and state banking authorities. As of the date
hereof, CNB Financial has no knowledge of any reason pertaining to CNB Financial
why any of the approvals referred to in this Section 3.2(f) should not be
obtained without the imposition of any material condition or restriction
described in Section
6.1(b).
(g) Securities
Filings. CNB Financial has filed with the SEC all reports,
schedules, registration statements, definitive proxy statements and other
documents that it has been required to file under the Securities Act or the
Exchange Act since December 31, 2005 (collectively, “CNB Financial’s SEC
Reports”). None of CNB Financial’s SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not
misleading. As of their respective dates, all of CNB Financial’s SEC
Reports complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder. Each of the financial
statements (including, in each case, any notes thereto) of CNB Financial
included in CNB Financial’s SEC Reports complied as to form, as of their
respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto.
18
(h) Financial
Statements. CNB Financial’s Disclosure Letter contains copies
of (i) the consolidated balance sheets of CNB Financial and its Subsidiaries as
of December 31, 2008 and 2007 and related consolidated statements of operations,
stockholders’ equity and cash flows for each of the years in the two-year period
ended December 31, 2008, together with the notes thereto, accompanied by the
audit report of CNB Financial’s independent public auditors, (ii) the unaudited
consolidated balance sheet of CNB Financial and its Subsidiaries as of March 31,
2009 and the related consolidated statements of operations and changes in
stockholders’ equity for the three months ended March 31, 2009, and (iii) the
consolidated report of condition and income filed with the FDIC by Commonwealth
National Bank for the period ended March 31, 2009. Such financial
statements were prepared from the books and records of CNB Financial and its
Subsidiaries, fairly present the consolidated financial position of CNB
Financial and its Subsidiaries in each case at and as of the dates indicated and
the consolidated results of operations, retained earnings and cash flows of CNB
Financial and its Subsidiaries for the periods indicated, and, except as
otherwise set forth in the notes thereto, were prepared in accordance with GAAP
consistently applied throughout the periods covered thereby; provided, however, that the unaudited
financial statements for interim periods are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack a statement of cash-flows and footnotes. The books and records
of CNB Financial and its Subsidiaries have been, and are being, maintained in
all respects in accordance with GAAP and any other legal and accounting
requirements and reflect only actual transactions.
(i) Undisclosed
Liabilities. Neither CNB Financial nor any of its Subsidiaries
has incurred any material debt, liability or obligation of any nature whatsoever
(whether accrued, contingent, absolute or otherwise and whether due or to become
due) other than liabilities reflected on or reserved against in the consolidated
financial statements of CNB Financial as of December 31, 2008, except for (i)
liabilities incurred since December 31, 2008 in the ordinary course of business
consistent with past practice that, either alone or when combined with all
similar liabilities, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on CNB Financial and (ii) liabilities incurred for
legal, accounting, financial advising fees and out-of-pocket expenses in
connection with the transactions contemplated by this Agreement.
(j) Absence of Certain Changes or
Events. Since December 31, 2008:
(i) CNB
Financial and its Subsidiaries have conducted their respective businesses only
in the ordinary and usual course of such businesses consistent with their past
practices;
(ii) there
has not been any event or occurrence that has had, or is reasonably expected to
have, a Material Adverse Effect on CNB Financial;
19
(iii) CNB
Financial has not declared, paid or set aside any dividends or distributions
with respect to the CNB Financial Common Stock;
(iv) except
for supplies or equipment purchased in the ordinary course of business, neither
CNB Financial nor any of its Subsidiaries have made any capital expenditures
exceeding individually or in the aggregate $20,000;
(v) there
has not been any write-down or specific reserve established by Commonwealth
National Bank in excess of $25,000 with respect to any of its Loans or other
real estate owned;
(vi) there
has not been any sale, assignment or transfer of any assets by CNB Financial or
any of its Subsidiaries in excess of $20,000 other than in the ordinary course
of business or pursuant to a contract or agreement disclosed in CNB Financial’s
Disclosure Letter;
(vii) there
has been no increase in the salary, compensation, pension or other benefits
payable or to become payable by CNB Financial or any of its Subsidiaries to any
of their respective directors, officers or employees, other than in conformity
with the policies and practices of such entity in the usual and ordinary course
of its business;
(viii) neither
CNB Financial nor any of its Subsidiaries has paid or made any accrual or
arrangement for payment of bonuses or special compensation of any kind or any
severance or termination pay to any of their directors, officers or employees;
and
(ix) there
has been no change in any accounting principles, practices or methods of CNB
Financial or any of its Subsidiaries other than as required by
GAAP.
(k) Litigation. Other
than for matters incidental to the business of CNB Financial, which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on CNB Financial, there are no suits, actions or legal,
administrative or arbitration proceedings pending or, to the knowledge of CNB
Financial, threatened against or affecting CNB Financial or any of its
Subsidiaries or any property or asset of CNB Financial or any of its
Subsidiaries. To the knowledge of CNB Financial, there are no
investigations, reviews or inquiries by any court or Governmental Entity pending
or threatened against CNB Financial or any of its Subsidiaries. There
are no judgments, decrees, injunctions, orders or rulings of any Governmental
Entity or arbitrator outstanding against CNB Financial or any of its
Subsidiaries that have not been satisfied or that enjoin CNB Financial or any of
its Subsidiaries from taking any action.
(l) Absence of Regulatory
Actions. Since December 31, 2005, neither CNB Financial nor
any of its Subsidiaries has been a party to any cease and desist order, written
agreement or memorandum of understanding with, or any commitment letter or
similar undertaking to, or has been subject to any action, proceeding, order or
directive by any Government Regulator, or has adopted any board resolutions at
the request of any Government Regulator, or has been advised by any Government
Regulator that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such action, proceeding, order,
directive, written agreement, memorandum of understanding, commitment letter,
board resolutions or similar undertaking. There are no unresolved
violations, criticisms or exceptions by any Government Regulator with respect to
any report or statement relating to any examinations of CNB Financial or its
Subsidiaries.
20
(m) Compliance with
Laws. CNB Financial and each of its Subsidiaries conducts its
business in compliance in all material respects with all statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable to
it. CNB Financial and each of its Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Entities that are
required in order to permit it to carry on its business as it is presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and no suspension or cancellation of any
of them is threatened. Neither CNB Financial nor any of its
Subsidiaries has been given notice or been charged with any violation of, any
law, ordinance, regulation, order, writ, rule, decree or condition to approval
of any Governmental Entity which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on CNB
Financial.
(n) Taxes. All
federal, state, local and foreign Tax returns required to be filed by or on
behalf of CNB Financial or any of its Subsidiaries have been timely filed or
requests for extensions have been timely filed and any such extension shall have
been granted and not have expired, and all such filed returns are complete and
accurate in all material respects. All Taxes shown on such returns,
all Taxes required to be shown on returns for which extensions have been granted
and all other taxes required to be paid by CNB Financial or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such Taxes on CNB Financial’s balance sheet (in accordance with
GAAP). There is no audit examination, deficiency assessment, tax
investigation or refund litigation with respect to any Taxes of CNB Financial or
any of its Subsidiaries, and no claim has been made in writing by any authority
in a jurisdiction where CNB Financial or any of its Subsidiaries do not file Tax
returns that CNB Financial or any such Subsidiary is subject to taxation in that
jurisdiction. All Taxes, interest, additions and penalties due with
respect to completed and settled examinations or concluded litigation relating
to CNB Financial or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such Taxes on CNB Financial’s balance sheet (in
accordance with GAAP). CNB Financial and its Subsidiaries have not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any Tax due that is currently in effect. CNB
Financial and each of its Subsidiaries has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party,
and CNB Financial and each of its Subsidiaries has timely complied with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the IRC and similar applicable state and local information
reporting requirements. Neither CNB Financial nor any of its
Subsidiaries is a party to any agreement, contract, arrangement or plan that has
resulted or would result, individually or in the aggregate, in connection with
this Agreement in the payment of any “excess parachute payments” within the
meaning of Section 280G of the IRC.
21
(o) Agreements.
(i) CNB
Financial’s Disclosure Letter lists, and CNB Financial has previously delivered
or made available to United Financial Bancorp a complete and correct copy of,
any contract, arrangement, commitment or understanding (whether written or oral)
to which CNB Financial or any of its Subsidiaries is a party or is
bound:
(A) with
any executive officer or other key employee of CNB Financial or any of its
Subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving CNB Financial
or any of its Subsidiaries of the nature contemplated by this
Agreement;
(B) with
respect to the employment of any directors, officers, employees or
consultants;
(C) any
of the benefits of which will be increased, or the vesting or payment of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement (including any stock option plan, phantom stock or stock
appreciation rights plan, restricted stock plan or stock purchase
plan);
(D) containing
covenants that limit the ability of CNB Financial or any of its Subsidiaries to
compete in any line of business or with any person, or that involve any
restriction on the geographic area in which, or method by which, CNB Financial
(including any successor thereof) or any of its Subsidiaries may carry on its
business (other than as may be required by law or any regulatory
agency);
(E) pursuant
to which CNB Financial or any of its Subsidiaries may become obligated to invest
in or contribute capital to any entity;
(F) that
relates to borrowings of money (or guarantees thereof) by CNB Financial or any
of its Subsidiaries in excess of $50,000, other than advances from the Federal
Home Loan Bank of Boston or securities sold under agreements to repurchase with
a maturity of thirty-one days or less and entered into in the ordinary course of
business; or
(G) which
is a lease or license with respect to any property, real or personal, whether as
landlord, tenant, licensor or licensee, involving a liability or obligation as
obligor in excess of $25,000 on an annual basis.
(ii) Neither
CNB Financial nor any of its Subsidiaries is in default under (and no event has
occurred which, with due notice or lapse of time or both, would constitute a
default under) or is in violation of any provision of any note, bond, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement to which it is
a party or by which it is bound or to which any of its respective properties or
assets is subject and, to the knowledge of CNB Financial, no other party to any
such agreement (excluding any loan or extension of credit made by CNB Financial
or any of its Subsidiaries) is in default in any respect thereunder, except for
such defaults or violations that would not, individually or in the aggregate,
have a Material Adverse Effect on CNB Financial.
22
(p) Intellectual
Property. CNB Financial and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks and trademarks
material to its business. CNB Financial’s Disclosure Letter sets forth a
complete and correct list of all material trademarks, trade names, service marks
and copyrights owned by or licensed to CNB Financial or any of its Subsidiaries
for use in its business, and all licenses and other agreements relating thereto
and all agreements relating to third party intellectual property that CNB
Financial or any of its Subsidiaries is licensed or authorized to use in its
business, including without limitation any software licenses (collectively, the
“Intellectual
Property”). With respect to each item of Intellectual Property
owned by CNB Financial or any of its Subsidiaries, the owner possesses all
right, title and interest in and to the item, free and clear of any
Lien. With respect to each item of Intellectual Property that CNB
Financial or any of its Subsidiaries is licensed or authorized to use, the
license, sublicense or agreement covering such item is legal, valid, binding,
enforceable and in full force and effect. Neither CNB Financial nor
any of its Subsidiaries has received any charge, complaint, claim, demand or
notice alleging any interference, infringement, misappropriation or violation
with or of any intellectual property rights of a third party (including any
claims that CNB Financial or any of its Subsidiaries must license or refrain
from using any intellectual property rights of a third party). To the
knowledge of CNB Financial, neither CNB Financial nor any of its Subsidiaries
has interfered with, infringed upon, misappropriated or otherwise come into
conflict with any intellectual property rights of third parties and no third
party has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any intellectual property rights of CNB Financial or any of
its Subsidiaries.
(q) Labor Matters. CNB
Financial and its Subsidiaries are in material compliance with all applicable
laws respecting employment, retention of independent contractors, employment
practices, terms and conditions of employment, and wages and
hours. Neither CNB Financial nor any of its Subsidiaries is or has
ever been a party to, or is or has ever been bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization with respect to its employees, nor is CNB Financial or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment nor
has any such proceeding been threatened, nor is there any strike, other labor
dispute or organizational effort involving CNB Financial or any of its
Subsidiaries pending or, to the knowledge of CNB Financial,
threatened.
23
(r) Employee Benefit
Plans.
(i) CNB
Financial’s Disclosure Letter contains a complete and accurate list of all
pension, retirement, stock option, stock purchase, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation, consulting,
bonus, group insurance, severance and other benefit plans, contracts, agreements
and arrangements, including, but not limited to, “employee benefit plans,” as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect to
any present or former directors, officers or other employees of CNB Financial or
any of its Subsidiaries (hereinafter referred to collectively as the “CNB Financial Employee
Plans”). CNB Financial has previously delivered or made
available to United Financial Bancorp true and complete copies of each
agreement, plan and other documents referenced in CNB Financial’s Disclosure
Letter, along with, where applicable, copies of the IRS Form 5500 or 5500-C for
the most recently completed year. There has been no announcement or
commitment by CNB Financial or any of its Subsidiaries to create an additional
CNB Financial Employee Plan, or to amend any CNB Financial Employee Plan, except
for amendments required by applicable law which do not materially increase the
cost of such CNB Financial Employee Plan. To the Knowledge of CNB
Financial, each CNB Financial Employee Plan has been operated and administered
in all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the IRC, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, COBRA, the Health Insurance
Portability and Accountability Act and any regulations or rules promulgated
thereunder, and all material filings, disclosures and notices required by ERISA,
the IRC, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made or any
interest, fines, penalties or other impositions for late filings have been paid
in full.
(ii) There
is no pending or threatened litigation, administrative action or proceeding
relating to any CNB Financial Employee Plan. All of the CNB Financial
Employee Plans comply in all material respects with all applicable requirements
of ERISA, the IRC and other applicable laws. There has occurred no
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the IRC) with respect to the CNB Financial Employee Plans which is likely to
result in the imposition of any penalties or taxes upon CNB Financial or any of
its Subsidiaries under Section 502(i) of ERISA or Section 4975 of the
IRC.
(iii) Each
CNB Financial Employee Plan that is an “employee pension benefit plan” (as
defined in Section 3(2) of ERISA) and which is intended to be qualified under
Section 401(a) of the IRC (a “CNB Financial Qualified Plan”)
has received a favorable determination letter from the IRS, and CNB Financial
and its Subsidiaries are not aware of any circumstances likely to result in
revocation of any such favorable determination letter. No CNB
Financial Qualified Plan is an “employee stock ownership plan” (as defined in
Section 4975(e)(7) of the IRC). Neither CNB Financial nor any
Subsidiary of CNB Financial or any ERISA Affiliate has ever sponsored a CNB
Financial Qualified Plan that is subject to Title IV of ERISA (any such plan
shall be referred to herein as a “CNB Financial Pension
Plan”). Neither CNB Financial nor its Subsidiaries or any
ERISA Affiliate has contributed to any “multiemployer plan,” as defined in
Section 3(37) of ERISA, on or after September 26, 1980.
24
(iv) With
respect to each CNB Financial Employee Plan that is a “multiple employer plan”
(as defined in Section 4063 of ERISA): (A) none of CNB Financial or any of its
Subsidiaries, nor any of their respective ERISA Affiliates, has received any
notification, nor has any actual knowledge, that if CNB Financial or any of its
Subsidiaries or any of their respective ERISA Affiliates were to experience a
withdrawal or partial withdrawal from such plan it would incur withdrawal
liability that would be reasonably likely to have a Material Adverse Effect on
CNB Financial; and (B) none of CNB Financial or any of its Subsidiaries, nor any
of their respective ERISA Affiliates, has received any notification, nor has any
reason to believe, that any CNB Financial Employee Plan is in reorganization,
has been terminated, is insolvent, or may be in reorganization, become insolvent
or be terminated.
(v) Each
CNB Financial Employee Plan that is a “nonqualified deferred compensation plan”
(as defined in Section 409A(d)(1) of the IRC) and which has not been terminated
has been operated since January 1, 2005 in good faith compliance with Section
409A of the IRC and the regulations issued under Section 409A of the
IRC.
(vi) Neither
CNB Financial nor any of its Subsidiaries has any obligations for
post-retirement or post-employment benefits under any CNB Financial Employee
Plan that cannot be amended or terminated upon 60 days’ notice or less without
incurring any liability thereunder, except for coverage required by Part 6 of
Title I of ERISA or Section 4980B of the IRC, or similar state laws, the cost of
which is borne by the insured individuals.
(vii) All
contributions required to be made with respect to any CNB Financial Employee
Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any CNB Financial Employee Plan, for any period
through the date hereof have been timely made or paid in full, or to the extent
not required to be made or paid on or before the date hereof, have been fully
reflected in the financial statements of CNB Financial. All
anticipated contributions and funding obligations are accrued on CNB Financial’s
consolidated financial statements to the extent required by
GAAP. Each CNB Financial Employee Plan that is an employee welfare
benefit plan under Section 3(1) of ERISA either (A) is funded through an
insurance company contract and is not a “welfare benefit fund” within the
meaning of Section 419 of the IRC or (B) is unfunded.
(s) Properties.
(i) A
list and description of all real property owned or leased by CNB Financial or a
Subsidiary of CNB Financial is set forth in CNB Financial’s Disclosure
Letter. CNB Financial and each of its Subsidiaries has good and
marketable title to all real property owned by it (including any property
acquired in a judicial foreclosure proceeding or by way of a deed in lieu of
foreclosure or similar transfer), in each case free and clear of any Liens
except (i) liens for taxes not yet due and payable and (ii) such
easements, restrictions and encumbrances, if any, as are not material in
character, amount or extent, and do not materially detract from the value, or
materially interfere with the present use of the properties subject thereto or
affected thereby. Each lease pursuant to which CNB Financial or
any of its Subsidiaries is lessee, leases real or personal property is valid and
in full force and effect and neither CNB Financial nor any of its Subsidiaries,
nor, to CNB Financial’s knowledge, any other party to any such lease, is in
default or in violation of any material provisions of any such
lease. A complete and correct copy of each such lease has been
provided or made available to United Financial Bancorp. All real
property owned or leased by CNB Financial or any of its Subsidiaries are in a
good state of maintenance and repair (normal wear and tear excepted), conform
with all applicable ordinances, regulations and zoning laws and are considered
by CNB Financial to be adequate for the current business of CNB Financial and
its Subsidiaries. To the knowledge of CNB Financial, none of the
buildings, structures or other improvements located on any real property owned
or leased by CNB Financial or any of its Subsidiaries encroaches upon or over
any adjoining parcel or real estate or any easement or
right-of-way.
25
(ii) CNB
Financial and each of its Subsidiaries has good and marketable title to all
tangible personal property owned by it, free and clear of all Liens except such
Liens, if any, as are not material in character, amount or extent, and do not
materially detract from the value, or materially interfere with the present use
of the properties subject thereto or affected thereby. With respect
to personal property used in the business of CNB Financial and its Subsidiaries
that is leased rather than owned, neither CNB Financial nor any of its
Subsidiaries is in default under the terms of any such lease.
(t) Fairness
Opinion. CNB Financial has received the opinion of Xxxxx,
Xxxxxxxx & Xxxxx, Inc. to the effect that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to CNB Financial’s
shareholders.
(u) Fees. Other than
for financial advisory services performed for CNB Financial by Xxxxx, Xxxxxxxx
& Xxxxx, Inc. pursuant to an agreement dated January 15, 2009, a true and
complete copy of which has been previously delivered or made available to United
Financial Bancorp, neither CNB Financial nor any of its Subsidiaries, nor any of
their respective officers, directors, employees or agents, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder’s fees, and no broker or finder has acted
directly or indirectly for CNB Financial or any of its Subsidiaries in
connection with this Agreement or the transactions contemplated
hereby.
(v) Environmental
Matters.
(i) Each
of CNB Financial and its Subsidiaries, the Participation Facilities, and, to the
knowledge of CNB Financial, the Loan Properties are, and have been, in
substantial compliance with all Environmental Laws.
(ii) There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending or, to the knowledge of CNB Financial,
threatened, before any court, governmental agency or board or other forum
against CNB Financial or any of its Subsidiaries or any Participation Facility
(A) for alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (B) relating to the presence of or release into
the environment of any Hazardous Material, whether or not occurring at or on a
site owned, leased or operated by CNB Financial or any of its Subsidiaries or
any Participation Facility.
26
(iii) To
the knowledge of CNB Financial, there is no suit, claim, action, demand,
executive or administrative order, directive, investigation or proceeding
pending or threatened before any court, governmental agency or board or other
forum relating to or against any Loan Property (or CNB Financial or any of its
Subsidiaries in respect of such Loan Property) (A) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at a Loan
Property.
(iv) Neither
CNB Financial nor any of its Subsidiaries has received any notice, demand
letter, executive or administrative order, directive or request for information
from any Governmental Entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law.
(v) There
are no underground storage tanks at any properties owned or operated by CNB
Financial or any of its Subsidiaries or any Participation
Facility. Neither CNB Financial nor any of its Subsidiaries nor, to
the knowledge of CNB Financial, any other person or entity, has closed or
removed any underground storage tanks from any properties owned or operated by
CNB Financial or any of its Subsidiaries or any Participation
Facility.
(vi) During
the period of (A) CNB Financial’s or its Subsidiary’s ownership or operation of
any of their respective current properties or (B) CNB Financial’s or its
Subsidiary’s participation in the management of any Participation Facility,
there has been no release of Hazardous Materials in, on, under or affecting such
properties. To the knowledge of CNB Financial, prior to the period of
(A) CNB Financial’s or its Subsidiary’s ownership or operation of any of their
respective current properties or (B) CNB Financial’s or its Subsidiary’s
participation in the management of any Participation Facility, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
(w) Loan Portfolio; Allowance for Loan
Losses.
(i) With
respect to each Loan owned by CNB Financial or its Subsidiaries in whole or in
part:
(A) The
note and the related security documents are each legal, valid and binding
obligations of the maker or obligor thereof, enforceable against such maker or
obligor in accordance with their terms;
(B) neither
CNB Financial nor any of its Subsidiaries, nor any prior holder of a Loan, has
modified the note or any of the related security documents in any material
respect or satisfied, canceled or subordinated the note or any of the related
security documents except as otherwise disclosed by documents in the applicable
Loan file;
27
(C) CNB
Financial or a Subsidiary of CNB Financial is the sole holder of legal and
beneficial title to each Loan (or CNB Financial’s or its Subsidiary’s applicable
participation interest, as applicable), except as otherwise referenced on the
books and records of CNB Financial or a Subsidiary of CNB
Financial;
(D) the
original note and the related security documents are included in the Loan files,
and copies of any documents in the Loan files are true and correct copies of the
documents they purport to be and have not been suspended, amended, modified,
canceled or otherwise changed except as otherwise disclosed by documents in the
applicable Loan file; and
(E) with
respect to a Loan held in the form of a participation, the participation
documentation is legal, valid, binding and enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws
of general applicability relating to or affecting creditors’ rights and to
general equity principles.
(ii) Neither
the terms of any Loan, any of the documentation for any Loan, the manner in
which any Loans have been administered and serviced, nor CNB Financial’s
practices of approving or rejecting Loan applications, violate any federal,
state, or local law, rule or regulation applicable thereto, including, without
limitation, the Truth In Lending Act, Regulations O and Z of the Federal Reserve
Board, the CRA, the Equal Credit Opportunity Act, and any state laws, rules and
regulations relating to consumer protection, installment sales and
usury.
(iii) The
allowance for loan losses reflected in CNB Financial’s audited balance sheet at
December 31, 2008 was, and the allowance for loan losses shown on the balance
sheets in CNB Financial’s SEC Reports for periods ending after such date, in the
opinion of management, was or will be adequate, as of the dates thereof, under
GAAP.
(x) Anti-takeover Provisions
Inapplicable. CNB Financial and its Subsidiaries have taken
all actions required to exempt United Financial Bancorp, the Agreement, the Plan
of Bank Merger, the Merger and the Bank Merger from any provisions of an
anti-takeover nature contained in CNB Financial and its Subsidiaries
organizational documents, and the provisions of any federal or state
“anti-takeover,” “fair price,” “moratorium,” “control share acquisition” or
similar laws or regulations applicable to CNB Financial and its
Subsidiaries.
(y) Material Interests of Certain
Persons. No current or former officer or director of CNB
Financial, or any family member or affiliate of any such person, has any
material interest, directly or indirectly, in any contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of CNB
Financial or any of its Subsidiaries.
28
(z) Insurance. In the
opinion of management, CNB Financial and its Subsidiaries are presently insured
for amounts deemed reasonable by management against such risks as companies
engaged in a similar business would, in accordance with good business practice,
customarily be insured. CNB Financial’s Disclosure Letter contains a
list of all policies of insurance carried and owned by CNB Financial or any of
CNB Financial’s Subsidiaries showing the name of the insurance company and
agent, the nature of the coverage, the policy limit, the annual premiums and the
expiration date. All of the insurance policies and bonds maintained
by CNB Financial and its Subsidiaries are in full force and effect, CNB
Financial and its Subsidiaries are not in default thereunder, all premiums and
other payments due under any such policy have been paid and all material claims
thereunder have been filed in due and timely fashion.
(aa) Investment Securities;
Derivatives.
(i) Except
for restrictions that exist for securities that are classified as “held to
maturity,” none of the investment securities held by CNB Financial or any of its
Subsidiaries is subject to any restriction (contractual or statutory) that would
materially impair the ability of the entity holding such investment freely to
dispose of such investment at any time.
(ii) Neither
CNB Financial nor any of its Subsidiaries is a party to 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 a derivative contract (including various combinations
thereof) or owns securities that (A) are referred to generically as “structured
notes,” “high risk mortgage derivatives,” “capped floating rate notes” or
“capped floating rate mortgage derivatives” or (B) 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.
(bb) Indemnification. Except
as provided in the articles of organization or bylaws of CNB Financial and the
similar organizational documents of its Subsidiaries, neither CNB Financial nor
any of its Subsidiaries is a party to any agreement that provides for the
indemnification of any of its present or former directors, officers or
employees, or other persons who serve or served as a director, officer or
employee of another corporation, partnership or other enterprise at the request
of CNB Financial and, to the knowledge of CNB Financial, there are no claims for
which any such person would be entitled to indemnification under the articles of
organization or bylaws of CNB Financial or the similar organizational documents
of any of its Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
(cc) Corporate Documents and
Records. CNB Financial has previously delivered or made
available to United Financial Bancorp a complete and correct copy of the
articles of organization, bylaws and similar organizational documents of CNB
Financial and each of CNB Financial’s Subsidiaries, as in effect as of the date
of this Agreement. Neither CNB Financial nor any of CNB Financial’s
Subsidiaries is in violation of its articles of organization, bylaws or similar
organizational documents. The minute books of CNB Financial and each
of CNB Financial’s Subsidiaries constitute a complete and correct record of all
actions taken by their respective boards of directors (and each committee
thereof) and their shareholders. CNB Financial and each of its
Subsidiaries maintains accounting records that fairly and accurately reflect, in
all material respects, its transactions, and accounting controls exist
sufficient to provide reasonable assurances that such transactions are, in all
material respects, (i) executed in accordance with management’s general or
specific authorization and (ii) recorded as necessary to permit the preparation
of financial statements in accordance with GAAP.
29
(dd) CNB Financial
Information. The information regarding CNB Financial and its
Subsidiaries to be supplied by CNB Financial for inclusion in the Registration
Statement, any filings or approvals under applicable state securities laws or
any filing pursuant to Rule 165 or Rule 425 under the Securities Act or Rule
14a-12 under the Exchange Act will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(ee) CRA, Anti-Money Laundering, OFAC and
Customer Information Security. Commonwealth National Bank has
received a rating of “Satisfactory” in its most recent examination or interim
review with respect to the CRA. CNB Financial is not aware of, has
not been advised of, and has no reason to believe that any facts or
circumstances exist that would cause Commonwealth National Bank or any other
Subsidiary of CNB Financial: (i) to be deemed not to be in satisfactory
compliance in any material respect with the CRA, and the regulations promulgated
thereunder, or to be assigned a rating for CRA purposes by federal or state bank
regulators of lower than “satisfactory”; or (ii) to be deemed to be operating in
violation in any material respect of the Bank Secrecy Act, the Patriot Act, any
order issued with respect to anti-money laundering by the U.S. Department of the
Treasury’s Office of Foreign Assets Control, or any other applicable anti-money
laundering statute, rule or regulation; or (iii) to be deemed not to be in
satisfactory compliance in any material respect with the applicable privacy of
customer information requirements contained in any federal and state privacy
laws and regulations, including without limitation, in Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 and the regulations promulgated thereunder, as
well as the provisions of the information security program adopted by
Commonwealth National Bank. CNB Financial is not aware of any facts
or circumstances that would cause it to believe that any non-public customer
information has been disclosed to or accessed by an unauthorized third party in
a manner which would cause either CNB Financial or of its Subsidiaries to
undertake any remedial action. The board of directors of Commonwealth
National Bank (or where appropriate of any other Subsidiary of CNB Financial)
has adopted, and Commonwealth National Bank (or such other Subsidiary of CNB
Financial) has implemented, an anti-money laundering program that contains
adequate and appropriate customer identification verification procedures that
comply with Section 326 of the Patriot Act and such anti-money laundering
program meets the requirements in all material respects of Section 352 of the
Patriot Act and the regulations thereunder, and Commonwealth National Bank (or
such other Subsidiary of CNB Financial) has complied in all material respects
with any requirements to file reports and other necessary documents as required
by the Patriot Act and the regulations thereunder.
30
(ff) Tax Treatment of the
Merger. CNB Financial has no knowledge of any fact or
circumstance relating to it that would prevent the transactions contemplated by
this Agreement from qualifying as a reorganization under Section 368 of the
IRC.
(gg) Internal
Controls.
(i) CNB
Financial has devised and maintained a system of internal accounting controls
sufficient to provide reasonable assurance that: (A) all material transactions
are executed in accordance with general or specific authorization of the Board
of Directors and the duly authorized executive officers of CNB Financial; (B)
all material transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP consistently applied; and (C)
access to the material properties and assets of CNB Financial is permitted only
in accordance with general or specific authorization of the Board of Directors
and the duly authorized executive officers of CNB Financial.
(ii) CNB
Financial (A) has implemented and maintains disclosure controls and procedures
(as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material
information relating to CNB Financial, including its Subsidiaries, is made known
to the chief executive officer and the chief financial officer of CNB Financial
by others within those entities, and (B) has disclosed, based on its most recent
evaluation prior to the date hereof, to CNB Financial’s outside auditors and the
audit committee of CNB Financial’s Board of Directors (1) any significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) which are reasonably likely to adversely affect CNB Financial’s ability to
record, process, summarize and report financial information, and (2) any fraud,
whether or not material, that involves management or other employees who have a
significant role in CNB Financial’s internal controls over financial
reporting. Any such disclosures were made in writing by management to
CNB Financial’s auditors and audit committee. As of the date hereof, there is no
reason to believe that CNB Financial’s chief executive officer and chief
financial officer will not be able to give the certifications required under SEC
regulations when next due.
(hh) Transaction With
Affiliates.
(i) All
“covered transactions” between CNB Financial and its Subsidiaries and an
“affiliate” within the meaning of Sections 23A and 23B of the Federal Reserve
Act and the regulations thereunder have been in compliance with such
provisions.
(ii) The
CNB Financial Disclosure Letter lists any transaction (including any loan or
other credit accommodation) between CNB Financial or any Subsidiary and any
affiliate of CNB Financial or any CNB Financial Subsidiary. All such
transactions set forth in the Disclosure Letter were made in the ordinary course
of business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and (c) did not involve more than the normal
risk of collectability or present other unfavorable features. No loan or credit
accommodation to any affiliate of CNB Financial or any Subsidiary is presently
in default or, during the three-year period prior to the date of this Agreement,
has been in default or has been restructured, modified or
extended. Neither CNB Financial nor any Subsidiary has been notified
that principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by CNB Financial is
inappropriate.
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3.3 Representations and Warranties of
United Financial Bancorp. United Financial Bancorp represents
and warrants to CNB Financial that, except as set forth in United Financial
Bancorp’s Disclosure Letter:
(a) Organization and
Qualification. United Financial Bancorp is a corporation duly
organized and validly existing under the laws of the State of Maryland and is
registered with the OTS as a savings and loan holding company. United
Financial Bancorp has all requisite corporate power and authority to own, lease
and operate its properties and to conduct the business currently being conducted
by it. United Financial Bancorp is duly qualified or licensed as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed and in good standing would not
have a Material Adverse Effect on United Financial Bancorp. United
Financial Bancorp engages only in activities (and holds properties only of the
types) permitted to savings and loan holding companies by the HOLA and the rules
and regulations of the OTS promulgated thereunder.
(b) Subsidiaries.
(i) United
Financial Bancorp owns of record and beneficially all the capital stock of each
of its Subsidiaries free and clear of any Liens. There are no contracts,
commitments, agreements or understandings relating to United Financial Bancorp’s
right to vote or dispose of any equity securities of its
Subsidiaries. United Financial Bancorp’s ownership interest in each
of its Subsidiaries is in compliance with all applicable laws, rules and
regulations relating to equity investments by savings and loan holding companies
or federally-chartered savings banks.
(ii) Each
of United Financial Bancorp’s Subsidiaries is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation, has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct the business currently being conducted by it and is duly
qualified or licensed as a foreign corporation to transact business and is in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing would not have a Material Adverse
Effect on such Subsidiary.
(iii) The
outstanding shares of capital stock of each Subsidiary have been validly
authorized and are validly issued, fully paid and nonassessable. No
shares of capital stock of any Subsidiary of United Financial Bancorp are or may
be required to be issued by virtue of any options, warrants or other rights, no
securities exist that are convertible into or exchangeable for shares of such
capital stock or any other debt or equity security of any Subsidiary, and there
are no contracts, commitments, agreements or understandings of any kind for the
issuance of additional shares of capital stock or other debt or equity security
of any Subsidiary or options, warrants or other rights with respect to such
securities.
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(iv) No
Subsidiary of United Financial Bancorp other than United Bank are an “insured
depository institution” as defined in the Federal Deposit Insurance Act, as
amended, and the applicable regulations thereunder. United Bank’s
deposits are insured by the FDIC to the fullest extent permitted by
law. United Bank is a member in good standing of the Federal Home
Loan Bank of Boston. United Bank engages only in activities (and
holds properties only of the types) permitted by the HOLA and the rules and
regulations of the OTS promulgated thereunder.
(c) Capital
Structure.
(i) The
authorized capital stock of United Financial Bancorp consists of: (A)
100,000,000 shares of United Financial Bancorp Common Stock; and (B) 50,000,000
shares of preferred stock, par value $.01 per share.
(ii) As
of June 17, 2009, (A) 16,249,970 shares of United Financial Bancorp Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable and were issued in full compliance with all applicable laws; (B)
no shares of United Financial Bancorp preferred stock, par value $0.01 per
share, were issued and outstanding; and (C) 354,258 shares of United
Financial Bancorp Common Stock were reserved for issuance pursuant to
outstanding grants or awards under United Financial Bancorp’s stock-based
benefit plans.
(iii) The
shares of United Financial Bancorp Common Stock to be issued in exchange for
shares of CNB Financial Common Stock upon consummation of the Merger in
accordance with this Agreement have been duly authorized and when issued in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable and subject to no preemptive rights.
(d) Authority. United
Financial Bancorp has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of the Board of Directors of United Financial Bancorp, and no other
corporate proceedings on the part of United Financial Bancorp are necessary to
authorize this Agreement or to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed and
delivered by United Financial Bancorp and constitutes a valid and binding
obligation of United Financial Bancorp, enforceable against United Financial
Bancorp in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights and remedies generally
and to general principles of equity, whether applied in a court of law or a
court of equity.
33
(e) No Violations. The
execution, delivery and performance of this Agreement by United Financial
Bancorp do not, and the consummation of the transactions contemplated by this
Agreement will not, (i) assuming all required governmental approvals have
been obtained and the applicable waiting periods have expired, violate any law,
rule or regulation or any judgment, decree, order, governmental permit or
license to which United Financial Bancorp or any of its Subsidiaries (or any of
their respective properties) is subject, (ii) violate the certificate of
incorporation or bylaws of United Financial Bancorp or the similar
organizational documents of any of its Subsidiaries or (iii) constitute a
breach or violation of, or a default under (or an event which, with due notice
or lapse of time or both, would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any Lien upon any of the properties or assets of United Financial
Bancorp or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which United Financial Bancorp or any of
its Subsidiaries is a party, or to which any of their respective properties or
assets may be subject except, in the case of (iii), for any such breaches,
violations or defaults that would not, individually or in the aggregate, have a
Material Adverse Effect on United Financial Bancorp.
(f) Consents and
Approvals. No consents or approvals of,
or filings or registrations with, any Governmental Entity or any third
party are required to be made or obtained in connection with the execution
and delivery by United Financial Bancorp of this Agreement or the
consummation by United Financial Bancorp of the Merger and the other
transactions contemplated by this Agreement, including the Bank Merger, except
for (i) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of the related waiting period required by,
federal banking authorities, (ii) filing of the Registration Statement with the
SEC and declaration by the SEC of the Registration Statement’s effectiveness
under the Securities Act, (iii) the registration or qualification of the
shares of United Financial Bancorp Common Stock to be issued in exchange for
shares of CNB Financial Common Stock under state securities or “blue sky” laws
and (iv) the listing of the shares of United Financial Bancorp Common Stock
to be issued in exchange for shares of CNB Financial Common Stock on the Nasdaq
Global Select Market. As of the date hereof, United Financial Bancorp
knows of no reason pertaining to United Financial Bancorp why any of the
approvals referred to in this Section 3.3(f) should not be
obtained without the imposition of any material condition or restriction
described in Section
6.1(b).
(g) Securities
Filings. United Financial Bancorp has filed with the SEC all
reports, schedules, registration statements, definitive proxy statements and
other documents that it has been required to file under the Securities Act or
the Exchange Act since December 31, 2005 (collectively, “United Financial Bancorp’s
Reports”). None of United Financial Bancorp’s Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, all of United Financial
Bancorp’s Reports complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder. Each of
the financial statements (including, in each case, any notes thereto) of United
Financial Bancorp included in United Financial Bancorp’s Reports complied as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto.
34
(h) Financial
Statements. United Financial Bancorp has previously made
available to CNB Financial copies of (i) the consolidated balance sheets of
United Financial Bancorp and its Subsidiaries as of December 31, 2008 and 2007
and related consolidated statements of income, cash flows and changes in
stockholders’ equity for each of the years in the three-year period ended
December 31, 2008, together with the notes thereto, accompanied by the audit
report of United Financial Bancorp’s independent public auditors, as reported in
United Financial Bancorp’s Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the SEC and (ii) the unaudited consolidated balance
sheet of United Financial Bancorp and its Subsidiaries as of March 31, 2009 and
the related consolidated statements of income, cash flows and changes in
stockholders’ equity for the three months ended March 31, 2009. Such
financial statements were prepared from the books and records of United
Financial Bancorp and its Subsidiaries, fairly present the consolidated
financial position of United Financial Bancorp and its Subsidiaries in each case
at and as of the dates indicated and the consolidated results of operations,
retained earnings and cash flows of United Financial Bancorp and its
Subsidiaries for the periods indicated, and, except as otherwise set forth in
the notes thereto, were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby; provided, however, that the
unaudited financial statements for interim periods are subject to normal
year-end adjustments (which will not be material individually or in the
aggregate) and lack a statement of cash flows and footnotes to the extent
permitted under applicable regulations. The books and records of
United Financial Bancorp and its Subsidiaries have been, and are being,
maintained in all respects in accordance with GAAP and any other legal and
accounting requirements and reflect only actual transactions.
(i) Undisclosed
Liabilities. Neither United Financial Bancorp nor any of its
Subsidiaries has incurred any material debt, liability or obligation of any
nature whatsoever (whether accrued, contingent, absolute or otherwise and
whether due or to become due) other than liabilities reflected on or reserved
against in the consolidated financial statements of United Financial Bancorp as
of December 31, 2008 as included in United Financial Bancorp’s Annual
Report on Form 10-K for the year ended December 31, 2008, except for (i)
liabilities incurred since December 31, 2008 in the ordinary course of business
consistent with past practice that, either alone or when combined with all
similar liabilities, have not had, and would not reasonably be expected to have,
a Material Adverse Effect on United Financial Bancorp and (ii) liabilities
incurred for legal, accounting, financial advising fees and out-of-pocket
expenses in connection with the transactions contemplated by this
Agreement.
(j) Absence of Certain Changes or
Events. Except as disclosed in United Financial Bancorp’s
Reports filed with the SEC prior to the date of this Agreement, since December
31, 2008, (i) United Financial Bancorp and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such businesses
consistent with their past practices and (ii) there has not been any event or
occurrence that has had, or is reasonably expected to have, a Material Adverse
Effect on United Financial Bancorp.
35
(k) Litigation. There
are no suits, actions or legal, administrative or arbitration proceedings
pending or, to the knowledge of United Financial Bancorp, threatened against or
affecting United Financial Bancorp or any of its Subsidiaries or any property or
asset of United Financial Bancorp or any of its Subsidiaries that (i)
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on United Financial Bancorp or (ii) challenge the
validity or propriety of the transactions contemplated by this
Agreement. There are no judgments, decrees, injunctions, orders or
rulings of any Governmental Entity or arbitrator outstanding against United
Financial Bancorp or any of its Subsidiaries that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
United Financial Bancorp.
(l) Absence of Regulatory
Actions. Since December 31, 2005, neither United Financial
Bancorp nor any of its Subsidiaries has been a party to any cease and desist
order, written agreement or memorandum of understanding with, or any commitment
letter or similar undertaking to, or has been subject to any action, proceeding,
order or directive by any Government Regulator, or has adopted any board
resolutions at the request of any Government Regulator, or has been advised by
any Government Regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such action,
proceeding, order, directive, written agreement, memorandum of understanding,
commitment letter, board resolutions or similar undertaking. There
are no unresolved violations, criticisms or exceptions by any Government
Regulator with respect to any report or statement relating to any examinations
of United Financial Bancorp or its Subsidiaries.
(m) Compliance with
Laws. United Financial Bancorp and each of its Subsidiaries
conducts its business in compliance in all material respects with all statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees applicable to
it. United Financial Bancorp and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all Governmental Entities
that are required in order to permit it to carry on its business as it is
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and no suspension or
cancellation of any of them is threatened. Neither United Financial
Bancorp nor any of its Subsidiaries has been given notice or been charged with
any violation of, any law, ordinance, regulation, order, writ, rule, decree or
condition to approval of any Governmental Entity which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
United Financial Bancorp.
(n) Taxes. All
federal, state, local and foreign Tax returns required to be filed by or on
behalf of United Financial Bancorp or any of its Subsidiaries have been timely
filed or requests for extensions have been timely filed and any such extension
shall have been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All Taxes shown on
such returns, all Taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by United Financial
Bancorp or any of its Subsidiaries have been paid in full or adequate provision
has been made for any such Taxes on United Financial Bancorp’s balance sheets
(in accordance with GAAP). There is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any Taxes of
United Financial Bancorp or any of its Subsidiaries, and no claim has been made
in writing by any authority in a jurisdiction where United Financial Bancorp or
any of its Subsidiaries do not file Tax returns that United Financial Bancorp or
any such Subsidiary is subject to taxation in that jurisdiction. All
Taxes, interest, additions and penalties due with respect to completed and
settled examinations or concluded litigation relating to United Financial
Bancorp or any of its Subsidiaries have been paid in full or adequate provision
has been made for any such Taxes on United Financial Bancorp’s balance sheet (in
accordance with GAAP). United Financial Bancorp and its Subsidiaries
have not executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in
effect. United Financial Bancorp and each of its Subsidiaries has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, shareholder or other third party, and United Financial Bancorp and
each of its Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the IRC and
similar applicable state and local information reporting
requirements.
36
(o) Intellectual
Property. United Financial Bancorp and each of its
Subsidiaries owns or possesses valid and binding licenses and other rights to
use without payment all patents, copyrights, trade secrets, trade names, service
marks and trademarks material to its business. With respect to each
item of Intellectual Property owned by United Financial Bancorp or any of its
Subsidiaries, the owner possesses all right, title and interest in and to the
item, free and clear of any Lien. With respect to each item of
Intellectual Property that United Financial Bancorp or any of its Subsidiaries
is licensed or authorized to use, the license, sublicense or agreement covering
such item is legal, valid, binding, enforceable and in full force and
effect. Neither United Financial Bancorp nor any of its Subsidiaries
has received any charge, complaint, claim, demand or notice alleging any
interference, infringement, misappropriation or violation with or of any
intellectual property rights of a third party (including any claims that United
Financial Bancorp or any of its Subsidiaries must license or refrain from using
any intellectual property rights of a third party). To the knowledge
of United Financial Bancorp, neither United Financial Bancorp nor any of its
Subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any intellectual property rights of third parties and no
third party has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any intellectual property rights of United Financial
Bancorp or any of its Subsidiaries.
(p) Labor
Matters. United Financial Bancorp and its Subsidiaries are in
material compliance with all applicable laws respecting employment, retention of
independent contractors, employment practices, terms and conditions of
employment, and wages and hours. Neither United Financial Bancorp nor
any of its Subsidiaries is or has ever been a party to, or is or has ever been
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization with respect to its
employees, nor is United Financial Bancorp or any of its Subsidiaries the
subject of any proceeding asserting that it has committed an unfair labor
practice or seeking to compel it or any such Subsidiary to bargain with any
labor organization as to wages and conditions of employment nor has any such
proceeding been threatened, nor is there any strike, other labor dispute or
organizational effort involving United Financial Bancorp or any of its
Subsidiaries pending or, to the knowledge of United Financial Bancorp,
threatened.
37
(q) Employee Benefit
Plans.
(i) United
Financial Bancorp’s Disclosure Letter contains a complete and accurate list of
all pension, retirement, stock option, stock purchase, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation, consulting,
bonus, group insurance, severance and other benefit plans, contracts, agreements
and arrangements, including, but not limited to, “employee benefit plans,” as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect to
any present or former directors, officers or other employees of United Financial
Bancorp or any of its Subsidiaries (hereinafter referred to collectively as the
“United Financial Bancorp
Employee Plans”). United Financial Bancorp has previously
delivered or made available to CNB Financial true and complete copies of each
agreement, plan and other documents referenced in United Financial Bancorp’s
Disclosure Letter, along with, where applicable, copies of the IRS Form 5500 or
5500-C for the most recently completed year. To the Knowledge of
United Financial Bancorp, each United Financial Bancorp Employee Plan has been
operated and administered in all material respects in accordance with its terms
and with applicable law, including, but not limited to, ERISA, the IRC, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act,
COBRA, the Health Insurance Portability and Accountability Act and any
regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the IRC, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any other applicable
law have been timely made or any interest, fines, penalties or other impositions
for late filings have been paid in full. All material contributions
required to be made under the terms of any United Financial Bancorp Employee
Plan or any employee benefit arrangements to which United Financial Bancorp or
any Subsidiary is a party or a sponsor have been timely made.
(ii) There
is no pending or threatened litigation, administrative action or proceeding
relating to any United Financial Bancorp Employee Plan. All of the
United Financial Bancorp Employee Plans comply in all material respects with all
applicable requirements of ERISA, the IRC and other applicable
laws. There has occurred no “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the IRC) with respect to the United
Financial Bancorp Employee Plans which is likely to result in the imposition of
any penalties or taxes upon United Financial Bancorp or any of its Subsidiaries
under Section 502(i) of ERISA or Section 4975 of the IRC.
38
(iii) No
liability to the Pension Benefit Guarantee Corporation has been or is expected
by United Financial Bancorp or any of its Subsidiaries to be incurred with
respect to any United Financial Bancorp Employee Plan which is subject to Title
IV of ERISA (“United Financial
Bancorp Pension Plan”), or with respect to any “single-employer plan” (as
defined in Section 4001(a) of ERISA) currently or formerly maintained by United
Financial Bancorp or any ERISA Affiliate. No United Financial Bancorp
Pension Plan had an “accumulated funding deficiency” (as defined in Section 302
of ERISA), whether or not waived, as of the last day of the end of the most
recent plan year ending prior to the date hereof; and no notice of a “reportable
event” (as defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived has been required to be filed for any United
Financial Bancorp Pension Plan within the 12-month period ending on the date
hereof. Neither United Financial Bancorp nor any of its Subsidiaries
has provided, or is required to provide, security to any United Financial
Bancorp Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the IRC. Neither United Financial
Bancorp, its Subsidiaries, nor any ERISA Affiliate has contributed to any
“multiemployer plan,” as defined in Section 3(37) of ERISA, on or after
September 26, 1980.
(iv) Each
United Financial Bancorp Employee Plan that is an “employee pension benefit
plan” (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a “United Financial Bancorp Qualified
Plan”) has received a favorable determination letter from the IRS, and
United Financial Bancorp and its Subsidiaries are not aware of any circumstances
likely to result in revocation of any such favorable determination
letter.
(v) With
respect to each United Financial Bancorp Employee Plan that is a “multiple
employer plan” (as defined in Section 4063 of ERISA): (A) none of United
Financial Bancorp or any of its Subsidiaries, nor any of their respective ERISA
Affiliates, has received any notification, nor has any actual knowledge, that if
United Financial Bancorp or any of its Subsidiaries or any of their respective
ERISA Affiliates were to experience a withdrawal or partial withdrawal from such
plan it would incur withdrawal liability that would be reasonably likely to have
a Material Adverse Effect on United Financial Bancorp; and (B) none of United
Financial Bancorp or any of its Subsidiaries, nor any of their respective ERISA
Affiliates, has received any notification, nor has any reason to believe, that
any United Financial Bancorp Employee Plan is in reorganization, has been
terminated, is insolvent, or may be in reorganization, become insolvent or be
terminated.
(vi) All
contributions required to be made with respect to any United Financial Bancorp
Employee Plan by applicable law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any United Financial Bancorp Employee Plan, for any
period through the date hereof have been timely made or paid in full, or to the
extent not required to be made or paid on or before the date hereof, have been
fully reflected in the financial statements of United Financial
Bancorp. All anticipated contributions and funding obligations are
accrued on United Financial Bancorp’s consolidated financial statements to the
extent required by GAAP.
(r) Properties.
39
(i) United
Financial Bancorp and each of its Subsidiaries has good and marketable title to
all real property owned by it (including any property acquired in a judicial
foreclosure proceeding or by way of a deed in lieu of foreclosure or similar
transfer), in each case free and clear of any Liens except (i) liens for
taxes not yet due and payable and (ii) such easements, restrictions and
encumbrances, if any, as are not material in character, amount or extent, and do
not materially detract from the value, or materially interfere with the present
use of the properties subject thereto or affected thereby. Each
lease pursuant to which United Financial Bancorp or any of its Subsidiaries is
lessee, leases real or personal property is valid and in full force and effect
and neither United Financial Bancorp nor any of its Subsidiaries, nor, to United
Financial Bancorp’s knowledge, any other party to any such lease, is in default
or in violation of any material provisions of any such lease. All
real property owned or leased by United Financial Bancorp or any of its
Subsidiaries are in a good state of maintenance and repair (normal wear and tear
excepted), conform with all applicable ordinances, regulations and zoning laws
and are considered by United Financial Bancorp to be adequate for the current
business of United Financial Bancorp and its Subsidiaries. To the
knowledge of United Financial Bancorp, none of the buildings, structures or
other improvements located on any real property owned or leased by United
Financial Bancorp or any of its Subsidiaries encroaches upon or over any
adjoining parcel or real estate or any easement or right-of-way.
(ii) United
Financial Bancorp and each of its Subsidiaries has good and marketable title to
all tangible personal property owned by it, free and clear of all Liens except
such Liens, if any, as are not material in character, amount or extent, and do
not materially detract from the value, or materially interfere with the present
use of the properties subject thereto or affected thereby. With
respect to personal property used in the business of United Financial Bancorp
and its Subsidiaries that is leased rather than owned, neither United Financial
Bancorp nor any of its Subsidiaries is in default under the terms of any such
lease.
(s) Reserved.
(t) Environmental
Matters.
(i) Each
of United Financial Bancorp and its Subsidiaries, the Participation Facilities,
and, to the knowledge of United Financial Bancorp, the Loan Properties are, and
have been, in substantial compliance with all Environmental Laws.
(ii) There
is no suit, claim, action, demand, executive or administrative order, directive,
investigation or proceeding pending or, to the knowledge of United Financial
Bancorp, threatened, before any court, governmental agency or board or other
forum against United Financial Bancorp or any of its Subsidiaries or any
Participation Facility (A) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (B) relating to
the presence of or release into the environment of any Hazardous Material,
whether or not occurring at or on a site owned, leased or operated by United
Financial Bancorp or any of its Subsidiaries or any Participation
Facility.
40
(iii) Neither
United Financial Bancorp nor any of its Subsidiaries has received any notice,
demand letter, executive or administrative order, directive or request for
information from any Governmental Entity or any third party indicating that it
may be in violation of, or liable under, any Environmental Law.
(iv) During
the period of (A) United Financial Bancorp’s or its Subsidiary’s ownership or
operation of any of their respective current properties or (B) United Financial
Bancorp’s or its Subsidiary’s participation in the management of any
Participation Facility, there has been no release of Hazardous Materials in, on,
under or affecting such properties. To the knowledge of United
Financial Bancorp, prior to the period of (A) United Financial Bancorp’s or its
Subsidiary’s ownership or operation of any of their respective current
properties or (B) United Financial Bancorp’s or its Subsidiary’s
participation in the management of any Participation Facility, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
(u) Material Interests of Certain
Persons. No current or former officer or director of United
Financial Bancorp, or any family member or affiliate of any such person, has any
material interest, directly or indirectly, in any contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of
United Financial Bancorp or any of its Subsidiaries.
(v) Insurance. In the
opinion of management, United Financial Bancorp and its Subsidiaries are
presently insured for amounts deemed reasonable by management against such risks
as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. United Financial Bancorp’s
Disclosure Letter contains a list of all policies of insurance carried and owned
by United Financial Bancorp or any of United Financial Bancorp’s Subsidiaries
showing the name of the insurance company and agent, the nature of the coverage,
the policy limit, the annual premiums and the expiration date. All of
the insurance policies and bonds maintained by United Financial Bancorp and its
Subsidiaries are in full force and effect, United Financial Bancorp and its
Subsidiaries are not in default thereunder, all premiums and other payments due
under any such policy have been paid and all material claims thereunder have
been filed in due and timely fashion.
(w) Indemnification. Except
as provided in the certificate of incorporation or bylaws of United Financial
Bancorp and the similar organizational documents of its Subsidiaries, neither
United Financial Bancorp nor any of its Subsidiaries is a party to any agreement
that provides for the indemnification of any of its present or former directors,
officers or employees, or other persons who serve or served as a director,
officer or employee of another corporation, partnership or other enterprise at
the request of United Financial Bancorp and, to the knowledge of United
Financial Bancorp, there are no claims for which any such person would be
entitled to indemnification under the certificate of incorporation or bylaws of
United Financial Bancorp or the similar organizational documents of any of its
Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
41
(x) Corporate Documents and
Records. United Financial Bancorp has previously delivered or
made available to CNB Financial a complete and correct copy of the certificate
of incorporation, bylaws and similar organizational documents of United
Financial Bancorp and each of United Financial Bancorp’s Subsidiaries, as in
effect as of the date of this Agreement. Neither United Financial
Bancorp nor any of United Financial Bancorp’s Subsidiaries is in violation of
its certificate of incorporation, bylaws or similar organizational
documents. The minute books of United Financial Bancorp and each of
United Financial Bancorp’s Subsidiaries constitute a complete and correct record
of all actions taken by their respective boards of directors (and each committee
thereof) and their shareholders. United Financial Bancorp and each of
its Subsidiaries maintains accounting records that fairly and accurately
reflect, in all material respects, its transactions, and accounting controls
exist sufficient to provide reasonable assurances that such transactions are, in
all material respects, (i) executed in accordance with management’s general or
specific authorization and (ii) recorded as necessary to permit the preparation
of financial statements in accordance with GAAP.
(y) CRA, Anti-Money Laundering, OFAC and
Customer Information Security. United Bank has received a
rating of “Satisfactory”
or better in its most recent examination or interim review with respect
to the CRA. United Bank is not aware of, has not been advised of, and
has no reason to believe that any facts or circumstances exist that would cause
United Bank or any other Subsidiary of United Financial Bancorp: (i) to be
deemed not to be in satisfactory compliance in any material respect with the
CRA, and the regulations promulgated thereunder, or to be assigned a rating for
CRA purposes by federal or state bank regulators of lower than “satisfactory”;
or (ii) to be deemed to be operating in violation in any material respect of the
Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money
laundering by the U.S. Department of the Treasury’s Office of Foreign Assets
Control, or any other applicable anti-money laundering statute, rule or
regulation; or (iii) to be deemed not to be in satisfactory compliance in any
material respect with the applicable privacy of customer information
requirements contained in any federal and state privacy laws and regulations,
including without limitation, in Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999
and the regulations promulgated thereunder, as well as the provisions of the
information security program adopted by United Bank. United Financial
Bancorp is not aware of any facts or circumstances that would cause it to
believe that any non-public customer information has been disclosed to or
accessed by an unauthorized third party in a manner which would cause either
United Financial Bancorp or of its Subsidiaries to undertake any remedial
action. The board of directors of United Bank (or where appropriate
of any other Subsidiary of United Financial Bancorp) has adopted, and United
Bank (or such other Subsidiary of United Financial Bancorp) has implemented, an
anti-money laundering program that contains adequate and appropriate customer
identification verification procedures that comply with Section 326 of the
Patriot Act and such anti-money laundering program meets the requirements in all
material respects of Section 352 of the Patriot Act and the regulations
thereunder, and United Bank (or such other Subsidiary of United Financial
Bancorp) has complied in all material respects with any requirements to file
reports and other necessary documents as required by the Patriot Act and the
regulations thereunder.
42
(z) United Financial Bancorp
Information. The information regarding United Financial
Bancorp and its Subsidiaries to be supplied by United Financial Bancorp for
inclusion in the Registration Statement, any filings or approvals under
applicable state securities laws, or any filing pursuant to Rule 165 or Rule 425
under the Securities Act or Rule 14a-12 under the Exchange Act will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement-Prospectus (except for such portions
thereof that relate only to CNB Financial or any of its Subsidiaries) will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. The Registration
Statement will comply as to form in all material respects with the provisions of
the Securities Act and the rules and regulations thereunder.
(aa) Tax Treatment of the
Merger. United Financial Bancorp has no knowledge of any fact
or circumstance relating to it that would prevent the transactions contemplated
by this Agreement from qualifying as a reorganization under Section 368 of the
IRC.
(bb) Allowance for Loan
Losses. The allowance for loan losses reflected in United
Financial Bancorp’s audited balance sheet at December 31, 2008 was, and the
allowance for loan losses shown on the balance sheets in United Financial
Bancorp’s Reports for periods after such date, in the opinion of management, was
or will be adequate, as of the dates thereof, under GAAP.
(cc) Internal
Controls.
(i) United
Financial Bancorp has devised and maintained a system of internal accounting
controls sufficient to provide reasonable assurance that: (A) all material
transactions are executed in accordance with general or specific authorization
of the Board of Directors and the duly authorized executive officers of United
Financial Bancorp; (B) all material transactions are recorded as necessary to
permit the preparation of financial statements in conformity with GAAP
consistently applied; and (C) access to the material properties and assets of
United Financial Bancorp is permitted only in accordance with general or
specific authorization of the Board of Directors and the duly authorized
executive officers of United Financial Bancorp.
(ii) United
Financial Bancorp (A) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that
material information relating to United Financial Bancorp, including its
Subsidiaries, is made known to the chief executive officer and the chief
financial officer of United Financial Bancorp by others within those entities,
and (B) has disclosed, based on its most recent evaluation prior to the date
hereof, to United Financial Bancorp’s outside auditors and the audit committee
of United Financial Bancorp’s Board of Directors (1) any significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) which are reasonably likely to adversely affect United Financial Bancorp’s
ability to record, process, summarize and report financial information, and (2)
any fraud, whether or not material, that involves management or other employees
who have a significant role in United Financial Bancorp’s internal controls over
financial reporting. Any such disclosures were made in writing by
management to United Financial Bancorp’s auditors and audit committee. As of the
date hereof, there is no reason to believe that United Financial Bancorp’s chief
executive officer and chief financial officer will not be able to give the
certifications required under SEC regulations when next due.
43
ARTICLE
IV
Conduct
Pending the Merger
4.1 Forbearances by CNB
Financial. Except as expressly contemplated or permitted by
this Agreement, during the period from the date of this Agreement to the
Effective Time, CNB Financial shall not, nor shall CNB Financial permit any of
its Subsidiaries to, without the prior written consent of United Financial
Bancorp, which consent shall not be unreasonably withheld:
(a) conduct
its business other than in the regular, ordinary and usual course consistent
with past practice; fail to maintain and preserve intact its business
organization, properties, leases, employees and advantageous business
relationships and retain the services of its officers and key employees; or take
any action that would adversely affect or delay its ability to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby;
(b) (i) incur,
modify, extend or renegotiate any indebtedness for borrowed money, or assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, other than (A)
the creation of deposit liabilities in the ordinary course of business
consistent with past practice and consistent with Section 4.1(s) hereof and (B)
advances from the Federal Home Loan Bank of Boston with a maturity of not more
than one year;
(ii) prepay
any indebtedness or other similar arrangements so as to cause CNB Financial to
incur any prepayment penalty thereunder;
|
(c)
|
(i)
|
adjust,
split, combine or reclassify any capital
stock;
|
(ii) make,
declare or pay any dividend or any other distribution on its capital
stock;
(iii) grant
any stock appreciation rights or grant any individual, corporation or other
entity any right to acquire any shares of its capital stock;
(iv) issue
any additional shares of capital stock or any securities or obligations
convertible or exercisable for any shares of its capital stock except pursuant
to the exercise of stock options or warrants outstanding as of the date hereof;
or
44
(v) except
in connection with the exercise of outstanding stock options or withholdings for
taxes related thereto under any of the CNB Financial stock-based incentive
plans, directly or indirectly redeem, purchase or otherwise acquire any shares
of its capital stock;
(d) sell,
transfer, mortgage, encumber or otherwise dispose of any of its material
properties or assets to any individual, corporation or other entity other than a
Subsidiary, or cancel, release or assign any indebtedness to any such person or
any claims held by any such person, except in the ordinary course of business
consistent with past practice or pursuant to contracts or agreements in force at
the date of this Agreement;
(e) except
pursuant to contracts or agreements in force at the date of or permitted by this
Agreement, make any equity investment, either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other
entity;
(f) enter
into, renew, amend or terminate any contract, plan or agreement, or make any
change in any of its leases or contracts, other than with respect to those
involving aggregate payments of less than, or the provision of goods or services
with a market value of less than, $10,000 per annum and other than contracts or
agreements covered by Section
4.1(g);
(g) (i) except
as provided in Section
4.1(g)(ii) below, renegotiate, renew, increase, extend or modify any
loan, lease (credit equivalent), advance (other than existing approved
commitments or lines of credit), credit enhancement or other extension of
credit, or make any commitment in respect of any of the foregoing,
except: (x) for renegotiations, renewals, increases, extensions or
modifications not required to be approved by the executive committee of the
board of directors of Commonwealth National Bank pursuant to existing loan
policies with notification in reasonable detail to United Financial Bancorp for
credits in amounts that exceed an aggregate of $500,000 with respect to any
individual borrower; or (y) for renegotiations, renewals, increases, extensions
or modifications required to be approved by the executive committee of the board
of directors of Commonwealth National Bank pursuant to existing loan policies,
only if approved by the executive committee of the board of directors of
Commonwealth National Bank in accordance with such policies; provided; however, that no
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit shall be eligible for approval by the executive committee of the board
of directors if the United Financial Bancorp designee appointed under Section 5.3(e) of this
Agreement, who must be at least a senior vice president, has delivered a written
objection to the Chief Executive Officer of Commonwealth National Bank two
business days prior to the executive committee meeting; provided that such
designee must receive such loan information no later than four business days
before an executive committee meeting. The designee then must attend,
either by phone or in person, the executive committee meeting in which the
credit is presented, discussed detailed concerns related to the approval,
suggest appropriate and reasonable scenarios to approve, mitigate or work
through said credit;
45
(ii) with
regard to any loan, lease, advance, credit enhancement or other extension of
credit to any borrower that is in default of any loan or other agreement with
CNB Financial or any of its Subsidiaries, or to any borrower with respect to any
loan or asset which is rated “6” or worse pursuant to the loan and asset grading
policies and procedures of CNB Financial or any of its Subsidiaries, or to any
affiliate of any such person, renegotiate, renew, increase, extend or modify any
loan, lease (credit equivalent), advance (other than existing approved
commitments or lines of credit), credit enhancement or other extension of
credit, or make any commitment in respect of any of the foregoing, except for
renegotiations, renewals, increases, extensions or modifications to
which: (x) United Financial Bancorp provides prior written consent of
United Financial Bancorp, which consent shall not be unreasonably withheld; and
(y) the executive committee of the board of directors of Commonwealth National
Bank approves in accordance with its written loan policies; or
(iii) make
or purchase any loan, lease (credit equivalent), advance, credit enhancement or
other extension of credit, or make any commitment in respect of any of the
foregoing, except (i) in conformity with existing lending practices in
amounts not to exceed an aggregate of $500,000 with respect to any individual
borrower, or (ii) loans or advances as to which CNB Financial has a binding
obligation to make such loans or advances as of the date hereof.
(h) except
for loans or extensions of credit made on terms generally available to the
public, make or increase any loan or other extension of credit, or commit to
make or increase any such loan or extension of credit, to any director or
executive officer of CNB Financial or Commonwealth National Bank, or any entity
controlled, directly or indirectly, by any of the foregoing, other than renewals
of existing loans or commitments to loan;
(i) (i) increase
in any manner the compensation or fringe benefits of any of its employees or
directors other than in the ordinary course of business consistent with past
practice and pursuant to policies currently in effect, or pay any bonus,
pension, retirement allowance or contribution not required by any existing plan
or agreement to any such employees or directors;
(ii) become
a party to, amend or commit itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement, employment agreement, change in control
agreement or severance agreement with or for the benefit of any employee or
director;
(iii) voluntarily
accelerate the vesting of, or the lapsing of restrictions with respect to, any
stock options or other stock-based compensation; or
(iv) except
for a new principal financial and/or accounting officer pursuant to such terms
and conditions, including compensation amounts, as agreed to by United Financial
Bancorp, elect to any senior executive office any person who is not a member of
its senior executive officer team as of the date of this Agreement or elect to
its Board of Directors any person who is not a member of its Board of Directors
as of the date of this Agreement, or hire any employee with annual compensation
in excess of $30,000;
46
(j) settle
any claim, action or proceeding involving payment by it of money damages in
excess of $20,000 or impose any material restriction on its operations or the
operations of any of its Subsidiaries;
(k) amend
its articles of organization or bylaws, or similar governing
documents;
(l) restructure
or materially change its investment securities portfolio or its interest rate
risk position, through purchases, sales or otherwise, or in the manner in which
the portfolio is classified;
(m) make
any investment in any debt security, including mortgage-backed and
mortgage-related securities, other than U.S. government and U.S. government
agency securities with final maturities not greater than one year;
(n) other
than for capital expenditures described in Section 3.2(j) of the CNB Financial
Disclosure Letter, make any capital expenditures other than pursuant to binding
commitments existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair or to make payment of necessary
taxes;
(o) establish
or commit to the establishment of any new branch or other office facilities or
file any application to relocate or terminate the operation of any banking
office;
(p) take
any action that is intended or expected to result in any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in any of the
conditions to the Merger set forth in Article VI not being satisfied or in a
violation of any provision of this Agreement;
(q) implement
or adopt any change in its accounting principles, practices or methods, other
than as may be required by GAAP or regulatory guidelines;
(r) knowingly
take action that would prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the IRC;
(s) implement
or adopt any change in its policies or practices with respect to deposit
liabilities, or incur or create any deposit liabilities with terms of greater
than one year, except that this restriction shall not prevent CNB Financial from
rolling over or renewing any existing deposit liability with a term of greater
than one year on terms and conditions consistent with prevailing market rates
and conditions; or
(t) agree
to take, make any commitment to take, or adopt any resolutions of its board of
directors in support of, any of the actions prohibited by this Section 4.1.
47
Any request by CNB Financial or
response thereto by United Financial Bancorp shall be made in accordance with
the notice provisions of Section 8.7 and shall note
that it is a request pursuant to this Section 4.1.
4.2 Forbearances by United Financial
Bancorp. Except as expressly contemplated or permitted by this
Agreement, and except to the extent required by law or regulation or any
Governmental Entity, during the period from the date of this Agreement to the
Effective Time, United Financial Bancorp shall not, nor shall United Financial
Bancorp permit any of its Subsidiaries to, without the prior written consent of
CNB Financial, which shall not unreasonably be withheld (except as specified in
Sections 4.2(e) and (f)
below):
(a) take
any action that would adversely affect or delay its ability to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby;
(b) take
any action that is intended to or expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VI not being satisfied
or in a violation of any provision of this Agreement;
(c) knowingly
take action that would prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the IRC;
(d) agree
to take, make any commitment to take, or adopt any resolutions of its
Board of Directors in support of, any of the actions prohibited by this Section 4.2;
(e) enter
into any material definitive merger agreement, purchase and assumption agreement
or similar document involving United Financial Bancorp or any of its
Subsidiaries with respect to the acquisition of any other insured depository
institution, without the prior notification by written, oral or electronic means
to the Chairman of the Board of Directors of CNB Financial; or
(f) issue
any additional shares of United Financial Bancorp Common Stock or any securities
convertible into United Financial Bancorp common stock, except for existing and
future grants under United Financial Bancorp’s stock-based benefit plans,
without the prior notification by written, oral or electronic means to the
Chairman of the Board of Directors.
ARTICLE
V
Covenants
5.1 Acquisition
Proposals.
48
(a) Except
as permitted by this Agreement, CNB Financial shall not, and shall cause its
Subsidiaries and any of its Subsidiaries’ officers, directors or employees and
any investment banker, financial advisor, attorney, accountant or other
representative retained by CNB Financial or any of its Subsidiaries not to,
directly or indirectly, (i) solicit, initiate or encourage (including by way of
furnishing non-public information), or take any other action to facilitate, any
inquiries, discussions or the making of any proposal that constitutes or could
reasonably be expected to lead to an Acquisition Proposal, (ii) participate in
any discussions or negotiations, or otherwise communicate in any way with any
person (other than United Financial Bancorp), regarding an Acquisition Proposal,
(iii) enter into or consummate any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the transactions
contemplated hereby, (iv) except as to employees who are not executive officers,
make any public statement critical of United Financial Bancorp or any of its
Subsidiaries, its board of directors, its management or the Merger or (v) except
as to employees who are not executive officers, join with or assist any person
or entity, directly or indirectly, in opposing or making any statement in
opposition to, the Merger. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the preceding
sentence by any officer, director or employee of CNB Financial or any of the
Subsidiaries or any investment banker, financial advisor, attorney, accountant
or other representative retained by CNB Financial or any of its Subsidiaries
shall be deemed to be a breach of this Section 5.1 by CNB
Financial. Notwithstanding the foregoing, CNB Financial may, in
response to a Superior Proposal that has not been withdrawn and that did not
otherwise result from a breach of this Section 5.1, (x) furnish
non-public information with respect to CNB Financial to the person who made such
Superior Proposal pursuant to a confidentiality agreement on terms no more
favorable to such person than the confidentiality agreement between CNB
Financial and United Financial Bancorp dated May 28, 2009 and (y) participate in
discussions or negotiations with such person regarding such Superior Proposal,
if and so long as CNB Financial’s Board of Directors determines in good faith,
after consultation with and based upon the advice of its outside legal counsel,
that failing to take such action would constitute a breach of its fiduciary
duties under applicable law.
(b) CNB
Financial will notify United Financial Bancorp immediately orally (within one
day) and in writing (within three days) of receipt of any Acquisition Proposal,
any request for non-public information that could reasonably be expected to lead
to an Acquisition Proposal, or any inquiry with respect to or that could
reasonably be expected to lead to an Acquisition Proposal, including, in each
case, the identity of the person making such Acquisition Proposal, request or
inquiry and the terms and conditions thereof, and shall provide to United
Financial Bancorp any written materials received by CNB Financial or any of its
Subsidiaries in connection therewith. CNB Financial will keep United Financial
Bancorp informed of any developments with respect to any such Acquisition
Proposal, request or inquiry immediately upon the occurrence
thereof.
(c) CNB
Financial will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted prior to the
date of this Agreement with respect to any of the foregoing. CNB Financial will
take the necessary steps to inform the appropriate individuals or entities
referred to in the first sentence of Section 5.1(a) of the
obligations undertaken in this Section 5.1. CNB Financial
will promptly request each person (other than United Financial Bancorp) that has
executed a confidentiality agreement in the 12 months prior to the date hereof
in connection with its consideration of a business combination with CNB
Financial or any of its Subsidiaries to return or destroy all confidential
information previously furnished to such person by or on behalf of CNB Financial
or any of its Subsidiaries. CNB Financial shall not release any third party
from, or waive any provisions of, any confidentiality agreements or standstill
agreement to which it or any of its Subsidiaries is a party.
49
5.2 Advice of
Changes. Prior to the Closing, each party shall promptly
advise the other party orally and in writing to the extent that it has knowledge
of (i) any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate in any material respect or (ii) the failure by it
to comply in any material respect with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
5.3 Access and
Information.
(a) Upon
reasonable notice, CNB Financial shall (and shall cause its Subsidiaries to)
afford United Financial Bancorp and its representatives (including, without
limitation, directors, officers and employees of United Financial Bancorp and
its affiliates and counsel, accountants and other professionals retained by it)
such reasonable 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), contracts, properties,
personnel and to such other information as may reasonably be requested; provided, however, that no
investigation pursuant to this Section 5.3 shall affect or
be deemed to modify any representation or warranty made by CNB Financial in this
Agreement.
(b) From
the date hereof until the Effective Time, CNB Financial shall, and shall cause
CNB Financial’s Subsidiaries to, promptly provide United Financial Bancorp with
(i) a copy of each report filed with federal or state banking regulators, (ii) a
copy of each periodic report to its senior management and all materials relating
to its business or operations furnished to its Board of Directors, (iii) a copy
of each press release made available to the public and (iv) all other
information concerning its business, properties and personnel as United
Financial Bancorp may reasonably request and United Financial Bancorp shall, and
shall cause United Financial Bancorp’s Subsidiaries to, promptly provide CNB
Financial with a copy of each periodic report filed with the SEC and call
reports filed with federal or state bank regulators. Notwithstanding
the foregoing, neither CNB Financial nor its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would violate the rights of such entity’s customers, jeopardize the
attorney-client privilege of the entity in possession or control of such
information, or contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
previous sentence apply.
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(c) United
Financial Bancorp will not, and will cause its representatives not to, use any
information obtained pursuant to this Section 5.3 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of applicable law, United
Financial Bancorp will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this Section 5.3 unless such
information (i) was already known to United Financial Bancorp or an affiliate of
United Financial Bancorp, other than pursuant to a confidentiality agreement or
other confidential relationship, (ii) becomes available to United Financial
Bancorp or an affiliate of United Financial Bancorp from other sources not known
by such party to be bound by a confidentiality agreement or other obligation of
secrecy, (iii) is disclosed with the prior written approval of CNB Financial or
(iv) is or becomes readily ascertainable from published information or trade
sources.
(d) From
and after the date hereof, representatives of United Financial Bancorp and CNB
Financial shall meet on a regular basis to discuss and plan for the conversion
of CNB Financial’s and its Subsidiaries’ data processing and related electronic
informational systems to those used by United Financial Bancorp and its
Subsidiaries with the goal of conducting such conversion as soon as is
practicable following the consummation of the Bank Merger. In
connection therewith, the parties hereto shall cooperate with each other and use
their reasonable best efforts to provide customers with any communications
and/or notices that are necessary or advisable.
(e) CNB
Financial shall give notice, and shall cause Commonwealth National Bank to give
notice, to a designee of United Financial Bancorp, and shall invite such person
to attend all regular and special meetings of the Board of Directors of CNB
Financial and Commonwealth National Bank, and all meetings of Board committees
and all regular and special meetings of any senior management committee
(including but not limited to the executive committee and the loan and discount
committee of Commonwealth National Bank) of CNB Financial or Commonwealth
National Bank. Such designees shall have no right to vote and shall
not attend sessions of board and committees during which there is being
discussed (i) matters involving this Agreement, (ii) information or material
that CNB Financial or Commonwealth National Bank is required or obligated to
maintain as confidential under applicable laws or regulations or policies or
procedures of CNB Financial or Commonwealth National Bank, or (iii) pending or
threatened litigation or investigations if, on the advice of counsel to CNB
Financial, the presence of such designees would or might adversely affect the
confidential nature of or any privilege relating to the matters being
discussed.
5.4 Applications;
Consents.
(a) The
parties hereto shall cooperate with each other and shall use their reasonable
best efforts to prepare and file within 30 days of the date hereof, or as soon
as practicable thereafter, all necessary applications, notices and filings to
obtain all permits, consents, approvals and authorizations of all Governmental
Entities that are necessary or advisable to consummate the transactions
contemplated by this Agreement. CNB Financial and United Financial
Bancorp shall furnish each other with all information concerning themselves,
their respective subsidiaries, and their and their respective subsidiaries’
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with any application, notice or filing made
by or on behalf of United Financial Bancorp, CNB Financial or any of their
respective subsidiaries to any Governmental Entity in connection with the
transactions contemplated by this Agreement and the Plan of Bank
Merger. United Financial Bancorp and CNB Financial shall have the
right to review in advance, and to the extent practicable each will consult with
the other on, all the information relating to United Financial Bancorp and CNB
Financial, as the case may be, and any of their respective subsidiaries, that
appears in any filing made with, or written materials submitted to, any
Governmental Entity pursuant to this Section
5.4(a).
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(b) As
soon as practicable after the date hereof, each of the parties hereto shall, and
they shall cause their respective subsidiaries to, use its best efforts to
obtain any consent, authorization or approval of any third party that is
required to be obtained in connection with the transactions contemplated by this
Agreement and the Plan of Bank Merger.
5.5 Anti-takeover
Provisions. CNB Financial and its Subsidiaries shall take all
steps required by any relevant federal or state law or regulation or under any
relevant agreement or other document to exempt or continue to exempt United
Financial Bancorp, United Bank, the Agreement, the Plan of Bank Merger and the
Merger from any provisions of an anti-takeover nature in CNB Financial’s or its
Subsidiaries’ articles of organization and bylaws, or similar organizational
documents, and the provisions of any federal or state anti-takeover
laws.
5.6 Additional
Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take promptly, or cause to be taken promptly, all actions and to do promptly, or
cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as possible,
including using efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable Governmental
Entities, effecting all necessary registrations, applications and filings
(including, without limitation, filings under any applicable state securities
laws) and obtaining any required contractual consents and regulatory
approvals.
5.7 Publicity. The
initial press release announcing this Agreement shall be a joint press release
and thereafter CNB Financial and United Financial Bancorp shall consult with
each other prior to issuing any press releases or otherwise making public
statements (including any written communications to shareholders) with respect
to the Merger and any other transaction contemplated hereby and in making any
filings with any Governmental Entity; provided, however, that
nothing in this Section 5.7 shall be
deemed to prohibit any party from making any disclosure which its counsel deems
necessary in order to satisfy such party’s disclosure obligations imposed by
law.
5.8 CNB Financial Shareholder
Meeting. CNB Financial will submit to its shareholders this
Agreement and any other matters required to be approved or adopted by
shareholders in order to carry out the intentions of this
Agreement. In furtherance of that obligation, CNB Financial will
take, in accordance with applicable law and its articles of organization and
bylaws, all action necessary to call, give notice of, convene and hold a meeting
of its shareholders (the “Shareholder Meeting”) as
promptly as practicable for the purpose of considering and voting on approval
and adoption of this Agreement and the transactions provided for in this
Agreement. CNB Financial’s Board of Directors will use all reasonable
best efforts to obtain from its shareholders a vote approving this
Agreement. Except as provided in this Agreement, (i) CNB Financial’s
Board of Directors shall recommend to its shareholders approval of this
Agreement, (ii) the Proxy Statement-Prospectus shall include a statement to the
effect that CNB Financial’s Board of Directors have recommended that its
shareholders vote in favor of the approval of this Agreement and (iii) neither
CNB Financial’s Board of Directors nor any committee thereof shall withdraw,
amend or modify, or propose or resolve to withdraw, amend or modify, the
recommendation of CNB Financial’s Board of Directors that its shareholders vote
in favor of approval of this Agreement or make any statement in connection with
the Shareholder Meeting inconsistent with such recommendation (collectively, a
“Change in
Recommendation”).
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Notwithstanding
the foregoing, if (x) CNB Financial has complied in all material respects with
its obligations under Section
5.1, (y) CNB Financial (1) has received an unsolicited bona fide written
Acquisition Proposal from a third party that CNB Financial’s Board of Directors
concludes in good faith constitutes a Superior Proposal after giving effect to
all of the adjustments that may be offered by United Financial Bancorp pursuant
to clause (3) below, (2) has notified United Financial Bancorp, at least five
business days in advance, of its intention to effect a Change in Recommendation,
specifying the material terms and conditions of any such Superior Proposal and
furnishing to United Financial Bancorp a copy of the relevant proposed
transaction documents, if such exist, with the person making such Superior
Proposal and (3) during the period of not less than five business days following
CNB Financial’s delivery of the notice referred to in clause (2) above and prior
to effecting such Change in Recommendation, has negotiated, and has used
reasonable best efforts to cause its financial and legal advisors to negotiate,
with United Financial Bancorp in good faith (to the extent that United Financial
Bancorp desires to negotiate) to make such adjustments in the terms and
conditions of this Agreement so that such Acquisition Proposal ceases to
constitute a Superior Proposal and (z) CNB Financial’s Board of Directors, after
consultation with and based on the advice of counsel, determines in good faith
that it would result in a violation of its fiduciary duties under applicable law
to recommend this Agreement, then in submitting the Agreement to shareholders at
the Shareholder Meeting it may submit the Agreement without recommendation, or
following submission of the Agreement to shareholders it may withdraw, amend or
modify its recommendation, in which case the Board of Directors may communicate
the basis for its lack of a recommendation, or the withdrawal, amendment or
modification of its recommendation, to the shareholders in the Proxy
Statement-Prospectus or an appropriate amendment or supplement thereto to the
extent required by law.
5.9 Registration of United Financial
Bancorp Common Stock.
(a) As
promptly as reasonably practicable following the date hereof, United Financial
Bancorp shall prepare and file with the SEC a registration statement on Form S-4
with respect to the issuance of United Financial Bancorp Common Stock in the
Merger (such Form S-4, and any amendments or supplements thereto, the “Registration Statement”). The
Registration Statement shall contain proxy materials relating to the matters to
be submitted to the CNB Financial shareholders at the Shareholder Meeting, which
shall also constitute the prospectus relating to the shares of United Financial
Bancorp Common Stock to be issued in the Merger (such proxy
statement/prospectus, and any amendments or supplements thereto, the “Proxy
Statement-Prospectus”). CNB Financial will furnish to United
Financial Bancorp the information required to be included in the Registration
Statement with respect to its business and affairs and shall have the right to
review and consult with United Financial Bancorp and approve the form of, and
any characterizations of such information included in, the Registration
Statement prior to its being filed with the SEC. United Financial
Bancorp shall use reasonable best efforts to have the Registration Statement
declared effective by the SEC and to keep the Registration Statement effective
as long as is necessary to consummate the Merger and the transactions
contemplated hereby. United Financial Bancorp and CNB Financial will
each use reasonable best efforts to cause the Proxy Statement-Prospectus to be
mailed to the shareholders of CNB Financial as promptly as practicable after the
Registration Statement is declared effective under the Securities Act. United
Financial Bancorp will advise CNB Financial, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective, the
issuance of any stop order, the suspension of the qualification of the United
Financial Bancorp Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement-Prospectus or the Registration Statement. If at
any time prior to the Effective Time any information relating to United
Financial Bancorp or CNB Financial, or any of their respective affiliates,
officers or directors, should be discovered by United Financial Bancorp or CNB
Financial which should be set forth in an amendment or supplement to any of the
Registration Statement or the Proxy Statement-Prospectus so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and, to
the extent required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall be promptly filed by United
Financial Bancorp with the SEC and disseminated by CNB Financial to the
shareholders of CNB Financial.
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(b) United
Financial Bancorp shall also take any action required to be taken under any
applicable state securities laws in connection with the Merger and each of CNB
Financial and United Financial Bancorp shall furnish all information concerning
it and the holders of CNB Financial Common Stock as may be reasonably requested
in connection with any such action.
(c) Prior
to the Effective Time, United Financial Bancorp shall notify The Nasdaq Global
Select Market of the additional shares of United Financial Bancorp Common Stock
to be issued by United Financial Bancorp in exchange for the shares of CNB
Financial Common Stock.
5.10
Notification of Certain
Matters. Each party shall give prompt notice to the other
of: (i) any event or notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results of operations of each
party and its Subsidiaries taken as a whole to which each party or any
Subsidiary is a party or is subject; and (ii) any event, condition, change or
occurrence which individually or in the aggregate has, or which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in a Material Adverse Effect. Each of CNB Financial and
United Financial Bancorp shall give prompt notice to the other party of any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with any of the
transactions contemplated by this Agreement.
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5.11
Employee Benefit
Matters.
(a) All
persons who are employees of Commonwealth National Bank immediately prior to the
Effective Time and whose employment is not specifically terminated at or prior
to the Effective Time (a “Continuing Employee”) shall,
at the Effective Time, become employees of United Bank; provided, however, that
in no event shall any of Commonwealth National Bank’s employees be officers of
United Bank, or have or exercise any power or duty conferred upon such an
officer, unless and until duly elected or appointed to such position in
accordance with the bylaws of United Bank. Except for those persons
who enter into an employment agreement with United Bank, all of the Continuing
Employees shall be employed at the will of United Bank and no contractual right
to employment shall inure to such employees because of this
Agreement.
(b) Continuing
Employees will receive credit for service with CNB Financial for purposes of
vesting and determination of eligibility to participate, but not for accrual of
benefits, in United Financial Bancorp’s 401(k) plan (The Defined Contribution
Plan (Plan A) of the CBERA Retirement Program) and the United Bank Employee
Stock Ownership Plan. Each Continuing Employee with sufficient CNB
Financial service credit to satisfy the United Financial Bancorp 401(k) plan
eligibility service requirement who has also attained the requisite plan
participation age shall be eligible to participate in the United Financial
Bancorp 401(k) plan at the Effective Time. Each Continuing Employee
with sufficient CNB Financial service credit to satisfy the United Bank Employee
Stock Ownership Plan eligibility service requirement who has also attained the
requisite plan participation age shall be eligible to participate in the United
Bank Employee Stock Ownership Plan at the Effective Time. CNB
Financial shall take the requisite action to cause the CNB Financial 401(k) Plan
to be frozen as to future contributions effective immediately prior to the
Effective Time. If requested by United Financial Bancorp, CNB
Financial will take all necessary action to terminate the CNB Financial 401(k)
Plan immediately prior to the Effective Time. Final distributions
from the CNB Financial 401(k) Plan need not be made by the Effective Date and
may be conditioned upon receipt of a letter from the IRS confirming that upon
termination the CNB Financial 401(k) Plan remains qualified under section 401 of
the Code.
(c) With
respect to each Continuing Employee covered under a health or other employee
welfare benefit plan maintained by CNB Financial as of the Effective Time,
United Financial Bancorp at its election shall either (i) cause such Continuing
Employee to participate in the comparable plan maintained by United Financial
Bancorp on the same basis as other similarly situated United Financial Bancorp
employees except that any pre-existing condition, eligibility waiting period or
other limitations or exclusions otherwise applicable under such plans to new
employees shall not apply to a Continuing Employee or their covered dependents
who were covered under a similar CNB Financial plan at the Effective Time of the
Merger; or (ii) cause the plan maintained by CNB Financial shall continue to be
maintained for the benefit of the Continuing Employee.
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(d) Each
employee of CNB Financial or a Subsidiary who has been employed by CNB Financial
or a Subsidiary for twelve months prior to the Effective Time, except any
employee who is a party to a change in control agreement with CNB Financial or a
Subsidiary, shall be entitled upon an involuntary termination of employment
(other than for “Just Cause”) occurring at the Effective Time or within one year
following the Effective Time, to a severance payment equal to two weeks of base
salary for each full year of service with CNB Financial or a Subsidiary up to a
maximum benefit equal to 26 weeks of base salary, provided that no benefit shall
be less than four weeks base salary. For these purposes, “Just Cause”
shall mean termination due to the employee’s personal dishonesty, incompetence,
willful misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than minor traffic violations or similar offenses) or final
cease-and-desist order. Any payment of severance shall be made not later
than twenty business days following the individual’s termination of
employment.
(e) United
Financial Bancorp shall honor all obligations under the change-in-control
agreements as set forth in CNB Financial’s Disclosure Letter.
(f) United
Financial Bancorp shall provide customary outplacement services to all employees
of CNB Financial and CNB Financial Subsidiaries, including executive officers,
whose employment is terminated in connection with the Merger.
(g) Employees
of CNB Financial or a CNB Financial Subsidiary shall be eligible to receive a
“retention” bonus from CNB Financial (or the applicable Subsidiary) as
determined by the Board of Directors of CNB Financial (with the approval of the
Chief Executive Officer of United Financial Bancorp) in the event that such
employee remains an employee of CNB Financial (or the applicable CNB Financial
Subsidiary), until the date the systems conversion occurs (or such other date
established or adjusted by United Financial Bancorp not to exceed forty-five 45
days following the date the system conversion occurs) or is terminated prior to
the date of the systems conversion, but after the Effective Time, and
satisfactorily fulfills the duties and responsibilities of the position of such
employee of CNB Financial (or the applicable CNB Financial Subsidiary) through
the employee’s termination date.
5.12
Indemnification.
(a) From
and after the Effective Time through the sixth anniversary of the Effective
Time, United Financial Bancorp agrees to indemnify and hold harmless each
present and former director and officer of CNB Financial and its Subsidiaries
and each officer or employee of CNB Financial and its Subsidiaries that is
serving or has served as a director or officer of another entity expressly at
CNB Financial’s request or direction (each, an “Indemnified Party”), against
any costs or expenses (including reasonable attorneys’ fees), judgments, fines,
amounts paid in settlement, 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 (including the
transactions contemplated by this Agreement), whether asserted or claimed prior
to, at or after the Effective Time, as they are from time to time incurred, in
each case to the fullest extent such person would have been indemnified or have
the right to advancement of expenses pursuant to CNB Financial’s articles of
organization and bylaws as in effect on the date of this Agreement and to the
fullest extent permitted by law.
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(b) Any
Indemnified Party wishing to claim indemnification under Section 5.12(a), upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify United Financial Bancorp thereof, but the failure to so notify
shall not relieve United Financial Bancorp of any liability it may have
hereunder to such Indemnified Party if such failure does not materially and
substantially prejudice United Financial Bancorp.
(c) United
Financial Bancorp shall use its reasonable best efforts to maintain CNB
Financial’s existing directors’ and officers’ liability insurance policy (or
provide a policy providing comparable coverage and amounts on terms no less
favorable to the persons currently covered by CNB Financial’s existing policy,
including United Financial Bancorp’s existing policy if it meets the foregoing
standard) covering persons who are currently covered by such insurance for a
period of six years after the Effective Time; provided, however, that in no event
shall United Financial Bancorp be obligated to expend, in order to maintain or
provide insurance coverage pursuant to this Section 5.12(c), an amount in
the aggregate in excess of 150% of the amount of the annual premiums paid by CNB
Financial as of the date hereof for such insurance (“Maximum Insurance Amount”);
provided further, that
if the amount of the premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Insurance Amount, United Financial Bancorp shall
obtain the most advantageous coverage obtainable for a premium equal to the
Maximum Insurance Amount.
(d) In
the event United Financial Bancorp or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of United
Financial Bancorp assume the obligations set forth in this Section 5.12.
(e) The
provisions of this Section
5.12 are intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party and his or her representatives.
5.13
Section 16
Matters. Prior to the Effective Time, United Financial Bancorp
shall take all such steps as may be required to cause any acquisitions of United
Financial Bancorp Common Stock resulting from the transactions contemplated by
this Agreement (including, without limitation, pursuant to the terms of the
Converted Options) by each director or officer of CNB Financial who becomes
subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to United Financial Bancorp to be exempt under Rule 16b-3 promulgated
under the Exchange Act. CNB Financial agrees to promptly furnish
United Financial Bancorp with all requisite information necessary for United
Financial Bancorp to take the actions contemplated by this Section 5.13.
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5.14 Board of
Directors. United Financial Bancorp shall take all action
necessary to appoint one member of CNB Financial’s Board of Directors, selected
by United Financial Bancorp after consultation with CNB Financial, to United
Financial Bancorp’s and United Bank’s Board of Directors, effective immediately
following the Effective Time.
5.15 Funds Availability At the Effective Time,
United Financial Bancorp shall have sufficient funds available to pay the
aggregate Per Share Cash Consideration.
5.16 CNB Financial Loan
Participations CNB Financial shall
obtain all necessary waivers, consents, approvals and authorizations that may be
required under any agreement or contract to which CNB Financial or any of its
subsidiaries is a party or by which any of its assets may be bound, including
any CNB Financial loan participation agreement or lease, as a result of the
transactions contemplated in this Agreement.
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5.17 Berkshire Hills Bancorp Termination
Fee. Prior to the execution of this Agreement, CNB Financial
has entered into a Merger Termination Agreement with Berkshire Hills Bancorp,
Inc. that provides for the payment of the Fee, as defined in the Berkshire Hills
Bancorp Agreement (the “Berkshire Hills Bancorp
Fee”), in accordance with Section 7.2 of the Berkshire Hills Bancorp
Agreement, as amended, dated April 29, 2009. United Financial Bancorp
agrees to pay the Berkshire Hills Bancorp Fee on behalf of CNB Financial
pursuant to the terms of the Merger Termination Agreement. If this
Agreement is terminated: (a) in circumstances requiring payment of a
Fee pursuant to Section 7.2 of this Agreement; or (b) by United Financial
Bancorp under Section 7.1(c) of this Agreement under circumstances where failure
to fulfill Section 7.1(c) of this Agreement are for reasons primarily
attributable to CNB Financial, then CNB Financial shall reimburse United
Financial Bancorp for the Berkshire Hills Bancorp Fee. The
reimbursement provided in this Section 5.17 shall be in addition to any Fee that
may be payable to United Financial Bancorp pursuant to Section 7.2 of this
Agreement.
ARTICLE
VI
Conditions
to Consummation
6.1 Conditions to Each Party’s
Obligations. The respective obligations of each party to
effect the Merger shall be subject to the satisfaction of the following
conditions:
(a) Shareholder
Approval. This Agreement shall have been approved by the
requisite vote of CNB Financial’s shareholders in accordance with applicable
laws and regulations.
(b) Regulatory
Approvals. All approvals, consents or waivers of any
Governmental Entity required to permit consummation of the transactions
contemplated by this Agreement shall have been obtained and shall remain in full
force and effect, and all statutory waiting periods shall have expired; provided, however, that none
of such approvals, consents or waivers shall contain any condition or
requirement that would so materially and adversely impact the economic or
business benefits to United Financial Bancorp of the transactions contemplated
hereby that, had such condition or requirement been known, United Financial
Bancorp would not, in its reasonable judgment, have entered into this
Agreement.
(c) No Injunctions or Restraints;
Illegality. No party hereto shall be subject to any order,
decree or injunction of a court or agency of competent jurisdiction that enjoins
or prohibits the consummation of the Merger or the Bank Merger and no
Governmental Entity shall have instituted any proceeding for the purpose of
enjoining or prohibiting the consummation of the Merger or the Bank Merger or
any transactions contemplated by this Agreement. No statute, rule or
regulation shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or makes illegal consummation of the
Merger.
(d) Third Party
Consents. United Financial Bancorp and CNB Financial shall
have obtained the consent or approval of each person (other than the
governmental approvals or consents referred to in Section 6.1(b)) whose consent
or approval shall be required to consummate the transactions contemplated by
this Agreement, except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a Material Adverse
Effect on United Financial Bancorp (after giving effect to the consummation of
the transactions contemplated hereby).
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(e) Tax
Opinions. United Financial Bancorp and CNB Financial shall
have received opinions of Xxxxx Lord Xxxxxxx & Xxxxxxx LLP and Xxxxxxxxxx
Xxxxxxxx LLP, respectively, dated as of the Closing Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to CNB Financial and United Financial Bancorp, as the case may be,
substantially to the effect that on the basis of the facts, representations and
assumptions set forth in such opinions which are consistent with the state of
facts existing at the Effective Time, (i) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the IRC and (ii) United Financial Bancorp and CNB Financial will each be a party
to that reorganization within the meaning of Section 368(b) of the
IRC. Such opinions may be based on, in addition to the review of such
matters of fact and law as counsel considers appropriate, representations
contained in certificates of officers of United Financial Bancorp, CNB Financial
and others.
(f) Registration Statement; Blue Sky
Laws. The Registration Statement shall have been declared
effective by the SEC and no proceedings shall be pending or threatened by the
SEC to suspend the effectiveness of the Registration Statement, and United
Financial Bancorp shall have received all required approvals by state securities
or “blue sky” authorities with respect to the transactions contemplated by this
Agreement.
(g) Nasdaq Listing. To
the extent required, the shares of United Financial Bancorp Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
Nasdaq Global Select Market, subject to official notice of
issuance.
6.2
Conditions to the
Obligations of United Financial Bancorp. The obligations of
United Financial Bancorp to effect the Merger shall be further subject to the
satisfaction of the following additional conditions, any one or more of which
may be waived by United Financial Bancorp:
(a) CNB Financial’s Representations and
Warranties. Each of the representations and warranties of CNB
Financial contained in this Agreement and in any certificate or other writing
delivered by CNB Financial pursuant hereto shall be true and correct in all
material respects at and as of the Closing Date as though made at and as of the
Closing Date, except that those representations and warranties that address
matters only as of a particular date need only be true and correct as of such
date.
(b) Performance of CNB Financial’s
Obligations. CNB Financial shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time.
60
(c) Officers’
Certificate. United Financial Bancorp shall have received a
certificate signed by the chief executive officer and the chief financial or
principal accounting officer of CNB Financial to the effect that the conditions
set forth in Sections
6.2(a) and (b)
have been satisfied.
6.3
Conditions to the
Obligations of CNB Financial. The obligations of CNB Financial
to effect the Merger shall be further subject to the satisfaction of the
following additional conditions, any one or more of which may be waived by CNB
Financial:
(a) United Financial Bancorp’s
Representations and Warranties. Each of the representations and
warranties of United Financial Bancorp contained in this Agreement and in any
certificate or other writing delivered by United Financial Bancorp pursuant
hereto shall be true and correct in all material respects at and as of the
Closing Date as though made at and as of the Closing Date, except that those
representations and warranties that address matters only as of a particular date
need only be true and correct as of such date.
(b) Performance of United Financial
Bancorp’s Obligations. United Financial Bancorp shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time.
(c) Officers’
Certificate. CNB Financial shall have received a certificate
signed by the chief executive officer and the chief financial or principal
accounting officer of United Financial Bancorp to the effect that the conditions
set forth in Sections
6.3(a) and (b)
have been satisfied.
ARTICLE
VII
Termination
7.1
Termination. This
Agreement may be terminated, and the Merger abandoned, at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party, either before or after any requisite shareholder
approval:
(a) by
the mutual written consent of United Financial Bancorp and CNB Financial;
or
(b) by
either United Financial Bancorp or CNB Financial, in the event of the failure of
CNB Financial’s shareholders to approve the Agreement at the CNB Financial
Shareholder Meeting; provided, however, that CNB Financial
shall only be entitled to terminate the Agreement pursuant to this clause if it
has complied in all material respects with its obligations under Section 5.8; or
(c) by
either United Financial Bancorp or CNB Financial, if either (i) any approval,
consent or waiver of a Governmental Entity required to permit consummation of
the transactions contemplated by this Agreement shall have been denied or (ii)
any Governmental Entity of competent jurisdiction shall have issued a final,
unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement; or
61
(d) by
either United Financial Bancorp or CNB Financial, in the event that the Merger
is not consummated by January 31, 2010, unless the failure to so consummate by
such time is due to the failure of the party seeking to terminate this Agreement
to perform or observe the covenants and agreements of such party set forth
herein; or
(e) by
either United Financial Bancorp or CNB Financial (provided that the party
seeking termination is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), in the event of a
breach of any covenant or agreement on the part of the other party set forth in
this Agreement, or if any representation or warranty of the other party shall
have become untrue, in either case such that the conditions set forth in Sections 6.2(a) and (b) or Sections 6.3(a) and (b), as the case may be,
would not be satisfied and such breach or untrue representation or warranty has
not been or cannot be cured within thirty (30) days following written notice to
the party committing such breach or making such untrue representations or
warranty; or
(f) by
United Financial Bancorp, (i) if CNB Financial shall have materially breached
its obligations under Section
5.1 or Section
5.8 or (ii) if the CNB Financial’s Board of Directors does not
publicly recommend in the Proxy Statement-Prospectus that shareholders approve
and adopt this Agreement or if, after recommending in the Proxy
Statement-Prospectus that shareholders approve and adopt this Agreement, the
Board of Directors of CNB Financial withdraws, qualifies or revises such
recommendation or takes any action in any respect materially adverse to United
Financial Bancorp.
7.2 Termination Fee.
(a) CNB
Financial shall pay to United Financial Bancorp a fee of $1,227,000 (the “Fee”) if this Agreement is
terminated as follows:
(i) if
this Agreement is terminated by United Financial Bancorp pursuant to Section 7.1(f), then CNB
Financial shall pay the Fee on the second business day following such
termination; or
(ii) if
this Agreement is terminated by (A) either party pursuant to Section 7.1(b) or (B) by
United Financial Bancorp pursuant to Section 7.1(e) because of CNB
Financial’s willful breach of any representation, warranty, covenant or
agreement under this Agreement, and in any such case an Acquisition Proposal
with respect to CNB Financial shall have been publicly announced or otherwise
communicated or made known to CNB Financial’s Board of Directors (or any person
shall have publicly announced, communicated or made known an intention to make
an Acquisition Proposal) at any time after the date of this Agreement and on or
prior to the date of the Shareholders Meeting, in the case of clause (A), or the
date of termination, in the case of clause (B), then CNB Financial shall pay (x)
one third of the Fee to United Financial Bancorp on the second business day
following such termination and (y) if within 12 months after such termination
CNB Financial enters into a definitive agreement with respect to, or
consummates, an Acquisition Proposal, then CNB Financial shall pay the remainder
of the Fee on the date of such execution or consummation.
62
(b) Any
amount that becomes payable pursuant to Section 7.2(a) shall be paid
by wire transfer of immediately available funds to an account designated by
United Financial Bancorp in writing to CNB Financial.
(c) CNB
Financial acknowledges that the agreement contained in Section 7.2(a) is an integral
part of the transactions contemplated by this Agreement, that without such
agreement by CNB Financial, United Financial Bancorp would not have entered into
this Agreement and that such amounts do not constitute a penalty. If
CNB Financial fails to pay the amounts due under Section 7.2(a) with the time
periods specified, CNB Financial shall pay the costs and expenses (including
reasonable legal fees and expenses) incurred by United Financial Bancorp in
connection with any action, including the filing of any lawsuit, taken to
collect payment of such amounts, together with interest on the amount of any
such unpaid amounts at the prime lending rate prevailing during such period as
published in The Wall
Street Journal, calculated on a daily basis from the date such amounts
were required to be paid until the date of actual payment.
(d) Notwithstanding
anything to the contrary contained herein, CNB Financial shall be obligated,
subject to the terms of this Section 7.2, to pay only one
Fee.
7.3
Effect of
Termination. In the event of termination of this Agreement by
either United Financial Bancorp or CNB Financial as provided in Section 7.1, this Agreement
shall forthwith become void and, subject to Section 7.2, have no
effect, and there shall be no liability on the part of any party hereto or their
respective officers and directors, except that (i) Sections 5.3(c), 7.2 and 8.6, shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the contrary
contained in this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
ARTICLE
VIII
Certain
Other Matters
8.1
Interpretation. When
a reference is made in this Agreement to Sections or Exhibits such reference
shall be to a Section of, or Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this
Agreement are for ease of reference only and shall not affect the meaning or
interpretation of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed
followed by the words “without limitation.” Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Any reference to gender in this Agreement shall be deemed
to include any other gender.
63
8.2 Survival. Only
those agreements and covenants of the parties that are by their terms applicable
in whole or in part after the Effective Time, including Section 5.12 of this
Agreement, shall survive the Effective Time. All other
representations, warranties, agreements and covenants shall be deemed to be
conditions of the Agreement and shall not survive the Effective
Time.
8.3 Waiver;
Amendment. Prior to the Effective Time, any provision of this
Agreement may be: (i) waived in writing by the party benefited by the provision
or (ii) amended or modified at any time (including the structure of the
transaction) by an agreement in writing between the parties hereto except that,
after the vote by the shareholders of CNB Financial, no amendment or
modification may be made that would alter or change the amount or the kind of
consideration to be received by holders of CNB Financial Common Stock, that
would change the articles of organization or certificate of incorporation of the
parties hereto, that would change any of the other terms or conditions of this
Agreement in a manner that would materially adversely affect the holders of CNB
Financial Common Stock, or that would contravene any provision of the MBCA or
MGCL, or the federal banking laws, rules and regulations.
8.4 Counterparts. This
Agreement may be executed in counterparts each of which shall be deemed to
constitute an original, but all of which together shall constitute one and the
same instrument.
8.5 Governing Law. This
Agreement shall be governed by, and interpreted in accordance with, the laws of
the State of Maryland, without regard to conflicts of laws principles (except to
the extent that mandatory provisions of federal law are
applicable).
8.6 Expenses. Each
party hereto will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby.
8.7 Notices. All
notices, requests, acknowledgments and other communications hereunder to a party
shall be in writing and shall be deemed to have been duly given when delivered
by hand, overnight courier or facsimile transmission to such party at its
address or facsimile number set forth below or such other address or facsimile
transmission as such party may specify by notice (in accordance with this
provision) to the other party hereto.
If to United Financial Bancorp,
to:
Xxxxxxx
X. Xxxxxxx
Chairman,
President and Chief Executive Officer
00 Xxx
Xxxxxx
Xxxx
Xxxxxxxxxxx, XX 00000
Facsimile: (000)
000-0000
With
copies to:
Xxxxx
Lord Bissell & Liddell LLP.
000 0xx
Xxxxxx, X.X.
Xxxxx 000
Xxxxx
00
Xxxxxxxxxx,
X.X. 00000
Facsimile:
(000) 000.0000
Attention: Xxxxxxx
X. Xxxxxxxx, Esq.
If to CNB Financial, to:
Xxxx X.
Xxxxxx
Chairman
of the Board of Directors
c/o The
Xxxxxxxxx Company
0 Xxxxxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Facsimile: (000)
000-0000
With
copies to:
Xxxxxxxxxx
Xxxxxxxx LLP
000
00xx
Xxxxxx, X.X.
Xxxxx
000
Xxxxxxxxxx,
X.X. 00000
Facsimile: (000)
000-0000
Attention: Xxxxx
X. Xxxxx, Esq.
8.8 Entire Agreement;
etc. This Agreement, together with the Exhibits and the
Disclosure Letters, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns. Except for Section 5.12, which confers
rights on the parties described therein, nothing in this Agreement is intended
to confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
8.9 Successors and Assigns;
Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement
may not be assigned by either party hereto without the written consent of the
other party.
8.10
Specific
Performance. Each of the parties hereto acknowledges that the
other party would be irreparably damaged and would not have an adequate remedy
at law for money damages in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. Each of the parties hereto therefore agrees
that, without the necessity of proving actual damages or posting bond or other
security, the other party shall be entitled to temporary or permanent injunction
or injunctions to prevent breaches of such performance and to enforce
specifically the terms and provisions of this Agreement in addition to any other
remedy to which they may be entitled, at law or in equity.
65
[Signature page
follows]
66
In Witness Whereof, the
parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date first above written.
United
Financial Bancorp, Inc.
|
|||
By:
|
/s/
Xxxxxxx X. Xxxxxxx
|
||
Xxxxxxx
X. Xxxxxxx
|
|||
Chairman,
President and Chief Executive Officer
|
|||
By:
|
/s/
Xxxx X. Xxxxxx
|
||
Xxxx
X. Xxxxxx
|
|||
Chairman
of the Board
|
67
EXHIBIT
A
VOTING
AGREEMENT
June 25,
2009
United
Financial Bancorp, Inc.
00 Xxx
Xxxxxx
Xxxx
Xxxxxxxxxxx, XX 00000
Gentlemen:
United
Financial Bancorp, Inc. ("United Financial Bancorp") and CNB Financial Corp.
("CNB Financial") have entered into an Agreement and Plan of Merger dated as of
June 22, 2009 (the "Merger Agreement"), pursuant to which, subject to the terms
and conditions set forth therein, (a) CNB Financial will merge with and
into United Financial Bancorp, with United Financial Bancorp surviving the
merger, to be followed by the merger of Commonwealth National Bank with and into
United Bank, with United Bank surviving the merger (collectively referred to as
the "Merger"); and (b) shareholders of CNB Financial will receive common
stock of United Financial Bancorp and/or cash as stated in the Merger Agreement.
Terms that are undefined herein shall have the meaning set forth in the Merger
Agreement.
United
Financial Bancorp has requested, as a condition to its execution and delivery to
CNB Financial of the Merger Agreement, that the undersigned, being certain of
the directors and executive officers of CNB Financial and Commonwealth National
Bank, execute and deliver to United Financial Bancorp this Letter
Agreement.
Each of
the undersigned, in order to induce United Financial Bancorp to execute and
deliver to CNB Financial the Merger Agreement, and intending to be legally
bound, hereby irrevocably:
(a) Agrees
to be present (in person or by proxy) at all meetings of shareholders of CNB
Financial called to vote for approval of the Merger Agreement and the Merger so
that all shares of common stock of CNB Financial over which the undersigned has
sole or shared voting power will be counted for the purpose of determining the
presence of a quorum at such meetings and to vote, or cause to be voted, all
such shares (i) in favor of approval and adoption of the Merger Agreement
and the transactions contemplated thereby (including any amendments or
modifications of the terms thereof approved by the Board of Directors of CNB
Financial), and (ii) against approval or adoption of any other merger,
business combination, recapitalization, partial liquidation or similar
transaction involving CNB Financial;
(b) Agrees
not to vote or execute any written consent to rescind or amend in any manner any
prior vote or written consent, as a shareholder of CNB Financial, to approve or
adopt the Merger Agreement unless the Merger Agreement is terminated pursuant to
Section 7.1(b) of the Merger Agreement;
(c) Agrees
not to sell, transfer or otherwise dispose of any common stock of CNB Financial
on or prior to the date of the meeting of CNB Financial shareholders to vote on
the Merger Agreement, except for transfers to charities, charitable trusts, or
other charitable organizations under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, lineal descendant or a spouse of the
undersigned, or to a trust or other entity for the benefit of one or more of the
foregoing persons, provided that the transferee agrees in writing to be bound by
the terms of this Letter Agreement;
(d) Agrees
in accordance with Section 5.1 of the Merger Agreement not to solicit,
initiate or engage in any negotiations or discussions with any party other than
United Financial Bancorp with respect to an Acquisition Proposal, except as
otherwise permitted by Section 5.1, and
(e) Represents
that the undersigned has the capacity to enter into this Letter Agreement and
that it is a valid and binding obligation enforceable against the undersigned in
accordance with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights and general equitable principles.
The
obligations set forth herein shall terminate concurrently with any termination
of the Merger Agreement.
This
Letter Agreement may be executed in two or more counterparts, each of which
shall be deemed to constitute an original, but all of which together shall
constitute one and the same Letter Agreement.
The
undersigned intend to be legally bound hereby.
Very
truly yours,
|
|
Name
|
|
Title
|
|
Accepted
and agreed to as of
the date
first above written:
United
Financial Bancorp, Inc.
Xxxxxxx
X. Xxxxxxx
President
and Chief Executive Officer
2
EXHIBIT
B
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of the 25th
day of June, 2009, by and between Commonwealth National Bank (“Commonwealth”),
and United Bank, a Federal savings association (“United Bank”).
RECITALS:
1. Commonwealth
and United Bank are wholly-owned subsidiaries of United Financial Bancorp, Inc.,
a Maryland corporation ("United Financial Bancorp");
2. United
Financial Bancorp desires that Commonwealth merge with and into United Bank
following the consummation of the merger of CNB Financial Corp., a Massachusetts
corporation ("CNB Financial "), with and into United Financial Bancorp, or a
subsidiary thereof, pursuant to the Agreement and Plan of Merger, dated as of
June 25, 2009, by and between United Financial Bancorp and CNB
Financial (the "Holding Company Merger Agreement"); and
3. In
consideration of the premises and the mutual covenants and agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Commonwealth and United Bank hereby
agree as follows:
1.
DEFINITIONS
Each of
the following terms shall have the meanings set forth below:
1.1 "Effective Time" shall refer
to the date and time at which the Merger becomes effective in accordance with
the rules and regulations of the OTS.
1.2 "Merger" shall refer to the
merger of Commonwealth with and into United Bank as provided in Section 2.1
of this Agreement.
1.3 "Holding Company Merger" shall
refer to the merger of CNB Financial with and into United Financial
Bancorp as contemplated by the Holding Company Merger Agreement.
1.4 "Merging Institutions" shall
collectively refer to Commonwealth and United Bank.
1.5 "OTS" shall refer to the
Office of Thrift Supervision.
1.6 "Surviving Institution" shall
refer to United Bank as the surviving institution of the Merger.
2. TERMS
OF THE MERGER
2.1 The Merger.
(a) Subject
to the terms and conditions set forth in this Agreement, at the Effective Time,
Commonwealth shall be merged with and into United Bank pursuant to applicable
Federal laws and regulations. United Bank shall be the Surviving
Institution of the Merger and shall continue as a savings association chartered
and regulated by the OTS. As of a result of the Merger, (i) each
share of common stock, par value $5.00 per share, of Commonwealth issued and
outstanding immediately prior to the Effective Time shall be canceled and
(ii) each share of common stock, par value $1.00 per share, of United Bank
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and shall constitute the only shares of capital stock of
the Surviving Institution issued and outstanding following consummation of the
Merger.
(b) The
consummation of the transactions contemplated by this Agreement is specifically
conditioned upon receipt of all necessary regulatory approvals, including the
approval of the OTS, and the expiration of all applicable waiting periods with
respect to both the Holding Company Merger and the Merger. The
stockholder of Commonwealth and United Bank shall have taken appropriate action
to vote to approve this Agreement and the Merger.
(c) At
the Effective Time, the Surviving Institution shall be considered the same
business and corporate entity as each of the Merging Institutions and thereupon
and thereafter all the property, rights, powers and franchises of each of the
Merging Institutions shall vest in the Surviving Institution and the Surviving
Institution shall be subject to and be deemed to have assumed all of the debts,
liabilities, obligations and duties of each of the Merging Institutions and
shall have succeeded to all of each of their relationships, fiduciary or
otherwise, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, obligations, duties and relationship had
been originally acquired, incurred or entered into by the Surviving
Institution. In addition, any reference to either of the Merging
Institutions in any contract, will or document, whether executed or taking
effect before or after the Effective Time, shall be considered a reference to
the Surviving Institution if not inconsistent with the other provisions of the
contract, will or document; and any pending, action or other judicial proceeding
to which either of the Merging Institutions is a party shall not be deemed to
have abated or to have been discontinued by reason of the Merger, but may be
prosecuted to final judgment, order or decree in the same manner as if the
Merger had not been made or the Surviving Institution may be substituted as a
party to such action or proceeding, and any judgment, order or decree may be
rendered for or against it that might have been rendered for or against either
of the Merging Institutions if the Merger had not occurred.
(d) All
deposit accounts of Commonwealth shall be and become deposit accounts in the
Surviving Institution without change in their respective terms, maturity,
minimum required balances or withdrawal value. Appropriate evidence
of the deposit account in the Surviving Institution shall be provided by the
Surviving Institution to each deposit account holder of Commonwealth, as
necessary, after consummation of the Merger.
2
(e) All
deposit accounts of United Bank prior to consummation of the Merger shall
continue to be deposit accounts in the Surviving Institution after consummation
of the Merger without any change whatsoever in any of the provisions of such
deposit accounts, including, without limitation, their respective terms,
maturity, minimum required balances or withdrawal value.
(f) The
principal office of United Bank shall continue to be 00 Xxx Xxxxxx, Xxxx
Xxxxxxxxxxx, XX 00000 after the Effective Time. The former
offices of Commonwealth will be operated as offices of United Bank immediately
following the Effective Time.
2.2 Effective Time; Closing
Date. A closing in respect of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of United Bank, on
such time and date as United Bank shall designate, which date shall be the date
of the Effective Time of the Holding Company Merger.
2.3 Name of Surviving
Institution. The name of the Surviving Institution shall be
"United Bank."
2.4 Charter. On and
after the Effective Time, the Charter of United Bank as a Federal savings
association shall be the Charter of the Surviving Institution until amended in
accordance with applicable law.
2.5 Bylaws. On and
after the Effective Time, the Bylaws of United Bank as a Federal savings
association shall be the Bylaws of the Surviving Institution until amended in
accordance with applicable law.
2.6 Directors. Except
as otherwise provided in the Merger Agreement, on and after the Effective Time,
until changed in accordance with the Charter and Bylaws of the Surviving
Institution, the directors of the Surviving Institution shall be those persons
serving as directors of United Bank immediately prior to the Effective Time,
subject to the provision of Section 2.9 of the Holding Company Merger
Agreement. The directors of the Surviving Institution shall hold
office in accordance with the Charter and Bylaws of the Surviving
Institution.
3. MISCELLANEOUS
3.1 Conditions
Precedent. The respective obligations of each party under this
Agreement shall be subject to: (i) the receipt or waiver of all required
regulatory approvals and the expiration of any required waiting periods
specified by applicable Federal law; (ii) the completion of the Holding
Company Merger; and (iii) the approval of this Agreement by United
Financial Bancorp in its capacity as sole stockholder of Commonwealth and United
Bank.
3.2 Amendments. To the
extent permitted by the applicable Federal banking law, this Agreement may be
amended by a subsequent writing signed by the parties hereto upon the approval
of the board of directors of each of the parties hereto.
3
3.3 Successors. This
Agreement shall be binding on the successors of Commonwealth and United
Bank.
3.4 Governing Law. This
Agreement shall be governed by the laws of the United States of America except
to the extent Massachusetts law governs.
3.5 Paragraph
Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
3.6 Miscellaneous. This
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which constitute one and the same instrument.
3.7 Termination. This
Agreement shall terminate upon the termination of the Holding Company Merger
Agreement in accordance with its terms. This Agreement also may be
terminated at any time prior to the Effective Time by mutual consent of the
parties. In the event of the termination of this Agreement as
provided in this Section 3.7, this Agreement shall forthwith become null
and void and of no further force or effect and there shall be no liability or
obligation under this Agreement on the part of any of the parties hereto or any
of their respective directors, officers or affiliates.
IN WITNESS WHEREOF,
Commonwealth and United Bank have caused this Agreement to be executed by their
duly authorized officers as of the day and year first above
written.
ATTEST:
|
COMMONWEALTH
NATIONAL BANK
|
|||
/s/
Xxxxxxxxx Xxxxxxx
|
By:
|
/s/
Xxxxxxx X. Xxxxxx
|
||
Xxxxxxx
X. Xxxxxx
|
||||
Secretary
|
President
and Chief
|
|||
Executive
Officer
|
||||
ATTEST:
|
UNITED
BANK
|
|||
/s/
Xxxxx X. Xxxxxxx
|
By:
|
/s/
Xxxxxxx X. Xxxxxxx
|
||
Xxxxxxx
X. Xxxxxxx
|
||||
Secretary
|
Chairman,
President and Chief
|
|||
Executive
Officer
|
4