Exhibit 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 26, 2002
BETWEEN
BANKNORTH GROUP, INC.,
AND
IPSWICH BANCSHARES, INC.
================================================================================
TABLE OF CONTENTS
RECITALS
ARTICLE I
CERTAIN DEFINITIONS
Page No.
--------
1.01. Certain Definitions..............................................1
ARTICLE II
THE MERGER
2.01. The Merger.......................................................7
2.02. Effective Date and Effective Time; Closing.......................8
ARTICLE III
CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
3.01. Conversion of Shares.............................................9
3.02. Election Procedures..............................................9
3.03. Exchange Procedures..............................................12
3.04. Rights as Shareholders; Stock Transfers..........................14
3.05. No Fractional Shares.............................................14
3.06. Dissenting Shares................................................14
3.07. Anti-Dilution Provisions.........................................14
3.08. Withholding Rights...............................................15
3.09. Company Options..................................................15
3.10. Stock Units......................................................16
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forbearances of the Company......................................16
4.02. Forbearances of Parent...........................................19
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules.............................................19
5.02. Standard.........................................................19
5.03. Representations and Warranties of the Company....................20
5.04. Representations and Warranties of Parent.........................32
i
ARTICLE VI
COVENANTS
Page No.
--------
6.01. Reasonable Best Efforts..........................................37
6.02. Shareholder Approval.............................................37
6.03. Registration Statement...........................................38
6.04. Regulatory Filings...............................................39
6.05. Press Releases...................................................39
6.06. Access; Information..............................................40
6.07. Affiliates.......................................................40
6.08. Acquisition Proposals............................................41
6.09. Certain Policies.................................................41
6.10. Nasdaq Listing...................................................42
6.11. Indemnification..................................................42
6.12. Benefit Plans....................................................43
6.13. Bank Merger......................................................45
6.14. Termination Agreement; Employment and Noncompetition Agreement...45
6.15. Notification of Certain Matters..................................45
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the Merger.......45
7.02. Conditions to Obligation of the Company..........................46
7.03. Conditions to Obligations of Parent..............................47
ARTICLE VIII
TERMINATION
8.01. Termination......................................................48
8.02. Effect of Termination and Abandonment............................49
ARTICLE IX
MISCELLANEOUS
9.01. Survival.........................................................49
9.02. Waiver; Amendment................................................49
9.03. Counterparts.....................................................49
9.04. Governing Law....................................................50
9.05. Expenses.........................................................50
9.09. Notices..........................................................50
9.07. Entire Understanding; No Third Party Beneficiaries...............51
ii
9.08. Severability.....................................................51
9.09. Enforcement of the Agreement.....................................51
9.10. Interpretation...................................................51
9.11. Assignment.......................................................52
9.12. Alternative Structure............................................52
ANNEX A Form of Shareholder Agreement
ANNEX B Form of Stock Option Agreement
ANNEX C Termination Agreement by and among Banknorth, the Company, the
Company Bank, Eastern Bank, as Trustee, and Xxxxx X. Xxxx
ANNEX D Employment and Noncompetition Agreement between Banknorth and Xxxxx
X. Xxxx
iii
AGREEMENT AND PLAN OF MERGER, dated as of February 26, 2002 (this
"Agreement"), between Banknorth Group, Inc. ("Parent") and Ipswich Bancshares,
Inc. (the "Company").
RECITALS
A. The Company. The Company is a Massachusetts corporation, having
its principal place of business in Ipswich, Massachusetts.
B. Parent. Parent is a Maine corporation, having its principal
place of business in Portland, Maine.
C. Intention of the Parties. It is the intention of the parties to
this Agreement that the Merger provided for herein be treated as a
"reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
D. Board Action. The respective Boards of Directors of each of
Parent and the Company have determined that it is in the best interests of their
respective companies and their shareholders to consummate the Merger provided
for herein.
E. Shareholder Agreements. As a material inducement to Parent to
enter into this Agreement, and simultaneously with, the execution of this
Agreement, each Shareholder (as defined herein) is entering into an agreement,
in the form of Annex A hereto (collectively, the "Shareholder Agreements")
pursuant to which they have agreed, among other things, to vote their shares of
Company Common Stock in favor of this Agreement.
F. Stock Option Agreement. As a material inducement to the
willingness of Parent to consummate the transactions contemplated by this
Agreement, the Company is simultaneously entering into the Stock Option
Agreement, substantially in the form of Annex B hereto (the "Stock Option
Agreement"), pursuant to which the Company will grant to Parent an option to
acquire shares of Company Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01. Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below:
"Acquisition Proposal" has the meaning set forth in Section
6.08.
"Agreement" means this Agreement, as amended or modified from
time to time in accordance with Section 9.02.
"Articles of Merger" has the meaning set forth in Section 2.02.
"Bank Insurance Fund" means the Bank Insurance Fund maintained
by the FDIC.
"Bank Merger Agreement" has the meaning set forth in Section
6.13.
"Bank Merger" has the meaning set forth in Section 6.13.
"Benefit Plans" has the meaning set forth in Section 5.03(m).
"Business Day" means Monday through Friday of each week, except
a legal holiday recognized as such by the U.S. Government or any day on
which banking institutions in the State of Maine or the Commonwealth of
Massachusetts are authorized or obligated to close.
"Certificate" means any certificate which immediately prior to
the Effective Time represented shares of Company Common Stock.
"Closing" and "Closing Date" have the meanings set forth in
Section 2.02(b).
"Code" has the meaning set forth in the recitals to this
Agreement.
"Community Reinvestment Act" means the Community Reinvestment
Act of 1977, as amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Affiliates" has the meaning set forth in Section 6.07.
"Company Articles" means the Articles of Organization of the
Company.
"Company Bank" means Ipswich Savings Bank.
"Company Board" means the Board of Directors of the Company.
"Company Bylaws" means the Bylaws of the Company.
"Company Common Stock" means the common stock, $0.10 par value
per share, of the Company.
"Company Deferred Compensation Plan" means the Deferred
Compensation Plan for Directors of the Company.
"Company Group" means any "affiliated group" (as defined in
Section 1504(a) of the Code without regard to the limitations contained
in Section 1504(b) of the Code) that includes the Company and its
Subsidiaries or any predecessor of or any successor to the Company (or
to another such predecessor or successor).
"Company Loan Property" has the meaning set forth in Section
5.03(o).
2
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Preferred Stock" means the preferred stock, $0.10 per
share, of the Company.
"Company Stock" means, collectively, the Company Common Stock
and the Company Preferred Stock.
"Company Options" means the options to acquire Company Common
Stock issued under the Company Stock Option Plans.
"Company Regulatory Authorities" has the meaning set forth in
Section 5.03(i).
"Company Stock Option Plans" means (i) the Company 1992
Incentive and Non-qualified Stock Option Plan, (ii) the Company 1996
Stock Incentive Plan and (iii) the Company 1998 Stock Incentive Plan.
"Company Units" means stock units which are issued under the
Company Deferred Compensation Plan.
"Depositors Insurance Fund" means the Depositors Insurance of
the Commonwealth of Massachusetts.
"Derivatives Contract" has the meaning set forth in Section
5.03(q).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenting Shares" has the meaning set forth in Section 3.06.
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"Election Deadline" has the meaning set forth in Section
3.02(b).
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Laws" has the meaning set forth in Section
5.03(o).
"Equal Credit Opportunity Act" means the Equal Credit
Opportunity Act, as amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
3
"Exchange Agent" has the meaning set forth in Section 3.02(a).
"Exchange Ratio" has the meaning set forth in Section
3.01(c)(1)(i), subject to adjustment pursuant to Sections 3.02(f) and
3.07.
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Act" means the Federal Reserve Act, as amended.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any federal, state or local
court, administrative agency or commission or other governmental
authority or instrumentality.
"Hazardous Substance" has the meaning set forth in Section
5.03(o).
"Indemnified Party" and "Indemnifying Party" have the meanings
set forth in Section 6.11(a).
"Insurance Amount" has the meaning set forth in Section 6.11(c).
"Insurance Policies" has the meaning set forth in Section
5.03(w).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Loans" has the meaning set forth in Section 5.03(r).
"Maine Superintendent" means the Superintendent of the Bureau of
Banking of the State of Maine.
"Massachusetts Bank Commissioner" means the Commissioner of
Banks of the Commonwealth of Massachusetts.
"Massachusetts Board" means the Massachusetts Board of Bank
Incorporation.
"Material Adverse Effect" means, with respect to Parent or the
Company any effect that (i) is material and adverse to the financial
position, results of operations or business of Parent and its
Subsidiaries taken as a whole or the Company and its Subsidiaries taken
as a whole, as the case may be or (ii) would materially impair the
ability of any of Parent and its Subsidiaries or the Company and its
Subsidiaries to perform their respective obligations under this
Agreement or the Bank Merger Agreement or otherwise materially impede
the consummation of the Transactions; provided, however, that Material
Adverse Effect shall not be deemed to include the
4
impact of (a) changes in banking and similar laws of general
applicability or interpretations thereof by Governmental Authorities,
(b) changes in GAAP or regulatory accounting requirements applicable to
banks and their holding companies generally, (c) changes in general
economic conditions affecting banks and their holding companies
generally, (d) any modifications or changes to valuation policies and
practices, or expenses incurred, in connection with the Transactions or
restructuring charges taken in connection with the Transactions, in each
case in accordance with GAAP, and (e) with respect to the Company, the
effects of any action or omission taken with the prior consent of Parent
or as otherwise contemplated by the Agreement.
"MBCA" means the Maine Business Corporation Act, as amended.
"MBCL" means the Massachusetts Business Corporation Law, as
amended.
"Merger" has the meaning set forth in Section 2.01(a).
"Merger Consideration" means the number of whole shares of
Parent Common Stock, plus cash in lieu of any fractional share interest,
and/or the amount of cash into which shares of Company Common Stock
shall be converted pursuant to the provisions of Article III.
"MHPF" means the Massachusetts Housing Partnership Fund.
"Nasdaq" means The Nasdaq Stock Market, Inc.'s National Market.
"National Bank Act" means the National Bank Act, as amended.
"National Labor Relations Act" means the National Labor
Relations Act, as amended.
"OCC" means the Office of the Comptroller of the Currency.
"OREO" means other real estate owned.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Articles" means the Amended and Restated Articles of
Incorporation of Parent, as amended.
"Parent Benefits Plans" has the meaning set forth in Section
6.12(a).
"Parent Board" means the Board of Directors of Parent.
"Parent Bylaws" means the Bylaws of Parent.
"Parent Common Stock" means the common stock, $0.01 par value
per share, of Parent and, unless the context otherwise requires, related
Parent Rights.
"Parent Bank" means Banknorth, NA and any successor thereto.
5
"Parent Preferred Stock" means the preferred stock, $0.01 par
value per share, of Parent.
"Parent Rights" means the rights attached to shares of Parent
Common Stock pursuant to the Parent Rights Agreement.
"Parent Rights Agreement" means the Stockholder Rights
Agreement, dated as of September 12, 1989 and amended and restated as of
July 27, 1999 and as of July 25, 2000, between Parent and American Stock
Transfer & Trust Company, as Rights Agent.
"Parent Regulatory Authorities" has the meaning set forth in
Section 5.04(k).
"Pension Plan" has the meaning set forth in Section 5.03(m)(ii).
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust, limited liability
company or unincorporated organization.
"Previously Disclosed" by a party shall mean information set
forth in a section of its Disclosure Schedule corresponding to the
section of this Agreement where such term is used.
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"Registration Statement" has the meaning set forth in Section
6.03(a).
"Rights" means, with respect to any Person, warrants, options,
rights, convertible securities and other arrangements or commitments
which obligate the Person to issue or dispose of any of its capital
stock or other ownership interests.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning set forth in Sections 5.03(g)
and 5.04(g) in the case of the Company and Parent, respectively.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Shareholder Agreements" has the meaning set forth in the
recitals to this Agreement.
"Shareholders" means each director of the Company.
"Subsidiary" and "Significant Subsidiary" have the meanings
ascribed to those terms in Rule 1-02 of Regulation S-X of the SEC.
"Stock Option Agreement" has the meaning set forth in the
recitals to this Agreement.
"Surviving Corporation" has the meaning set forth in Section
2.01(a).
6
"Tax" and "Taxes" mean all federal, state, local or foreign
income, gross income, gains, gross receipts, sales, use, ad valorem,
goods and services, capital, production, transfer, franchise, windfall
profits, license, withholding, payroll, employment, disability, employer
health, excise, estimated, severance, stamp, occupation, property,
environmental, custom duties, unemployment or other taxes of any kind
whatsoever, together with any interest, additions or penalties thereto
and any interest in respect of such interest and penalties.
"Tax Returns" means any return, declaration or other report
(including elections, declarations, schedules, estimates and information
returns) with respect to any Taxes.
"Transactions" means the Merger and the Bank Merger.
"Treasury Stock" means shares of Company Stock held by the
Company or any of its Subsidiaries or by Parent or any of its
Subsidiaries, in each case other than in a fiduciary (including
custodial or agency) capacity or as a result of debts previously
contracted in good faith.
ARTICLE II
THE MERGER
2.01. The Merger.
(a) The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, the Company shall merge with and into Parent
in accordance with the applicable provisions of the MBCA and the MBCL (the
"Merger"), the separate corporate existence of the Company shall cease and
Parent shall survive and continue to exist as a corporation incorporated under
the MBCA (Parent, as the surviving corporation in the Merger, sometimes being
referred to herein as the "Surviving Corporation").
(b) Name. The name of the Surviving Corporation shall be "Banknorth
Group, Inc."
(c) Articles and Bylaws. The articles of incorporation and bylaws of
Parent immediately after the Merger shall be the Parent Articles and the Parent
Bylaws as in effect immediately prior to the Merger.
(d) Directors and Officers of the Surviving Corporation. The
directors and officers of Parent immediately after the Merger shall be the
directors and officers of Parent immediately prior to the Merger, until such
time as their successors shall be duly elected and qualified.
(e) Authorized Capital Stock. The authorized capital stock of the
Surviving Corporation upon consummation of the Merger shall be as set forth in
the Parent Articles immediately prior to the Merger.
(f) Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in Section 905 of the MBCA and Section 80 of the
MBCL. Without limiting the
7
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
(g) Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider that any further assignments or
assurances in law or any other acts are necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of the Company acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger, or (ii) otherwise carry out the
purposes of this Agreement, the Company, and its proper officers and directors,
shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such rights, properties or assets in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Surviving Corporation or otherwise to take any and
all such action.
2.02 Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in Article VII (other than those conditions that by their nature are to be
satisfied at the consummation of the Merger, but subject to the fulfillment or
waiver of those conditions), the parties shall cause articles of merger relating
to the Merger (the "Articles of Merger') to be filed with the Secretary of State
of the State of Maine pursuant to the MBCA and the Secretary of State of the
Commonwealth of Massachusetts pursuant to the MBCL on (i) a date selected by
Parent after such satisfaction or waiver which is no later than the later of (A)
five Business Days after such satisfaction or waiver or (B) the first month end
following such satisfaction or waiver, or (ii) such other date to which the
parties may agree in writing. The Merger provided for herein shall become
effective upon such filings or on such date as may be specified therein. The
date of such filings or such later effective date is herein called the
"Effective Date." The "Effective Time" of the Merger shall be the time of such
filings or as set forth in such filings.
(b) A closing (the "Closing") shall take place immediately prior to
the Effective Time at 10:00 a.m., Eastern Time, at the principal offices of
Parent in Portland, Maine, or at such other place, at such other time, or on
such other date as the parties may mutually agree upon (such date, the "Closing
Date"). At the Closing, there shall be delivered to Parent and the Company the
opinions, certificates and other documents required to be delivered under
Article VII hereof.
8
ARTICLE III
CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
3.01. Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of a holder of shares of Company
Common Stock:
(a) Each share of Parent Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall be unchanged by the Merger.
(b) Each share of Company Common Stock held as Treasury Stock
immediately prior to the Effective Time shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
(c) (1) Subject to Sections 3.02, 3.05, 3.06, 3.07 and 3.10, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
3.01(b)) shall be converted into, and shall be canceled in exchange for, the
right to receive, at the election of the holder thereof:
(i) the number of shares of Parent Common Stock which is
equal to the quotient (the "Exchange Ratio") determined by dividing (x)
$20.50 by (y) the Average Share Price of the Parent Common Stock (the
"Per Share Stock Consideration"), or
(ii) a cash amount equal to $20.50 per share of Company
Common Stock (the "Per Share Cash Consideration").
(2) For purposes of this Agreement:
(i) the "Aggregate Cash Consideration" shall amount to the
product of the number of shares of Company Common Stock (other than
Treasury Stock) outstanding immediately prior to the Effective Time
times .49 times $20.50; and
(ii) the "Average Share Price" of the Parent Common Stock
shall mean the average of the closing sales price of a share of Parent
Common Stock, as reported on Nasdaq (as reported by an authoritative
source), for the 20 trading-day period ending with the close of business
on the Business Day preceding the Effective Time.
3.02. Election Procedures.
(a) Parent shall designate an exchange agent to act as agent (the
"Exchange Agent") for purposes of conducting the election procedure and the
exchange procedure described in Sections 3.01 and 3.02. Provided that the
Company has delivered, or caused to be delivered, to the Exchange Agent all
information which is necessary for the Exchange Agent to perform its obligations
as specified herein, the Exchange Agent shall, no later than five (5) Business
Days after the Effective Date, mail or make available to each holder of record
of a Certificate or Certificates (i) a notice and letter of transmittal (which
shall specify that delivery shall be
9
effected, and risk of loss and title to the Certificates theretofore
representing shares of Company Common Stock shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Exchange
Agent such Certificate or Certificates in exchange for the consideration set
forth in Section 3.01(c) hereof deliverable in respect thereof pursuant to this
Agreement and (ii) an election form in such form as Parent and the Company shall
mutually agree (the "Election Form"). Each Election Form shall permit the holder
(or in the case of nominee record holders, the beneficial owner through proper
instructions and documentation) (i) to elect to receive Parent Common Stock with
respect to all of such holder's Company Common Stock as hereinabove provided
(the "Stock Election Shares"), (ii) to elect to receive cash with respect to all
of such holder's Company Common Stock as hereinabove provided (the "Cash
Election Shares"), or (iii) to indicate that such holder makes no such election
with respect to such holder's shares of Company Common Stock (the "No-Election
Shares"). Nominee record holders who hold Company Common Stock on behalf of
multiple beneficial owners shall indicate how many of the shares held by them
are Stock Election Shares, Cash Election Shares and No-Election Shares. If a
shareholder either (i) does not submit a properly completed Election Form in a
timely fashion or (ii) revokes an Election Form prior to the Election Deadline
and does not resubmit a properly completed Election Form prior to the Election
Deadline, the shares of Company Common Stock held by such shareholder shall be
designated No-Election Shares. Any Dissenting Shares shall be deemed to be Cash
Election Shares, and with respect to such shares the holders thereof shall in no
event be classified as Reallocated Stock Shares (as hereinafter defined).
(b) The term "Election Deadline" shall mean 5:00 p.m., Eastern Time,
on the 20th day following but not including the date of mailing of the Election
Form or such other date as Parent and the Company shall mutually agree upon.
(c) Any election to receive Parent Common Stock or cash 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 will
be properly completed only if accompanied by Certificates representing all
shares of Company Common Stock covered thereby, subject to the provisions of
paragraph (c) of Section 3.03. Any Election Form may be revoked or changed by
the person submitting such Election Form to the Exchange Agent by written notice
to the Exchange Agent only if such written notice is actually received by the
Exchange Agent at or prior to the Election Deadline. The Certificate or
Certificates representing Company Common Stock relating to any revoked Election
Form shall be promptly returned without charge to the person submitting the
Election Form to the Exchange Agent. The Exchange Agent shall have reasonable
discretion to determine when any election, modification or revocation is
received, whether any such election, modification or revocation 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. Neither Parent nor the Exchange Agent shall be under any
obligation to notify any person of any defect in an Election Form.
(d) Within ten (10) Business Days after the Election Deadline, the
Exchange Agent shall effect the allocation among holders of Company Common Stock
of rights to receive Parent Common Stock or cash in the Merger in accordance
with the Election Forms as follows:
10
(i) If the number of Cash Election Shares times the Per
Share Cash Consideration is less than the Aggregate Cash Consideration,
then:
(1) all Cash Election Shares (subject to Section
3.06 with respect to Dissenting Shares) shall be converted into the
right to receive cash,
(2) No-Election Shares shall then be deemed to be
Cash Election Shares to the extent necessary to have the total number of
Cash Election Shares times the Per Share Cash Consideration equal the
Aggregate Cash Consideration. If less than all of the No-Election Shares
need to be treated as Cash Election Shares, then the Exchange Agent
shall select which No-Election Shares shall be treated as Cash Election
Shares in such manner as the Exchange Agent shall determine, and all
remaining No-Election Shares shall thereafter be treated as Stock
Election Shares,
(3) If all of the No-Election Shares are treated as
Cash Election Shares under the preceding subsection and the total number
of Cash Election Shares times the Per Share Cash Consideration is less
than the Aggregate Cash Consideration, then the Exchange Agent shall
convert on a pro rata basis as described below a sufficient number of
Stock Election Shares into Cash Election Shares ("Reallocated Cash
Shares") such that the sum of the number of Cash Election Shares plus
the number of Reallocated Cash Shares times the Per Share Cash
Consideration equals the Aggregate Cash Consideration, and all
Reallocated Cash Shares will be converted into the right to receive
cash, and
(4) the Stock Election Shares which are not
Reallocated Cash Shares shall be converted into the right to receive
Parent Common Stock.
(ii) If the number of Cash Election Shares times the Per
Share Cash Consideration is greater than the Aggregate Cash
Consideration, then:
(1) all Stock Election Shares and all No-Election
Shares shall be converted into the right to receive Parent Common Stock,
(2) the Exchange Agent shall convert on a pro rata
basis as described below a sufficient number of Cash Election Shares
(excluding any Dissenting Shares)("Reallocated Stock Shares") such that
the number of remaining Cash Election Shares (including Dissenting
Shares) times the Per Share Cash Consideration equals the Aggregate Cash
Consideration, and all Reallocated Stock Shares shall be converted into
the right to receive Parent Common Stock, and
(3) the Cash Election Shares (subject to Section
3.06 with respect to Dissenting Shares) which are not Reallocated Stock
Shares shall be converted into the right to receive cash.
(iii) If the number of Cash Election Shares times the Per
Share Cash Consideration is equal to the Aggregate Cash Consideration,
then subparagraphs (d)(i)
11
and (ii) above shall not apply and all No-Election Shares and all Stock
Election Shares will be converted into the right to receive Parent
Common Stock.
(e) In the event that the Exchange Agent is required pursuant to
Section 3.02(d)(i)(3) to convert some Stock Election Shares into Reallocated
Cash Shares, each holder of Stock Election Shares shall be allocated a pro rata
portion of the total Reallocated Cash Shares. In the event the Exchange Agent is
required pursuant to Section 3.02(d)(ii)(2) to convert some Cash Election Shares
into Reallocated Stock Shares, each holder of Cash Election Shares shall be
allocated a pro rata portion of the total Reallocated Stock Shares.
(f) If the tax opinion referred to in Section 7.01(f) cannot be
rendered (as reasonably determined by Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.) as
a result of the Merger potentially failing to qualify as a reorganization under
Section 368(a) of the Code, then Parent shall reduce the Per Share Cash
Consideration and correspondingly increase the Per Share Stock Consideration,
based on the Average Share Price, in each case to the minimum extent necessary
to enable such tax opinion to be rendered.
3.03. Exchange Procedures.
(a) At the Effective Time, for the benefit of the holders of
Certificates, (i) Parent shall deliver to the Exchange Agent certificates
evidencing the number of shares of Parent Common Stock issuable and (ii) Parent
shall deliver, or cause Parent Bank to deliver, to the Exchange Agent the
Aggregate Cash Consideration payable, pursuant to this Article III in exchange
for Certificates representing outstanding shares of Company Common Stock. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of Parent 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.
(b) After completion of the allocation referred to in paragraph (d)
of Section 3.02, each holder of an outstanding Certificate or Certificates who
has surrendered such Certificate or Certificates to the Exchange Agent will,
upon acceptance thereof by the Exchange Agent, be entitled to a certificate or
certificates representing the number of whole shares of Parent Common Stock
and/or the amount of cash into which the aggregate number of shares of Company
Common Stock previously represented by such Certificate or Certificates
surrendered shall have been converted pursuant to this Agreement and, if such
holder's shares of Company Common Stock have been converted into Parent Common
Stock, any other distribution theretofore paid with respect to Parent Common
Stock issuable in the Merger, in each case without interest. The Exchange Agent
shall accept such Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. Each outstanding
Certificate which prior to the Effective Time represented Company Common Stock
and which is not surrendered to the Exchange Agent in accordance with the
procedures provided for herein shall, except as otherwise herein provided, until
duly surrendered to the Exchange Agent be deemed to evidence ownership of the
number of shares of Parent Common Stock or the right to receive the amount of
cash into which such Company Common Stock shall have been converted. After the
12
Effective Time, there shall be no further transfer on the records of the Company
of Certificates representing shares of Company Common Stock and if such
Certificates are presented to the Company for transfer, they shall be cancelled
against delivery of certificates for Parent Common Stock or cash as hereinabove
provided. No dividends which have been declared will be remitted to any person
entitled to receive shares of Parent Common Stock under Section 3.02 until such
person surrenders the Certificate or Certificates representing Company Common
Stock, at which time such dividends shall be remitted to such person, without
interest.
(c) Parent shall not be obligated to deliver cash and/or a
certificate or certificates representing shares of Parent Common Stock to which
a holder of Company Common Stock would otherwise be entitled as a result of the
Merger until such holder surrenders the Certificate or Certificates representing
the shares of Company Common Stock for exchange as provided in this Section
3.03, or, in default thereof, an appropriate affidavit of loss and indemnity
agreement and/or a bond as may be required by Parent. If any certificates
evidencing shares of Parent Common Stock are to be issued in a name other than
that in which the Certificate evidencing Company Common Stock surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed or accompanied by
an executed form of assignment separate from the Certificate and otherwise in
proper form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
certificate for shares of Parent Common Stock in any name other than that of the
registered holder of the Certificate surrendered or otherwise establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) Any portion of the shares of Parent Common Stock and cash
delivered to the Exchange Agent by Parent pursuant to Section 3.03(a) that
remains unclaimed by the shareholders of the Company for six months after the
Effective Time (as well as any proceeds from any investment thereof) shall be
delivered by the Exchange Agent to Parent. Any shareholders of Company who have
not theretofore complied with Section 3.03(b) shall thereafter look only to
Parent for the consideration deliverable in respect of each share of Company
Common Stock such shareholder holds as determined pursuant to this Agreement
without any interest thereon. If outstanding Certificates for shares of Company
Common Stock are not surrendered or the payment for them is not claimed prior to
the date on which such shares of Parent Common Stock or cash would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of Parent (and to the extent not in
its possession shall be delivered to it), free and clear of all claims or
interest of any person previously entitled to such property. Neither the
Exchange Agent nor any party to this Agreement shall be liable to any holder of
stock represented by any Certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Parent and the Exchange Agent shall be entitled to rely upon the stock transfer
books of the Company to establish the identity of those persons entitled to
receive the consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Parent and the Exchange Agent
shall be entitled to deposit any consideration represented thereby in
13
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
(e) Notwithstanding anything in this Agreement to the contrary,
Certificates surrendered for exchange by any Company Affiliate shall not be
exchanged for certificates representing shares of Parent Common Stock to which
such Company Affiliate may be entitled pursuant to the terms of this Agreement
until Parent has received a written agreement from such person as specified in
Section 6.07.
3.04. Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Company Stock shall cease to be, and shall have no rights as,
shareholders of the Company other than to receive the consideration provided
under this Article III. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company or the Surviving Corporation of shares
of Company Stock.
3.05. No Fractional Shares. Notwithstanding any other provision of
this Agreement, neither certificates nor scrip for fractional shares of Parent
Common Stock shall be issued in the Merger. Each holder of Company Common Stock
who otherwise would have been entitled to a fraction of a share of Parent Common
Stock shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the Average Share Price. No such holder shall be
entitled to dividends, voting rights or any other rights in respect of any
fractional share.
3.06. Dissenting Shares. Each outstanding share of Company Common
Stock the holder of which has perfected his right to dissent under the MBCL and
has not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
shares of Parent Common Stock or cash hereunder, and the holder thereof shall be
entitled only to such rights as are granted by the MBCL. The Company shall give
Parent prompt notice upon receipt by the Company of any such written demands for
payment of the fair value of such shares of Company Common Stock and of
withdrawals of such demands and any other instruments provided pursuant to the
MBCL. If any holder of Dissenting Shares shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent at or prior to the Effective
Time and shall have delivered a properly completed Election Form to the Exchange
Agent by the Election Deadline, the Dissenting Shares held by such holder shall
be converted into a right to receive Company Common Stock and/or cash in
accordance with the applicable provisions of this Agreement; and if any such
holder of Dissenting Shares shall not have delivered a properly completed
Election Form to the Exchange Agent by the Election Deadline, the Dissenting
Shares held by such holder shall be designated No-Election Shares. If any holder
of Dissenting Shares shall have effectively withdrawn or lost the right to
dissent (through failure to perfect or otherwise) after the Effective Time, the
Dissenting Shares held by such holder shall be converted on a share by share
basis into either the right to receive Parent Common Stock and/or cash in
accordance with the applicable provisions of this Agreement as Parent or the
Exchange Agent shall determine. Any payments made in respect of Dissenting
Shares shall be made by the Surviving Corporation.
3.07. Anti-Dilution Provisions. If, between the date hereof and the
Effective Time, the shares of Parent Common Stock shall be changed into a
different number or class of shares by
14
reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment, or a stock dividend thereon shall be
declared with a record date within said period, the Exchange Ratio shall be
adjusted accordingly.
3.08. Withholding Rights. Parent (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as Parent is required under the Code or any state, local or
foreign tax law or regulation thereunder to deduct and withhold with respect to
the making of such payment. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the holder of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
3.09. Company Options.
(a) At the Effective Time, and subject to the provisions of
paragraph (b) of this Section 3.09, each Company Option which is outstanding and
unexercised immediately prior to the Effective Time, whether or not then vested
and exercisable, shall be terminated and each grantee thereof shall be entitled
to receive, in lieu of each share of Company Common Stock that would otherwise
have been issuable upon the exercise thereof, an amount of cash computed by
multiplying (i) the difference between (x) the Per Share Cash Consideration and
(y) the per share exercise price applicable to such Company Option by (ii) the
number of such shares of Company Common Stock subject to such Company Option.
The Company agrees to take or cause to be taken all action necessary to provide
for termination of the Company Options covered by this Section 3.09(a) and the
payment of the amounts required in connection therewith effective at or before
the Effective Time.
(b) Notwithstanding the provisions of paragraph (a) of this Section
3.09, in the event that a holder of Company Options so elects pursuant to a
written election submitted to the Company prior to the Election Deadline, which
shall be in such form as shall be prescribed by the Company and reasonably
satisfactory to Parent, each Company Option held by such holder which is
outstanding and unexercised immediately prior to the Effective Time, whether or
not then vested and exercisable, shall cease to represent a right to acquire
shares of Company Common Stock and shall be converted automatically into an
option to purchase shares of Parent Common Stock, and Parent shall assume each
Company Option, in accordance with the terms of the applicable Company Stock
Option Plan and stock option or other agreement by which it is evidenced, except
that from and after the Effective Time, (i) Parent and the Human Resources
Committee of its Board of Directors shall be substituted for the Company and the
committee of the Company's Board of Directors (including, if applicable, the
entire Board of Directors of the Company) administering such Company Stock
Option Plan, (ii) each Company Option assumed by Parent may be exercised solely
for shares of Parent Common Stock, (iii) the number of shares of Parent Common
Stock subject to such Company Option shall be equal to the number of shares of
Company Common Stock subject to such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, provided that any fractional
shares of Parent Common Stock resulting from such multiplication shall be
rounded down to the nearest share, and (iv) the per share exercise price under
each such Company Option shall be adjusted by dividing the per share exercise
price under each such Company Option by the Exchange Ratio, provided that such
15
exercise price shall be rounded up to the nearest cent. Notwithstanding clauses
(iii) and (iv) of the preceding sentence, each Company Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Code, and the regulations promulgated thereunder, so as not to constitute a
modification, extension or renewal of the option within the meaning of Section
424(h) of the Code. Parent and the Company agree to take all necessary steps to
effect the foregoing provisions of this Section 3.09(b).
(c) Prior to the Effective Time, the Company shall take or cause to
be taken all actions required under the Company Stock Option Plans to provide
for the actions set forth in paragraphs (a) and (b) of this Section 3.09, which
actions shall be reasonably satisfactory to Parent.
(d) Within five Business Days after the Effective Time, Parent shall
file a registration statement on Form S-3 or Form S-8, as the case may be (or
any successor or other appropriate forms), with respect to the shares of Parent
Common Stock subject to the options referred to in paragraph (b) of this Section
3.09 and shall use its reasonable efforts to maintain the current status of the
prospectus or prospectuses contained therein for so long as such options remain
outstanding in the case of a Form S-8 or, in the case of a Form S-3, until the
shares subject to such options may be sold without a further holding period
under Rule 144 under the Securities Act.
3.10. Company Units. For purposes of Sections 3.01 and 3.02 hereof,
each Company Unit which is outstanding under the Company Deferred Compensation
Plan immediately prior to the Effective Time shall be treated as an outstanding
share of Company Common Stock. At the time that the Exchange Agent provides
holders of Company Common Stock an Election Form pursuant to Section 3.02(a),
the Company agrees to provide a comparable form to the holders of Company Units
in order to permit them to make elections pursuant thereto by the Election
Deadline with respect to the manner of conversion of their Company Units
pursuant to the terms of the Company Deferred Compensation Plan and this
Agreement.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Forbearances of the Company. From the date hereof until the
Effective Time, except as expressly contemplated or permitted by this Agreement
or as Previously Disclosed, without the prior written consent of Parent, the
Company will not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct its business other than in the ordinary
and usual course consistent with past practice or fail to use reasonable best
efforts to preserve its business organization, keep available the present
services of its employees and preserve for itself and Parent the goodwill of the
customers of the Company and its Subsidiaries and others with whom business
relations exist.
(b) Capital Stock. Other than pursuant to the Stock Option Agreement
and Rights set forth on Schedule 4.01(b) of the Company's Disclosure Schedule
and outstanding on the date
16
hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize
the creation of, any additional shares of stock or any Rights or (ii) permit any
additional shares of stock to become subject to grants of employee or director
stock options or other Rights.
(c) Dividends; Etc. (a) Make, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any distribution on any
shares of Company Stock, other than (A) regular quarterly cash dividends at a
rate not in excess of $ 0.12 per share on the Company Common Stock and (B)
dividends from wholly-owned Subsidiaries to the Company or another wholly-owned
Subsidiary of the Company or (b) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock, provided, however, that any dividend under the Company's normal quarterly
dividend payment schedule that has been declared by the Company Board but not
paid prior to the Effective Time shall be paid immediately prior to the
Effective Time.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of the Company or its
Subsidiaries or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, provided that no such increase shall
result in an annual adjustment of more than 4%, (ii) for other changes that are
required by applicable law, (iii) to satisfy contractual obligations existing as
of the date hereof and set forth in Schedule 4.01(d) of the Company's Disclosure
Schedule or (iv) for grants of awards to newly-hired employees consistent with
past practice.
(e) Hiring. Hire any person as an employee of the Company or any of
its Subsidiaries or promote any employee, except (i) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule 4.01(e) of
the Company's Disclosure Schedule and (ii) persons hired to fill any vacancies
arising after the date hereof and whose employment is terminable at the will of
the Company or a Subsidiary of the Company, as applicable, other than any person
to be hired who would have a base salary, including any guaranteed bonus or any
similar bonus, considered on an annual basis of more than $50,000.
(f) Benefit Plans. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy contractual obligations
existing as of the date hereof and set forth on Schedule 4.01(f) of the
Company's Disclosure Schedule) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare contract, plan
or arrangement, or any trust agreement (or similar arrangement) related thereto,
in respect of any director, officer or employee of the Company or its
Subsidiaries or take any action to accelerate the vesting or exercisability of
stock options, restricted stock or other compensation or benefits payable
thereunder.
(g) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or properties
except in the ordinary course of business consistent with past practice and in a
transaction that, together with all other such transactions, is not material to
the Company and its Subsidiaries taken as a whole.
17
(h) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of
the assets, business, deposits or properties of any other entity.
(i) Capital Expenditures. Make any capital expenditures other than
capital expenditures in the ordinary course of business consistent with past
practice in amounts not exceeding $50,000 individually or $500,000 in the
aggregate.
(j) Governing Documents. Amend the Company Articles or Company
Bylaws or the articles of incorporation or bylaws (or equivalent documents) of
any Subsidiary of the Company.
(k) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
changes in laws or regulations or GAAP.
(l) Contracts. Except in the ordinary course of business consistent
with past practice or as otherwise permitted under this Section 4.01, enter into
or terminate any Material Contract (as defined in Section 5.03(k)) or amend or
modify in any material respect any of its existing Material Contracts.
(m) Claims. Enter into any settlement or similar agreement with
respect to any action, suit, proceeding, order or investigation to which the
Company or any of its Subsidiaries is or becomes a party after the date of this
Agreement, which settlement, agreement or action involves payment by the Company
and its Subsidiaries of an amount which exceeds $50,000 and/or would impose any
material restriction on the business of the Company or create precedent for
claims that are reasonably likely to be material to the Company and its
Subsidiaries taken as a whole.
(n) Banking Operations. Enter into any new material line of business
or change its material lending, investment, underwriting, risk and asset
liability management and other material banking and operating policies, except
as required by applicable law, regulation or policies imposed by any
Governmental Authority.
(o) Derivatives Contracts. Enter into any Derivatives Contract,
except in the ordinary course of business consistent with past practice.
(p) Indebtedness. Incur any indebtedness for borrowed money (other
than deposits, federal funds purchased, cash management accounts, borrowings
from the Federal Home Loan Bank of Boston and securities sold under agreements
to repurchase, in each case in the ordinary course of business consistent with
past practice) or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other Person, other than in the
ordinary course of business consistent with past practice.
(q) Adverse Actions. (i) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) take any
action that is intended or is reasonably likely to result in (x)
18
any of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time at or prior to the Effective
Time, (y) any of the conditions to the Merger set forth in Article VII not being
satisfied or (z) a material violation of any provision of this Agreement, the
Bank Merger Agreement or the Stock Option Agreement except, in each case, as may
be required by applicable law or regulation.
(r) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
4.02. Forbearances of Parent. From the date hereof until the Effective
Time, except as expressly contemplated or permitted by this Agreement, without
the prior written consent of the Company, Parent will not, and will cause each
of its Subsidiaries not to:
(a) Adverse Actions. (i) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code, provided,
however, that nothing contained herein shall limit the ability of Parent to
exercise its rights under the Stock Option Agreement, or (ii) take any action
that is intended or is reasonably likely to result in (x) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(y) any of the conditions to the Merger set forth in Article VII not being
satisfied or (z) a material violation of any provision of this Agreement, the
Bank Merger Agreement or the Stock Option Agreement except, in each case, as may
be required by applicable law or regulation.
(b) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Disclosure Schedules. On or prior to the date hereof, Parent has
delivered to the Company a schedule and the Company has delivered to Parent a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
provided, however, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02 and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that, absent such inclusion in the Disclosure Schedule, such
item is or would be reasonably likely to result in a Material Adverse Effect.
5.02. Standard. No representation or warranty of the Company or Parent
contained in Sections 5.03 or 5.04, respectively, shall be deemed untrue or
incorrect, and no party hereto shall
19
be deemed to have breached a representation or warranty, as a consequence of the
existence of any fact, event or circumstance unless such fact, circumstance or
event, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty contained in
Section 5.03 or 5.04, has had or is reasonably likely to have a Material Adverse
Effect on the party making such representation or warranty.
5.03. Representations and Warranties of the Company. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed, the Company hereby
represents and warrants to Parent:
(a) Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. The Company is duly qualified to do business and
is in good standing in each jurisdiction where its ownership or leasing of
property or assets or the conduct of its business requires it to be so
qualified. The Company has in effect all federal, state, local and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as now conducted.
(b) Company Capital Stock. The authorized capital stock of the
Company consists solely of 12,000,000 shares of Company Common Stock, of which
1,931,849 shares are outstanding as of the date hereof, and 1,000,000 shares of
Company Preferred Stock, of which no shares are outstanding. As of the date
hereof, 604,900 shares of the Company Common Stock were held in treasury by the
Company or otherwise directly or indirectly owned by the Company. The
outstanding shares of Company Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, and none of the outstanding shares
of Company Common Stock have been issued in violation of the preemptive rights
of any Person. Section 5.03(b) of the Company's Disclosure Schedule sets forth
(i) for each Company Stock Option, the name of the grantee, the date of the
grant, the type of grant, the status of the option grant as qualified or
non-qualified under Section 422 of the Code, the number of shares of Company
Common Stock subject to each option, the number of shares of Company Common
Stock subject to options that are currently exercisable and the exercise price
per share and (ii) for each Company Unit outstanding under the Company Deferred
Compensation Plan, the name of the holder and the number of Company Units held
by such holder. Except as set forth in the preceding sentence and other than
pursuant to the Stock Option Agreement, there are no shares of Company Stock
reserved for issuance, the Company does not have any Rights issued or
outstanding with respect to Company Stock, and the Company does not have any
commitment to authorize, issue or sell any Company Stock or Rights.
(c) Subsidiaries.
(i) (A) The Company has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) the Company owns, directly or indirectly, all
the issued and outstanding equity securities of each of its
Subsidiaries, (C) no equity securities of any of its Subsidiaries are or
may become required to be issued (other than to the Company) by reason
of any Right or otherwise, (D) there are no contracts, commitments,
understandings or arrangements by which any of its Subsidiaries is or
may be bound to sell or otherwise transfer any of its equity securities
(other than to the Company or any of its wholly-owned Subsidiaries),
(E) there are no
20
contracts, commitments, understandings, or arrangements relating to the
Company's rights to vote or to dispose of such securities and (F) all
the equity securities of the Company's Subsidiaries held by the Company
or its Subsidiaries are fully paid and nonassessable and are owned by
the Company or its Subsidiaries free and clear of any Liens.
(ii) Except for securities and other interests held in a
fiduciary capacity and beneficially owned by third parties or taken in
consideration of debts previously contracted, the Company does not own
beneficially, directly or indirectly, any equity securities or similar
interests of any Person or any interest in a partnership or joint
venture of any kind other than its Subsidiaries and stock in the Federal
Home Loan Bank of Boston.
(iii) Each of the Company's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so
qualified.
(iv) The deposit accounts of the Company Bank are insured by
the Bank Insurance Fund and the Depositors Insurance Fund in the manner
and to the maximum extent provided by applicable law, and the Company
Bank has paid all deposit insurance premiums and assessments required by
applicable laws and regulations.
(d) Corporate Power. Each of the Company and its Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject to receipt of all
necessary approvals of Governmental Authorities and the approval of the
Company's shareholders of this Agreement.
(e) Corporate Authority. Subject to the approval of this Agreement
by the holders of the outstanding Company Common Stock, this Agreement and the
Stock Option Agreement and the transactions contemplated hereby and thereby
have been authorized by all necessary corporate action of the Company and the
Company Board on or prior to the date hereof. The Company has duly executed and
delivered this Agreement and the Stock Option Agreement and, assuming due
authorization, execution and delivery by Parent, each of this Agreement and the
Stock Option Agreement is a valid and legally binding obligation of the
Company, enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
(f) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or waivers by, or filings
or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by the Company or any of its
Subsidiaries in connection with the execution, delivery or performance
by the Company or the Company Bank of this Agreement, the Bank Merger
21
Agreement and the Stock Option Agreement, as applicable, or to
consummate the Transactions and the other transactions contemplated
hereby and thereby, except for (A) filings of applications or notices
with, and approvals or waivers by, the Federal Reserve Board, the OCC,
the Massachusetts Bank Commissioner, the Depositors Insurance Fund, the
Maine Superintendent, the Massachusetts Board and the MHPF, as required,
(B) filings with the SEC and state securities authorities in connection
with the issuance of Parent Common Stock in the Merger, (C) the filing
of Articles of Merger with the Secretary of State of the State of Maine
pursuant to the MBCA and the Secretary of State of the Commonwealth of
Massachusetts pursuant to the MBCL, (D) the approval of this Agreement
by the holders of a majority of the outstanding shares of Company Common
Stock and (E) such corporate approvals and such consents or approvals
of, or waivers by, or filings or registrations with, certain of the
foregoing federal and state banking agencies in connection with the Bank
Merger. As of the date hereof, the Company is not aware of any reason
why the approvals set forth above and referred to in Section 7.01(b)
will not be received in a timely manner and without the imposition of a
condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt of the approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, the
execution, delivery and performance of this Agreement, the Bank Merger
Agreement and the Stock Option Agreement by the Company and the Company
Bank, as applicable, and the consummation of the Transactions and the
other transactions contemplated hereby and thereby do not and will not
(A) constitute a breach or violation of, or a default under, or give
rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries or any of their respective properties
is subject or bound, (B) constitute a breach or violation of, or a
default under, the articles of association or bylaws (or similar
governing documents) of the Company or any of its Subsidiaries or (C)
require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) Financial Reports; Undisclosed Liabilities.
(i)(A) The Company's Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000, December 31, 1999 and December 31, 1998
and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it
subsequent to December 31, 1998 with the SEC (collectively, the
Company's "SEC Documents"), as of the date filed or to be filed and as
amended prior to the date hereof, (A) complied or will comply in all
material respects as to form with the applicable securities regulations
of the SEC as the case may be and (B) did not and will not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that information as of a later date shall be
deemed to modify information as of an earlier date; and each of the
balance sheets contained in any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present,
the consolidated financial
22
position of the Company and its Subsidiaries as of its date, and each of
the consolidated statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such SEC Documents
(including any related notes and schedules thereto) fairly presents, or
will fairly present, the consolidated results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of
the Company and its Subsidiaries for the periods to which they relate,
in each case in accordance with GAAP consistently applied during the
periods involved.
(i)(B) The draft audited consolidated financial statements of
the Company at December 31, 2001 and 2000 and for each of the years in
the three-year period ended December 31, 2001, delivered by the Company
to Parent prior to the execution of this Agreement, (A) comply in all
material respects as to form with the applicable securities regulations
of the SEC and (B) do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as
of an earlier date; and each of the balance sheets contained in such
financial statements (including the related notes and schedules thereto)
fairly presents the consolidated financial position of the Company and
its Subsidiaries as of its date, and each of the consolidated statements
of income and changes in shareholders' equity and cash flows or
equivalent statements in such financial statements (including any
related notes and schedules thereto) fairly presents the consolidated
results of operations, changes in shareholders' equity and changes in
cash flows, as the case may be, of the Company and its Subsidiaries for
the periods to which they relate, in each case in accordance with GAAP
consistently applied during the periods involved.
(ii) Since September 30, 2001, neither the Company nor any of
its Subsidiaries has incurred any liability other than in the ordinary
course of business consistent with past practice (excluding the
incurrence of expenses related to this Agreement and the transactions
contemplated hereby).
(iii) Since September 30, 2001, (A) the Company and its
Subsidiaries have conducted their respective businesses in the ordinary
and usual course consistent with past practice (excluding the incurrence
of expenses related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and
events (described in any paragraph of this Section 5.03 or otherwise),
is reasonably likely to have a Material Adverse Effect with respect to
the Company.
(iv) No agreement pursuant to which any loans or other assets
have been or shall be sold by the Company or its Subsidiaries entitled
the buyer of such loans or other assets, unless there is material breach
of a representation or covenant by the Company or its Subsidiaries, to
cause the Company or its Subsidiaries to repurchase such loan or other
asset or the buyer to pursue any other form of recourse against the
Company or its Subsidiaries. Except for regular quarterly cash dividends
at the rate of $0.12 per share on the Company Common Stock, since
December 31, 1999, no cash, stock or other dividend or any other
distribution with respect to the stock of the Company or any of its
23
Subsidiaries have been declared, set aside or paid. No shares of the
stock of the Company have been purchased, redeemed or otherwise
acquired, directly or indirectly, by the Company since September 30,
2001, and no agreements have been made to do the foregoing.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against the Company or any of its
Subsidiaries and, to the Company's knowledge, no such litigation, claim or other
proceeding has been threatened and there are no facts which could reasonably
give rise to such litigation, claim or other proceeding.
(i) Regulatory Matters.
(i) Neither the Company nor any of its Subsidiaries nor any
of any of their respective properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from, any federal or state governmental
agency or authority charged with the supervision or regulation of
financial institutions or issuers of securities or engaged in the
insurance of deposits or the supervision or regulation of it
(collectively, the "Company Regulatory Authorities"). The Company and
its Subsidiaries have paid all assessments made or imposed by any
Company Regulatory Authority.
(ii) Neither the Company nor any its Subsidiaries has been
advised by, or has any knowledge of facts which could give rise to an
advisory notice by, any Company Regulatory Authority that such Company
Regulatory Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(j) Compliance With Laws. Each of the Company and its Subsidiaries:
(i) is in material compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act, the Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Company's knowledge, no suspension or cancellation of any of them is
threatened; and
24
(iii) has received, since December 31, 1999, no notification
or communication from any Governmental Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit or
governmental authorization (nor, to the Company's knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for documents listed as
exhibits to the SEC Documents, neither the Company nor any of its Subsidiaries
is a party to, bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is a "Material
Contract" within the meaning of Item 601(b)(10) of the SEC's Regulation S-K or
(ii) that materially restricts the conduct of business by the Company or by any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in
material default under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits,
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default. No power of attorney or
similar authorization given directly or indirectly by the Company or any of its
Subsidiaries is currently outstanding.
(l) No Brokers. No action has been taken by the Company or any of
its Subsidiaries that would give rise to any valid claim against any party
hereto for a brokerage commission, finder's fee or other like payment with
respect to the transactions contemplated by this Agreement and the Stock Option
Agreement, excluding a Previously Disclosed fee to be paid to Xxxxx, Xxxxxxxx &
Xxxxx, Inc.
(m) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies
or arrangements covering current or former employees of the Company and
its Subsidiaries (the "Employees") and current or former directors of
the Company including, but not limited to, "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and deferred compensation,
stock option, stock purchase, stock appreciation rights, stock based,
incentive and bonus plans (the "Benefits Plans"), are Previously
Disclosed in the Disclosure Schedule. True and complete copies of all
Benefit Plans including, but not limited to, any trust instruments and
insurance contracts forming a part of any Benefit Plans and all
amendments thereto have been provided or made available to Parent.
(ii) All Benefits Plans other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees, to the
extent subject to ERISA, are in substantial compliance with ERISA. Each
Benefit Plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended
to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service, and
the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter or the loss of the
qualification of such Pension Plan under Section 401(a) of the Code.
25
There is no material pending or, to the Company's knowledge, threatened
litigation relating to the Benefits Plans. Neither the Company nor any
of its Subsidiaries has engaged in a transaction with respect to any
Benefit Plan or Pension Plan that, assuming the taxable period of such
transaction expired as of the date hereof, could subject the Company or
any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount which would be
material.
(iii) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA Affiliate"). Neither the Company nor any of its Subsidiaries has
incurred, and neither expects to incur, any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived,
has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will
be required to be filed in connection with the transactions contemplated
by this Agreement.
(iv) All contributions required to be made under the terms of
any Benefit Plan have been timely made or have been reflected on the
financial statements of the Company included in the Company's SEC
Documents. Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302 of
ERISA and no ERISA Affiliate has an outstanding funding waiver. Neither
the Company nor any of its Subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) All Pension Plans subject to Title IV of ERISA have been
terminated prior to the date hereof.
(vi) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan,
other than coverage as may be required under Section 4980B of the Code
or Part 6 of Title I of ERISA, or under the continuation of coverage
provisions of the laws of any state or locality. The Company or any of
its Subsidiaries may amend or terminate any such Benefit Plan at any
time without incurring any liability thereunder.
(vii) None of the execution of this Agreement, shareholder
approval of this Agreement or consummation of the transactions
contemplated by this Agreement will (A) entitle any employees of the
Company or any of its Subsidiaries to severance pay or any increase in
severance pay upon any termination of employment after the date hereof,
(B) accelerate the time of payment or vesting or trigger any payment or
funding (through a
26
grantor trust or otherwise) of compensation or benefits under, increase
the amount payable or trigger any other material obligation pursuant to,
any of the Benefit Plans, (C) result in any breach or violation of, or a
default under, any of the Benefit Plans or (D) result in any payment
that would be a "parachute payment" to a "disqualified individual" as
those terms are defined in Section 280G of the Code, without regard to
whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(n) Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of a proceeding asserting
that it has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel the Company or any of its
Subsidiaries to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving it or any
of its Subsidiaries pending or, to the Company's knowledge, threatened, nor is
the Company or any of its Subsidiaries aware of any activity involving its
employees seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) Environmental Matters.
(i) The Company and its Subsidiaries are in compliance with
applicable Environmental Laws; (ii) to the Company's knowledge, no real
property (including buildings or other structures) currently or formerly
owned or operated by the Company or any of its Subsidiaries, or any
property in which the Company or any of its Subsidiaries has held a
security interest, Lien or a fiduciary or management role ("Company Loan
Property"), has been contaminated with, or has had any release of, any
Hazardous Substance except in compliance with Environmental Laws; (iii)
neither the Company nor any of its Subsidiaries could be deemed the
owner or operator of, or has participated in the management regarding
Hazardous Substances of, any Company Loan Property which has been
contaminated with, or has had any release of, any Hazardous Substance
except in compliance with Environmental Laws; (iv) neither the Company
nor any of its Subsidiaries has any liability for any Hazardous
Substance disposal or contamination on any third party property; (v)
neither the Company nor any of its Subsidiaries has received any notice,
demand letter, claim or request for information alleging any violation
of, or liability under, any Environmental Law; (vi) neither the Company
nor any of its Subsidiaries is subject to any order, decree, injunction
or other agreement with any Governmental Authority or any third party
relating to any Environmental Law; (vii) to the Company's knowledge,
there are no circumstances or conditions (including the presence of
asbestos, underground storage tanks, lead products, polychlorinated
biphenyls, prior manufacturing operations, dry-cleaning, or automotive
services) involving the Company or any of its Subsidiaries, any
currently or formerly owned or operated property, or any Company Loan
Property, that could reasonably be expected to result in any claims,
liability or investigations against the Company or any of its
Subsidiaries, result in any restrictions on the ownership, use, or
transfer of any property pursuant to any Environmental Law, or adversely
affect the value of any Company Loan Property; and (viii) the Company
has delivered to Parent copies of all environmental
27
reports, studies, sampling data, correspondence, filings and other
environmental information in its possession or reasonably available to
it relating to the Company, its Subsidiaries and any currently or
formerly owned or operated property or any Company Loan Property.
As used herein, the term "Environmental Laws" means any federal,
state or local law, regulation, order, decree, permit, authorization,
opinion or agency requirement relating to: (A) the protection or
restoration of the environment, health, safety, or natural resources,
(B) the handling, use, presence, disposal, release or threatened release
of any Hazardous Substance or (C) wetlands, indoor air, pollution,
contamination or any injury or threat of injury to persons or property
in connection with any Hazardous Substance; and the term "Hazardous
Substance" means any substance that is: (A) listed, classified or
regulated pursuant to any Environmental Law, (B) any petroleum product
or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive materials or radon or
(C) any other substance which is the subject of regulatory action by any
Governmental Authority in connection with any Environmental Law.
(p) Tax Matters.
(i)(A) All Tax Returns that are required to be filed on or
before the Effective Date (taking into account any extensions of time
within which to file which have not expired) by or with respect to the
Company Group have been or will be timely filed on or before the
Effective Date, (B) all such Tax Returns are or will be true and
complete in all material respects, (C) all Taxes shown to be due on the
Tax Returns referred to in clause (A) have been or will be timely paid
in full, (D) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate Tax
authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (E) all
deficiencies asserted or assessments made as a result of examinations
conducted by any taxing authority have been paid in full, (F) no
material issues that have been raised by the relevant taxing authority
in connection with the examination of any of the Tax Returns referred to
in clause (A) are currently pending and (G) no member of the Company
Group has waived any statutes of limitation with respect to any Taxes of
the Company or any of its Subsidiaries.
(ii) The Company has made available to Parent true and
correct copies of the United States federal income Tax Returns filed by
the Company and its Subsidiaries for each of the three most recent
fiscal years ended on or before December 31, 2000.
(iii) Neither the Company nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that
accrued on or before the end of the most recent period covered by the
Company's SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in the Company's SEC Documents filed on or prior to
the date hereof.
28
(iv) Neither the Company nor any of its Subsidiaries is a
party to any Tax allocation or sharing agreement, is or has been a
member of an affiliated group filing consolidated or combined Tax
Returns (other than a group the common parent of which is or was the
Company) or otherwise has any liability for the Taxes of any Person
(other than the Company and its Subsidiaries).
(v) No closing agreements, private letter rulings, technical
advice memoranda or similar agreement or rulings have been entered into
or issued by any taxing authority with respect to the Company and its
Subsidiaries.
(vi) Neither the Company nor any of its Subsidiaries
maintains any compensation plans, programs or arrangements the payments
under which would not reasonably be expected to be deductible as a
result of the limitations under Section 162(m) of the Code and the
regulations issued thereunder.
(vii) As of the date hereof, the Company has no reason to
believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(viii) (A) No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the Transactions and (B) all
Taxes that the Company or any of its Subsidiaries is or was required by
law to withhold or collect have been duly withheld or collected and, to
the extent required by applicable law, have been paid to the proper
Governmental Authority or other Person.
(q) Risk Management Instruments. Neither the Company nor any of its
Subsidiaries is a party or has agreed to enter into an exchange traded or
over-the-counter equity, interest rate, foreign exchange or other swap, forward,
future, option, cap, floor or collar or any other contract that is not included
on the balance sheet and is a derivatives contract (including various
combinations thereof) (each, a "Derivatives Contract") or owns securities that
(i) are referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate mortgage
derivatives" or (ii) are likely to have changes in value as a result of interest
or exchange rate changes that significantly exceed normal changes in value
attributable to interest or exchange rate changes, except for those Derivatives
Contracts and other instruments legally purchased or entered into in the
ordinary course of business, consistent with safe and sound banking practices
and regulatory guidance. All of such Derivatives Contracts or other instruments,
are legal, valid and binding obligations of the Company or any of its
Subsidiaries enforceable in accordance with their terms (except as enforcement
may be limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally), and are in full force and effect. The
Company and its Subsidiaries have duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations to
perform have accrued; and, to the Company's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder which would have or would reasonably be expected to have a Material
Adverse Effect on the Company.
29
(r) Loans; Nonperforming and Classified Assets.
(i) Each loan agreement, note or borrowing arrangement,
including without limitation portions of outstanding lines of credit and
loan commitments (collectively, "Loans"), on the books and records of
the Company and its Subsidiaries, was made and has been serviced in all
material respects in accordance with customary lending standards in the
ordinary course of business, is evidenced in all material respects by
appropriate and sufficient documentation and, to the knowledge of the
Company, constitutes the legal, valid and binding obligation of the
obligor named therein, subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditor's rights or by
general equity principles.
(ii) The Company has Previously Disclosed as to the Company
and each Company Subsidiary as of the latest practicable date: (i) any
written or, to the Company's knowledge, oral Loan under the terms of
which the obligor is 60 or more days delinquent in payment of principal
or interest, or to the Company's knowledge, in default of any other
material provision thereof; (ii) each Loan which has been classified as
"substandard," "doubtful," "loss" or "special mention" (or words of
similar import) by the Company, a Company Subsidiary or an applicable
regulatory authority (it being understood that no representation is
being made that the FDIC or the Massachusetts Bank Commissioner would
agree with the loan classifications established by the Company); (iii) a
listing of the OREO acquired by foreclosure or by deed-in-lieu thereof,
including the book value thereof; and (iv) each Loan with any director,
executive officer or five percent or greater shareholder of the Company
or a Company Subsidiary, or to the best knowledge of the Company, any
Person controlling, controlled by or under common control with any of
the foregoing.
(s) Properties. All real and personal property owned by the Company
or a Subsidiary of the Company or presently used by any of them in its
respective business is in an adequate condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary course of
business consistent with its past practices. The Company has good and marketable
title free and clear of all Liens to all of the material properties and assets,
real and personal, reflected on the consolidated statement of financial
condition of the Company as of September 30, 2001 included in the Company's SEC
Documents or acquired after such date, other than properties sold by the Company
in the ordinary course of business, except (i) Liens for current taxes and
assessments not yet due or payable (ii) pledges to secure deposits and other
Liens incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the consolidated
statement of financial condition of the Company as of September 30, 2001
included in the Company's SEC Documents. All real and personal property which is
material to the Company's business on a consolidated basis and leased or
licensed by the Company or a Subsidiary of the Company is held pursuant to
leases or licenses which are valid and enforceable in accordance with their
respective terms and such leases will not terminate or lapse prior to the
Effective Time.
(t) Intellectual Property. The Company and each Subsidiary of the
Company owns or possesses valid and binding licenses and other rights to use
without payment of any material
30
amount all material patents, copyrights, trade secrets, trade names, service
marks and trademarks used in its businesses, all of which have been Previously
Disclosed by the Company, and none of the Company or any of its Subsidiaries has
received any notice of conflict with respect thereto that asserts the right of
others. The Company and each of its Subsidiaries have performed in all material
respects all the obligations required to be performed by them and are not in
default under any contract, agreement, arrangement or commitment relating to any
of the foregoing.
(u) Fiduciary Accounts. The Company and each of its Subsidiaries has
properly administered all accounts for which it acts as a fiduciary, including
but not limited to accounts for which it serves as a trustee, agent, custodian,
personal representative, guardian, conservator or investment advisor, in
accordance with the terms of the governing documents and applicable laws and
regulations. Neither the Company nor any of its Subsidiaries, nor any of their
respective directors, officers or employees, has committed any breach of trust
with respect to any fiduciary account and the records for each such fiduciary
account are true and correct and accurately reflect the assets of such fiduciary
account.
(v) Books and Records. The books and records of the Company and its
Subsidiaries are being maintained in material compliance with applicable legal
and accounting requirements, and such books and records accurately reflect in
all material respects all dealings and transactions in respect of the business,
assets, liabilities and affairs of the Company and its Subsidiaries.
(w) Insurance. The Company has Previously Disclosed all of the
material insurance policies, binders, or bonds currently maintained by the
Company or any of its Subsidiaries ("Insurance Policies"). The Company and its
Subsidiaries are insured with reputable insurers against such risks and in such
amounts as the management of the Company reasonably has determined to be prudent
in accordance with industry practices. All the Insurance Policies are in full
force and effect; the Company and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely fashion.
(x) Allowance For Loan Losses. The Company's allowance for loan
losses is, and shall be as of the Effective Date, in compliance with the
Company's existing methodology for determining the adequacy of its allowance for
loan losses as well as the standards established by applicable Governmental
Authorities and the Financial Accounting Standards Board and is and shall be
adequate under all such standards.
(y) Transactions With Affiliates. All "covered transactions" between
a Company Bank and an "affiliate" within the meaning of Sections 23A and 23B of
the Federal Reserve Act have been in compliance with such provisions.
(z) Required Vote; Antitakeover Provisions.
(i) The affirmative vote of the holders of two-thirds of the
outstanding shares of Company Common Stock is necessary to approve this
Agreement and the Transactions on behalf of the Company.
31
(ii) Based on the representation and warranty of Parent
contained in Section 5.04(m), no "control share acquisition," "business
combination moratorium," "fair price" or other form of antitakeover
statute or regulation is applicable to this Agreement or the Stock
Option Agreement and the transactions contemplated hereby and thereby.
Without limiting the foregoing, the Board of Directors of the Company
has approved the transactions contemplated by this Agreement and the
Stock Option Agreement and taken all other requisite action such that
the provisions of the Company Articles relating to special voting
requirements for certain business combinations will not apply to this
Agreement or the Stock Option Agreement or any of the transactions
contemplated hereby or thereby.
(aa) Fairness Opinion. The Company Board has received the written
opinion of Xxxxx, Xxxxxxxx & Xxxxx, Inc. to the effect that as of the date
hereof the Merger Consideration is fair to the holders of Company Common Stock
from a financial point of view.
(bb) Transactions in Securities. The Company has questioned its
directors and executive officers concerning known stock transfers since December
31, 1999 and based upon that investigation the Company has not, and to the
Company's knowledge (a) no director or officer of the Company or the Company's
Subsidiaries, (b) no person related to any such director or officer by blood,
marriage or adoption and residing in the same household and (c) no person who
has been knowingly provided material nonpublic information by any one or more of
these persons, has purchased or sold, or caused to be purchased or sold, any
shares of Company Common Stock or other securities issued by the Company (i)
during any period when the Company was in possession of material nonpublic
information or (ii) in violation of any applicable provision of the Exchange
Act.
(cc) Disclosure. The representations and warranties contained in this
Section 5.03, when considered as a whole, do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Section 5.03 not misleading.
5.04. Representations and Warranties of Parent. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed, Parent hereby represents and
warrants to the Company as follows:
(a) Organization, Standing and Authority. Parent is duly organized,
validly existing and in good standing under the laws of the State of Maine.
Parent is duly qualified to do business and is in good standing in each
jurisdiction where its ownership or leasing of property or assets or the conduct
of its business requires it to be so qualified. Parent has in effect all
federal, state, local and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now conducted.
(b) Parent Stock.
(i) As of the date hereof, the authorized capital stock of
Parent consists solely of 400,000,000 shares of Parent Common Stock, of
which 151,220,600 shares were outstanding as of December 31, 2001, and
5,000,000 shares of Parent Preferred Stock, of
32
which no shares were outstanding as of the date hereof. The outstanding
shares of Parent Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable, and none of the shares of
Parent Common Stock have been issued in violation of the preemptive
rights of any Person. As of the date hereof, there are no Rights
authorized, issued or outstanding with respect to the capital stock of
Parent, except for (i) shares of Parent Common Stock issuable pursuant
to the Parent Benefits Plans, (ii) shares of Parent Common Stock and/or
Parent Preferred Stock issuable upon the exercise of Parent Rights and
(iii) by virtue of this Agreement.
(ii) The shares of Parent Common Stock to be issued in
exchange for shares of Company Common Stock in the Merger, when issued
in accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and the issuance thereof is
not subject to any preemptive right.
(c) Subsidiaries.
(i) As of the date hereof, the only subsidiary of the
Company which constitutes a Significant Subsidiary is the Parent Bank.
The Parent Bank has been duly organized and is validly existing in good
standing under the laws of United States and is duly qualified to do
business and in good standing in the jurisdictions where its ownership
or leasing of property or the conduct of its business requires it to be
so qualified. The Parent Bank is duly licensed by the OCC and its
deposits are insured by the FDIC in the manner and to the maximum extent
provided by law.
(ii) As of the date hereof, (A) Parent owns, directly or
indirectly, all the issued and outstanding equity securities of the
Parent Bank, (B) no equity securities of the Parent Bank are or may
become required to be issued (other than to Parent) by reason of any
Right or otherwise, (C) there are no contracts, commitments,
understandings or arrangements by which the Parent Bank is or may be
bound to sell or otherwise transfer any of its equity securities (other
than to Parent or any of its wholly-owned Subsidiaries) and (D) there
are no contracts, commitments, understandings, or arrangements relating
to Parent's rights to vote or to dispose of such securities.
(d) Corporate Power. Each of Parent and the Parent Bank has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets. Parent has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby, subject to the receipt of all necessary
approvals of Governmental Authorities.
(e) Corporate Authority. This Agreement and the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of Parent and the Parent Board.
This Agreement has been duly executed and delivered by Parent and, assuming due
authorization, execution and delivery by the Company, this Agreement is a valid
and legally binding agreement of Parent enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization,
33
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity principles).
(f) Regulatory Approvals; No Defaults
(i) No consents or approvals of, or waivers by, or filings
or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by Parent or any of its
Subsidiaries in connection with the execution, delivery or performance
by Parent and the Parent Bank of this Agreement, the Bank Merger
Agreement and the Stock Option Agreement, as applicable, or to
consummate the Transactions and the other transactions contemplated
hereby and thereby, except for (A) filings of applications or notices
with and approvals or waivers by the Federal Reserve Board, the OCC, the
Massachusetts Bank Commissioner, the Depositors Insurance Fund, the
Maine Superintendent, the Massachusetts Board and the MHPF, as required,
(B) filings with the SEC and state securities authorities in connection
with the issuance of Parent Common Stock in the Merger, (C) the approval
of the listing on Nasdaq of the Parent Common Stock to be issued in the
Merger, (D) the filing of Articles of Merger with the Secretary of State
of the State of Maine pursuant to the MBCA and the Secretary of State of
the Commonwealth of Massachusetts pursuant to the MBCL and (E) such
corporate approvals and such consents or approvals of, or waivers by, or
filings or registrations with, certain of the foregoing federal and
state banking agencies in connection with the Bank Merger. As of the
date hereof, Parent is not aware of any reason why the approvals set
forth above and referred to in Section 7.01(b) will not be received in a
timely manner and without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt, or the making, of the consents,
approvals and filings referred to in the preceding paragraph and
expiration of the related waiting periods, the execution, delivery and
performance of this Agreement, the Bank Merger Agreement and the Stock
Option Agreement by Parent and the Parent Bank, as applicable, and the
consummation of the Transactions and the other transactions contemplated
hereby and thereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit
or license, or Agreement, indenture or instrument of Parent or of any of
its Subsidiaries or to which Parent or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of,
or a default under, the articles of incorporation or bylaws (or similar
governing documents) of Parent or any of its Subsidiaries or (C) require
any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect.
(i)(A) Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 and all other reports, registration statements,
definitive proxy statements or information statements filed or to be
filed by it subsequent to December 31, 1998 under the Securities Act, or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act in the
34
form filed or to be filed (collectively, Parent's "SEC Documents") with
the SEC, as of the date filed or to be filed, (A) complied or will
comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as
of an earlier date; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, the financial position of Parent and its Subsidiaries as of its
date, and each of the statements of income and changes in shareholders'
equity and cash flows or equivalent statements in such SEC Documents
(including any related notes and schedules thereto) fairly presents, or
will fairly present, the results of operations, changes in shareholders'
equity and changes in cash flows, as the case may be, of Parent and its
Subsidiaries for the periods to which they relate, in each case in
accordance with GAAP consistently applied during the periods involved,
except in each case as may be noted therein.
(i)(B) The draft audited consolidated financial statements of
Parent at December 31, 2001 and 2000 and for each of the years in the
three-year period ended December 31, 2001, delivered by Parent to the
Company prior to the execution of this Agreement, (A) comply in all
material respects as to form with the applicable securities regulations
of the SEC and (B) do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as
of an earlier date; and each of the balance sheets contained in such
financial statements (including the related notes and schedules thereto)
fairly presents the consolidated financial position of Parent and its
Subsidiaries as of its date, and each of the consolidated statements of
income and changes in shareholders' equity and cash flows or equivalent
statements in such financial statements (including any related notes and
schedules thereto) fairly presents the consolidated results of
operations, changes in shareholders' equity and changes in cash flows,
as the case may be, of Parent and its Subsidiaries for the periods to
which they relate, in each case in accordance with GAAP consistently
applied during the periods involved.
(ii) Since September 30, 2001, no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of this
Section 5.04 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to Parent.
(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Parent or its Subsidiaries and,
to Parent's knowledge, no such litigation, claim or other proceeding has been
threatened and there are no facts which could reasonably give rise to such
litigation, claim or other proceeding.
35
(i) No Brokers. No action has been taken by Parent or its
Subsidiaries that would give rise to any valid claim against any party hereto
for a brokerage commission, finder's fee or other like payment with respect to
the transactions contemplated by this Agreement and the Stock Option Agreement.
(j) Tax Matters. As of the date hereof, Parent does not have any
reason to believe that any conditions exist that might prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(k) Regulatory Matters.
(1)(i) Neither Parent nor any of its Subsidiaries nor any of any of
their respective properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits or the supervision or regulation of it (collectively, the
"Parent Regulatory Authorities"). Parent and its Subsidiaries have paid
all assessments made or imposed by any Parent Regulatory Authority.
(ii) Neither Parent nor any its Subsidiaries has been advised
by, and does not have any knowledge of facts which could give rise to an
advisory notice by, any Parent Regulatory Authority that such Parent
Regulatory Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(l) Compliance With Laws. Each of Parent and its Subsidiaries:
(i) is in material compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
Act, the Home Mortgage Disclosure Act and all other applicable fair
lending laws and other laws relating to discriminatory business
practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
Parent's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1999, no notification
or communication from any Governmental Authority (A) asserting that
Parent or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or
36
ordinances which such Governmental Authority enforces or (B) threatening
to revoke any license, franchise, permit or governmental authorization
(nor, to Parent's knowledge, do any grounds for any of the foregoing
exist).
(m) Ownership of Company Common Stock. Except for the Stock Option
Agreement, none of Parent or any of its Subsidiaries, or to Parent's knowledge,
any of its other affiliates or associates (as such terms are defined under the
Exchange Act), owns beneficially or of record, directly or indirectly, or is a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, shares of Company Common Stock
(other than shares held in a fiduciary capacity that are beneficially owned by
third parties or as a result of debts previously contracted) which in the
aggregate represent 5% or more of the outstanding Company Common Stock.
(n) Financial Ability. On the Effective Date, Parent or Parent Bank
will have all funds necessary to consummate the Merger and pay the Aggregate
Cash Consideration to holders of Company Common Stock pursuant to Section
3.01(c) hereof. Each of Parent and Parent Bank is, and immediately following
completion of the Transactions will be, in compliance with all capital
requirements applicable to it.
(o) Disclosure. The representations and warranties contained in this
Section 5.04, when considered as a whole, do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements and information contained in this Section 5.04 not misleading.
ARTICLE VI
COVENANTS
6.01. Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of the Company and Parent agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Transactions as promptly as
practicable and otherwise to enable consummation of the Transactions, including
the satisfaction of the conditions set forth in Article VII hereof, and shall
cooperate fully with the other party hereto to that end.
6.02 Shareholder Approval. The Company agrees to take, in accordance
with applicable law and the Company Articles and Company Bylaws, all action
necessary to convene as soon as reasonably practicable a meeting of its
shareholders to consider and vote upon the approval of this Agreement and any
other matters required to be approved by the Company's shareholders for
consummation of the Transactions (including any adjournment or postponement, the
"Company Meeting"). Except with the prior approval of Parent, no other matters
shall be submitted for the approval of the Company shareholders at the Company
Meeting, other than the annual election of directors of the Company. The Company
Board shall at all times prior to and during such meeting recommend such
approval and shall take all reasonable lawful action to solicit such approval by
its shareholders; provided that nothing in this
37
Agreement shall prevent the Company Board from withholding, withdrawing,
amending or modifying its recommendation if the Company Board determines, after
consultation with its outside counsel, that such action is legally required in
order for the directors to comply with their fiduciary duties to the Company
shareholders under applicable law; provided, further, that Section 6.08 shall
govern the withholding, withdrawing, amending or modifying of such
recommendation in the circumstances described therein.
6.03. Registration Statement.
(a) Parent agrees to prepare a registration statement on Form S-4 or
other applicable form (the "Registration Statement") to be filed by Parent with
the SEC in connection with the issuance of Parent Common Stock in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of the Company constituting a part thereof (the "Proxy Statement") and
all related documents). The Company shall prepare and furnish such information
relating to it and its directors, officers and shareholders as may be reasonably
required in connection with the above referenced documents based on its
knowledge of and access to the information required for said documents, and the
Company, and its legal, financial and accounting advisors, shall have the right
to review in advance such Registration Statement prior to its filing. The
Company agrees to cooperate with Parent and Parent's counsel and accountants in
requesting and obtaining appropriate opinions, consents and letters from its
financial advisor and independent auditor in connection with the Registration
Statement and the Proxy Statement. Provided that the Company has cooperated as
described above, Parent agrees to file, or cause to be filed, the Registration
Statement and the Proxy Statement with the SEC as promptly as reasonably
practicable. Each of the Company and Parent agrees to use its reasonable best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after the filing thereof.
Parent also agrees to use its reasonable best efforts to obtain all necessary
state securities law or "Blue Sky" permits and approvals required to carry out
the transactions contemplated by this Agreement. After the Registration
Statement is declared effective under the Securities Act, the Company shall
promptly mail at its expense the Proxy Statement to its shareholders.
(b) Each of the Company and Parent agrees that none of the
information supplied or to be supplied by it for inclusion or incorporation by
reference in (i) the Registration Statement shall, at the time the Registration
Statement and each amendment or supplement thereto, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (ii) the Proxy Statement and any
amendment or supplement thereto shall, at the date(s) of mailing to shareholders
and at the time of the Company Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. Each of the Company
and Parent further agrees that if such party shall become aware prior to the
Effective Date of any information furnished by such party that would cause any
of the statements in the Registration Statement or the Proxy Statement to be
false or misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or misleading,
to promptly inform the other parties thereof and to take the necessary steps to
correct the Registration Statement or the Proxy Statement.
38
(c) Parent agrees to advise the Company, promptly after Parent
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Parent Common Stock for
offering or sale in any jurisdiction, of the initiation or, to the extent Parent
is aware thereof, threat of any proceeding for any such purpose, or of any
request by the SEC for the amendment or supplement of the Registration Statement
or for additional information.
6.04. Regulatory Filings.
(a) Each of Parent and the Company and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the Transactions and any other transactions contemplated
by this Agreement (including the consolidation of any Company branches with
Parent Bank branches or the closure of any Company branches, in each case as
Parent in its sole discretion shall deem necessary; provided, however, that in
no event shall such branch closures or consolidations be deemed a condition to
Parent's obligation hereunder to consummate the Merger), the Bank Merger
Agreement and the Stock Option Agreement; and any initial filings with
Governmental Authorities (other than the Proxy Statement) shall be made by
Parent as soon as reasonably practicable after the execution hereof. Each of
Parent and the Company shall have the right to review in advance, and to the
extent practicable each shall consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect to all
written information submitted to any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement and the Stock
Option Agreement. In exercising the foregoing right, each of such parties agrees
to act reasonably and as promptly as practicable. Each party hereto agrees that
it shall consult with the other parties hereto with respect to the obtaining of
all permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement, the Bank Merger Agreement and the Stock Option
Agreement and each party shall keep the other parties apprised of the status of
material matters relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other parties
with all information concerning itself, its Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other parties or any of their respective Subsidiaries to any
third party or Governmental Authority.
6.05. Press Releases. The Company and Parent shall consult with each
other before issuing any press release with respect to the Transactions or this
Agreement and shall not issue any such press release or make any such public
statements without the prior consent of the other party, which shall not be
unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party (but after such consultation, to the extent
practicable in the circumstances), issue such press release or make such public
statements as may upon the advice of outside counsel be required by law or the
rules or regulations of Nasdaq. The Company and Parent shall cooperate to
develop all public announcement materials and make appropriate
39
management available at presentations related to the Transactions as reasonably
requested by the other party.
6.06. Access; Information.
(a) The Company agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford Parent
and Parent's officers, employees, counsel, accountants and other authorized
representatives such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties and
personnel and to such other information as Parent may reasonably request and,
during such period, it shall furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request.
(b) Parent agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford the
Company and its authorized representatives such access to Parent's personnel as
the Company may reasonably request.
(c) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.06 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, each party shall keep confidential, and shall cause
its representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.06 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the party to which such information pertains or (iv) is or becomes
readily ascertainable from publicly available sources. In the event that this
Agreement is terminated or the transactions contemplated by this Agreement shall
otherwise fail to be consummated, each party shall promptly cause all copies of
documents or extracts thereof containing information and data as to another
party hereto to be returned to the party which furnished the same. No
investigation by any party of the business and affairs of any other party shall
affect or be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to any party's obligation to
consummate the transactions contemplated by this Agreement.
6.07. Affiliates. The Company shall use its reasonable best efforts to
identify those persons who may be deemed to be "affiliates" of the Company
within the meaning of Rule 145 promulgated by the SEC under the Securities Act
(the "Company Affiliates") and to cause each person so identified to deliver to
Parent as soon as practicable, and in any event prior to the date of the Company
Meeting, a written agreement to comply with the requirements of Rule 145 under
the Securities Act in connection with the sale or other transfer of Parent
Common Stock received in the Merger, which agreement shall be in a form
reasonably satisfactory to the Company.
40
6.08. Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries nor any of their respective officers or directors shall,
and that it shall direct and use its reasonable best efforts to cause its and
each such Subsidiary's employees, agents and representatives not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation or similar transaction involving, or any purchase
of all or substantially all of the assets of the Company or more than 10% of the
outstanding equity securities of the Company or any of its Subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal"). The Company further agrees that neither the Company nor any of its
Subsidiaries nor any of their respective officers and directors shall, and that
it shall direct and use its reasonable best efforts to cause its and each such
Subsidiary's employees, agents and representatives not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing contained in
this Agreement shall prevent the Company or the Company Board from (A) complying
with its disclosure obligations under federal or state law; (B) providing
information in response to a request therefor by a Person who has made an
unsolicited bona fide written Acquisition Proposal if the Company Board receives
from the Person so requesting such information an executed confidentiality
agreement; (C) engaging in any negotiations or discussions with any Person who
has made an unsolicited bona fide written Acquisition Proposal or (D)
recommending such an Acquisition Proposal to the shareholders of the Company, if
and only to the extent that, (i) in each such case referred to in clause (B),
(C) or (D) above, the Company Board determines in good faith (after consultation
with outside legal counsel) that such action would be required in order for its
directors to comply with their respective fiduciary duties under applicable law
and (ii) in the case referred to in clause (D) above, the Company Board
determines in good faith (after consultation with its financial advisor) that
such Acquisition Proposal, if accepted, is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the Person making the proposal and would, if consummated, result in a
transaction more favorable to the Company's shareholders from a financial point
of view than the Merger. The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Acquisition Proposals. The
Company agrees that it will notify Parent immediately if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, any of its representatives.
6.09. Certain Policies. Prior to the Effective Date, each of the
Company and its Subsidiaries shall, consistent with GAAP, the rules and
regulations of the SEC and applicable banking laws and regulations, modify or
change its loan, OREO, accrual, reserve, tax, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied on a basis that is consistent with that of Parent;
provided, however, that no such modifications or changes need be made prior to
the satisfaction of the conditions set forth in Section 7.01(b); and further
provided that in any event, no accrual or reserve made by the Company or any of
its Subsidiaries pursuant to this Section 6.09 shall constitute or be deemed to
be a breach, violation of or failure to satisfy any representation, warranty,
covenant, agreement, condition or other provision of this Agreement or otherwise
be considered in determining whether any such breach, violation or failure to
satisfy shall have occurred. The
41
recording of any such adjustments shall not be deemed to imply any misstatement
of previously furnished financial statements or information and shall not be
construed as concurrence of the Company or its management with any such
adjustments.
6.10. Nasdaq Listing. Parent agrees to use its reasonable best efforts
to list, prior to the Effective Date, on the Nasdaq the shares of Parent Common
Stock to be issued in connection with the Merger.
6.11. Indemnification.
(a) From and after the Effective Time, Parent (the "Indemnifying
Party") shall indemnify and hold harmless each present and former director,
officer and employee of the Company or a Company Subsidiary, as applicable,
determined as of the Effective Time (the "Indemnified Parties") against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, arising in whole or in part out of or pertaining to
the fact that he or she was a director, officer, employee, fiduciary or agent of
the Company or any Company Subsidiary or is or was serving at the request of the
Company or any of the Company Subsidiaries as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint venture, trust or
other enterprise, including without limitation matters related to the
negotiation, execution and performance of this Agreement, the Stock Option
Agreement or any of the transactions contemplated hereby and thereby, to the
fullest extent which such Indemnified Parties would be entitled under the
Company Articles and Company Bylaws or equivalent documents of any Company
Subsidiary, as applicable, or any agreement, arrangement or understanding which
has been Previously Disclosed by the Company pursuant to this Section, in each
case as in effect on the date hereof. Without limiting the foregoing, Parent
also agrees that limitations on liability existing in favor of the Indemnified
Parties as provided in the Company Articles and Company Bylaws or similar
governing documents of the Company Subsidiaries as in effect on the date hereof
with respect to matters occurring prior to the Effective Time shall survive the
Merger and the Bank Merger and shall continue in full force and effect from and
after the Effective Time.
(b) Any Indemnified Party wishing to claim indemnification under
this Section 6.11, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Indemnifying Party, but the failure to
so notify shall not relieve the Indemnifying Party of any liability it may have
to such Indemnified Party if such failure does not actually prejudice the
Indemnifying Party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) the
Indemnifying Party shall have the right to assume the defense thereof and the
Indemnifying Party shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if the
Indemnifying Party elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between the Indemnifying Party and the Indemnified Parties, the
Indemnified Parties may retain counsel which is reasonably
42
satisfactory to the Indemnifying Party, and the Indemnifying Party shall pay,
promptly as statements therefor are received, the reasonable fees and expenses
of such counsel for the Indemnified Parties (which may not exceed one firm in
any jurisdiction), (ii) the Indemnified Parties will cooperate in the defense of
any such matter, (iii) the Indemnifying Party shall not be liable for any
settlement effected without its prior written consent and (iv) the Indemnifying
Party shall have no obligation hereunder in the event that a federal or state
banking agency or a court of competent jurisdiction shall determine that
indemnification of an Indemnified Party in the manner contemplated hereby is
prohibited by applicable laws and regulations.
(c) Prior the Effective Time, Parent shall use its reasonable best
efforts to purchase an extended reporting period endorsement under the Company's
existing directors' and officers' liability insurance coverage for the Company's
directors and officers in a form reasonably acceptable to the Company which
shall provide such directors and officers with coverage for six years following
the Effective Time of not less than the existing coverage under, and have other
terms no materially less favorable on the whole to, the insured persons than the
directors' and officers' liability insurance coverage presently maintained by
the Company, provided that in no event shall Parent be required to expend in any
one year an amount in excess of 150% of the annual premiums currently paid by
the Company for such insurance (the "Insurance Amount"), and further provided
that if Parent is unable to maintain or obtain the insurance called for by this
Section 6.11(c) as a result of the preceding provision, Parent shall use its
reasonable best efforts to obtain as much comparable insurance as is available
for the Insurance Amount with respect to acts or omissions occurring prior to
the Effective Time by such directors and officers in their capacities as such.
(d) If Parent or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any other entity, then and in each case, proper provision
shall be made so that the successors and assigns of Parent shall assume the
obligations set forth in this Section 6.11.
6.12 Benefit Plans.
(a) As soon as administratively practicable after the Effective
Time, Parent shall take all reasonable action so that employees of the Company
and its Subsidiaries shall be entitled to participate in each employee benefit
plan, program or arrangement of Parent of general applicability (the "Parent
Benefits Plans") to the same extent as similarly-situated employees of Parent
and its Subsidiaries (it being understood that inclusion of the employees of
the Company and its Subsidiaries in the Parent Benefits Plans may occur at
different times with respect to different plans.) Parent shall cause each
Parent Benefits Plan in which employees of the Company and its Subsidiaries are
eligible to participate to recognize, for purposes of determining eligibility
to participate in, the vesting of benefits and for all other purposes (but not
for accrual of pension benefits) under the Parent Benefit Plans, the service of
such employees with the Company and its Subsidiaries to the same extent as such
service was credited for such purpose by the Company. Nothing herein shall
limit the ability of Parent to amend or terminate any of the Company's Benefits
Plans in accordance with their terms at any time.
43
(b) Except as otherwise expressly provided in this Agreement and in
the Termination Agreement to be executed pursuant to Section 6.14 hereof, Parent
shall honor, and the Surviving Corporation shall continue to be obligated to
perform, in accordance with their terms, all benefit obligations to, and
contractual rights of, current and former employees of the Company existing as
of the Effective Date, as well as all employment, severance, deferred
compensation or "change-in-control" agreements, plans or policies of the Company
which are Previously Disclosed. Parent acknowledges that the consummation of the
Merger will constitute a "change-in-control" of the Company for purposes of any
employee benefit plans, agreements and arrangements of the Company.
(c) If employees of the Company or any of its Subsidiaries become
eligible to participate in a medical, dental or health plan of Parent, Parent
shall cause each such plan to (i) waive any preexisting condition limitations to
the extent such conditions covered under the applicable medical, health or
dental plans of Parent, (ii) provide full credit for under such plans any
deductibles, co-payment and out-of-pocket expenses incurred by the employees and
their beneficiaries during the portion of the calendar year prior to such
participation and (iii) waive any waiting period limitation or evidence of
insurability requirement which would otherwise be applicable to such employee on
or after the Effective Time to the extent such employee had satisfied any
similar limitation or requirement under an analogous Plan prior to the Effective
Time.
(d) For a period of six months following the Effective Time, Parent
shall provide all employees of the Company and its Subsidiaries whose employment
was terminated other than for cause, disability or retirement at or following
the Effective Time, and who so desires, job counseling and outplacement
assistance services in accordance with Parent's employment policies and
practices, shall assist such employees in locating new employment and shall
notify all such employees who want to be so notified of opportunities for
positions with Parent or any of its Subsidiaries for which Parent reasonably
believes such persons are qualified and shall consider any application for such
positions submitted by such persons, provided, however, that any decision to
offer employment to any such person shall be made in the sole discretion of
Parent.
(e) All employees of the Company or a Company Subsidiary as of the
Effective Time shall become employees of Parent or a Parent Subsidiary as of the
Effective Time, and Parent or a Parent Subsidiary will use its reasonable best
efforts to give such persons (other than any such person who is party to an
employment agreement, a severance agreement or a special termination agreement)
at least four weeks prior written notice of any job elimination after the
Effective Time for a period of 90 days following the Effective Time. Subject to
such four-week notice requirement, Parent or a Parent Subsidiary shall have no
obligation to continue the employment of any such person and nothing contained
herein shall give any employee of the Company or a Company Subsidiary the right
to continue employment with Parent or a Parent Subsidiary after the Effective
Time. An employee of the Company or a Company Subsidiary (other than an employee
who is party to an employment agreement, a severance agreement or a special
termination agreement) whose employment is involuntarily terminated other than
for cause following the Effective Time shall be entitled to receive severance
payments in accordance with, and to the extent provided in, the Company Bank's
Merger Severance Benefit Program, as amended, a copy of which Parent
acknowledges has been provided to it by the Company.
44
6.13. Bank Merger. Parent and the Company agree to take all action
necessary and appropriate, including causing the entering into of an appropriate
merger agreement (the "Bank Merger Agreement"), to cause the Company Bank to
merge with and into the Parent Bank (the "Bank Merger") in accordance with
applicable laws and regulations and the terms of the Bank Merger Agreement and
as soon as practicable after consummation of the Merger.
6.14. Termination Agreement; Employment and Noncompetition Agreement.
Concurrently with the execution of this Agreement by the Company and Parent, (i)
Parent, the Company, the Company Bank, Eastern Bank, as Trustee, and Xxxxx X.
Xxxx shall enter into a Termination Agreement in the form of Annex C hereto, and
(ii) Banknorth and Xxxxx X. Xxxx shall enter into an Employment and
Noncompetition Agreement in the form of Annex D hereto.
6.15. Notification of Certain Matters. Each of the Company and Parent
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of the parties hereto to consummate the Merger is
subject to the fulfillment or written waiver by the parties hereto prior to the
Closing Date of each of the following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by holders of not less than a majority of the outstanding shares of the
Company Common Stock.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the Transactions shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall have
expired and no such approvals shall contain any conditions, restrictions or
requirements which the Parent Board reasonably determines in good faith would,
individually or in the aggregate, materially reduce the benefits of the
Transactions to such a degree that Parent would not have entered into this
Agreement had such conditions, restrictions or requirements been known at the
date hereof.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the Transactions.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration
45
Statement shall have been issued and no proceedings for that purpose shall have
been initiated by the SEC and not withdrawn.
(e) Listing. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for listing on the Nasdaq.
(f) Tax Opinion. Each of Parent and the Company shall have received
the written opinion of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., in form and
substance reasonably satisfactory to both the Company and Parent, dated as of
the Effective Date, substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated for Federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, and Parent and the Company will each be a party
to the reorganization within the meaning of Section 368(b) of the Code, and that
accordingly:
(i) no gain or loss will be recognized by Parent or the
Company as a result of the Merger;
(ii) no gain or loss will be recognized by the shareholders
of the Company who exchange their Company Common Stock solely for Parent
Common Stock pursuant to the Merger (except with respect to cash
received in lieu of a fractional share interest in Parent Common Stock);
(iii) the tax basis of the Parent Common Stock received by the
shareholders of the Company who exchange all of their Company Common
Stock solely for Parent Common Stock in the Merger will be the same as
the tax basis of the Company Common Stock surrendered in exchange
therefor; and
(iv) the holding period of the Parent Common Stock received
by a shareholder of the Company pursuant to the Merger will include the
period during which the Company Common Stock surrendered therefor was
held, provided the Company Common Stock is a capital asset in the hands
of the shareholder of the Company at the time of the Merger.
In rendering such opinion, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Parent, the Company and others.
7.02. Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Closing Date of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in this Agreement, subject in all cases to the
standard set forth in Section 5.02, shall be true and correct as of the date of
this Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct as of such date), and
46
the Company shall have received a certificate, dated the Effective Date, signed
on behalf of Parent by the Chief Executive Officer and the Chief Financial
Officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Effective Time, and the Company
shall have received a certificate, dated the Effective Date, signed on behalf of
Parent by the Chief Executive Officer and the Chief Financial Officer of Parent
to such effect.
(c) Other Actions. Parent shall have furnished the Company with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 7.01 and 7.02 as
the Company may reasonably request.
7.03. Conditions to Obligations of Parent. The obligations of Parent
to consummate the Merger are also subject to the fulfillment or written waiver
by Parent prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement, subject in all cases to
the standard set forth in Section 5.02, shall be true and correct as of the date
of this Agreement and as of the Effective Date as though made on and as of the
Effective Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct as of such date), and Parent shall have received a certificate, dated
the Effective Date, signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Parent shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) Dissenting Shares. Dissenting Shares shall not represent 10% or
more of the outstanding Company Common Stock.
(d) Other Agreements. The agreements referred to in Section 6.14
shall have been duly executed and delivered by the respective parties thereto
and shall be in full force and effect, and each party thereto other than
Banknorth shall have performed in all material respects all obligations required
to be performed by it thereunder at or prior to the Effective Time.
(e) Other Actions. The Company shall have furnished Parent with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 7.01 and 7.03 as Parent may
reasonably request.
47
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the
Transactions may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Parent and the Company if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Parent or
the Company if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of: (i) a breach by Parent or the
Company, as the case may be, of any representation or warranty contained herein
(subject to the standard set forth in Section 5.02), which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party or parties of such breach; or (ii) a breach by Parent or the
Company, as the case may be, of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party or parties of such breach, which
breach (whether under (i) or (ii)) would be reasonably expected, individually or
in the aggregate with other breaches, to result in a Material Adverse Effect
with respect to Parent or the Company, as the case may be.
(c) Delay. At any time prior to the Effective Time, by Parent or the
Company if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Transactions are not
consummated by December 31, 2002, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the knowing action
or inaction of (i) the party seeking to terminate pursuant to this Section
8.01(c) or (ii) any of the Shareholders (if the Company is the party seeking to
terminate), which action or inaction is in violation of its obligations under
this Agreement or, in the case of the Shareholders, his, her or its obligations
under the relevant Shareholder Agreement.
(d) No Regulatory Approval. By the Company or Parent, if its Board
of Directors so determines by a vote of a majority of the members of its entire
Board, in the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or an application therefor shall have been permanently
withdrawn at the request of a Governmental Authority or (ii) the shareholder
approval referred to in Section 7.01(a) herein is not obtained at the Company
Meeting.
(e) No Shareholder Approval. By either Parent or the Company if any
approval of the shareholders of the Company contemplated by this Agreement shall
not have been obtained by reason of the failure to obtain the required vote at
the Company Meeting.
(f) Failure to Recommend. At any time prior to the Company Meeting,
by Parent if (i) the Company shall have breached Section 6.08, (ii) the Company
Board shall have failed to
48
make its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner adverse in
any respect to the interests of Parent or (iii) the Company shall have
materially breached its obligations under Section 6.02 by failing to call, give
notice of, convene and hold the Company Meeting in accordance with Section 6.02.
(g) Certain Tender or Exchange Offers. By Parent if a tender offer
or exchange offer for 10% or more of the outstanding shares of Company Common
Stock is commenced (other than by Parent or a Subsidiary thereof), and the
Company Board recommends that the shareholders of the Company tender their
shares in such tender or exchange offer or otherwise fails to recommend that
such shareholders reject such tender offer or exchange offer within the 10
business day period specified in Rule 14e-2(a) under the Exchange Act.
8.02. Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in Section 9.01
and (ii) that termination will not relieve a breaching party from liability for
any willful breach of any covenant, agreement, representation or warranty of
this Agreement giving rise to such termination.
ARTICLE IX
MISCELLANEOUS
9.01. Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than agreements or covenants contained herein that by their express terms are to
be performed after the Effective Time, and the Stock Option Agreement, the
Termination Agreement and the Employment and Noncompetition Agreement, which
shall terminate in accordance with the terms thereof) or the termination of this
Agreement if this Agreement is terminated prior to the Effective Time (other
than Sections 6.06(c), 8.02 and, excepting Section 9.12 hereof, this Article IX,
which shall survive any such termination, and the Stock Option Agreement).
Notwithstanding anything in the foregoing to the contrary, no representations,
warranties, agreements and covenants contained in this Agreement shall be deemed
to be terminated or extinguished so as to deprive a party hereto or any of its
affiliates of any defense at law or in equity which otherwise would be available
against the claims of any Person, including without limitation any shareholder
or former shareholder.
9.02. Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision or (ii)
amended or modified at any time, by an agreement in writing among the parties
hereto executed in the same manner as this Agreement, except that after the
Company Meeting no amendment shall be made which by law requires further
approval by the shareholders of the Company without obtaining such approval.
9.03. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
49
9.04. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Maine applicable to
contracts made and to be performed entirely within such State.
9.05 Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby,
including fees and expenses of its own financial consultants, accountants and
counsel and, in the case of Parent, the registration fee to be paid to the SEC
in connection with the Registration Statement, except that expenses of printing
the Proxy Statement shall be shared equally between the Company and Parent, and
provided further that nothing contained herein shall limit either party's rights
to recover any liabilities or damages arising out of the other party's willful
breach of any provision of this Agreement.
9.06. Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to the Company to:
Ipswich Bancshares, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
President and Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq. and
Xxxxx Xxxxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
If to Parent to:
Banknorth Group, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Chairman, President
and Chief Executive Officer
Fax: (000) 000-0000
50
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
12th Floor, The Xxxxxx Building
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
9.07. Entire Understanding; No Third Party Beneficiaries. This
Agreement, the Shareholder Agreements, the Stock Option Agreement, the
Termination Agreement and the Employment and Noncompetition Agreement represent
the entire understanding of the parties hereto and thereto with reference to the
transactions contemplated hereby and thereby and this Agreement, the Shareholder
Agreements, the Stock Option Agreement, the Termination Agreement and the
Employment and Noncompetition Agreement supersede any and all other oral or
written agreements heretofore made. Except for the Indemnified Parties' right to
enforce Parent's obligation under Section 6.11, which are expressly intended to
be for the irrevocable benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and representatives, nothing in this Agreement,
expressed or implied, is intended to confer upon any Person, other than the
parties hereto or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
9.08. Severability. Except to the extent that application of this
Section 9.08 would have a Material Adverse Effect on the Company or Parent, any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable. In all such cases, the parties shall use their reasonable best
efforts to substitute a valid, legal and enforceable provision which, insofar as
practicable, implements the original purposes and intents of this Agreement.
9.09. Enforcement of the Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.10. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
51
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
9.11. Assignment. No party may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of the other party. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
9.12. Alternative Structure. Notwithstanding any provision of this
Agreement to the contrary, Parent may at any time modify the structure of the
acquisition of the Company set forth herein, subject to the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed, provided that (i) the Merger Consideration to be paid to the holders of
Company Common Stock is not thereby changed in kind or reduced in amount as a
result of such modification, (ii) such modification will not adversely affect
the tax treatment of the Company's shareholders as a result of receiving the
Merger Consideration and (iii) such modification will not materially delay or
jeopardize receipt of any required approvals of Governmental Authorities.
52
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
BANKNORTH GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
IPSWICH BANCSHARES, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief
Executive Officer
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Treasurer and
Chief Financial Officer
53
ANNEX A
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (the "Agreement"), dated as of February 26, 2002,
by and between _________, a shareholder ("Shareholder") of Ipswich Bancshares,
Inc., a Massachusetts corporation (the "Company"), and Banknorth Group, Inc., a
Maine corporation ("Parent"). All terms used herein and not defined herein shall
have the meanings assigned thereto in the Merger Agreement (defined below).
WHEREAS, Parent and the Company have entered into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to
which the Company will merge with and into Parent on the terms and conditions
set forth therein and, in connection therewith, outstanding shares of Company
Common Stock will be converted into shares of Parent Common Stock and/or cash in
the manner set forth therein; and
WHEREAS, Shareholder owns the shares of Company Common Stock identified
on Annex I hereto (such shares, together with all shares of Company Common Stock
subsequently acquired by Shareholder during the term of this Agreement, being
referred to as the "Shares"); and
WHEREAS, in order to induce Parent to enter into the Merger Agreement,
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company and not in any other capacity, has agreed to enter into and perform this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. Shareholder agrees that at any
meeting of the shareholders of the Company, or in connection with any
written consent of the shareholders of the Company, Shareholder shall:
(i) appear at each such meeting or otherwise cause the
Shares to be counted as present thereat for purposes of calculating a
quorum; and
(ii) vote (or cause to be voted), in person or by proxy, or
deliver a written consent (or cause a consent to be delivered) covering,
all the Shares (whether acquired heretofore or hereafter) that are
beneficially owned by Shareholder or as to which Shareholder has,
directly or indirectly, the right to vote or direct the voting, (x) in
favor of adoption and approval of the Merger Agreement and the Merger
and any other action requested by Parent in furtherance thereof; (y)
against any action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or
agreement of the Company contained in the Merger Agreement or of
Shareholder contained in this Agreement; and (z) against any Acquisition
Proposal or any other
action, agreement or transaction that is intended, or could reasonably
be expected, to materially impede, interfere or be inconsistent with,
delay, postpone, discourage or materially and adversely affect
consummation of the Merger or this Agreement.
2. No Transfers Prior to the Company Meeting (as defined in the
Merger Agreement), Shareholder agrees not to, directly or indirectly,
sell transfer, pledge, assign or otherwise dispose of, or enter into any
contract option, commitment or other arrangement or understanding with
respect to the sale, transfer, pledge, assignment or other disposition
of, any of the Shares. In the case of any transfer by operation of law,
this Agreement shall be binding upon and inure to the transferee(s). Any
transfer or other disposition in violation of the terms of this Section
2 shall be null and void.
3. Representations and Warranties of Shareholder. Shareholder
represents and warrants to and agrees with Parent as follows:
A. Capacity. Shareholder has all requisite capacity and
authority to enter into and perform his, her or its obligations under
this Agreement.
B. Binding Agreement. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
C. Non-Contravention. The execution and delivery of this
Agreement by Shareholder does not, and the performance by Shareholder of
his, her or its obligations hereunder and the consummation by
Shareholder of the transactions contemplated hereby will not, violate or
conflict with, or constitute a default under, any agreement, instrument,
contract or other obligation or any order, arbitration award, judgment
or decree to which Shareholder is a party or by which Shareholder is
bound, or any statute, rule or regulation to which Shareholder is
subject or, in the event that Shareholder is a corporation, partnership,
trust or other entity, any charter, bylaw or other organizational
document of Shareholder.
D. Ownership of Shares. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex I
hereto, the Shares are so owned free and clear of any liens, security
interests, charges or other encumbrances.
4. Specific Performance and Remedies. Shareholder acknowledges
that it will be impossible to measure in money the damage to Parent if
Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Parent will not
have an adequate remedy at law or in equity. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to
remedies at law or in damages, is the appropriate remedy for any such
failure and will not oppose the granting of such relief on the basis
that Parent has an adequate remedy at law. Shareholder agrees that
Shareholder will not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with Parent's seeking or
obtaining such equitable relief.
2
In addition, after discussing the matter with Shareholder, Parent shall
have the right to inform any third party that Parent reasonably believes
to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of
the terms of this Agreement and of the rights of Parent hereunder, and
that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Parent set forth in this
Agreement may give rise to claims by Parent against such third party.
5. Term of Agreement; Termination.
A. The term of this Agreement shall commence on the date hereof.
B. This Agreement shall terminate upon the date, if any, of
termination of the Merger Agreement in accordance with its terms. Upon
such termination, no party shall have any further obligations or
liabilities hereunder; provided, however, such termination shall not
relieve any party from liability for any breach of this Agreement prior
to such termination.
C. If the Merger Agreement is not terminated in accordance with
its terms, this Agreement (except for the provisions of Sections 3, 8
and 9, which shall survive the Effective Time) shall terminate upon the
Effective Time. Upon such termination, no party shall have any further
obligations or liabilities under this Agreement; provided, however, such
termination shall not relieve any party from liability for any breach of
such Section prior to such termination.
6. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to
the subject matter hereof and contains the entire agreement among the
parties with respect to the subject matter hereof. This Agreement may
not be amended, supplemented or modified, and no provisions hereof may
be modified or waived, except by an instrument in writing signed by each
party hereto. No waiver of any provisions hereof by either party shall
be deemed a waiver of any other provisions hereof by any such party, nor
shall any such waiver be deemed a continuing waiver of any provision
hereof by such party.
7. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given
when delivered personally, upon receipt of a transmission confirmation
if sent by telecopy or like transmission and on the next business day
when sent by a reputable overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
3
If to Parent:
Banknorth Group, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx
Chairman, President and
Chief Executive Officer
Fax: (000) 000-0000
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to Shareholder:
------------------------
------------------------
------------------------
With a copy to:
Xxxxx Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
8. Miscellaneous.
A. Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be
held invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of
such invalidity or unenforceability, and the remainder of the provision
held invalid or unenforceable and the application of such provision to
persons or circumstances, other than the party as to which it is held
invalid, and the remainder of this Agreement, shall not be affected.
B. Capacity. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the
Company, and no covenant contained herein shall apply to Shareholder in
his or her capacity as a director, officer or
4
employee of the Company or in any other capacity. Nothing contained in
this Agreement shall be deemed to apply to, or limit in any manner, the
obligations of the Shareholder to comply with his or her fiduciary
duties as a director of the Company.
C. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
D. Headings. All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction
or reference shall be derived therefrom.
E. CHOICE OF LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE
UNDER, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF MAINE, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
9. Attorney's Fees. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other
proceeding ("Proceeding") relating to the enforcement or interpretation
of this Agreement may recover from the unsuccessful party or parties all
fees and disbursements of counsel (including expert witness and other
consultants' fees and costs) relating to or arising out of (a) the
Proceeding (whether or not the Proceeding proceeds to judgment), and (b)
any post-judgment or post-award proceeding including, without
limitation, one to enforce or collect any judgment or award resulting
from the Proceeding. All such judgments and awards shall contain a
specific provision for the recovery of all such subsequently incurred
costs, expenses, and fees and disbursements of counsel.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
BANKNORTH GROUP, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and Chief
Executive Officer
[SHAREHOLDER]
------------------------------------------
(Signature)
5
ANNEX I
SHAREHOLDER AGREEMENT
Number of Shares Owned:
6
ANNEX B
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of February 26, 2002, between Banknorth
Group, Inc., a Maine corporation ("Grantee"), and Ipswich Bancshares, Inc., a
Massachusetts corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which provides for the
merger of Issuer with and into Grantee on the terms and conditions set forth
therein; and
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to an aggregate of 384,438 fully paid and nonassessable shares (the "Option
Shares") of common stock, par value $0.10 per share, of Issuer (the "Common
Stock") at a price per share equal to $15.35 (the "Option Price"); provided,
however, that in no event shall the number of shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Common Stock.
The number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement and other than pursuant to an
event described in Section 5 hereof), including, without limitation, pursuant to
stock option or other employee plans or as a result of the exercise of
conversion rights, or (ii) redeemed, repurchased, retired or otherwise cease to
be outstanding after the date of this Agreement, the number of shares of Common
Stock subject to the Option shall be increased or decreased, as appropriate, so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer or
Grantee to breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the
Exercise Notice (as hereinafter defined) within ninety (90) days following such
Subsequent Triggering Event (or such later period as provided in Section 10).
Each of the following shall be an Exercise Termination Event: (i) the Effective
Time (as defined in the Merger Agreement); (ii) termination of the Merger
Agreement in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event, except a termination by
Grantee pursuant to Section 8.01(b) of the Merger Agreement (unless the breach
by Issuer giving rise to such right of termination was non-volitional ( a
"Listed Termination")); or (iii) the passage of 12 months (or such longer period
as provided in Section 10) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a Listed
Termination, provided that if an Initial Triggering Event continues or occurs
beyond such termination and prior to the passage of such 12-month-period, the
Exercise Termination Event shall be 12 months from the expiration of the Last
Triggering Event but in no event more than 18 months after such termination. The
term "Last Triggering Event" shall mean the last Initial Triggering Event to be
in effect, and the term "Holder" shall mean the permitted holder or holders of
the Option pursuant to this Agreement. Notwithstanding anything to the contrary
contained herein, the Option may not be exercised at any time when Grantee shall
be in willful material breach of any of its covenants or agreements contained in
the Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.01(b) thereof as a result of such a willful
material breach.
(b) The term "Initial Triggering Event" shall mean any of
the following events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary (as hereinafter
defined) of Issuer (an "Issuer Subsidiary"), without having
received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and
regulations thereunder), other than Grantee or any Subsidiary of
Grantee (a "Grantee Subsidiary") or the Board of Directors of
Issuer (the "Issuer Board") shall have recommended that the
stockholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Grantee
Subsidiary. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Issuer Subsidiary,
(x) a purchase, lease or other acquisition or assumption of all
or any substantial part of the consolidated assets or
consolidated deposits of Issuer or any Issuer Subsidiary, (y) a
purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any
Issuer Subsidiary or (z) any substantially similar transaction,
provided that in no event shall (i) any merger, consolidation,
purchase or similar transaction involving only Issuer and one or
more of its Subsidiaries, or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition Transaction,
provided that any such transaction is not entered into in
violation of the terms of the Merger Agreement, or (ii) the
transactions contemplated by the Merger Agreement or the
entering into of the Merger Agreement be deemed to be an
2
Acquisition Transaction; and (b) "Subsidiary" shall have the
meaning set forth in Rule 12b-2 under the 1934 Act;
(ii) After the date hereof, any person, other than
Grantee or a Grantee Subsidiary, shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term
"beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and
the rules and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and
failed to approve the Merger Agreement at a meeting which has
been held for that purpose or any adjournment or postponement
thereof, or such meeting shall not have been held in violation
of the Merger Agreement or shall have been cancelled prior to
termination of the Merger Agreement if, in each case prior to
such meeting (or if such meeting shall not have been held or
shall have been cancelled, prior to such termination), it shall
have been publicly announced that any person (other than Grantee
or a Grantee Subsidiary) shall have made, or publicly disclosed
an intention to make, a proposal to engage in an Acquisition
Transaction;
(iv) The Issuer Board, without having received
Grantee's prior written consent, shall have withdrawn or
modified, or publicly announced its intention to withdraw or
modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the
transactions contemplated by the Merger Agreement in
anticipation of engaging in an Acquisition Transaction, or
Issuer or any Issuer Subsidiary shall have authorized,
recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an
Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee
Subsidiary shall have filed with the Securities and Exchange
Commission ("SEC") a registration statement or tender offer
materials with respect to a potential exchange offer or tender
offer that would constitute an Acquisition Transaction (or filed
a preliminary proxy statement with the SEC with respect to a
potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer);
(vi) Issuer shall have breached any covenant or
obligation contained in the Merger Agreement after a proposal is
made by any third party, other than Grantee or a Grantee
Subsidiary, to engage in an Acquisition Transaction and
following such breach (x) Grantee would be entitled to terminate
the Merger Agreement (whether immediately or after the giving of
notice or passage of time or both) and (y) such breach shall not
have been cured prior to the Notice Date (as defined below); or
(vii) Any person other than Grantee or a Grantee
Subsidiary, without Grantee's prior written consent, shall have
filed an application or notice with the
3
Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") or other federal or state bank regulatory or
antitrust authority, which application or notice has been
accepted for processing, for approval to engage in an
Acquisition Transaction.
The acquisition of additional shares of Common Stock by Xxxxx X. Xxxx,
who beneficially owns more than 10% of the outstanding Common Stock as of the
date hereof, shall not be deemed to be an Initial Triggering Event within the
meaning of subparagraph (ii) above as long as he is party to and in compliance
with the Shareholder Agreement between him and Grantee dated as of the date
hereof.
(c) The term "Subsequent Triggering Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of
25% or more of the then outstanding Common Stock; or
(ii) the occurrence of the Initial Triggering Event
described in clause (i) of subsection (b) of this Section 2,
except that the percentage referred to in clause (y) of the
second sentence thereof shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event") of which it has notice, it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (an "Exercise Notice," the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 60 business days from the Notice Date for the
closing of such purchase (the "Closing," the date of which being herein referred
to as the "Closing Date"); provided that if prior notification to or approval of
the Federal Reserve Board or any other regulatory or antitrust agency is
required in connection with such purchase, the Holder shall promptly file the
required notice or application for approval, shall promptly notify Issuer of
such filing and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto. The term "business day" for purposes of this Agreement
means any day, excluding Saturdays, Sundays and any other day that is a legal
holiday in the Commonwealth of Massachusetts or a day on which banking
institutions in the Commonwealth of Massachusetts are authorized by law or
executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the
aggregate purchase price for the Option Shares purchased pursuant to the
exercise of the Option in immediately available funds
4
by wire transfer to a bank account designated by Issuer and (ii) present and
surrender this Agreement to Issuer at its principal executive offices, provided
that the failure or refusal of the Issuer to designate such a bank account or
accept surrender of this Agreement shall not preclude the Holder from exercising
the Option.
(g) At a Closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of Option Shares purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the Option Shares purchasable hereunder, and the
Holder shall deliver to Issuer a copy of this Agreement and a letter agreeing
that the Holder will not offer to sell or otherwise dispose of such shares in
violation of applicable law or the provisions of this Agreement.
(h) Certificates for Option Shares delivered at a Closing
hereunder may be endorsed (in the sole discretion of Issuer) with a restrictive
legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act") in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to the Holder,
which shall be set forth in a written opinion in form and substance reasonably
satisfactory to Issuer; and (iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under paragraph (e) of this
Section 2, the tender of the applicable purchase price in immediately available
funds and the tender of a copy of this Agreement to Issuer, the Holder shall be
deemed, subject to the receipt of any necessary regulatory approvals, to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with
5
the preparation, issue and delivery of stock certificates under this Section 2
in the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Bank Holding Company Act of 1956, as amended (the "BHCA"), or the Change in
Bank Control Act of 1978, as amended, or any state or other federal banking law,
prior approval of or notice to the Federal Reserve Board or to any state or
other federal regulatory authority is necessary before the Option may be
exercised, cooperating fully with the Holder in connection with the preparation
of such applications or notices and providing such information to the Federal
Reserve Board or such state or other federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase
on the same terms and subject to the same conditions as are set forth herein in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or distributions in
respect of, the Common Stock by reason of stock dividend, stock split, split-up,
merger, recapitalization, stock combination, subdivision, conversion, exchange
of shares, distribution on or in respect of the Common Stock or similar
transaction, the type and number of
6
Option Shares subject to the Option, and the Option Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of Option Shares or other securities or property
that Grantee would have received in respect of Option Shares if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six (6) months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option and the Option Shares, a registration statement under
the 1933 Act, to the extent applicable, and qualify such Option and Option
Shares for resale or other disposition under applicable state securities laws,
in each case in accordance with any plan of disposition requested by Grantee.
Issuer will use all reasonable efforts to cause such registration statement
promptly to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. Grantee shall have the right to demand two such
registrations. Issuer shall bear the costs of such registrations (including, but
not limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the inclusion of the Option and/or Option Shares would interfere with
the successful marketing of the shares of Common Stock offered by Issuer, the
number of shares represented by the Option and/or the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may be
reduced; provided, however, that after any such required reduction the number of
shares represented by the Option and/or the number of Option Shares to be
included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Issuer in
the aggregate; and provided further, however, that if such reduction occurs,
then Issuer shall file a registration statement for the balance as promptly as
practicable thereafter as to which no reduction pursuant to this Section 6 shall
be permitted or occur and Holder shall thereafter be entitled to one additional
registration and the twelve (12) month period referred to in the first sentence
of this section shall be increased to twenty four (24) months. Each such Holder
shall provide all information reasonably requested by Issuer for inclusion in
any such registration statement to be filed hereunder. If requested by any such
Holder in connection with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements for Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person known to Issuer
to be entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary contained herein, in no event shall
7
the number of registrations that Issuer is obligated to effect be increased by
reason of the fact that there shall be more than one Holder as a result of any
assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as described below), (i) at the request of any Holder delivered prior to
an Exercise Termination Event (or such later period as provided in Section 10),
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which the Option may then be exercised, and (ii) at
the request of the owner of Option Shares from time to time (the "Owner"),
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase such
number of the Option Shares from the Owner as the Owner shall designate at a
price (the "Option Share Repurchase Price") equal to the greater of (A) the
Market/Offer Price and (B) the average exercise price per share paid by the
Owner for the Option Shares so designated. The term "Market/Offer Price" shall
mean the highest of (i) the price per share of Common Stock at which a tender
offer or exchange offer therefor has been made, (ii) the price per share of
Common Stock to be paid by any person, other than Grantee or a Grantee
Subsidiary, pursuant to an agreement with Issuer of the kind described in
Section 2(b)(i), (iii) the highest closing price for shares of Common Stock
within the six-month period immediately preceding the date of such required
repurchase of the Option or Option Shares, as the case may be, or (iv) in the
event of a sale of all or any substantial part of Issuer's assets or deposits,
the sum of the price paid in such sale for such consolidated assets or
consolidated deposits and the current market value of the remaining assets of
Issuer as determined by a nationally-recognized investment banking firm selected
by a majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that such Holder
or Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, or as a result
of a written agreement or other binding obligation with a governmental or
regulatory body or agency, from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify each Holder and/or each Owner and
8
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or such Owner, as appropriate, the portion of the Option Repurchase Price
and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within two business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and Issuer
hereby undertakes to use all reasonable efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), such Holder or Owner may
revoke its notice of repurchase of the Option and/or the Option Shares either in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering with respect to Options or Option
Shares as to which the Holder or the Owner, as the case may be, has not revoked
its repurchase demand; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares of
Common Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to such Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing.
(d) For purposes of this Agreement, a "Repurchase Event"
shall be deemed to have occurred upon the occurrence of any of the following
events or transactions after the date hereof:
(i) the acquisition by any person (other than
Grantee or any Grantee Subsidiary) of beneficial ownership of 50% or
more of the then outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction
described in Section 2(b)(i) hereof, except that the percentage referred
to in clause (y) of the second sentence thereof shall be 50%;
provided that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an Exercise Termination
Event. The parties hereto agree that Issuer's obligations to repurchase the
Option or Option Shares under this Section 7 shall not terminate upon the
occurrence of any Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise Termination
Event.
8. (a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement (i) to consolidate with or merge into any
person, other than Grantee or a Grantee Subsidiary, or engage in a plan of
exchange with any person, other than Grantee or a Grantee Subsidiary, and Issuer
shall not be the continuing or surviving corporation of such consolidation or
9
merger or the acquiror in such plan of exchange, (ii) to permit any person,
other than Grantee or a Grantee Subsidiary, to merge into Issuer or be acquired
by Issuer in a plan of exchange and Issuer shall be the continuing or surviving
or acquiring corporation, but, in connection with such merger or plan of
exchange, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding shares of Common Stock shall after such merger
or plan of exchange represent less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (iii) to sell or otherwise
transfer all or a substantial part of its or any Issuer Subsidiary's
consolidated assets or consolidated deposits to any person, other than Grantee
or a Grantee Subsidiary, then, and in each such case, the agreement governing
such transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of any Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the
continuing or surviving person of a consolidation or merger with Issuer
(if other than Issuer), (ii) the acquiring person in a plan of exchange
in which Issuer is acquired, (iii) Issuer in a merger or plan of
exchange in which Issuer is the continuing or surviving or acquiring
person, and (iv) the transferee of all or a substantial part of Issuer's
consolidated assets or consolidated deposits (or the assets or deposits
of an Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common
stock issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer
Price, as defined in Section 7.
(iv) "Average Price" shall mean the average closing
price of a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger, share exchange or sale
in question, but in no event higher than the closing price of the shares
of Substitute Common Stock on the day preceding such consolidation,
merger, share exchange or sale; provided that if Issuer is the issuer of
the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by the person merging into Issuer or
by any company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall, to the extent legally permissible,
be as similar as possible to, and in no event less advantageous to the Holder
than, the terms of the Option. The issuer of the Substitute Option also shall
enter into an agreement with the then Holder or Holders of the Substitute Option
in substantially the same form as
10
this Agreement (after giving effect for such purpose to the provisions of
Section 9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this paragraph (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
paragraph (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this paragraph (e). This difference in value shall be
determined by a nationally-recognized investment banking firm selected by a
majority in interest of the Holders and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option
(the "Substitute Option Holder") delivered to the Substitute Option Issuer, the
Substitute Option Issuer shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as hereinafter
defined) exceeds (ii) the exercise price of the Substitute Option, multiplied by
the number of shares of Substitute Common Stock for which the Substitute Option
may then be exercised, and at the request of each owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to the greater of (A) the Highest
Closing Price and (B) the average exercise price per share paid by the
Substitute Share Owner for the Substitute Shares so designated, multiplied by
the number of Substitute Shares so designated. The term "Highest Closing Price"
shall mean the highest closing price for shares of Substitute Common Stock
within the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
11
(b) Each Substitute Option Holder and Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this
Agreement) and/or certificates for Substitute Shares accompanied by a written
notice or notices stating that the Substitute Option Holder or the Substitute
Share Owner, as the case may be, elects to require the Substitute Option Issuer
to repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in any
event within two business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor, or the portion(s) thereof which the Substitute Option
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from repurchasing
the Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to this
Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within two business days after the date on which the
Substitute Option Issuer is no longer so prohibited; provided, however, that if
the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use all reasonable efforts to
obtain all required regulatory and legal approvals as promptly as practicable in
order to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
12
which is the Substitute Option Repurchase Price, and/or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is then so
prohibited from repurchasing.
10. The 90-day or six-month periods for exercise of certain rights
under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights (for so long as
the Holder, Owner, Substitute Option Holder or Substitute Share Owner, as the
case may be, is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii) during
the pendency of any order, injunction or judgment that prohibits or delays
exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as
follows:
(i) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Issuer Board and no other corporate
proceedings on the part of Issuer are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Issuer.
(ii) The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and compliance
by Issuer with any of the provisions hereof will not (i) conflict with
or result in a breach of any provision of its Articles of Organization
or Bylaws or a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, debenture, mortgage, indenture, license,
material agreement or other material instrument or obligation to which
Issuer is a party, or by which it or any of its properties or assets may
be bound, or (ii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Issuer or any of its properties or
assets.
(iii) Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal to
the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, and all such shares, upon issuance pursuant
thereto, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances and security interests and not subject to any
preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Grantee and
the performance of its obligations hereunder by Grantee have
13
been duly and validly authorized by all necessary corporate action on
the part of Grantee and no other corporate proceedings on the part of
Grantee are necessary to authorize this Agreement for Grantee to perform
its obligations hereunder. This Agreement has been duly and validly
executed and delivered by Grantee.
(ii) The Option is not being, and any shares of
Common Stock or other securities acquired by Grantee upon exercise of
the Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the 1933 Act
and any applicable securities offering rules of a federal or state
banking authority.
12. Neither of the parties hereto may assign or otherwise transfer
any of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Subsequent Triggering Event shall have
occurred prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder, provided, however, that until the date 15 days following the date on
which the Federal Reserve Board approves an application by Grantee under the
BHCA to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the sole purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use all reasonable efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder and applying for listing or quotation of such shares on any exchange
or quotation system on which the Common Stock is then listed or quoted.
14. (a) Notwithstanding any other provision of this Agreement,
in no event shall the Grantee's Total Profit (as hereinafter defined) exceed
$2,400,000 (the "Maximum Profit") and, if it otherwise would exceed such amount,
the Grantee, at its sole election, shall either (i) reduce the number of shares
of Common Stock subject to this Option, (ii) deliver to the Issuer for
cancellation Option Shares previously purchased by Grantee, (iii) pay cash to
the Issuer or (iv) any combination thereof, so that Grantee's actually realized
Total Profit shall not exceed the Maximum Profit after taking into account the
foregoing actions. As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 7 hereof, (ii) (x) the amount received by Grantee pursuant
to Issuer's repurchase of the Option Shares pursuant to Section 7 hereof, less
(y) the Grantee's purchase price for such Option Shares, (iii) (x) the net cash
amounts received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price of such Option Shares,
(iv) any amounts received by Grantee on the transfer of the Option (or
14
any portion thereof) to any unaffiliated party and (v) any equivalent amount
with respect to the Substitute Option.
(b) Notwithstanding any other provision of this Agreement,
this Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (as hereinafter defined) of more
than the Maximum Profit, provided that nothing in this sentence shall restrict
any exercise of the Option permitted hereby on any subsequent date. As used
herein, the term "Notional Total Profit" with respect to any number of shares as
to which Grantee may propose to exercise this Option shall be the Total Profit
determined as of the date of such proposed exercise assuming that this Option
were exercised on such date for such number of shares and assuming that such
shares, together with all other Option Shares held by Grantee and its affiliates
as of such date, were sold for cash at the closing market price for the Common
Stock as of the close of business on the preceding trading day (less customary
brokerage commissions).
15. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief. In connection therewith,
both parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance
with the laws of the State of Maine, without regard to the conflict of law
principles thereof.
19. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
20. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions
15
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
16
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
IPSWICH BANCSHARES, INC.
By:
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief Executive
Officer
BANKNORTH GROUP, INC.
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President
and Chief Executive Officer
17
ANNEX C
TERMINATION AGREEMENT
AGREEMENT, dated as of February 26, 2002, by and among Banknorth Group,
Inc. ("Banknorth"), Ipswich Bancshares, Inc. ( the "Company"), Ipswich Savings
Bank (the "Bank"), a wholly-owned subsidiary of the Company, Eastern Bank, as
Trustee of the Ipswich Irrevocable Insurance Trust (the "Trust"), and Xxxxx X.
Xxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive is a director and president and chief executive
officer of the Company and the Bank; and
WHEREAS, the Executive and the Bank have entered into an Amended and
Restated Employment Agreement, dated as of June 18, 1997 and amended and
restated as of May 18, 1999 (the "Employment Agreement"); and
WHEREAS, the Executive, the Bank and Eastern Bank, as Trustee of the
Trust, have entered into an Amended and Restated Split Dollar Agreement, dated
as of February 21, 1996 and amended and restated as of May 18, 1999 (the "Split
Dollar Agreement"), and a related Amended and Restated Assignment of Life
Insurance Policy as Collateral in favor of Eastern Bank, as Trustee of the
Trust, dated as of February 21, 1996 and amended and restated as of May 18, 1999
(the "Collateral Assignment"), and the Bank and Eastern Bank, as Trustee of the
Trust, have entered into an Amended and Restated Ipswich Irrevocable Insurance
Trust Agreement, dated as of February 21, 1996 and amended and restated as of
May 18, 1999 (the "Trust Agreement"); and
WHEREAS, Banknorth and the Company have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), pursuant
to which the Company will merge with and into Banknorth on the terms and
conditions set forth therein and, in connection therewith, outstanding shares of
Company Common Stock will be converted into shares of Banknorth Common Stock
and/or cash in the manner set forth therein; and
WHEREAS, as an inducement to Banknorth to enter into the Merger
Agreement, the Employers and the Executive desire to set forth the status of the
Executive's employment relationships with the Company and the Bank
(collectively, the "Employers") as of the Effective Time (as defined in the
Merger Agreement) and the benefits he will be entitled to receive upon
termination of such employment relationships; and
WHEREAS, the Executive's employment relationship with Banknorth as of
the Effective Time is the subject of an Employment and Noncompetition Agreement
between Banknorth and the Executive entered into as of the date hereof and to be
effective as of the Effective Time (the "Employment and Noncompetition
Agreement");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto agree as follows:
1. Termination of Employment and Directorships; Accrued but Unpaid
Obligations.
(a) At the Effective Time, the Executive shall cease to be a
director and president and chief executive officer of the Company and the Bank
and any other employment and consulting relationships between the Executive and
any of the Company, the Bank and each other direct or indirect subsidiary of the
Company, and his membership on the boards of directors of the Company, the Bank
and each other such subsidiary, shall be terminated. Without limiting the
foregoing, the Employers and the Executive agree that at the Effective Time the
Employment Agreement shall be automatically terminated without the necessity of
any further action on the part of either party thereto, with the result that it
shall be null and void and no party thereto or any heir, successor or assignee
thereof shall have any continuing rights or obligations thereunder.
(b) In connection with the terminations provided in paragraph (a) of
this Section 1, the Company shall pay to the Executive, immediately prior to the
Effective Time, a cash amount equal to the sum of (i) the Executive's accrued
but unpaid annual base salary to the Effective Time and (ii) an amount in
compensation for Executive's accrued but unused vacation time to the extent
permitted under the Employers' vacation policies in effect as of the date
hereof. The calculation and payment of such amounts shall be subject to the
reasonable review and approval of Banknorth.
2. Payments to the Executive. In consideration of the agreements of
the Executive pursuant to Section 1(a), Banknorth agrees to pay to the
Executive, or to cause the Bank to pay to the Executive, at the Effective Time,
a cash amount equal to three times his current "base amount" for purposes of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), less
one dollar. Banknorth, the Employers and the Executive agree that the amount
required to be paid to the Executive pursuant to the preceding sentence is
$876,189.
3. Split Dollar Agreement and Related Agreements. The Employers,
the Executive and Eastern Bank, as Trustee of the Trust, as applicable, agree,
within thirty (30) days after the date hereof, to (i) amend the Split Dollar
Agreement and the related Collateral Assignment to eliminate the Bank as a party
thereto effective as of the Effective Time and (ii) amend and restate the Trust
Agreement to reflect the foregoing amendments to the Split Dollar Agreement and
the Collateral Assignment, all with the result that (x) the Employers shall have
no further obligation to make contributions to the Trust, (y) the Employers
shall have no right to receive Premium Reimbursement (as defined in the Split
Dollar Agreement) from the Trust except in the case of the insolvency of the
Bank and (z) all administrative and Trustee's fees and expenses shall be paid
from the Trust. Such amended Split Dollar Agreement, amended Collateral
Assignment and amended and restated Trust Agreement shall be in form and
substance reasonably satisfactory to Banknorth. The Employers agree to make no
further payments of premiums on the insurance policy held by the Trust between
the date hereof and the Effective Time.
4. No Effect on Employee Benefit Plans. Except as expressly
provided in this Agreement, the termination of the Executive's directorships and
employment pursuant to this
2
Agreement shall have no special effect on the rights and obligations of the
Executive and the Employers under the Company's 401(k) Savings Plan, the
Company's stock option plans or any other employee benefit plan of the Employers
pursuant to which the Executive has any accrued rights or is entitled to any
benefits or payments (the "Employee Benefit Plans"), provided that the Executive
shall have no rights under (i) the Merger Severance Benefit Program maintained
by the Employers in connection with the termination of his employment by the
Employers pursuant to this Agreement or (ii) the Bank's Director Recognition and
Retirement Plan in connection with the termination of his directorships of the
Company, the Bank or any other direct or indirect subsidiary of the Company
pursuant to this Agreement.
5. Release.
(a) For, and in consideration of the commitments made herein by
Banknorth, the Executive, for himself and for his heirs and assigns, does hereby
release completely and forever discharge Banknorth and its subsidiaries,
affiliates, stockholders, attorneys, officers, directors, agents, employees,
successors and assigns, and any other party associated with Banknorth (the
"Released Parties"), to the fullest extent permitted by applicable law, from any
and all claims, rights, demands, actions, liabilities, obligations, causes of
action of any and all kind, nature and character whatsoever, known or unknown,
in any way connected with his employment by the Company or any of its
subsidiaries (including in each case predecessors thereof), either as a
director, officer or employee, or termination of such employment.
Notwithstanding the foregoing, the Executive does not release Banknorth from any
obligations of Banknorth to the Executive under (i) the Employee Benefit Plans,
(ii) Section 6.11 of the Merger Agreement, (iii) this Agreement and (iv) the
Employment and Noncompetition Agreement.
(b) For and in consideration of the commitments made herein by the
Executive, including without limitation the releases in paragraph (a) above,
Banknorth, for itself, and for its successors and assigns does hereby release
completely and forever discharge the Executive and his heirs and assigns, to the
fullest extent permitted by applicable law, from any and all claims, rights,
demands, actions, liabilities, obligations, causes of action of any and all
kind, nature and character whatsoever, known or unknown, in any way connected
with the Executive's employment by the Company or any of its subsidiaries
(including predecessors thereof), either as a director, officer or employee.
Notwithstanding anything in the foregoing to the contrary, Banknorth does not
release the Executive from claims arising out of any breach by the Executive of
(i) any law or regulation by the Executive during the term of and related to his
employment by the Company or any of its subsidiaries (including predecessors
thereof), either as a director, officer or employee, (ii) this Agreement or
(iii) the Employment and Noncompetition Agreement.
6. Representations and Warranties. The parties hereto represent and
warrant to each other that they have carefully read this Agreement and consulted
with respect thereto with their respective counsel and that each of them fully
understands the content of this Agreement and its legal effect. Each party
hereto also represents and warrants that this Agreement is a legal, valid and
binding obligation of such party which is enforceable against such party in
accordance with its terms.
3
7. Successors and Assigns. This Agreement will inure to the benefit
of and be binding upon the Executive and his heirs and assigns, and upon
Banknorth, including any successor to Banknorth by merger or consolidation or
any other change in form or any other person or firm or corporation to which all
or substantially all of the assets and business of Banknorth may be sold or
otherwise transferred. This Agreement may not be assigned by any party hereto
without the consent of the other party.
8. Notices. Any communication to a party required or permitted
under this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five (5) days
after mailing if mailed, postage prepaid, by registered or certified mail,
return receipt requested, addressed to such party at the address listed below or
at such other address as one such party may by written notice specify to the
other party or parties, as applicable:
If to the Executive:
Xxxxx X. Xxxx
0 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
If to Banknorth:
Banknorth Group, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attention: President
9. Withholding. Banknorth may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
10. Entire Agreement; Severability.
(a) This Agreement contains the entire agreement of the parties
relating to the subject matter hereof and from and after the Effective Time
shall supersede in its entirety any and all prior agreements or understandings,
whether written or oral, between the Employers and the Executive relating to the
subject matter hereof, including without limitation the Employment Agreement,
the Split Dollar Agreement, the Collateral Assignment, the Bank's Merger
Severance Benefit Program and the Bank's Director Recognition and Retirement
Plan. In reaching this Agreement, no party has relied upon any representation or
promise except those set forth herein and in the Employment and Noncompetition
Agreement.
4
(b) Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable. In all such cases, the parties shall use their
reasonable best efforts to substitute a valid, legal and enforceable provision
which, insofar as practicable, implements the original purposes and intents of
this Agreement.
11. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Maine applicable to
agreements made and entirely to be performed within such jurisdiction.
14. Headings. The headings of sections in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of any
section. Any reference to a section number shall refer to a section of this
Agreement, unless otherwise stated.
15. Effectiveness. Notwithstanding anything herein to the contrary,
the effectiveness of this Agreement shall be subject to consummation of the
Merger in accordance with the terms of the Merger Agreement, as the same may be
amended by the parties thereto in accordance with its terms.
5
IN WITNESS WHEREOF, each of the undersigned has entered into this
Agreement as of the day and year first above written.
BANKNORTH GROUP, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and Chief
Executive Officer
---------------------------------------
Xxxxx X. Xxxx
IPSWICH BANCSHARES, INC.
By:
---------------------------------------
Name:
Title:
IPSWICH SAVINGS BANK
By:
---------------------------------------
Name:
Title:
EASTERN BANK, Trustee
By:
---------------------------------------
Name:
Title:
6
ANNEX D
EMPLOYMENT AND NONCOMPETITION AGREEMENT
AGREEMENT, dated as of February 26, 2002, between Banknorth Group, Inc.
("Banknorth") and Xxxxx X. Xxxx (the "Executive").
WITNESSETH
WHEREAS, Banknorth has determined that it is in the best interests of
its shareholders to ensure that Banknorth will have the continued dedication of
the Executive following the merger of Ipswich Bancshares, Inc. (the "Company"),
a Massachusetts corporation, with and into Banknorth (the "Merger") pursuant to
an Agreement and Plan of Merger, dated as of February 26, 2002, between
Banknorth and the Company (the "Merger Agreement"), and to provide Banknorth
after the Merger with continuity of management; and
WHEREAS, in order to accomplish these objectives, the Executive and
Banknorth desire to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto agree as follows:
1. Effective Date. The "Effective Date" shall mean the
effective date of the Merger.
2. Employment Period. Banknorth hereby agrees to employ the
Executive, and the Executive hereby agrees to enter into the employ of Banknorth
subject to the terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the one-year anniversary thereof (the
"Employment Period").
3. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as
a Senior Vice President of Banknorth, reporting directly to the Chief Executive
Officer of Banknorth or his designee and with appropriate authority, duties and
responsibilities, as determined from time to time by the Chief Executive Officer
of Banknorth or his designee. It is contemplated that the employment services
will include, without limitation, assistance in connection with the integration
of the operations of Banknorth and the Company following consummation of the
Merger, regular meetings between the Executive and the Chief Executive Officer
of Banknorth or his designee, attendance at certain public functions on behalf
of Banknorth and its banking subsidiary in Massachusetts and southern New
Hampshire and attendance at certain functions of Banknorth. Employment services
shall be provided by the Executive in the Company's pre-merger market areas,
provided that the Executive may be required to provide employment services at
the executive offices of Banknorth located in Portland, Maine or the executive
offices of Banknorth, NA located in Worcester,
Massachusetts. Employment services may be provided in person, telephonically,
electronically or by correspondence to the extent appropriate under the
circumstances. The Executive shall not be required to provide employment
services outside of the Company's pre-Merger market areas more often than four
times per month.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote substantially all of his attention and time during normal
business hours to the business and affairs of Banknorth and its subsidiaries
and, to the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities.
(b) Vacation. The Executive shall be entitled to four (4) weeks
of vacation during the Employment Period, which shall be taken in accordance
with Banknorth's vacation policy as in effect from time to time.
4. Non-Compete. The Executive agrees that during the
three-year period commencing on the Effective Date and ending on the third
annual anniversary thereof (the "Noncompetition Period"), the Executive will
not, directly or indirectly, (i) become a director, officer, employee,
principal, agent, consultant or independent contractor of any insured depository
institution, trust company or parent holding company of any such institution or
company which has an office in Massachusetts or the counties of Rockingham,
Hillsborough and Cheshire in New Hampshire (a "Competing Business"), provided,
however, that this provision shall not prohibit the Executive from (x) owning
bonds, non-voting preferred stock or up to five percent (5%) of the outstanding
common stock of any such entity if such common stock is publicly traded and (y)
being employed outside of Massachusetts and the aforementioned counties in New
Hampshire as long as he is in compliance with the provisions of clauses (ii) and
(iii) below, (ii) solicit or induce, or cause others to solicit or induce, any
employee of Banknorth or any of its subsidiaries to leave the employment of such
entities or (iii) solicit (whether by mail, telephone, personal meeting or any
other means) any customer of Banknorth or any of its subsidiaries to transact
business with any other entity, whether or not a Competing Business, or to
reduce or refrain from doing any business with Banknorth or its subsidiaries, or
interfere with or damage (or attempt to interfere with or damage) any
relationship between Banknorth or its subsidiaries and any such customers.
5. Confidentiality. Except (i) in the course of providing
employment services hereunder or (ii) as required by law or regulation
(including without limitation in connection with any judicial or administrative
process or proceeding), the Executive shall keep secret and confidential and
shall not disclose to any third party (other than Banknorth or its subsidiaries)
in any fashion or for any purpose whatsoever any information regarding
Banknorth, the Company or any of their respective subsidiaries which is not
available to the general public to which he has had or will have access at any
time during the course of his employment by Banknorth, the Company or any of
their respective subsidiaries, including, without limitation, any such
information relating to: business or operations; plans, strategies, prospects or
objectives; products, technology, processes or specifications; research and
development operations or plans; customers and customer lists; distribution,
sales, service, support and marketing practices and operations; financial
condition, results of operations and prospects; operational strengths and
weaknesses; and personnel and
2
compensation policies and procedures. This restriction shall not apply to
information made available to be public by Banknorth and information which is
already in the public domain through no breach of this Agreement by the
Executive.
6. Injunctive Relief.
(a) The Executive agrees that damages at law will be an
insufficient remedy to Banknorth in the event that the Executive violates any of
the provisions of Sections 4 or 5, and that Banknorth may apply for and, upon
the requisite showing, have injunctive relief in any court of competent
jurisdiction to restrain the breach or threatened or attempted breach of or
otherwise to specifically enforce any of the covenants contained in Sections 4
or 5. The Executive hereby consents to any injunction (temporary or otherwise)
which may be issued against the Executive and to any other court order which may
be issued against the Executive from violating, or directing the Executive to
comply with, any of the covenants in Sections 4 and 5. The Executive also agrees
that such remedies shall be in addition to any and all remedies, including
damages, available to Banknorth against the Executive for such breaches or
threatened or attempted breaches.
(b) In addition to Banknorth's rights set forth in paragraph
(a) of this Section 6, in the event that the Executive shall be determined
(pursuant to the procedures described in Section 10) to have been in material
violation of the terms and conditions of Sections 4 or 5 of this Agreement,
Banknorth and its subsidiaries may terminate any payments or benefits payable by
Banknorth to the Executive pursuant to paragraphs (a) and (c) of Section 7 of
this Agreement.
7. Compensation and Other Benefits.
(a) Base Salary and Other Benefits During the Employment
Period. In consideration of the Executive's employment and confidentiality
obligations during the Employment Period, Banknorth agrees to pay to the
Executive an annual base salary of $250,000 during the Employment Period,
$100,000 of which shall be payable on the Effective Date and the remainder of
which shall be payable to the Executive in accordance with Banknorth's customary
payroll practices. During the Employment Period, except as otherwise expressly
provided herein, the Executive also shall be entitled to participate in all
employee benefit, welfare and retirement plans generally applicable to full-time
employees of Banknorth (collectively, the "Employee Benefit Plans"), on a basis
no less favorable than that provided to other full-time employees of Banknorth,
provided that the Executive shall not be eligible to participate in short and
long-term incentive plans, stock option and restricted stock plans and
supplemental retirement plans maintained by Banknorth or its subsidiaries,
except in the case of stock option plans as permitted by Section 3.09 of the
Merger Agreement. In addition to the foregoing benefits, Banknorth also agrees
to provide the Executive (i) with a $700 per month car allowance, (ii) the use
of a cell phone in accordance with Banknorth's policies regarding the same in
effect from time to time and (iii) the use of an office located in Ipswich,
Massachusetts together with reasonable secretarial assistance. Banknorth also
agrees to pay, in accordance with the past practices of the Employers, amounts
becoming due during the Employment Period with respect to the Supplemental
Disability Insurance Policy that was, as of the date hereof, being funded by the
Employers.
3
(b) Expense Reimbursement. Banknorth shall reimburse the
Executive or otherwise provide for or pay for all reasonable expenses incurred
by the Executive during the Employment Period at the request of Banknorth in
accordance with the terms of the travel policy of Banknorth in effect from time
to time and subject to such reasonable documentation as may be requested by
Banknorth. If such expenses are paid in the first instance by the Executive,
Banknorth shall reimburse the Executive therefor upon receipt of such reasonable
documentation as may be requested by Banknorth.
(c) Noncompetition Payments. In consideration of the
performance of the Executive's obligations pursuant to Section 4 hereof,
Banknorth agrees to pay to the Executive $280,000, $350,000 and $100,000 during
the first, second and third years of the Noncompetition Period, respectively,
which amounts shall be payable in twelve (12) equal monthly installments
commencing on the first business day in the first, second and third years of the
Noncompetition Period, respectively. The Executive agrees that during the second
and third years of the Noncompetition Period the Executive shall be treated as
an independent contractor and shall not be deemed to be an employee of Banknorth
or any subsidiary or other affiliate of Banknorth for any purpose.
8. Termination of Employment and Noncompetition
Obligations.
(a) Termination for Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If Banknorth determines in good faith that the Disability of
the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 13(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with Banknorth shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the thirty (30) days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with Banknorth on a full-time basis for ninety (90)
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
Banknorth or its insurers and reasonably acceptable to the Executive or the
Executive's legal representative.
(b) Termination for Cause. Banknorth may terminate the
Executive's employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) conviction of a felony or a guilty or nolo
contendere plea by the Executive with respect thereto; or
(ii) willful and intentional misconduct, willful
neglect or gross negligence in the performance of the Executive's duties which
has caused a demonstrable injury to Banknorth, monetary or otherwise.
4
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of Banknorth. The
cessation of employment of the Executive for conduct described in subparagraph
(ii) above shall not be deemed to be for Cause unless and until the Board of
Directors of Banknorth (after reasonable advance notice is provided to the
Executive and the Executive is given an opportunity to be heard before the Board
of Directors) shall have adopted a resolution finding that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (ii) above, and specifying the particulars thereof in detail.
Banknorth may suspend the Executive's authority and employment after the
provision of a notice of intention to terminate the Executive's employment for
conduct described in subparagraph (ii) above and prior to the time the Executive
is given an opportunity to meet with the Board of Directors, and any such
suspension shall not constitute "Good Reason" as defined in Section 8(c) below.
(c) Termination With Good Reason. The Executive's employment
during the Employment Period may be terminated by the Executive for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean in the absence of a
written consent of the Executive:
(i) any failure by Banknorth to make employment of
the type described in Section 3(a)(i) available to the Executive during the
Employment Period or to comply with any of the requirements of Section 7 of this
Agreement, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by Banknorth within thirty (30)
days after receipt of notice thereof given by the Executive; or
(ii) any failure by Banknorth to comply with and
satisfy the requirements of Section 12(c) of this Agreement.
(d) Termination Without Good Reason. The Executive's
employment during the Employment Period may be terminated by Banknorth without
Cause or by the Executive without Good Reason.
(e) Termination of Noncompetition Obligations. Termination
of the Executive's employment during the Employment Period by either Banknorth
or the Executive shall not result in termination of the noncompetition
obligations of the Executive set forth in Section 4 or of the obligations of
Banknorth to make the payments required by Section 7(c). Banknorth shall not
have the right to terminate the noncompetition provisions of this Agreement. The
Executive may voluntarily terminate such noncompetition obligations at any time
during the second and third years of the Noncompetition Period (in which event
Banknorth shall have no further obligations to make payments pursuant to Section
7(c), as provided in Section 9(f)), provided that if the Executive terminates
the noncompetition obligations on a date which is within thirty (30) months
after the Effective Date, the Executive shall be required to comply with such
noncompetition obligations, without additional compensation from Banknorth, for
a period of three calendar months following the Date of Termination of such
noncompetition obligations.
(f) Notice of Termination. Any termination of the
Executive's employment during the Employment Period by Banknorth or the
Executive, and any termination by the Executive
5
of the noncompetition obligations of the Executive set forth in Section 4 hereof
during the second or third years of the Noncompetition Period, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 13(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than 30 days after the giving of such notice). The
failure by the Executive or Banknorth to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or Banknorth, respectively, hereunder
or preclude the Executive or Banknorth, respectively, from asserting such fact
or circumstance in enforcing the Executive's or Banknorth's rights hereunder.
(g) Date of Termination. In the case of termination of the
Executive's employment during the Employment Period, "Date of Termination" means
(i) if the Executive's employment is terminated by Banknorth for Cause, or by
the Executive with or without Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein within thirty (30) days of such
notice, as the case may be, (ii) if the Executive's employment is terminated by
Banknorth other than for Cause or Disability, the Date of Termination shall be
the date on which Banknorth notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be. In the case of termination of the
Executive's noncompetition obligations during the second or third years of the
Noncompetition Period, "Date of Termination" means the date of Banknorth's
receipt of a Notice of Termination from the Executive.
9. Obligations of Banknorth upon Termination.
(a) Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, Banknorth shall terminate the
Executive's employment other than for Cause, death or Disability or the
Executive shall terminate his employment during the Employment Period for Good
Reason:
(i) Banknorth shall:
A. pay to the Executive the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid (the "Accrued Obligations");
B. subject to Section 13(f) hereof, continue to pay
to the Executive the amount of the Executive's Annual Base
Salary from the Date of Termination through the end of the
Employment Period; and
C. continue to pay to the Executive the amounts
payable under Section 7(c) through the end of the Noncompetition
Period, subject to earlier termination as provided in Section
9(f);
6
(ii) subject to Section 13(f) hereof, for the remainder of
the Employment Period, Banknorth shall continue to provide medical and dental
benefits to the Executive, his spouse and dependents at the level in effect on,
and at the same out-of-pocket costs to the Executive as of, the Date of
Termination; and
(iii) to the extent not theretofore paid or provided,
Banknorth shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
Banknorth and its affiliated companies through the Date of Termination (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of the Accrued
Obligations and the timely payment or provision of Other Benefits. The Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination.
(c) Disability. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period, Banknorth
shall have no further obligations to the Executive under this Agreement, other
than for payment of the Accrued Obligations and the timely payment or provision
of Other Benefits. The Accrued Obligations shall be paid to the Executive in a
lump sum in cash within thirty (30) days of the Date of Termination.
(d) Cause; Other than for Good Reason. If the Executive's
employment during the Employment Period shall be terminated for Cause or the
Executive terminates his employment during the Employment Period without Good
Reason, Banknorth shall have no further obligations to the Executive under this
Agreement, other than for (i) payment of the Accrued Obligations and the timely
payment or provision of Other Benefits and (ii) continued payment of the amounts
payable under Section 7(c) through the end of the Noncompetition Period, subject
to earlier termination as provided in Section 9(f).
(e) Purchase of Furniture and Furnishings. Notwithstanding
any provision of the preceding paragraphs of this Section 9 to the contrary,
upon termination of the Executive's employment hereunder, the Executive shall be
entitled to purchase his office furniture and furnishings at their estimated
fair market value at the time, as reasonably determined by Banknorth.
(f) Noncompetition Obligations. Banknorth shall have no
obligation to make any payments to the Executive pursuant to Section 7(c) hereof
for periods after the Date of Termination of the noncompetition provisions
hereof in the event that the Executive voluntarily terminates his noncompetition
obligations at any time during the second and third years of the Noncompetition
Period.
10. Resolution of Disputes. With the exception of
proceedings for equitable relief brought pursuant to Section 6(a), any dispute
or controversy arising under or in connection with this
7
Agreement may, at either Banknorth's or the Executive's option, be settled
exclusively by arbitration in Portland, Maine in accordance with the rules of
the American Arbitration Association then in effect and at Banknorth's expense.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction. The Executive shall be entitled to seek specific performance in
court of his right to be paid until the Date of Termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement. If a claim for any payments or benefits under this Agreement or any
other provision of this Agreement is disputed by Banknorth and the Executive,
the Executive shall, to the extent and at such time or times as is not
prohibited by applicable law, regulation, regulatory bulletin and/or any other
regulatory requirements, as the same exists or may be hereafter promulgated or
amended, if the Executive is successful in his claim, be reimbursed for all
reasonable attorney's fees and expenses incurred by the Executive in pursuing
such claim.
11. Advisory Director.
Banknorth agrees to cause the Executive to be appointed as a
member of the Massachusetts State Board of Banknorth, NA, Banknorth's
wholly-owned banking subsidiary, effective as of the Effective Date. The
Executive shall have the right, but not the obligation, to serve on such Board
for the one-year period following the Effective Date but shall not receive any
compensation from Banknorth or Banknorth, NA for such service.
12. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of Banknorth shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon Banknorth and its successors and assigns.
(c) Banknorth will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Banknorth to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that Banknorth would be required to perform it if no such succession had taken
place. As used in this Agreement, "Banknorth" shall mean Banknorth as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. Miscellaneous.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Maine, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
8
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx X. Xxxx
0 Xxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
If to Banknorth:
Banknorth Group, Inc
X.X. Xxx 0000
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000-0000
Attention: President
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) Banknorth may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or Banknorth's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or Banknorth may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 8(c) of this Agreement, shall not be deemed to be a
waiver of such provision or right or any other provision of, or right under,
this Agreement.
(f) In the event that Banknorth becomes obligated to
make payments to the Executive pursuant to Section 9(a)(i)(B) and Section 9(a)
(ii) hereof, the Executive shall have no obligation to seek other employment and
shall be entitled to continue to receive the payments and benefits provided
thereunder, provided that in the event that the Executive nonetheless obtains
other employment, which shall be consistent with the terms of this Agreement,
prior to the end of the Employment Period, any compensation or benefits received
by the Executive pursuant to such other employment shall be applied against and
reduce any payments or benefits to be paid or provided to the Executive pursuant
to Section 9(a)(i)(B) or Section 9(a)(ii) hereof. The Executive agrees to
provide prompt notice to Banknorth of the obtainment of any such other
employment and the amount of compensation and other benefits to be received by
him in connection therewith.
9
(g) This Agreement contains the entire agreement of
the parties relating to the subject matter hereof and supersedes in its entirety
any and all prior agreements or understandings, whether written or oral, between
Banknorth and the Executive relating to the subject matter hereof. In reaching
this Agreement, no party has relied upon any representation or promise except
those set forth herein and in the Termination Agreement, dated as of the date
hereof, by and among Banknorth, the Executive and the other parties thereto.
(h) Any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder. In addition, to the extent required by applicable law, regulation,
regulatory bulletin and/or any other regulatory requirement, the aggregate
amount and/or value of the compensation paid as a result of any termination of
the Executive's employment with Banknorth, regardless of the reason for any such
termination of employment, shall not exceed the limit prescribed by applicable
law, rule or regulation.
14. Effectiveness. Notwithstanding anything herein to the contrary,
the effectiveness of this Agreement shall be subject to consummation of the
Merger in accordance with the terms of the Merger Agreement, as the same may be
amended by the parties thereto in accordance with its terms.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of Directors,
Banknorth has caused this Agreement to be executed in its name on its behalf,
all as of the day and year first above written.
------------------------------------------
Xxxxx X. Xxxx
BANKNORTH GROUP, INC.
By:
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and Chief
Executive Officer
10
