EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
By and Among
CITIZENS BANK OF CONNECTICUT
and
BNH BANCSHARES, INC.
and
BANK OF NEW HAVEN
Dated as of April 8, 1997
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . 1
SECTION 1.02. Effective Time . . . . . . . . . . . . . 1
SECTION 1.03. Effect of the Holding Company Merger . . 2
SECTION 1.04. Certificate Incorporation. . . . . . . . 2
SECTION 1.05. By-Laws. . . . . . . . . . . . . . . . . 2
SECTION 1.06. Directors and Officers . . . . . . . . . 2
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01. Conversion of Securities . . . . . . . . 2
SECTION 2.02. Employee Stock Options . . . . . . . . . 3
SECTION 2.03. Objecting Shares . . . . . . . . . . . . 4
SECTION 2.04. Surrender of Shares;
Stock Transfer Books. . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE BANK
SECTION 3.01. Organization and Qualification;
Subsidiaries. . . . . . . . . . . . 6
SECTION 3.02. Certificate of Incorporation; By-Laws;
Corporate Records . . . . . . . . . 7
SECTION 3.03. Capitalization . . . . . . . . . . . . . 7
SECTION 3.04. Authority. . . . . . . . . . . . . . . . 8
SECTION 3.05. N o Conflict . . . . . . . . . . . . . . 9
SECTION 3 06. Consents and Approvals . . . . . . . . .10
SECTION 3.07. Compliance . . . . . . . . . . . . . . .10
SECTION 3.08. SEC Report and Bank Reports. . . . . . .11
SECTION 3.09. Financial Statements . . . . . . . . . .12
SECTION 3.10. Absence of Certain Changes or Events . .13
SECTION 3.11. Absence of Litigation. . . . . . . . . .14
SECTION 3.12. Employee Benefit Plans . . . . . . . . .14
SECTION 3.13. Labor Matters. . . . . . . . . . . . . .15
SECTION 3.14. Property and Leases. . . . . . . . . . .16
SECTION 3.15. Taxes. . . . . . . . . . . . . . . . . .17
SECTION 3.16. Certain Contracts. . . . . . . . . . . .18
(i)
SECTION 3.17. Loan Portfolio . . . . . . . . . . . . .19
SECTION 3.18. Investment Securities. . . . . . . . . .20
SECTION 3.19. Derivative Transactions. . . . . . . . .20
SECTION 3.20. Insurance. . . . . . . . . . . . . . . .20
SECTION 3.21. Environmental Matters. . . . . . . . . .21
SECTION 3.22. Intellectual Property. . . . . . . . . .23
SECTION 3.23. Administration of Fiduciary Accounts . .23
SECTION 3.24. Agreements with Bank Regulators. . . . .23
SECTION 3.25. Material Interests of Certain Persons. .23
SECTION 3.26. Brokers' Fees; Opinions. . . . . . . . .24
SECTION 3.27. Proxy Statement. . . . . . . . . . . . .24
SECTION 3.28. State Takeover Laws. . . . . . . . . . .24
SECTION 3.29. Disclosure . . . . . . . . . . . . . . .25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
SECTION 4.01. Corporate Organization . . . . . . . . .25
SECTION 4.02. Authority. . . . . . . . . . . . . . . .25
SECTION 4.03. No Conflict. . . . . . . . . . . . . . .26
SECTION 4.04. Consents and Approvals . . . . . . . . .26
SECTION 4.05. Proxy Statement. . . . . . . . . . . . .27
SECTION 4.06. Financial Statements . . . . . . . . . .27
SECTION 4.07. Brokers' Fees. . . . . . . . . . . . . .27
SECTION 4.08. Capital; Financing . . . . . . . . . . .27
ARTICLE V
CONDUCT OF BUSINESS PENDING
THE HOLDING COMPANY MERGER
SECTION 5.01. Covenants of the Company and the Bank. .28
SECTION 5.02. Purchaser Products and Services. . . . .32
SECTION 5.03. System Conversions . . . . . . . . . . .32
SECTION 5.04. Certain Changes and Adjustments. . . . .32
SECTION 5.05. ALCO Management. . . . . . . . . . . . .33
SECTION 5.06. Covenants of Purchaser . . . . . . . . .33
(ii)
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholders' Meeting. . . . . . . . . .33
SECTION 6.02. Proxy Statement. . . . . . . . . . . . .33
SECTION 6.03. Regulatory Matters . . . . . . . . . . .34
SECTION 6.04. Access to Information . . . . . . . . .35
SECTION 6.05. No Solicitation. . . . . . . . . . . . .36
SECTION 6.06. Employee Benefits Matters. . . . . . . .36
SECTION 6.07. Directors' and Officers' Insurance and
Indemnification . . . . . . . . . .37
SECTION 6.08. Financial and Other Statements . . . . .38
SECTION 6.09. Further Action . . . . . . . . . . . . .39
SECTION 6.10. Public Announcements . . . . . . . . . .39
SECTION 6.11. Additional Agreements . . . . . . . . .39
SECTION 6.12. Update of Disclosure Schedules . . . . .39
SECTION 6.13. Current Information. . . . . . . . . . .40
SECTION 6.14. Bank Merger. . . . . . . . . . . . . . .41
SECTION 6.15. Organization of Merger Sub . . . . . . .41
ARTICLE VII
CONDITIONS TO THE HOLDING COMPANY MERGER
SECTION 7.01. Conditions to Each Party's Obligations
to Effect the
Holding Company Merger. . . . . . .42
SECTION 7.02. Conditions to Obligations of Purchaser
and Merger Sub. . . . . . . . . . .43
SECTION 7.03. Conditions to Obligations of the Company
and the Bank. . . . . . . . . . . .44
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. . . . . . . . . . . . . . .45
SECTION 8.02. Effect of Termination. . . . . . . . . .46
SECTION 8.03. Amendment. . . . . . . . . . . . . . . .48
SECTION 8.04. Waiver . . . . . . . . . . . . . . . . .49
(iii)
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Closing. . . . . . . . . . . . . . . . .49
SECTION 9.02. Alternative Structure. . . . . . . . . .49
SECTION 9.03. Non-Survival of Representations
Warranties and Agreements . . . . .50
SECTION 9.04. Notices. . . . . . . . . . . . . . . . .50
SECTION 9.05. Certain Definitions. . . . . . . . . . .51
SECTION 9.06. Severability . . . . . . . . . . . . . .52
SECTION 9.07. Entire Agreement . . . . . . . . . . . .52
SECTION 9.08. Assignment . . . . . . . . . . . . . . .52
SECTION 9.09. Parties in Interest. . . . . . . . . . .52
SECTION 9.10. Specific Performance . . . . . . . . . .53
SECTION 9.11. Governing Law. . . . . . . . . . . . . .53
SECTION 9.12. Headings . . . . . . . . . . . . . . . .53
SECTION 9.13. Interpretation . . . . . . . . . . . . .53
SECTION 9.14. Counterparts . . . . . . . . . . . . . .53
EXHIBITS
Exhibit I Bank Merger Agreement
Exhibit II Agreement Regarding Company Option Plans
(iv)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 8, 1997
(this "Agreement"), by and among CITIZENS BANK OF CONNECTICUT, a
Connecticut chartered savings bank ("Purchaser"), BNH BANCSHARES,
INC., a Connecticut corporation (the "Company"), and BANK OF NEW
HAVEN, a Connecticut chartered bank and trust company and wholly
owned subsidiary of the Company (the "Bank").
WHEREAS, the Boards of Directors of Purchaser, the Company
and the Bank have each determined that it is in the best
interests of their respective stockholders for Purchaser to
acquire the Company and the Bank upon the terms and subject to
the conditions set forth herein and have each approved the
transactions contemplated by this Agreement;
WHEREAS, following the execution and delivery of this
Agreement, Purchaser shall take such action as is appropriate to
form a subsidiary to be organized as a corporation ("Merger Sub")
under the General Statutes of Connecticut ("Connecticut Law"),
and to cause Merger Sub to become a party to this Agreement,
pursuant to which Merger Sub shall merge with and into the
Company (the "Holding Company Merger") upon the terms and subject
to the conditions set forth herein (the Company and Merger Sub
being the constituent corporations of the Holding Company
Merger);
WHEREAS, following the execution and delivery of this
Agreement, Purchaser (also sometimes referred to herein as the
"Surviving Bank"), shall enter into a Bank Merger Agreement (the
"Bank Merger Agreement") with the Bank, substantially in the form
of Exhibit I hereto,providing for the merger of the Bank with and
into Purchaser (the "Bank Merger") under Connecticut Law,
promptly following the consummation of the Holding Company
Merger; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending
to be legally bound hereby, Purchaser, the Company and the Bank
hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with
Connecticut Law, at the Effective Time (as hereinafter defined),
Merger Sub shall be merged with and into the Company. As a result
of the Holding Company Merger, the separate corporate existence
of Merger Sub shall cease and the Company shall continue as the
surviving corporation of the Holding Company Merger (the
"Surviving Corporation").
SECTION 1.02. Effective Time. As promptly as
practicable after all of the
conditions set forth in Article VII shall have been satisfied or,
if permissible, waived by the party entitled to the benefit of the
same, Merger Sub and the Company shall duly execute and file a
certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Connecticut (the "Connecticut
Secretary") in accordance with Section 33-819 of Connecticut Law.
The Holding Company Merger shall become effective on the date
(the "Effective Date") and at such time (the "Effective Time") as
the Certificate of Merger is filed with the Connecticut Secretary
or at such later time as is specified in the Certificate of
Merger.
SECTION 1.03. Effect of the Holding Company Merger. At the
Effective Time, the effect of the Holding Company Merger shall be
as provided herein and in the applicable provisions of
Connecticut Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions,
disabilities and duties of the Company and Merger Sub shall
become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation. Unless otherwise
determined by Purchaser prior to the Effective Time, at the
Effective Time, the Certificate of Incorporation of the Company
shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter further amended as provided by law
and such Certificate of Incorporation.
SECTION 1.05. By-Laws. Unless otherwise determined by
Purchaser prior to the Effective Time, the By-Laws of Merger Sub,
as in effect immediately prior to the Effective Time, shall be
the By-Laws of the Surviving Corporation until thereafter amended
as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such By-Laws.
SECTION 1.06. Directors and Officers. The directors and
officers of Merger Sub immediately prior to the Effective Time
shall be the initial directors and officers of the Surviving
Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving
Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01. Conversion of Securities. At the Effective
Time, by virtue of the Holding Company Merger and without any
action on the part of Merger Sub, the Company or the holders of
any of the common stock, without par value per share, of the
Company (the "Shares" or the "Company Common Stock"):
(a) Each Share issued and outstanding immediately prior to the
Effective Time
2
(other than any Shares to be canceled pursuant to Section 2.01(b)
and any Objecting Shares (as hereinafter defined)) shall be
canceled and shall be converted automatically into the right to
receive an amount equal to $15.50 in cash (the "Fixed
Consideration") payable, without interest, to the holder of such
Share, upon surrender, in the manner provided in Section 2.04, of
the certificate that formerly evidenced such Share. In the event
that the Effective Time has not occurred on or prior to August
31, 1997 and (i) the condition contained in Section 7.01(a) has
been satisfied, and (ii) the failure of the Effective Time to
have occurred on or prior to August 31, 1997 is not attributable
to acts or omissions by or circumstances related to the Company
or the Bank, then the Fixed Consideration shall be adjusted
upwards by an amount determined by (A) multiplying (1) the Fixed
Consideration by (2) 6%, rounded at the date the foregoing
calculation is made at the Effective Time to the nearest $.01,
then (B) dividing the product determined pursuant to clause (A)
by 365, and then (C) multiplying the amount obtained after the
application of clauses (A) and (B) by the number of calendar days
in the period commencing on September 1, 1997 through and
including the Effective Date; provided, however, that in the
event that the Stockholders Meeting (as deemed below) is not held
on or before June 30, 1997 each of the preceding references to
August 31, 1997 and to September 1, 1997 shall automatically and
without any action by the parties each be extended by the number
of days the Stockholder meeting is delayed beyond June 30, 1997.
The Fixed Consideration, to the extent adjusted as provided
above, is referred to herein as the "Merger Consideration."
(b) Each Share held in the treasury of the Company and each
Share owned by Merger Sub, Purchaser or any direct or indirect
wholly owned subsidiary of Purchaser or of the Company
immediately prior to the Effective Time shall be canceled without
any conversion thereof and no payment or distribution shall be
made with respect thereto.
(c) Each share of the common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid
and nonassessable share of the common stock of the Surviving
Corporation.
SECTION 2.02. Employee Stock Options. Prior to the Effective
Time, the Company shall take all such action as is necessary to
terminate The 1986 BNH Bancshares, Inc. Stock Option Plan, The
BNH Bancshares, Inc. 1992 Stock Incentive Plan, and The BNH
Bancshares, Inc. Stock Option Plan for Non-Employee Directors,
each as amended to date (collectively, the "Company Option
Plans"), and shall provide written notice to each holder of a
then outstanding stock option to purchase Shares pursuant to the
Company Option Plans (whether or not such stock option is then
vested or exercisable), that such stock option shall be, as at
the date of such notice, exercisable in full and that such stock
option shall terminate at the Effective Time and that, if such
stock option is not exercised or otherwise terminated before the
Effective Time, such holder shall be entitled to receive in
cancellation of such option a cash payment from the Company at
the Closing in an amount equal to the excess of the Merger
3
Consideration over the per share exercise price of such stock
option, multiplied by the number of Shares covered by such stock
option, subject to any required withholding of taxes. Subject
to the foregoing, the Company Option Plans and all options issued
thereunder shall terminate at the Effective Time. The Company
hereby represents and warrants to Purchaser that the maximum
number of Shares subject to issuance pursuant to the exercise of
stock options issued and outstanding under the Company Option
Plans is not and shall not be at or prior to the Effective Time
more than 150,954. On or prior to the date of this Agreement, the
Company shall, to the extent practicable, cause each director and
executive officer of the Company or the Bank who holds, as of the
date of this Agreement, an outstanding stock option under the
Company Option Plans to execute and deliver an Agreement, in the
form appended hereto as Exhibit II. After the date of this
Agreement, the Company shall cause each other director, officer
or employee of the Company or the Bank who holds, as of the date
of this Agreement, an outstanding stock option under the Company
Option Plans to execute and deliver, as soon as practicable, an
Agreement in the form appended hereto as Exhibit II.
SECTION 2.03. Objecting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary and unless otherwise provided by applicable law, Shares
that are issued and outstanding immediately prior to the
Effective Time and that are owned by stockholders who have
properly objected within the meaning of Section 33-855 et. seq. of
Connecticut Law (the "Objecting Shares"), shall not be converted
into the right to receive the Merger Consideration, unless and
until such stockholders shall have failed to perfect or shall
have effectively withdrawn or lost their right of payment under
applicable law. If any such stockholder shall have failed to
perfect or shall have effectively withdrawn or lost such right of
payment, each Share held by such stockholder shall thereupon be
deemed to have been converted into the right to receive and
become exchangeable for, at the Effective Time, the Merger
Consideration in the manner provided in Section 2.04 hereof.
(b) The Company shall give Purchaser (i) prompt notice of
any objections filed pursuant to Section 33-855 et. seq. of
Connecticut Law received by the Company, withdrawals of such
objections, and any other instruments served in connection with
such objections pursuant to Connecticut Law and received by the
Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to objections under Connecticut Law
consistent with the obligations of the Company thereunder. The
Company shall not, except with the prior written consent of
Purchaser, (x) make any payment with respect to any such
objection, (y) offer to settle or settle any such objections or
(z) waive any failure to timely deliver a written objection in
accordance with Connecticut Law.
SECTION 2.04. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Purchaser shall designate a
bank or trust company to act as agent (the "Paying Agent") for
the holders of Shares in connection with the Holding Company
Merger to receive the funds to which holders of Shares shall
become entitled
4
pursuant to Section 2.01(a). Immediately prior to the Effective
Time, Purchaser shall deposit, or cause to be deposited, with the
Paying Agent, for the benefit of the holders of Certificates, for
exchange in accordance with this Article II, such amount of cash
as is sufficient to pay the aggregate Merger Consideration which
holders of Shares are entitled to receive pursuant to Section
2.01 and paid pursuant to this Section 2.04 in exchange for
outstanding Shares.
(b) Promptly after the Effective Time (but in no event more
than three business days thereafter), Purchaser and the Surviving
Corporation shall cause to be mailed to each person who was, at
the Effective Time, a holder of record of Shares entitled to
receive the Merger Consideration pursuant to Section 2.01(a) a
form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon
proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal. The Company
shall have the right to review the letter of transmittal, the
instructions and any accompanying letter. Upon surrender to the
Paying Agent of a Certificate, together with such letter of
transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each Share formerly evidenced by such
Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate for the benefit of
the holder of such Certificate. If payment of the Merger
Consideration is to be made to a person other than the person in
whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment
that the Certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other
taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such taxes either
have been paid or are not applicable.
(c) At any time following the sixth month after the
Effective Time, Purchaser and the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not
disbursed to holders of Shares (including, without limitation,
all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such
holders shall be entitled to look to Purchaser and the Surviving
Corporation (subject to abandoned property, escheat and other
similar laws) only as general creditors thereof with respect to
any Merger Consideration that may be payable upon due surrender
of the Certificates held by them. Notwithstanding the foregoing,
neither Purchaser nor the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public
official pursuant to any abandoned property, escheat or other
similar law.
(d) At the close of business on the Effective Date, the
stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of
5
Shares on the records of the Company. From and after the
Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided herein or by
applicable law.
(e) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Purchaser or the Surviving
Corporation, upon the posting by such person of a bond in such
amount as Purchaser or the Surviving Corporation may reasonably
direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate, the cash
representing the Merger Consideration deliverable in respect
thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE BANK
The Company and the Bank hereby jointly and severally
represent and warrant to Purchaser and Merger Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized,
validly existing and in good standing under Connecticut Law and a
bank holding company registered with the Board of Governors of
the Federal Reserve System (the "FRB") under the Bank Holding
Company Act of 1956, as amended (the "BHCA"). The Bank is a state
chartered bank and trust company duly organized, validly existing
and in good standing under Connecticut Law. The deposit accounts
of the Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") to the fullest extent permitted by law
and all premiums and assessments required in connection therewith
have been paid by the Bank. Each other subsidiary (as defined in
Section 9.05(h) below) five percent or more of the capital stock
(or other voting or equity interest) of which is beneficially
owned by the Company, is a corporation or other entity duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization. The
Company, the Bank and their subsidiaries each has the requisite
power and authority and all necessary governmental approvals to
own, lease and operate all of its properties and assets and to
carry on its business as it is now being conducted, and is duly
licensed or qualified to do business and is in good standing in
each jurisdiction where the nature of the business conducted by
it or the character or location of the properties and assets
owned, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so
licensed or qualified and be in good standing would not, either
individually or in the aggregate, have a Material Adverse Effect
(as defined in Section 9.05(f) below).
6
(b) A true and complete list of all the subsidiaries
of the Company, together with the jurisdiction of incorporation
or organization of each subsidiary and the percentage of the
outstanding capital stock or other ownership interest of each
subsidiary, is set form in Section 3.01 of the Disclosure
Schedule previously delivered by the Company to Purchaser (the
"Disclosure Schedule"). Except for the Bank and its
subsidiaries, the Company does not directly or indirectly own
five percent or more of the capital stock or other equity or
similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest
in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02. Certificate of Incorporation; By-Laws;
Corporate Records. The Company and the Bank each has heretofore
made available to Purchaser a complete and correct copy of the
Certificate of Incorporation and the By-Laws or equivalent
organizational documents, each as amended to date, of the
Company, the Bank and each of their subsidiaries. Such
Certificate of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither
the Company, the Bank nor any of their subsidiaries is in violation
of any provision of its Certificate of Incorporation or
equivalent organizational documents or of its By-Laws. The minute
books of the Company, the Bank and each of their subsidiaries
contain in all material respects true and complete records of all
meetings held and true and complete records of all corporate
actions taken since January 1, 1994 of their respective
stockholders and boards of directors (including committees of
their respective boards of directors).
SECTION 3.03. Capitalization.
(a) The authorized capital stock of the Company
consists of 30,000,000 Shares. As of the date hereof, (a)
3,694,492 Shares are issued and outstanding, all of which are
duly authorized, validly issued, fully paid, non-assessable and
free of preemptive rights, with no personal liability attaching
to the ownership thereof, (b) 4,776 Shares are held in the
treasury of the Company, (c) no Shares are held by any of its
subsidiaries, and (d) 226,716 Shares are reserved for future
issuance pursuant to the Company Option Plans. All Shares
subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they
are issuable, will be duly authorized, validly issued, fully
paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
(b) The authorized capital stock of the Bank consists
of 1,250,000 shares of Common Stock, par value $1.00 per share
("Bank Common Stock") (shares of Bank Common Stock being
hereinafter collectively referred to as "Bank Shares"). As of
the date hereof, (a) 1,002,735 Bank Shares are issued and
outstanding and owned by the Company, all of which are duly
authorized, validly issued, fully paid, non-assessable and free
of preemptive rights, with no personal liability attaching to the
ownership thereof. (b) no Bank Shares are held in the treasury of
the Bank, and (c) no Bank Shares are held by any of its
subsidiaries. Each issued and outstanding share of capital stock
of each other subsidiary of the Company is duly authorized,
validly issued, fully paid, non-assessable and free of preemptive
rights, with no personal liability
7
attaching to the ownership thereof. Each share of capital stock
of each subsidiary of the Company owned by the Company, the Bank
or any of their other subsidiaries is free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Company's, the
Bank's or such other subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
(c) Neither the Company nor the Bank has any stock
option or equity-based compensation plans, agreements or
arrangements other than the Company Option Plans. Except for
stock options issued pursuant to the Company Option Plans, there
are no outstanding subscriptions, options, warrants, calls or
other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the
Company, the Bank or any of their subsidiaries or obligating the
Company, the Bank or any of their subsidiaries to issue or sell
any shares of capital stock of, or other equity interests in, the
Company, the Bank or any of their subsidiaries. There are no
outstanding contractual obligations of the Company, the Bank or
any of their subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of, or other equity interests
in, the Company, the Bank or any of their subsidiaries or to
provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any subsidiary. The names
of the optionees, the date of each option to purchase Shares
granted, the number of Shares subject to each such option, the
expiration date of each such option, and the price at which each
such option may be exercised under the Company Option Plans are
set forth in Section 3.03 of the Disclosure Schedule
(d) The BNH Bancshares, Inc. 1985 Warrant Plan for
Directors has terminated by its terms and all rights to acquire
securities of the Company thereunder are extinguished. All
warrants or other rights, agreements, arrangements or commitments
of any character thereunder have terminated by their terms and
none of the foregoing is of any force or effect.
SECTION 3.04. Authority.
(a) The Company has full corporate power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, the performance of
its obligations hereunder and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the performance of its obligations
hereunder or to consummate the transactions contemplated hereby
(other than, with respect to the Holding Company Merger, the
approval and adoption of this Agreement by the holders of the
then outstanding Shares). The Board of Directors of the Company
(the "Company Board") has approved this Agreement and has
directed that this Agreement and the transactions contemplated
hereby, including the Holding Company Merger, be submitted to the
Company's stockholders for approval at a meeting of such
stockholders. This Agreement has been duly and validly executed
and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms.
8
(b) The Bank has full corporate power and authority to
execute and deliver this Agreement and the Bank Merger Agreement,
to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Bank Merger
Agreement, the performance of its obligations hereunder and
thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on
the part of the Bank are necessary to authorize this Agreement or
the Bank Merger Agreement or the performance of its obligations
hereunder or thereunder or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the
Bank Merger, the approval and adoption of the Bank Merger
Agreement by the Surviving Corporation as the sole stockholder of
the Bank). The Board of Directors of the Bank (the "Bank Board")
has approved this Agreement and has directed that the Bank Merger
Agreement and the transactions contemplated thereby, including
the Bank Merger, be submitted to the Company as the sole
stockholder of the Bank for its approval. This Agreement has been
duly and validly executed and delivered by the Bank and
constitutes a legal, valid and binding obligation of the Bank,
enforceable against the Bank in accordance with its terms. The
Bank Merger Agreement, upon execution and delivery by the Bank,
will be duly and validly executed and delivered by the Bank and
will constitute a legal, valid and binding obligation of the Bank
enforceable against the Bank in accordance with its terms.
SECTION 3.05. No Conflict. Neither the execution, delivery
and performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated
hereby, nor the execution, delivery and performance of this
Agreement or the Bank Merger Agreement by the Bank, nor the
consummation by the Bank of the transactions contemplated hereby
or thereby, nor compliance by the Company or the Bank with any of
the terms or provisions hereof or thereof, will, (i) conflict
with, violate or result in a breach of the Certificate of
Incorporation or By-Laws or equivalent organizational documents
of the Company, the Bank or any of their subsidiaries, (ii)
conflict with, violate or result in a breach of any statute,
code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree applicable to the Company, the Bank or any
of their subsidiaries or by which any property or asset of the
Company, the Bank or any of their subsidiaries is bound or
affected, or (iii) conflict with, violate or result in a breach
of any provisions of or the loss of any benefit under, constitute
a default (or an event which with notice or lapse of time or both
would constitute a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of the
Company, the Bank or any of their subsidiaries pursuant to, any
of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which the Company, the Bank or any of their subsidiaries is a
party or by which the Company, the Bank or any of their
subsidiaries or any property or asset of the Company, the Bank or
any of their subsidiaries is bound or affected, except, in the
case of clause (iii) above, for any such conflicts, violations,
breaches, defaults or other occurrences which would not be deemed
material.
9
SECTION 3.06. Consents and Approvals.
(a) The execution, delivery and performance of this
Agreement by the Company, and the execution, delivery and
performance of this Agreement and the Bank Merger Agreement by
the Bank, does not require any consent, approval, authorization
or permit of, or filing with or notification to, any court,
administrative agency or commission or other governmental or
regulatory authority or instrumentally, domestic or foreign,
including, without limitation, any Bank Regulator (as hereinafter
defined) (each a "Governmental Entity"), except (i) for
applicable requirements, if any, of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), state takeover laws,
the pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), and filing and
recordation of appropriate merger documents as required by
Connecticut Law, (ii) for consents and approvals of or filings,
registrations or negotiations with the FRB, the FDIC and the
Banking Commissioner of the State of Connecticut (the
"Connecticut Commissioner"), and (iii) the filings required by
the Bank Merger Agreement. The Company and the Bank are not aware
of any reason why the approvals, consents and waivers of
Governmental Entities referred to herein and in Section 7.01(b)
should not be obtained.
(b) The execution, delivery and performance of this
Agreement by the Company, and the execution, delivery and
performance of this Agreement and the Bank Merger Agreement by
the Bank, does not require any consent, approval, authorization
or permit of, or filing with or notification to, any third party,
except where failure to obtain any such consent, approval,
authorization or permit, or to make any such filing or
notification, would not prevent or significantly delay
consummation of the Holding Company Merger or the Bank Merger, or
otherwise prevent the Company or the Bank from performing its
obligations under this Agreement or the Bank from performing its
obligations under the Bank Merger Agreement, or would not, either
individually or in the aggregate, be material.
SECTION 3.07. Compliance. The Company, the Bank and each of
their subsidiaries hold, and have at all times within the last
six years held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have
complied with and are not in conflict with, or in default or
violation of, (a) any statute, code, ordinance, law, rule,
regulation, order, writ, judgment, injunction, decree or board
resolution, published policies and guidelines of any Governmental
Entity, applicable to the Company, the Bank or any of their
subsidiaries or by which any property or asset of the Company,
the Bank or any of their subsidiaries is bound or affected or (b)
any note, bond, mortgage, indenture, deed of trust, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which the Company, the Bank or any of their
subsidiaries is a party or by which the Company, the Bank or any
of their subsidiaries or any property or asset of the Company,
the Bank or any of their subsidiaries is bound or affected,
except for any such noncompliance, conflicts, defaults or
violations that would not, individually or in the aggregate, be
material or, with respect to any matters described in clause (a)
above, that were resolved to the satisfaction of the appropriate
Governmental Entity; and neither the Company, the Bank or any
10
of their subsidiaries knows of, or has received notice of, any
material violation of any of the above. Without limiting the
generality of the foregoing, neither the Company, the Bank nor
any of their subsidiaries has been advised of the existence of
any facts or circumstances which would cause the Bank to be
deemed not to be in satisfactory compliance with the applicable
provisions of Part II of Chapter 664a of Connecticut Law (Section
36a-30 et seq.) and, as applicable to the Bank, the Community
Reinvestment Act of 1977, as amended (the "CRA"), and the
regulations promulgated thereunder.
SECTION 3.08. SEC Reports and Bank Reports.
(a) The Company has filed, and made available to
Purchaser, true and complete copies of all forms, reports and
documents required to be filed by it with the Securities and
Exchange Commission (the "SEC") since January 1, 1994, and has
heretofore delivered to Purchaser, in the form filed with the
SEC, true and complete copies of (i) its Annual Reports on Form
10-K for the fiscal years ended December 31, 1994, December 31,
1995 and December 31, 1996, respectively, (ii) its Quarterly
Report on Form 10-Q since January 1, 1994, (iii) all proxy
statements relating to the Company's meetings of stockholders
(whether annual or special) held since January 1, 1994, (iv) all
other forms, reports and other registration statements (other
than Quarterly Reports on Form 10-Q not referred to in clause
(ii) above) filed by the Company with the SEC since January 1,
1994, and (v) all communications mailed by the Company to its
stockholders since January 1, 1994 (the forms, reports and other
documents referred to in clauses (i), (ii), (iii), (iv) and (v)
above being referred to herein, collectively, as the "SEC
Reports"). As of their respective dates, the SEC Reports (A)
complied in all material respects as to form with the
requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (B) did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Company has
timely filed all SEC Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act.
Neither the Bank nor any of their other subsidiaries is required
to file any form, report or other document with the SEC. The
Company has made available to Purchaser true and complete copies
of all amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with
the SEC and are currently in effect.
(b) The Company, the Bank and their subsidiaries each
has timely filed and made available to Purchaser true and
complete copies of all forms, reports and documents required to
be filed by each of them with all appropriate federal or state
governmental or regulatory authorities charged with the
supervision of banks or bank holding companies or engaged in the
insurance of bank deposits, including without limitation, the
FRB, the FDIC and the Connecticut Commissioner ("Bank
Regulators") since January 1, 1994, and has paid all fees and
assessments due and payable in connection therewith. Such reports
as of their respective date of filing complied in all material
respects with the requirements of all laws, rules and regulations
enforced
11
or promulgated by such Bank Regulators. Except for normal
periodic examinations conducted by the FRB, the FDIC, the
Connecticut Commissioner or any other Bank Regulator in the
regular course of the business of the Company, the Bank and their
subsidiaries (the "Bank Examinations"), no Bank Regulator has
initiated any proceeding or, to the best knowledge of the Company
and the Bank, investigation into the business or operations of
the Company, the Bank or any of their subsidiaries since January
1, 1994. The Company, the Bank and their subsidiaries have
resolved all violations, criticisms or exceptions by any Bank
Regulator with respect to any Bank Examination.
SECTION 3.09. Financial Statements.
(a) Each of the consolidated financial statements of
the Company and its subsidiaries, including, in each case, the
notes thereto, contained in the SEC Reports was prepared, and the
financial statements referred to in Section 6.08 hereof will be
prepared, in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
indicated ("GAAP") (except as may be indicated in the notes
thereto) and each fairly presents, and the financial statements
referred to in Section 6.08 hereof each will fairly present, the
consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries
as at the respective dates thereof and for the respective periods
indicated therein, subject, in the case of unaudited statements,
to normal and recurring year-end adjustments normal in nature and
not material in amount. Each of the consolidated financial
statements of the Company and its subsidiaries, including, in
each case, the notes thereto, contained in the SEC Reports
comply, and the financial statements referred to in Section 6.08
hereof will comply, in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto. Without limiting the
generality of the foregoing, (x) the allowance for possible loan
losses included in the consolidated financial statements of the
Company and its subsidiaries contained in the SEC Reports was,
and the allowance for possible loan losses to be included in the
financial statements referred to in Section 6.08 hereof will be,
determined in accordance with GAAP and is, and will be, in the
judgment of the Company adequate to provide for losses relating
to or inherent in the loan and lease portfolios of the Company
and their subsidiaries (including without limitation commitments
to extend credit), and (y) the Other Real Estate Owned ("OREO")
included in the consolidated financial statements of the Company
and its subsidiaries contained in the SEC Reports was, and the
OREO included in the financial statements referred to in Section
6.08 hereof will be, carried net of reserves at the lower of cost
or market value in accordance with GAAP or the regulations or
other requirements of the SEC, the FDIC and the Connecticut
Commissioner. The books and records of the Company, the Bank and
their subsidiaries are true and complete in all material respects
and have been, and are being, maintained in all material respects
in accordance with applicable legal and accounting requirements.
(b) The consolidated balance sheets of the Company and
its subsidiaries as at December 31, 1996, contained in the SEC
Reports, including the notes thereto, each makes, and the
consolidated balance sheets contained in the financial statements
referred to in Section 6.08
12
will make, adequate provision for, reflect or disclose all
material liabilities and obligations of every nature (whether
accrued, absolute, contingent or otherwise and whether due or to
become due) of the Company and its subsidiaries as of December
31, 1996, and except as and to the extent set forth on such
balance sheets, neither the Company, the Bank nor any of their
subsidiaries has any material liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise and
whether due or to become due) which would be required to be
provided for, reflected or disclosed on a balance sheet, or in
the notes thereto, prepared in accordance with GAAP. To the best
knowledge of the Company and the Bank, no facts or circumstances
exist which would give either the Company or the Bank reason to
believe that a material liability or obligation that, in
accordance with GAAP applied on a consistent basis,
should have been reflected or disclosed on such balance sheet,
was not so reflected or disclosed.
SECTION 3.10. Absence of Certain Changes or Events. Since
December 31, 1996, except as contemplated by this Agreement or as
disclosed (i) in Section 3.10 of the Disclosure Schedule or (ii)
any SEC Report filed prior to the date of this Agreement, the
Company and the Bank have conducted their businesses only in the
ordinary course and in a manner consistent with past practice
and, since December 31, 1996, there has not been (a) either
individually or in the aggregate, any Material Adverse Effect,
and to the best knowledge of the Company and the Bank, no fact or
condition exists which is reasonably likely to cause such a
Material Adverse Effect in the future, (b) any material damage,
destruction or loss with respect to any property or asset of the
Company, the Bank or any of their subsidiaries, (c) any change by
the Company, the Bank or any of their subsidiaries in its
accounting methods, principles or practices, other than changes
required by applicable law or GAAP or regulatory accounting as
concurred in by the Company's independent accountants, (d) any
revaluation by the Company, the Bank or any of their subsidiaries
of any asset, including, without limitation, any writing down of
the value of inventory or writing off of notes or accounts
receivable, other than in the ordinary course of business
consistent with past practice, (e) any entry by the Company, the
Bank or any of their subsidiaries into any contract or commitment
of more than $100,000 or with a term of more than one year, (f)
any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company, the
Bank or any of their subsidiaries or any redemption, purchase or
other acquisition of any of its securities, (g) any increase in
or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options,
stock appreciation rights, performance awards, or restricted
stock awards), stock purchase or other employee benefit plan, or
any other increase in the compensation payable or to become
payable to any directors, officers or employees of the Company,
the Bank or any of their subsidiaries, or any grant of severance
or termination pay, or any contract or arrangement entered into
to make or grant any severance or termination pay, any payment of
any bonus, or the taking of any action not in the ordinary course
of business with respect to the compensation or employment of
directors, officers or employees of the Company, the Bank or any
of their subsidiaries, (h) any strike, work stoppage, slowdown or
other labor disturbance, (i) any material election made by the
Company, the Bank or any of their subsidiaries for federal or
state income tax purposes, (j) any change in the credit policies
or procedures of the Company, the Bank or any of their
subsidiaries, the effect of which
13
was or is to make any such policy or procedure less restrictive
in any material respect, (k) any material liability or obligation
of any nature (whether accrued, absolute, contingent or otherwise
and whether due or to become due), including without limiting the
generality of the foregoing, liabilities as guarantor under any
guarantees or liabilities for taxes, (l) any forgiveness or
cancellation of any indebtedness or contractual obligation other
than in the ordinary course of business consistent with past
practice, (m) any mortgage, pledge, lien or lease of any assets,
tangible or intangible, of the Company, the Bank or any of their
subsidiaries, (n) any acquisition or disposition of any assets or
properties, or any contract for any such acquisition or
disposition entered into, or (o) any lease of real or personal
property entered into, other than in connection with foreclosed
property or in the ordinary course of business consistent with
past practice.
SECTION 3.11. Absence of Litigation. Except as set forth in
Section 3.11 of the Disclosure Schedule, neither the Company, the
Bank nor any of their subsidiaries is a party to any, and there
are no pending, or to the best knowledge of the Company and the
Bank, threatened legal, administrative, arbitral or other claims,
actions, proceedings or investigations of any nature, against the
Company, the Bank or any of their subsidiaries or any property or
asset of the Company, the Bank or any of their subsidiaries,
before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, and no facts
or circumstances have come to the Company's or the Bank's
attention which have caused either of them to believe that a
material claim, action, proceeding or investigation against or
affecting the Company, the Bank or any of their subsidiaries
could reasonably be expected to occur. Neither the Company, the
Bank nor any of their subsidiaries, nor any property or asset of
the Company, the Bank or any of their subsidiaries, is subject to
any order, writ, judgment, injunction, decree, determination or
award which restricts its ability to conduct business in any
area.
SECTION 3.12. Employee Benefit Plans.
(a) Section 3.12 of the Disclosure Schedule sets forth
a true and complete list of all Plans maintained or contributed
to by the Bank during the six years preceding this Agreement. The
term "Plans" means all employee benefit plans, arrangements or
agreements that are maintained or contributed to, or that were
maintained or contributed to at any time during the six years
preceding the date of this Agreement, by the Company, the Bank,
any of their subsidiaries or by any trade or business, whether or
not incorporated (an "ERISA Affiliate"), all of which together
with the Company or the Bank would be deemed a "single employer"
within the meaning of Section 4001 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(b) The Company and the Bank have heretofore delivered
to Purchaser true and complete copies of each of the Plans and
all related documents, including but not limited to (i) all
required Forms 5500 and all related schedules for such Plans (if
applicable) for each of the last two years, (ii) the actuarial
report for such Plan (if applicable) for each of the last two
years, and (iii) the most recent determination letter from the
IRS (if applicable) for such Plan.
14
(c) (i) Each of the Plans has been operated and
administered in all material respects in accordance with
applicable laws, including but not limited to ERISA and the Code,
(ii) each of the Plans intended be "qualified" within the meaning
of Section 401(a) of the Code has been maintained so as to
qualify from the effective date of such Plan to the Effective
Time, (iii) no Plan provides benefits, including without
limitation death, medical or other benefits (whether or not
insured), with respect to current or former employees of the
Company, the Bank, their subsidiaries or any ERISA Affiliate
beyond their retirement or other termination of service, other
than (u) coverage mandated by applicable law, (v) life insurance
death benefits payable in the event of the death of a covered
employee, (w) disability benefits payable to disabled former
employees, (x) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2)
of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of the Company, the Bank, their
subsidiaries or any ERISA Affiliate or (z) benefits the full cost
of which is borne by the current or former employee (or his
beneficiary), (iv) neither the Company, the Bank, nor any of
their subsidiaries nor any ERISA Affiliate has ever maintained or
contributed to Plan subject to Title IV of ERISA or a
"multiemployer pension plan," as such term is defined in Section
3(37) of ERISA, (v) all contributions or other amounts payable by
the Company, the Bank or their subsidiaries as of the Effective
Time with respect to each Plan in respect of current or prior
plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (vi) neither the Company, the Bank, any
of their subsidiaries nor any ERISA Affiliate has engaged in a
transaction in connection with which the Company, the Bank, any
of their subsidiaries or any ERISA Affiliate has any material
liability for either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975
or 4976 of the Code, (vii) consummation of the transactions
contemplated hereby will not cause any amounts payable under any
of the Plans to fail to be deductible for federal income tax
purposes under Section 280G of the Code, (viii) there are no
pending or, to the best knowledge of the Company and the Bank,
threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any
trusts related thereto.
(d) With respect to any Plan that is a welfare plan
(within the meaning of Section 3(1) of ERISA) (i) no such Plan is
funded through a "welfare benefit fund," as such term is defined
in Section 419(e) of the Code, and (ii) each such Plan complies
in all material respects with the applicable requirements of
Section 4980B(f) of the Code, Part 6 of Subtitle B of Title I of
ERISA and any applicable state continuation coverage requirements
("COBRA").
(e) Except as prohibited by law (including Section
411(d)(6) of the Code), each Plan may be amended, terminated,
modified or otherwise revised by the Company, the Bank, their
subsidiaries or any ERISA Affiliate as of the Effective Time to
eliminate without material effect, any and all future benefit
accruals under any Plan (except claims incurred under any welfare
plan).
SECTION 3.13. Labor Matters. Neither the Company, the Bank
nor any of their subsidiaries is a party to any collective
bargaining or other labor union or guild contract. There is no
pending or, to the best knowledge of the Company and the Bank,
threatened, labor dispute, strike or work stoppage against the
Company, the Bank or any of their subsidiaries which may
15
interfere with the respective business activities of the Company,
the Bank or their subsidiaries. Neither the Company, the Bank nor
any of their subsidiaries, nor, to the best knowledge of the
Company and the Bank, their respective representatives or
employees, has committed any unfair labor practices in connection
with the operation of the respective businesses of the Company,
the Bank or any of their subsidiaries, and there is no pending
or, to the best knowledge of the Company and the Bank,
threatened, charge or complaint against the Company, the Bank or
any of their subsidiaries by the National Labor Relations Board
or any comparable state agency.
SECTION 3.14. Property and Leases.
(a) The Company, the Bank and each of their
subsidiaries each has good and marketable title to all the real
property and all other property owned by it and included in the
consolidated balance sheet of the Company and its subsidiaries
included in its Annual Report on Form 10-K for the period ended
December 31, 1996. Each parcel of real property, and each item of
personal property, owned or leased by the Company, the Bank or
any of their subsidiaries (i) is owned or leased free and clear
of all mortgages, pledges, liens, security interests, conditional
and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind (collectively, "Liens"),
other than (A) Liens for current taxes and assessments not yet
past due or which are being contested in good faith, (B) inchoate
mechanics' and materialmen's Liens for construction in progress,
(C) workmen's, repairmen's, warehousemen's and carriers' Liens
arising in the ordinary course of business of the Company, the
Bank or such subsidiary consistent with past practice, (D) all
matters of record, Liens and other imperfections of title and
encumbrances which, either individually or in the aggregate,
would not be material, and (E) those items that secure public or
statutory obligations or any discount with, borrowing from, or
obligations to any Federal Reserve Bank or Federal Home Loan
Bank, interbank credit facilities, or any transaction by a
Subsidiary acting in a fiduciary capacity (collectively,
"Permitted Liens"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the best
knowledge of the Company or the Bank, has any such condemnation,
expropriation or taking been proposed. Neither the Company, the
Bank nor any of their subsidiaries has received any notice of
violation of any applicable zoning regulation, ordinance or other
law, order, regulation or requirement relating to its properties.
(b) All leases of real property leased for the use or
benefit of the Company, the Bank or any of their subsidiaries to
which the Company, the Bank or any of their subsidiaries is a
party requiring rental payments in excess of $100,000 during the
period of the lease, and all amendments and modifications
thereto, are in full force and effect, and there exists no
default under any such lease by the Company, the Bank or any of
their subsidiaries, nor, to the best knowledge of the Company and
the Bank, any event which with notice or lapse of time or both
would constitute a material default thereunder by the Company,
the Bank or any of their subsidiaries.
16
SECTION 3.15. Taxes.
(a) The Company, the Bank and their subsidiaries each has
duly filed in correct form all Federal, state, county and local
information returns and tax returns required to be filed by it on
or prior to the date hereof (all such returns being true and
complete in all material respects) and has duly paid, discharged
or made provisions for the payment of all material Taxes (as
hereinafter defined) and other governmental charges which have
been incurred or are due or claimed to be due from it by Federal,
state, county or local taxing authorities on or prior to the date
hereof (including without limitation, if and to the extent
applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales
and payrolls, and any net worth tax), other than Taxes or other
charges that are not yet delinquent or are being contested in
good faith and have not been finally determined. The amounts set
up as reserves for Taxes on the consolidated balance sheet of the
Company and its subsidiaries included in its Annual Report on
Form 10-K for the period ended December 31, 1996 are sufficient
in the aggregate for the payment of all material unpaid Federal,
state, county and local Taxes (including any interest or
penalties thereon), whether or not disputed, accrued or
applicable, for the period ended December 31, 1996 and all prior
periods covered by such returns, and for which the Company, the
Bank or any of their subsidiaries is liable in its own right or
as transferee of the assets of, or successor to, any corporation,
person, association, partnership, joint venture or other entity.
The federal income tax returns of the Company, the Bank and their
subsidiaries have been examined by the Internal Revenue Service
("IRS") for all years through 1992 and any liability with respect
thereto has been satisfied, and no deficiencies were asserted as
a result of such examination or all such deficiencies were
satisfied. The State of Connecticut tax returns of the Company,
the Bank and their subsidiaries have not, in the ten years prior
to the date of this Agreement, been examined by the State of
Connecticut. There are no material disputes pending or claims
asserted for Taxes or assessments upon the Company, the Bank or
any of their subsidiaries, nor has the Company, the Bank or any
of their subsidiaries been requested to give any currently
effective waivers extending the statutory period of limitation
applicable to any Federal, state, county or local income tax
return for any period. In addition, (a) proper and accurate
amounts have been withheld by the Company, the Bank and their
subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding
provisions of applicable Federal, state, county and local laws;
(b) Federal, state, county and local returns which are accurate
and complete in all material respects have been filed by the
Company, the Bank and their subsidiaries for all periods for
which returns were due with respect to income tax withholding,
Social Security and unemployment taxes; and (c) the amounts shown
on such returns to be due and payable have been paid in full or
adequate provision therefor has been included by the Company in
its consolidated financial statements included in its Annual
Report on Form 10-K for the period ended December 31, 1996.
(b) No property of the Company, the Bank or any of
their subsidiaries is property that is or will be required to be
treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code (as
in effect prior to its amendment
17
by the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Section 168(h) of the Internal Revenue Code
of 1986, as amended (the "Code"). Neither the Company, the Bank
nor any of their subsidiaries has been required to include in
income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by
the Company, the Bank or any of their subsidiaries, and the IRS
has not initiated or proposed any such adjustment or change in
accounting method. Neither the Company, the Bank nor any of their
subsidiaries is a party to any agreement, contract or arrangement
that would, individually or in the aggregate, result in the
payment of an "excess parachute payment" within the meaning of
Section 280C; of the Code or that would result in payments that
would be nondeductible pursuant to Section 162(m) of the Code.
(c) As used in this Agreement, the term "Taxes" means
all Federal, state, county, local and foreign income, excise,
gross receipts, ad valorem, profits, gains, property, sales,
transfer, use, payroll, employment, severance, withholding,
duties, intangibles, franchise and other taxes, charges, levies
or like assessments, including any net worth tax, together with
all penalties and additions to tax and interest thereon.
SECTION 3.16. Certain Contracts.
(a) Except as set forth in the SEC Reports filed prior
to the date of this Agreement or as disclosed in Section 3.16 of
the Disclosure Schedule, neither the Company, the Bank nor any of
their subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or
oral): (i) with respect to the employment of any director,
officer, employee or consultant, (ii) which, upon the
consummation of the transactions contemplated by this Agreement
or the Bank Merger Agreement, will result in any payment (whether
of severance pay or otherwise) becoming due from the Company, the
Bank, or any of their subsidiaries to any officer or employee
thereof, (iii) which is a material contract (as defined in Item
601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or
incorporated by reference in the SEC Reports, (iv) which is a
consulting or other agreement (including agreements entered into
in the ordinary course and data processing, software programming
and licensing contracts) not terminable on 60 days or less notice
involving the payment of more than $100,000 per annum, (v) which
materially restricts the conduct of any line of business by the
Company, the Bank or any of their subsidiaries, (vi) with or to a
labor union or guild (including any collective bargaining
agreement), or (vii) (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase
plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement. The Company has previously delivered to
Purchaser true and complete copies of all employment, consulting
and deferred compensation agreements which are in writing and to
which the Company, the Bank or any of their subsidiaries is a
party. Each contract, arrangement, commitment or understanding of
the type described in this Section, whether or not set forth in
Section 3.16 of the Disclosure Schedule, is referred to herein as
a
18
"Company Contract".
(b) (i) To the best knowledge of the Company and the
Bank, each Company Contract listed on such Disclosure Schedule is
legal, valid and binding upon the Company, the Bank or such
subsidiary, as the case may be, and in full force and effect,
(ii) the Company, the Bank and each of their subsidiaries has in
all material respects performed all obligations required to be
performed by it to date under each such Company Contract, and
(iii) no event or condition exists which constitutes or, after
notice or lapse of time or both, would constitute, a material
default on the part of the Company, the Bank or any of their
subsidiaries under any such Company Contract.
SECTION 3.17. Loan Portfolio. Except as set forth in Section
3.17 of the Disclosure Schedule, neither the Company, the Bank
nor any of their subsidiaries is a party to any written or oral
(a) loan agreement, note or borrowing arrangement (including,
without limitation, leases and credit enhancements)
(collectively, "Loans") the current principal balance of which
exceeds $150,000 and as to which the obliger is, as of the date
of this Agreement, over 90 days delinquent in payment of
principal or interest, or (b) Loan with any director, executive
officer or, to the best knowledge of the Company and the Bank,
five percent stockholder of the Company, the Bank or any of their
subsidiaries, or to the best knowledge of the Company and the
Bank, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing.
To the best knowledge of the Company and the Bank, all of the
Loans originated and held currently and at the Effective Time by
the Company, the Bank and their subsidiaries, and any other Loans
purchased and held currently and at the Effective Time by the
Company, the Bank and their subsidiaries, were solicited,
originated and exist, and will exist at the Effective Time, in
material compliance with all applicable loan policies and
procedures of the Company, the Bank and their subsidiaries.
Section 3.17 of the Disclosure Schedule sets forth as of February
28, 1997, (i) all of the Loans the current principal balance of
which exceeds $150,000 of the Company, the Bank or any of their
subsidiaries that as of the date of this Agreement are classified
by the Bank as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Watch list" or words of similar import, together
with the principal amount of and accrued and unpaid interest on
each such Loan and the identity of the obligor thereunder, and
(ii) by category of Loan (i.e., commercial, consumer, etc.), all
of the other Loans of the Company, the Bank and their
subsidiaries that as of the date of this Agreement are classified
as such, together with the aggregate principal amount of such
Loans by category, it being understood that no representation is
being made that the FDIC or the Connecticut Commissioner would
agree with the loan classifications contained in Section 3.17 of
the Disclosure Schedule. The Company shall promptly inform
Purchaser in writing of any Loan the current principal balance of
which exceeds $150,000 that becomes classified in the manner
described in this Section 3.17, or any Loan the classification of
which is materially and adversely changed at any time after the
date of this Agreement. The information (including electronic
information and information contained on tapes and computer
disks) with respect to the Loans furnished to Purchaser by the
Company and the Bank is true and complete in all material
respects.
19
SECTION 3.18. Investment Securities. Section 3.18(a) of the
Disclosure Schedule sets forth the book and market value as of
February 28, 1997 of the investment securities, mortgage backed
securities and securities held for sale by the Company, the Bank
and their subsidiaries. Section 3.18(b) of the Disclosure
Schedule sets forth the names of all the joint ventures in which
the Company, the Bank or any of their subsidiaries has an
investment (whether or not such joint ventures remain active).
Except for pledges to secure public and trust deposits, Federal
Reserve borrowings, repurchase agreements and reverse repurchase
agreements entered into in arms'-length transactions pursuant to
normal commercial terms and conditions and other pledges required
by law, none of the investments reflected in the consolidated
balance sheet of the Company and its subsidiaries included in its
Annual Report on Form 10-K for the period ended December 31,
1996, and none of the material investments made by the Company,
the Bank or any of their subsidiaries since December 31, 1996, is
subject to any restriction (contractual, statutory or otherwise)
that would materially impair the ability of the entity holding
such investment freely to dispose of such investment at any time.
The Company has (i) properly reported as such any investment
securities which are required under GAAP to be classified as
"available for sale" at the lower of cost or market, and (ii)
accounted for any decline in the market value of its marketable
equity securities portfolio in accordance with Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 12 and Staff Accounting Bulletin No. 59, including
without limitation the recognition through the Company's
consolidated statement of operations of any unrealized loss with
respect to any individual marketable equity security as a
realized loss in the accounting period in which a decline in the
market value of such security is determined to be "other than
temporary."
SECTION 3.19. Derivative Transactions. Except as described
in Section 3.19 of the Disclosure Schedule, neither the Company,
the Bank nor any of their subsidiaries is engaged in transactions
in or involving forwards, futures, options on futures, swaps or
similar derivative instruments except as agent on the order and
for the account of others other than Federal Home Loan Bank
advances or in connection with mortgage loan secondary market
activities in the ordinary course of business consistent with the
Bank's past practices. To the extent that the Company or the Bank
is engaged in such transactions, to the best knowledge of the
Company and the Bank, none of the counterparties to any contract
or agreement with respect to any such instrument is in default
with respect to such contract or agreement and no such contract
or agreement, were it to be a Loan held by the Company, the Bank
or any of their subsidiaries, would be classified as "Other Loans
Specially Mentioned," "Special Mention," "Substandard,"
"Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans," "Watch List" or words of similar
import. The financial position of the Company, the Bank and their
subsidiaries on a consolidated basis under or with respect to
each such instrument has been reflected in the books and records
of the Company, the Bank and such subsidiaries in accordance with
GAAP consistently applied, and no open exposure of the Company,
the Bank or any of their subsidiaries with respect to any such
instrument (or with respect to multiple instruments with any
single counterparts) exceeds $100,000.
SECTION 3.20. Insurance. The Company and the Bank each has
made available to
20
Purchaser true and complete copies of all material policies of
insurance of the Company, the Bank and their subsidiaries
currently in effect. All of the policies relating to insurance
maintained by the Company, the Bank or any of their subsidiaries
with respect to its material properties and the conduct of its
business in any material respect (or any comparable policies
entered into as a replacement therefor)are in full force and
effect and neither the Company, the Bank nor any of their
subsidiaries has received any notice of cancellation with respect
thereto. All life insurance policies on the lives of any of the
current and former officers and directors of the Company and the
Bank which are maintained by the Company and the Bank or which
are otherwise included as assets on the books of the Company or
the Bank (i) are, or will at the Effective Time be, owned by the
Company or the Bank, as the case may be, free and clear of any
claims thereon by the officers or members of their families,
except with respect to the death benefits thereunder, as to which
the Company and the Bank agree that there will not be an
amendment prior to the Effective Time without the consent of
Purchaser, and (ii) are accounted for properly as assets on the
books of the Bank in accordance with GAAP in all material
respects. Neither the Company, the Bank nor any of their
subsidiaries has any material liability for unpaid premiums or
premium adjustments not properly reflected on the Company's
consolidated financial statements contained in the SEC Reports.
SECTION 3.21. Environmental Matters.
(a) Each of the Company, the Bank and their
subsidiaries and, to the best knowledge of the Company and the
Bank, the Participation Facilities and the Loan Properties (each
as hereinafter defined), are, and have been, in material
compliance with all applicable environmental laws and with all
rules, regulations, standards and requirements of the United
States Environmental Protection Agency (the "EPA") and of state
and local agencies with jurisdiction over pollution or protection
of the environment.
(b) There is no suit, claim, action or proceeding
pending or, to the best knowledge of the Company or the Bank,
threatened, before any Governmental Entity or other forum in
which the Company, the Bank or any of their subsidiaries or any
Participation Facility has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or
potentially responsible party (i) for alleged noncompliance
(including by any predecessor), with any environmental law, rule,
regulation, standard or requirement or (ii) relating to the
release into or presence in the Environment (as hereinafter
deemed) of any Hazardous Materials (as hereinafter defined) or
Oil (as hereinafter defined) whether or not occurring at or on a
site owned, leased or operated by the Company, the Bank or any of
their subsidiaries or any Participation Facility, except as have
not been or would not be material.
(c) To the best knowledge of the Company or the Bank,
there is no suit, claim, action or proceeding pending, or
threatened, before any Governmental Entity or other forum in
which any Loan Property has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or
potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any environmental law, rule,
regulation, standard or
21
requirement or (ii) relating to the release into or presence in
the Environment of any Hazardous Material or Oil whether or not
occurring at or on a site owned, leased or operated by a Loan
Property, except as have not been or would not be material.
(d) Neither the Company, nor the Bank, nor any of their
subsidiaries, nor to their best knowledge any Participation
Facility or any Loan Property, has received any notice regarding
a matter on which a suit, claim, action or proceeding as
described in subsection (b) or (c) of this Section 3.21 could
reasonably be based. No facts or circumstances have come to the
Company's or the Bank's attention which have caused it to believe
that a material suit, claim, action or proceeding as described in
subsection (b) or (c) of this Section 3.21 could reasonably be
expected to occur.
(e) During the period of (i) the Company's, the Bank's
or any of their subsidiaries' ownership or operation of any of
their respective current properties, (ii) the Company's, the
Bank's or any of their subsidiaries' participation in the
management of any Participation Facility, or (iii) the Company's,
the Bank's or any of their subsidiaries' holding of a security
interest in a Loan Property, there has been no release or
presence of Hazardous Material or Oil in the Environment in, on,
under or affecting such property or, to the best knowledge of the
Company or the Bank, such Participation Facility or Loan
Property, except where such release or presence is not or would
not, either individually or in the aggregate, be material. To the
best knowledge of the Company and the Bank, prior to the period
of (x) the Company's, the Bank's or any of their subsidiaries'
ownership or operation of any of their respective current
properties or any previously owned or operated properties, (y)
the Company's, the Bank's or any of their subsidiaries'
participation in the management of any Participation Facility, or
(z) the Company's, the Bank's or any of their subsidiaries'
holding of a security interest in a Loan Property, there was no
release or presence of Hazardous Material or Oil in the
Environment in, on, under or affecting any such property,
Participation Facility or Loan Property, except where such
release or presence is not or would not, either individually or
in the aggregate, be material.
(f) The following definitions apply for purposes of
this Section 3.21: (i) "Loan Property" means any property in
which the Company, the Bank or any of their subsidiaries holds a
security interest, and, where required by the context, said term
means the owner or operator of such property; (ii) "Participation
Facility" means any facility in which the Company, the Bank or
any of their subsidiaries participates or has participated in the
management and, where required by the context, said term means
the owner or operator of such property; (iii) "Hazardous
Material" means any pollutant, contaminant, or hazardous
substance or hazardous material as defined in or pursuant to the
Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. s9601 et seq., or any other federal, state, or
local environmental law, regulation, or requirement; (iv) "Oil"
means oil or petroleum of any kind or origin or in any form, as
defined in or pursuant to the Federal Clean Water Act, 33 U.S.C.
s 1251 et seq., or any other federal, state, or local
environmental law, regulation, or requirement; (v) "Environment"
means any soil, surface waters, groundwaters, stream sediments,
surface or subsurface strata, and
22
ambient air, and any other environmental medium; and (vi) "to the
best knowledge" or "have come to the Company's or the Bank's
attention" means, with respect to the Company, the Bank or any of
their respective subsidiaries, facts or circumstances known to
any officer or member of the lending or work-out staff of any
such entity or facts or circumstances reflected in the files of
any such entity.
(g) Except as set forth in Section 3.21 of the
Disclosure Schedule, neither the Company nor the Bank nor any of
their respective subsidiaries currently has or in the past has
ever had any Participation Facility.
SECTION 3.22. Intellectual Property. The Company, the Bank
and each of their subsidiaries owns or possesses valid and
binding licenses and other rights to use without payment of any
material amount all material patents, copyrights, trade secrets,
trade names, service marks and trademarks used in its businesses,
and neither the Company, the Bank nor any of their subsidiaries
has received any notice of conflict with respect thereto that
asserts the right of others. The Company, the Bank and each of
their subsidiaries have performed in all material respects all
the obligations required to be performed by them and are not in
material default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
SECTION 3.23. Administration of Fiduciary Accounts. The
Company, the Bank and their subsidiaries each has properly
administered in all material respects 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 law. Neither the Company, the Bank nor their
respective officers, directors or employees has committed any
breach of trust with respect to any fiduciary account. The
accountings for each such fiduciary account are true and correct
in all material respects and accurately reflects the assets of
such fiduciary account.
SECTION 3.24. Agreements with Bank Regulators. Except for
the corporate resolution entered into at the request of the FDIC,
a copy of which has previously been delivered to Purchaser,
neither the Company, the Bank nor any of their subsidiaries is a
party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking
to, or is subject to any order, directive or board resolution by,
or is a recipient of any extraordinary supervisory letter from,
any Bank Regulator which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its
loan loss allowances or reserves, its credit policies or its
management, nor has the Company or the Bank been informed by any
Bank Regulator that it is contemplating issuing or requesting any
such order, directive, agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter or similar
submission. Neither the Company, nor the Bank or nor any of their
subsidiaries is a party to any agreement or arrangement entered
into in connection with the consummation of a federally assisted
acquisition of a depository institution pursuant to which the
Company, the Bank or any of their subsidiaries is entitled to
receive financial assistance or indemnification from any
governmental agency.
23
SECTION 3.25. Material Interests of Certain Persons. No
officer or director of the Company, the Bank or any of their
subsidiaries, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer or director,
has any material interest in any material contract or property
(real or personal), tangible or intangible, used in or pertaining
to the business of the Company, the Bank or any of their
subsidiaries that would be required to be disclosed in a proxy
statement to stockholders under Regulation 14A of the Exchange
Act.
SECTION 3.26. Brokers' Fees; Opinions. broker, finder or
investment banker, other than Friedman, Billings, Xxxxxx & Co.,
Inc. ("Xxxxxxxx"), is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions
contemplated by this Agreement or the Bank Merger Agreement based
upon arrangements made by or on behalf of the Company or the
Bank. The fee payable to Xxxxxxxx in connection with the
transactions contemplated by this Agreement is as described in an
engagement letter between the Company and Xxxxxxxx, a true and
complete copy of which has heretofore been furnished to
Purchaser. The Company has previously received the opinion of
Xxxxxxxx to the effect that, as of the date of such opinion, the
Merger Consideration to be received by the stockholders of the
Company pursuant to the Holding Company Merger is fair to such
stockholders, and such opinion has not been amended or rescinded
as of the date of this Agreement.
SECTION 3.27. Proxy Statement. The information contained in
the proxy statement to be sent to the stockholders of the Company
in connection with the Stockholders' Meeting (the "Proxy
Statement") will not, on the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to stockholders
of the Company or at the time of the Stockholders' Meeting,
contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect
to the solicitation of proxies for the Stockholders' Meeting
which shall have become false or misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with
respect to any information to be supplied by Purchaser or Merger
Sub which is contained in any of the foregoing documents. The
Proxy Statement will comply in all material respects as to form
with the requirements of the Exchange Act and the rules and
regulations thereunder.
SECTION 3.28. State Takeover Laws. The Board of Directors of
the Company has taken all necessary action prior to the date of
this Agreement in connection with the approval of the execution,
delivery and performance of this Agreement and the Bank Merger
Agreement, any purchase or other transaction respecting the
Company Common Stock provided for herein or therein, and the
other transactions contemplated hereby and thereby, including
without limitation approval by the affirmative vote of at least a
majority of the members of the Company Board and a majority of
the non-employee directors of the Company Board, such that
assuming that immediately prior to the execution of this
Agreement, neither Purchaser, Merger Sub nor any of their
Affiliates or Associates (as such terms are defined in either
Section 33-840 or Section 33-843 of Connecticut Law), either
individually or in the aggregate, was an Interested Shareholder
(as
24
such term is defined in either Section 33-840 or Section 33-843
of Connecticut Law), the provisions of Section 33-841 and
33-844(a) of Connecticut Law as they relate to the Company and
the provisions of Article SEVENTH of the Company's Certificate of
Incorporation do not and will not apply to this Agreement, the
Bank Merger Agreement, the Holding Company Merger, the Bank
Merger or any of the other transactions contemplated hereby or
thereby. In taking the action referred to in this Section 3.28,
the Company Board has complied with the requirements of Section
33-756(e) of Connecticut Law.
SECTION 3.29. Disclosure. No representation or warranty
contained in this Agreement, and no statement contained in any
Schedule, certificate, list or other writing furnished to
Purchaser pursuant to the provisions hereof, contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances in
which they are made, not misleading. No information believed by
the Company or the Bank to be material to the Holding Company
Merger or the Bank Merger and which is necessary to make the
representations and warranties herein contained, taken as a
whole, not misleading, to the best knowledge of the Company and
the Bank, has been withheld from, or has not been delivered in
writing to, Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company
that:
SECTION 4.01. Corporate Organization. Purchaser is a state
chartered savings bank duly organized, validly existing and in
good standing under Connecticut Law. The deposit accounts of
Purchaser are insured by the FDIC to the fullest extent permitted
by law, and all premiums and assessments required in connection
therewith have been paid by Purchaser. Purchaser has the
requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry
on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to
have such power, authority and governmental approvals would not,
either individually or in the aggregate, have a material adverse
effect on the business, assets, liabilities, financial condition
or results of operations of Purchaser and its subsidiaries taken
as a whole.
SECTION 4.02. Authority. Purchaser has full corporate power
and authority to execute and deliver this Agreement and the Bank
Merger Agreement, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the
Bank Merger Agreement and the performance by Purchaser of its
obligations hereunder and thereunder and the consummation by
Purchaser of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of
25
Purchaser are necessary to authorize this Agreement or the Bank
Merger Agreement or the performance of its obligations hereunder
or thereunder or to consummate the transactions contemplated
hereby or thereby, other than the approval of its stockholders.
This Agreement has been duly and validly executed and delivered
by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in
accordance with its terms. On the date executed and delivered by
Purchaser, the Bank Merger Agreement will be duly and validly
executed and delivered by Purchaser and will constitute a legal,
valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms.
SECTION 4.03. No Conflict. Neither the execution, delivery
and performance of this Agreement or the Bank Merger Agreement by
Purchaser, nor the consummation by Purchaser of the transactions
contemplated hereby or thereby, will (i) conflict with, violate
or result in a breach of the Certificate of Incorporation or
By-Laws or equivalent organizational documents of Purchaser, (ii)
conflict with, violate or result in a breach of any statute,
code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree applicable to Purchaser or by which any
property or asset of Purchaser is bound or affected, or (iii)
conflict with, violate or result in a breach of any provisions of
or the loss of any benefit under, constitute a default (or an
event which with notice or lapse of time or both would constitute
a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien, pledge, security interest, charge or other
encumbrance on any property or asset of Purchaser pursuant to,
any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which Purchaser is a party or by which Purchaser or any property
or asset of Purchaser is bound or affected, except, in the case
of clause (iii) above, for any such conflicts, violations,
breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a material adverse effect
on the business, assets, liabilities, financial condition or
results of operations of Purchaser and its subsidiaries taken as
a whole.
SECTION 4.04. Consents and Approvals. The execution,
delivery and performance of this Agreement and the Bank Merger
Agreement by Purchaser does not require any consent, approval,
authorization or permit of, or filing with or notification to any
Governmental Entity, (i) except for (A) those referred to in
Section 3.06 hereof, (B) confirmation or approval from the Office
of Fair Trading that it is not the intention of the Secretary of
State for Trade and Industry to refer the transactions
contemplated by this Agreement to the Monopolies and Mergers
Commission, (C) consent from the Treasury under Section 765 of
the Income and Corporation Taxes Xxx 0000, (D) notification to
the International Stock Exchange of the United Kingdom and the
Republic of Ireland Limited (the "International Stock Exchange")
by announcement on the Company News Service of the International
Stock Exchange of particulars of the transactions contemplated by
this Agreement, and (E) consent or approval of the Bank of
England and the Central Bank of Ireland, and (ii) except for any
consent, approval, authorization, permit of, or filing with, or
notification to, any Governmental Entity where failure to obtain
any such consent, approval, authorization or permit, or to make
any such filing or notification, would not prevent or
significantly delay consummation of the Holding Company Merger,
or otherwise prevent
26
Purchaser or Merger Sub from performing the obligations
contemplated under this Agreement to be performed by them or
Merger Sub from performing its obligations under the Bank Merger
Agreement, or which, either individually or in the aggregate,
would not, in the reasonable judgment of the parties hereto, have
a material adverse effect on the business, liabilities, financial
condition or results of operation of Purchaser and its
subsidiaries taken as a whole.
SECTION 4.05. Proxy Statement. The information supplied by
Purchaser and Merger Sub for inclusion in the Proxy Statement
will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the
Company or at the time of the Stockholders' Meeting, contain any
statement which, at such time and in light of the circumstances
under which it is made, is false or misleading with respect to
any material fact, or omits to state any material fact required
to be stated therein or necessary in order to make the statements
therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders' Meeting which shall
have become false or misleading.
SECTION 4.06. Financial Statements. Purchaser has previously
made available to the Company copies of (a) the consolidated
balance sheets of Purchaser and its subsidiaries as of the fiscal
years of Purchaser ending September 30, 1994, September 30, 1995
and September 30, 1996, and the related consolidated statements
of income, changes in shareholders' equity and cash flows for the
fiscal years ending on September 30 of each of 1993 through 1996,
inclusive, and (b) the unaudited consolidated balance sheets of
Citizens Financial Group, Inc. and its subsidiaries as of
December 31, 1996, and the related unaudited consolidated
statements of income, changes in shareholder's equity and cash
flows for the three-month period then ended. Such financial
statements were prepared in accordance with GAAP (except as may
be indicated in the notes thereto) and each fairly presented the
consolidated financial position, results of operations and
changes in financial position of Citizens Financial Group, Inc.
and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein subject,
in the case of unaudited statements, to normal and recurring
year-end adjustments normal in nature and not material in amount.
SECTION 4.07. Brokers' Fees. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
Purchaser or Merger Sub.
SECTION 4.08. Capital; Financing. On the date hereof,
Purchaser is, at a minimum, "adequately capitalized" as such term
is defined in the rules and regulations promulgated by the FRB
and the FDIC, as the case may be. Purchaser and Merger Sub will
have available to them sources of capital and financing
sufficient to fulfill their obligations hereunder.
27
ARTICLE V
CONDUCT OF BUSINESS PENDING
THE HOLDING COMPANY MERGER
SECTION 5.01. Covenants of the Company and the Bank.
(a) The Company and the Bank each covenants and agrees
that, between the date of this Agreement and the Effective Time,
unless Purchaser shall otherwise agree in writing, the business
of the Company, the Bank and their subsidiaries shall be
conducted only in, and the Company, the Bank and their
subsidiaries shall not take any action except in, the usual,
regular and ordinary course of business and in a manner
consistent with prudent banking practice and generally to conduct
their business in substantially the same way as heretofore
conducted, and without limiting the foregoing, to continue to
operate in the same geographic markets serving the same market
segments and without significant increase in the rate of growth
of the Bank's loan portfolio. The Company and the Bank shall use
their reasonable best efforts to preserve substantially intact
the business organization of the Company, the Bank and their
subsidiaries, to keep available the present services of the
officers, employees and consultants of the Company, the Bank and
their subsidiaries and to preserve the current relationships and
goodwill of the Company, the Bank and their subsidiaries with
customers, suppliers and other persons with which the Company,
the Bank or any of their subsidiaries have business
relationships, including without limitation, upon the concurrence
of Purchaser implementing a branch employee incentive program in
furtherance thereof.
(b) By way of amplification and not limitation of
clause (a) above, except as contemplated by this Agreement and
the Bank Merger Agreement, the Company and the Bank shall not,
nor shall they permit any of their subsidiaries, between the date
of this Agreement and the Effective Time, directly or indirectly
to do, or publicly announce an intention to do, any of the
following without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld:
(i) amend or otherwise change its Certificate of
Incorporation or Bylaws or equivalent organizational documents;
(ii) issue, deliver, sell, pledge, dispose of,
grant, encumber, or authorize the issuance, delivery, sale,
pledge, disposition, grant or encumbrance of, any shares of
capital stock of any class of the Company, the Bank or any of
their subsidiaries, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest, of the
Company, the Bank or any of their subsidiaries, or enter into any
agreement with respect to any of the foregoing (except for the
issuance of a maximum of 150,954 shares issuable pursuant to
employee stock options outstanding under the Company Option Plans
on the date hereof);
28
(iii) declare, set aside, make or pay any dividend
or other distribution, payable cash, stock, property or
otherwise, with respect to any of its capital stock;
(iv) split, combine or reclassify any shares of
its capital stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except upon the
exercise or fulfillment of rights or options issued or existing
pursuant to employee benefit plans, programs or arrangements, all
to the extent outstanding and in existence on the date of this
Agreement;
(v) repurchase, redeem or otherwise acquire any
shares of the capital stock of the Company, the Bank or any of
their subsidiaries, or any securities convertible into or
exercisable for any shares of the capital stock of the Company,
the Bank or any of their subsidiaries;
(vi) enter into any new line of business or
materially expand the business currently conducted by the
Company, the Bank and their subsidiaries or file any application
to relocate or terminate the operations of any banking office of
the Company, the Bank or any of their subsidiaries;
(vii) acquire or agree to acquire, by merging or
consolidating with, or by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any business or
any corporation, partnership, other business organization or any
division thereof or any material amount of assets, other than
subject to Section 5.05 hereof;
(viii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the
obligations of any individual, corporation or other entity, or
make any loan or advance, other than in the ordinary course of
business consistent with past practice;
(ix) enter into any contract or agreement other
than in the ordinary course of business consistent with past
practice and, in any event, regardless of whether consistent with
past practice, undertake or enter into (i) any contract or other
commitment (other than contracts or commitments related to Loans)
involving an aggregate payment by or to the Company, the Bank or
any of their subsidiaries under any such contract or commitment
of more than $100,000 or having a term of one year or more from
the time of execution, (ii) any contract or commitment, or
related contracts or commitments, for Loans having an original
principal amount in excess of $250,000;
(x) authorize any single capital expenditure which
is in excess of $50,000 or capital expenditures which are, in the
aggregate, in excess of $100,000 for the Company, the Bank and
their subsidiaries taken as a whole, except for written
contractual commitments entered into prior to the date of this
Agreement as disclosed in the
29
Disclosure Schedule and for capital expenditures (A) not to
exceed $150,000 related to the Bank's acquisition of its Whalley
Norton branch site and (B) not to exceed $450,000 relating to its
wide area network service;
(xi) (i) except as required by applicable law, (x)
adopt, amend, renew or terminate any Plan or any agreement,
arrangement, plan or policy between the Company, the Bank or any
of their subsidiaries and one or more of its current or former
directors, officers or employees, or (y) increase in any manner
the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or agreement
as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation
rights, restricted stock, restricted stock units or performance
units or shares); provided, however, that the Company and the
Bank may, in consultation with Purchaser, increase the directors
fees payable to the directors of the Company or the Bank in the
ordinary course of business consistent with past practice and
grant salary increases to its employees (other than those
employees who are officers) at the regular review date of such
employees in an aggregate amount for all employees not to exceed
four percent (4%) of the aggregate current annualized base
salaries of such employees or constitute more than a ten percent
(10%) increase with respect to any one employee; or (ii) enter
into, modify or renew any employment, severance or other
agreement with any director, officer or employee of the Company,
the Bank or any of their subsidiaries, or establish, adopt, enter
into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement providing for any benefit to any director, officer or
employee;
(xii) take any action with respect to accounting
methods, principles or practices, other than changes required by
applicable law or GAAP or regulatory accounting as concurred in
by the Company's independent accountants;
(xiii) make any tax election or settle or
compromise any Federal, state, local or foreign tax liability;
(xiv) pay, discharge or satisfy any claim,
liability or obligation, other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent
with past practice, of liabilities reflected or reserved against
in the consolidated balance sheet of the Company and its
subsidiaries included in the Annual Report on Form 10-K for the
period ended December 31, 1996, or subsequently incurred in the
ordinary course of business and consistent with past practice or
in connection with this Agreement;
(xv) make any new or additional equity investment
or commitment to make such an investment in real estate or in any
real estate development project, other than in connection with
foreclosures, settlements in lieu of foreclosure or troubled loan
or debt
30
restructurings in the ordinary course of business consistent with
past practice;
(xvi) sell any securities in its investment
portfolio, except in the ordinary course of business, or engage
in transactions in or involving forwards, futures, options on
futures, swaps or similar derivative instruments;
(xvii) sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets, properties or
other rights or agreements or purchase or sell any loans in bulk;
(xviii) take any action that is intended or
reasonably can be expected to result in any of its
representations and warranties set forth in this Agreement being
or becoming untrue in any material respect, or any of the
conditions to the consummation of the Holding Company Merger, the
Bank Merger and the other transactions contemplated by this
Agreement set forth in Article VII not being satisfied in any
material respect, or in any material violation of any provision
of this Agreement or the Bank Merger Agreement, except, in every
case, as may be required by applicable law;
(xix) commit any act or omission which constitutes
a material breach or default by the Company, the Bank or any of
their subsidiaries under any Regulatory Agreement or under any
material contract or material license to which any of them is a
party or by which any of them or their respective properties is
bound;
(xx) foreclose upon or take a deed or title to any
commercial real estate without first conducting a Phase I
environmental assessment of the property or foreclose upon any
commercial real estate if such environmental assessment indicates
the presence of Hazardous Material in amounts which, if such
foreclosure were to occur, would be material:
(xxi) enter into or renew, amend or terminate, or
give notice of a proposed renewal, amendment or termination of or
make any commitment with respect to, (i) any contract, agreement
or lease for office space, operations space or branch space to
which the Company, the Bank or any of their subsidiaries is a
party or by which the Company, the Bank or any of their
subsidiaries or their respective properties is bound; (ii) any
lease, contract or agreement other than in the ordinary course of
business consistent with past practice including renewals of
leases to existing tenants of the Company or the Bank; (iii)
regardless of whether consistent with past practices, any lease,
contract, agreement or commitment involving an aggregate payment
by or to the Company, the Bank or any of their subsidiaries of
more than $100,000 or having a term of one year or more from the
time of execution except with respect to the acquisition of its
Whalley Norton branch site;
(xxii) change in any material respect its loan
policies or procedures, except
31
as required by regulatory authorities; or
(xxiii) agree to do any of the foregoing.
SECTION 5.02. Purchaser Products and Services. From and
after the date hereof, Purchaser, the Company and the Bank shall
consult with each other on the introduction of products and
services not currently offered by the Company or the Bank which
Purchaser would expect to make available to customers following
the Holding Company Merger and the Bank Merger, and the Company
and the Bank shall consider offering such products and services
to its customers prior to the Effective Date, on terms and
conditions mutually acceptable to Purchaser, the Company and the
Bank; provided, however, that nothing herein shall obligate the
Company or the Bank to offer any such products or services prior
to the Effective Time.
SECTION 5.03. System Conversions. From and after the date
hereof, Purchaser and the Bank shall meet on a regular basis to
discuss and plan for the conversion of the Bank's data processing
and related electronic informational systems to those used by
Purchaser and its subsidiaries, which planning shall include, but
not be limited to, discussion of the possible termination by the
Bank of third-party service provider arrangements effective at
the Effective Time or at a date thereafter, non-renewal of
personal property leases and software licenses used by the Bank
in connection with its systems operations and outsourcing, as
appropriate, of proprietary or self-provided system services, it
being understood that the Bank shall not be obligated to take any
such action prior to the Effective Time and, unless the Bank
otherwise agrees, no conversion shall take place prior to the
Effective Time. In the event that the Bank takes, at the request
of Purchaser, any action relative to third parties to facilitate
the conversion that results in the imposition of any termination
fees or charges, Purchaser shall indemnify the Bank on terms
reasonably satisfactory to the Bank for any such fees and
expenses, and the costs of reversing the conversion process, if
for any reason the Holding Company Merger is not consummated in
accordance with the terms of this Agreement.
SECTION 5.04. Certain Changes and Adjustments. Prior to the
Closing (as defined in Section 9.01 hereof), Purchaser, the
Company and the Bank shall consult and cooperate with each other
concerning the Bank's loan, litigation and real estate valuation
policies and practices (including loan classifications and levels
of reserves) to reflect Purchaser's plans with respect to the
conduct of the Surviving Bank's business and the then anticipated
post-closing disposition of certain assets of the Surviving Bank
following the Bank Merger; provided, however, that neither the
Company nor the Bank shall be obligated to take any action
pursuant to this Section which is inconsistent with GAAP and
unless and until Purchaser acknowledges, and the Company and the
Bank are satisfied, that all conditions to its obligation to
consummate the Holding Company Merger have been satisfied. No
action taken by the Company or the Bank pursuant to this Section
or the consequences resulting therefrom shall be deemed to be a
breach of any representation, warranty, agreement or covenant
herein or constitute a Material Adverse Effect.
32
SECTION 5.05. ALCO Management. The Company and the Bank
agree that during the period from the date of this Agreement
through the Effective Time, they will consult with Purchaser in
the development of a reasonable program to manage the Bank's
interest sensitive assets and liabilities (including its
fixed-rate mortgage portfolio and its investment portfolio),
which program will include a policy not to acquire securities for
the investment portfolio of the Bank other than securities which
were issued by the United States of America and have a maturity
date that is not more than two years after the date of
acquisition thereof, unless otherwise agreed by the parties. The
Company, the Bank and Purchaser agree to consult on investment
programs to be administered by the Bank.
SECTION 5.06. Covenants of Purchaser. During the period from
the date of this Agreement and continuing until the Effective
Time, the Purchaser shall not, and shall not permit any of its
subsidiaries to, take any action that is intended or which
reasonably can be expected to result in any of its
representations and warranties set forth in this Agreement being
untrue in any material respect, or in any of the conditions to
the Holding Company Merger, the Bank Merger or other transactions
contemplated in this Agreement as set forth in Article VII not
being satisfied in any material respect, or in a material
violation of any provision of this Agreement or the Bank Merger
Agreement, except, in every case, as may be required by
applicable law.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholders' Meeting. In order to consummate
the Holding Company Merger, the Company, acting through the
Company Board, shall, in accordance with applicable law and the
Company's Certificate of Incorporation and By-laws, (a) duly
call, give notice of, convene and hold an annual or special
meeting of its stockholders as soon as practicable, but in no
event later than July 31, 1997, for the purpose of considering
and taking action on this Agreement and the transactions
contemplated hereby (the "Stockholders' Meeting") and (b) subject
to the fiduciary duties of the Company Board under applicable law
as determined by such Board with the advice of the Company's
independent counsel, (i) include in the Proxy Statement the
recommendation of the Board that the stockholders of the Company
approve and adopt this Agreement, the Holding Company Merger and
the other transactions contemplated hereby and (ii) use all
reasonable efforts to obtain such approval and adoption. The
Purchaser, the Company and the Bank shall coordinate and
cooperate with respect to the foregoing matters.
SECTION 6.02. Proxy Statement. As soon as practicable after
the date hereof, the Company shall file the Proxy Statement with
the SEC under the Exchange Act and shall use its reasonable best
efforts to have the Proxy Statement cleared by the SEC.
Purchaser, Merger Sub, the Company and the Bank shall cooperate
with each other in the preparation of the Proxy Statement, and
the Company shall notify Purchaser of the receipt of any comments
of the SEC with respect to the Proxy Statement and of any
requests by the SEC for any amendment or
33
supplement thereto or for additional information and shall
provide to Purchaser promptly copies of all correspondence
between the Company or any representative of the Company and the
SEC. The Company shall give Purchaser and its counsel adequate
opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Purchaser and its counsel
adequate opportunity to review all amendments and supplements to
the Proxy Statement and all responses to requests for additional
information and replies to comments prior to their being filed
with, or sent to, the SEC. The Company, the Bank, Purchaser and
Merger Sub each agrees to use its reasonable best efforts, after
consultation with the other parties hereto to respond promptly to
all such comments of and requests by the SEC and to cause the
Proxy Statement and all required amendments and supplements
thereto to be mailed to the holders of Shares entitled to vote at
the Stockholders' Meeting at the earliest practicable time.
SECTION 6.03. Regulatory Matters.
(a) The parties hereto shall cooperate with each other
and use their reasonable best efforts to promptly prepare and
file all necessary documentation, to effect all applications,
notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations
of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions
contemplated by this Agreement and the Bank Merger Agreement
(including without limitation the Holding Company Merger and the
Bank Merger). Purchaser, the Company and the Bank shall have the
right to review in advance, and to the extent practicable, each
will consult the other on, in each case subject to applicable
laws relating to the exchange of information, all the information
relating to either of them, as the case may be, and any of their
respective subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any
Governmental Entity in connection with the Holding Company
Merger, the Bank Merger and the other transactions contemplated
by this Agreement and by the Bank Merger Agreement. In exercising
the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto
agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations
of all third parties and Governmental Entities necessary or
advisable to consummate the Holding Company Merger, the Bank
Merger and other transactions contemplated by this Agreement and
the Bank Merger Agreement and each party will keep the other
apprised of the status of matters relating to the completion of
all of the transactions contemplated hereby.
(b) Purchaser, the Company and the Bank shall, upon
request, furnish each other with all information concerning
themselves, their respective subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing,
notice or application made by or on behalf of Purchaser, the
Company, the Bank or any of their respective subsidiaries to any
Governmental Entity in connection with the Holding Company
Merger, the Bank Merger or the other transactions contemplated by
this Agreement and the Bank Merger Agreement.
(c) Purchaser, the Company and the Bank shall promptly
furnish each other
34
with copies of written communications received by Purchaser or
the Company, as the case may be, or any of their respective
subsidiaries, affiliates or associates (as such terms are defined
in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to,
any Governmental Entity in respect of the Holding Company Merger,
the Bank Merger and the other transactions contemplated by this
Agreement and the Bank Merger Agreement.
SECTION 6.04. Access to Information.
(a) Upon reasonable notice and subject to applicable
laws relating to the disclosure or exchange of information, the
Company and the Bank shall, and shall cause each of their
subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Purchaser, access, during
normal business hours during the period prior to the Effective
Time, to all its officers, employees, agents, properties, books,
loan documentation and files, contracts, commitments and records
and, during such period, the Company and the Bank shall, and
shall cause their subsidiaries to, make available to Purchaser
(i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period
pursuant to the requirements of federal securities laws or
federal or state banking laws (other than reports or documents
which the Company or the Bank is not permitted to disclose under
applicable law), (ii) copies of all periodic reports to senior
management, including, without limitation, reports on
non-performing loans and other asset quality matters and all
materials furnished to the Company Board or the Bank Board
relating to asset quality generally, and (iii) all other
information concerning the business, properties, assets and
personnel of the Company and the Bank as Purchaser may reasonably
request. Neither the Company, the Bank nor any of their
subsidiaries shall be required to provide access to or to
disclose information where such access or disclosure would
violate or prejudice the rights of customers, jeopardize the
attorney-client privilege of the institution in possession or
control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement or, in
the event of any litigation or threatened litigation between the
Company, the Bank and Purchaser over the terms of this Agreement
where access to information will be adverse to the interests of
the Company and the Bank. The parties hereto will make
appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply. Purchaser will hold all such information in confidence to
the extent required by, and in accordance with, the provisions of
the confidentiality agreement, dated March 11, 1997, between
Purchaser and the Company (the "Confidentiality Agreement").
(b) All information furnished by Purchaser to the
Company, the Bank or its representatives pursuant hereto shall be
treated as the sole property of Purchaser and, if the Holding
Company Merger shall not occur, the Company, the Bank and its
representatives shall return to Purchaser all of such written
information and all documents, notes, summaries or other
materials containing, reflecting or referring to, or derived
from, such information. The Company and the Bank shall, and shall
use their reasonable best efforts to cause their representatives
to, keep confidential all such information, and shall not
directly or indirectly use such information
35
for any competitive or other commercial purpose. The obligation
to keep such information confidential shall continue for five
years from the date the proposed Merger is abandoned and shall
not apply to (i) any information which (x) was already in the
Company's or the Bank's possession prior to the disclosure
thereof by Purchaser; (y) was then generally known to the public;
or (z) was disclosed to the Company or the Bank by a third party
not bound by an obligation of confidentiality, or (ii)
disclosures made as required by law.
(c) No investigation by any of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein or any condition to the
obligations of the parties hereto.
SECTION 6.05. No Solicitation. Neither the Company, the Bank
nor any of their subsidiaries shall, directly or indirectly,
through any officer, director, agent or otherwise, solicit or
initiate the submission of any proposal or offer from any person
relating to any acquisition or purchase of all or (other than in
the ordinary course of business) any material portion of the
assets of, or any equity interest in, the Company, the Bank or
any of their subsidiaries or any business combination with the
Company, the Bank or any of their subsidiaries or, except to the
extent determined by the Company Board, upon the opinion of its
independent counsel, to be required by fiduciary obligations
under applicable law, participate in any negotiations regarding,
or furnish to any other person any information with respect to,
or otherwise cooperate in any way with, or assist or participate
in, facilitate, any effort or attempt by any other person to do
or seek any of the foregoing. The Company and the Bank
immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. The Company and the Bank
shall notify Purchaser promptly if any such proposal or offer, or
any inquiry or contact with any person with respect thereto, is
made and shall, in any such notice to Purchaser, indicate in
reasonable detail the identity of the person making such
proposal, offer, inquiry or contact and the terms and conditions
of such proposal, offer, inquiry or contact. The Company and the
Bank agree not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to
which the Company or the Bank is a party. Actions of the Company,
the Bank or any of their subsidiaries permitted by this Section
6.05 shall not be deemed to be a breach of this Agreement.
SECTION 6.06. Employee Benefits Matters.
(a) Provision of Benefits. As soon as practicable after
the Effective Time and subject to applicable law, Purchaser shall
provide the employees of the Company and the Bank ("Company
Employees") with the same health, dental, pension, life
insurance, disability, 401(k) plan and other benefits, if any,
which Purchaser then provides generally to its own employees.
With respect to the provision of such benefits to the Company
Employees pursuant hereto, to the extent Company Employees
participate after the Effective Time in employee benefit plans
other than the Company Benefit Plans, all prior service of such
employees with the Company or the Bank shall be recognized under
such plans for all benefit plan for purposes of eligibility and
vesting, but excluding benefit accrual under any defined benefit
pension plan. Purchaser shall not
36
treat any Company Employee as a "new" employee for purposes of
any exclusion under any health plan or dental plan of Purchaser
or any of its affiliates for a preexisting medical condition.
Nothing herein is intended or should be construed to provide a
commitment for continued employment or to confer any rights on
any officer or employee of the Bank except as herein expressly
provided.
(b) Severance Payments and Benefits. Company Employees
(excluding all officers who are parties to employment or
severance agreements with the Company or the Bank) whose
employment with the Surviving Corporation or the Surviving Bank
is terminated within one year after the Effective Time other than
for cause (which shall mean gross negligence or dereliction in
the performance of such employee's duties, dishonesty or
commission of a crime) or as a result of a sale of a business
unit if Company Employees are offered the opportunity to continue
their employment with the purchaser of the business unit in
substantially the same capacity, location and salary and
benefits, shall be provided by Purchaser the severance and other
benefits set forth below:
(i) severance payable on an installment basis
pursuant to regular payroll in an amount equal to two weeks' base
salary for each full year of service of such terminated Company
Employee to the Company and the Bank; provided, that all officers
and employees shall be subject to a maximum severance payment
limitation of twenty six weeks' base salary; and
(ii) continuation of health benefits during the
same period of time that such terminated Company Employee is
receiving severance payments pursuant to (i) above after
termination on the same terms and conditions as though they had
remained active employees, and thereafter shall be entitled to
COBRA benefits for an additional period of time determined as
though their employment had terminated at the end of such period.
(c) Parachute Payments. Notwithstanding anything to the
contrary contained in this Agreement, in no event shall the
Company or the Bank take any action or make any payments that
would result, either individually or in the aggregate, in the
payment of an "excess parachute payment" within the meaning of
Section 280G of the Code or that would result, either
individually or in the aggregate, in payments that would be
nondeductible pursuant to Section 162(m) of the Code.
SECTION 6.07. Directors' and Officers' Insurance and
Indemnification.
(a) Purchaser shall use its reasonable best efforts to
maintain in effect for three years from the Effective Time, if
available, the current directors' and officers' liability
insurance policy maintained by the Company (provided that
Purchaser may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that, unless otherwise agreed
to by Purchaser, in no event shall Purchaser be required to
expend pursuant to
37
this Section 6.07(a) more than the amount equal to 150% of the
current annual amount expended by the Company to maintain or
procure insurance pursuant hereto. In connection with the
foregoing, the Company and the Bank each agrees to provide such
insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior
claims.
(b) For a period of six years from the Effective Time,
the Purchaser shall indemnify the directors and officers of the
Company and the Bank to the same extent that such persons are
entitled to indemnification by the Company or the Bank, as
appropriate, as of the date of this Agreement. The
indemnification by Purchaser provided for hereunder shall not be
amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would affect adversely
the rights thereunder of individuals who were directors or
officers of the Company or the Bank as of the date of this
Agreement, unless such modification shall be required by law. In
the event that any claim is asserted or made by such director or
officer within such six year period, the right to indemnification
in respect of such claim shall continue until the disposition of
such claim. The provisions of this Section 6.07(b) are
specifically for the benefit of those directors and officers
entitled to indemnification by the Company or the Bank as of the
date of this Agreement.
SECTION 6.08. Financial and Other Statements.
Notwithstanding anything to the contrary in Section 6.04, during
the term of this Agreement, the Company shall provide to
Purchaser the following documents and information:
(a) As soon as reasonably available, but in no event
more than 45 days after the end of each fiscal quarter
ending after the date of this Agreement, the Company will
deliver to Purchaser its Quarterly Report on Form 10-Q as
filed under the Exchange Act and the Bank's Quarterly Call
Report as filed with the FDIC. As soon as reasonably
available, but in no event more than 90 days after the end
of each fiscal year ending after the date of this Agreement,
the Company will deliver to Purchaser its Annual Report on
Form 10-K, as filed under the Exchange Act. The Company will
also deliver to Purchaser, contemporaneously with its being
filed with the SEC, a copy of all Current Reports on Form
8-K.
(b) Promptly upon receipt thereof, the Company will
furnish to Purchaser copies of all internal control reports
submitted to the Company, the Bank or their Subsidiaries by
independent auditors in connection with each annual, interim
or special audit of the books of the Company, the Bank or
their subsidiaries made by such auditors.
(c) As soon as practicable, the Company and the Bank
will furnish to Purchaser copies of all such financial
statements and reports as they or any of their subsidiaries
shall send to its stockholders, the SEC or any other
regulatory authority, to the extent any such reports
furnished to any such regulatory authority are not
confidential and except as legally prohibited thereby.
38
(d) Promptly upon receipt thereof the Company will
furnish to Purchaser copies of each examination report of
any federal or state regulatory or examination authority
with respect to the condition or activities of the Company,
the Bank or any of their subsidiaries, except to the extent
prohibited by law. With respect to any examination report
the disclosure of which is prohibited by law, the Company
and the Bank will use their reasonable best efforts to
obtain authority to deliver to Purchaser copies of such
examination report, or to the extent practicable, provide
appropriate substitute disclosure arrangements.
(e) With reasonable promptness, the Company and the
Bank will furnish to Purchaser such additional financial
data as Purchaser may reasonably request.
SECTION 6.09. Further Action. Purchaser, the Company and the
Bank each shall, and shall cause its subsidiaries to, use its
reasonable best efforts (a) to take, or cause to be taken, all
actions necessary, proper or advisable to comply promptly with
all legal requirements which may be imposed on such party or its
subsidiaries with respect to the Holding Company Merger or the
Bank Merger and, subject to the conditions set forth in Article
VII hereof, to consummate the transactions contemplated by this
Agreement and the Bank Merger Agreement and (b) to obtain (and to
cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required
to be obtained by the Company, the Bank or Purchaser or any of
their respective subsidiaries in connection with the Holding
Company Merger or the Bank Merger and any of the other
transactions contemplated by this Agreement.
SECTION 6.10. Public Announcements. Purchaser, the Company
and the Bank shall consult with each other before issuing any
press release or otherwise making any public statements with
respect to this Agreement, the Bank Merger Agreement or any
transaction contemplated hereby or thereby and shall not issue
any such press release or make any such public statement prior to
such consultation, except as may be required by law or any
listing agreement with a national or regional securities exchange
to which Purchaser or the Company is a party or any requirement
of agreement with any automated interdealer quotation system.
SECTION 6.11. Additional Agreements. In case at any time
after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement or the Bank
Merger Agreement, or to vest the Surviving Corporation or the
Surviving Bank with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the
Holding Company Merger or the Bank Merger, the proper officers
and directors of each party to this Agreement and their
respective subsidiaries shall take all such necessary action as
may be reasonably requested by Purchaser.
SECTION 6.12. Update of Disclosure Schedules. From time to
time prior to the Effective Time, the Company will promptly
supplement or amend the Disclosure Schedules to reflect any
matter which, if existing, occurring or known at the date of this
Agreement, would
39
have been required to be set forth or described in the Disclosure
Schedules or which is necessary to correct any information in the
Disclosure Schedules which has been rendered inaccurate thereby.
No supplement or amendment to the Disclosure Schedules shall have
any effect for the purpose of determining satisfaction of the
conditions set forth in Sections 7.02(a) or 7.03(a) hereof, as
the case may be, or the compliance by the Company with the
covenants set forth in Article V hereof.
SECTION 6.13. Current Information.
(a) During the period from the date of this Agreement
to the Effective Time, the Company and the Bank will cause one or
more of its designated representatives (i) to confer on a regular
and frequent basis (not less than monthly) with representatives
of Purchaser to report on (x) the general status of the ongoing
operations of the Company and the Bank, (y) the status of, and
the action proposed to be taken with respect to, those Loans held
by the Company, the Bank or any of their subsidiaries which,
either individually or in combination with one or more other
Loans to the same borrower thereunder, have an aggregate
outstanding principal amount of $250,000 or more and are
classified or non-performing assets, and (z) the status of, and
the action proposed to be taken with respect to, foreclosed
property and other real estate owned, and (ii) to cooperate and
communicate with respect to the manner in which the business of
the Company and the Bank are conducted and the disposition of
certain assets after the Effective Time, the type and mix of
products and services, personnel matters, branch alignment, the
granting of credit, and problem loan management, reserve adequacy
and accounting. In order to facilitate the foregoing, the
Company, the Bank and Purchaser shall promptly establish a
liaison committee (the "Liaison Committee") which will be chaired
by an officer designated by Purchaser and which will meet on a
regular basis to discuss these matters and may establish
sub-committees from time-to-time to pursue various issues. During
the period from the date of this Agreement to the Effective Time,
the Company and the Bank shall provide Purchaser prior to such
extensions with sufficient information to review new extensions
of credit, renewals and restructurings having an outstanding
principal amount of $250,000 and information detailing overall
asset quality. The Bank shall also allow Purchaser to designate
one of its officers to attend the Bank's credit committee
meetings and be a non-voting attendee thereof.
(b) The Company and the Bank will promptly notify
Purchaser of any material change in the normal course of business
or in the operation of the properties of the Company, the Bank or
any of their subsidiaries and of any governmental complaints,
investigations or hearings (or communications indicating that the
same may be contemplated), or the institution or the threat of
significant litigation involving the Company, the Bank or any of
their subsidiaries, and will keep Purchaser reasonably informed
of such events.
(c) To the extent not covered by paragraphs (a) and (b)
above, the Company and the Bank shall give prompt notice to
Purchaser, and Purchaser shall give prompt notice to the Company,
of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be reasonably
likely to cause any representation or warranty
40
contained in this Agreement to be untrue or inaccurate in any
material respect and (ii) any failure of the Company, the Bank,
Purchaser or Merger Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement or the Bank Merger
Agreement; provided, however, that the delivery of any notice
pursuant to this paragraph (c) shall not let or otherwise affect
Me remedies available hereunder to the party receiving such
notice.
SECTION 6.14. Bank Merger.
(a) Purchaser shall cause Citizens Financial Group,
Inc. to approve the Bank Merger Agreement as a stockholder of
Purchaser and the Surviving Corporation to approve the Bank
Merger Agreement as a stockholder of the Bank.
(b) Unless otherwise determined by Purchaser prior to
the Closing, at the effective time of the Bank Merger the
Articles of Organization and By-laws of Purchaser, as in effect
immediately prior thereto, shall be the Articles of Organization
and By-laws of the Surviving Bank until thereafter amended as
provided by law and such Articles of Organization and By-laws;
(c) The directors and officers of Purchaser immediately
prior to the effective time of the Bank Merger shall be the
initial directors and officers of the Surviving Bank, each to
hold office in accordance with the Certificate of Incorporation
and By-Laws of the Surviving Bank and until their respective
successors are duly elected or appointed and qualified. The Bank
shall be entitled to designate two of its directors (the
"Designated Directors") to become directors of the Surviving
Bank. The Designated Directors of the Bank shall be mutually
agreed by the Bank and Purchaser.
(d) Promptly following the consummation of the Bank
Merger, the Surviving Bank shall establish an advisory committee
(the "Advisory Committee") to the Board of Directors of the
Surviving Bank. The Advisory Committee shall be comprised of the
persons who are nonemployee directors of the Bank immediately
prior to the consummation of the Merger but who are not
Designated Directors. The Advisory Committee shall meet on a
regular basis and shall advise the Board of Directors of the
Surviving Bank with respect to such matters as may be identified
by such Board of Directors to such Advisory Committee.
SECTION 6.15. Organization of Merger Sub.
(a) Prior to the Effective Time, Purchaser will take
any and all necessary action to cause (i) Merger Sub to be
organized, (ii) Merger Sub to become a direct or indirect wholly
owned subsidiary of Purchaser, (iii) the directors and
stockholders of Merger Sub to approve the transactions
contemplated by this Agreement, (iv) Merger Sub to execute one or
more counterparts to this Agreement and to deliver at least one
such counterpart so executed to the Company and the Bank,
whereupon Merger Sub shall become a party to and be bound by this
41
Agreement, and (v) Merger Sub to take all necessary action to
complete the transactions contemplated hereby subject to the
terms and conditions hereof.
(b) On and as of the date Merger Sub becomes a party to
this Agreement, Purchaser and Merger Sub shall, jointly and
severally, represent and warrant to the Company and the Bank as
follows:
(i) Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Connecticut and all of its outstanding
capital stock are owned, directly or indirectly, by
Purchaser. Since the date of its incorporation, Merger
Sub has not engaged in any activities other than in
connection with or as contemplated by this Agreement;
(ii) Merger Sub has all necessary corporate power
and authority to enter into this Agreement and to carry
on its obligations hereunder. The execution, delivery
and performance of this Agreement by Merger Sub and the
consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate
action on the part of Merger Sub and will not (A)
conflict with or violate the Certificate of
Incorporation or By-laws of Merger Sub or (B) conflict
with or violate any law, rule, regulation, order,
judgment or decree applicable to Merger Sub or by which
any of its properties or assets is bound or affected;
and
(iii) Merger Sub has executed and delivered this
Agreement and this Agreement constitutes the legal,
valid and binding obligation of Merger Sub enforceable
against Merger Sub in accordance with its terms.
ARTICLE VII
CONDITIONS TO THE HOLDING COMPANY MERGER
SECTION 7.01. Conditions to Each Party's Obligations to
Effect the Holding Company Merger. The respective obligations of
each party to effect the Holding Company Merger shall be subject
to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been
approved and adopted by the affirmative vote of the
stockholders of the Company to the extent required by
Connecticut Law and the Certificate of Incorporation of
the Company;
(b) Regulatory Approvals. All necessary approvals,
authorizations and consents of all Governmental
Entities required to consummate the Holding Company
42
Merger and the Bank Merger shall have been obtained and
remain in full force and effect, and all waiting
periods relating to such approvals, authorizations and
consents shall have expired or been terminated (all
such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite
Regulatory Approvals").
(c) No Orders, Injunctions or Restraints;
Illegality. No order, injunction or decree (whether
temporary, preliminary or permanent) issued by federal
or state governmental authority or other agency or
commission or federal or state court of competent
jurisdiction or other legal restraint or prohibition
(an "Injunction") preventing the consummation of the
Holding Company Merger, the Bank Merger or any of the
other transactions contemplated by this Agreement or
the Bank Merger Agreement shall be in effect and no
proceeding initiated by any governmental entity seeking
an Injunction shall be pending. No statute, rule,
regulation, order, injunction or decree (whether
temporary, preliminary or permanent) shall have been
enacted, entered, promulgated or enforced by any
federal or state governmental authority or other agency
or commission or federal or state court of competent
jurisdiction, which prohibits, restricts or makes
illegal the consummation of the Holding Company Merger,
the Bank Merger or any of the other transactions
contemplated by this Agreement or the Bank Merger
Agreement.
SECTION 7.02. Conditions to Obligations of Purchaser and
Merger Sub. The obligations of Purchaser and Merger Sub to effect
the Holding Company Merger are also subject to the following
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company and the
Bank in this Agreement which is qualified as to
materiality shall be true and correct and each such
representation or warranty that is not so qualified
shall be true and correct in all material respects, in
each case as of the date of this Agreement, as
applicable, and (except to the extent such
representations and warranties speak as of an earlier
date) as of the Effective Time, and Purchaser shall
have received a certificate to such effect signed by
the Chief Executive Officer and the Chief Financial
Officer of the Company and the Bark dated as of the
Effective Date.
(b) Agreements and Covenants. The Company and the
Bank shall have performed in all material respects all
obligations and complied in all material respects with
all agreements or covenants of the Company and the Bank
to be performed or complied with by it at or prior to
the Effective Date under the this Agreement and the
Bank Merger Agreement, and Purchaser shall have
received a certificate to such effect signed by the
Chief Executive Officer and Chief Financial Officer of
the Company and the Bank dated as of the Effective
Date.
(c) Consents Under Agreements. The consent,
approval or waiver of each person (other than Requisite
Regulatory Approvals contemplated in Section 7.01(b))
whose consent or approval shall be required in order to
permit the lawful succession by the
43
Surviving Company pursuant to the Holding Company
Merger or the Surviving Bank as survivor to the Bank
Merger, as the case may be, to any material obligation,
right or interest of the Company, the Bank or any of
their subsidiaries under agreement or instrument shall
have been obtained, and none of such permits, consents,
waivers, clearances, approvals and authorizations shall
contain any term or condition which would materially
impair the value of the Company and the Bank to
Purchaser.
(d) No Material Burdensome Condition. None of the
Requisite Regulatory Approvals shall impose any
material term, condition or restriction upon Purchaser
or the Surviving Bank that Purchaser reasonably
determines would materially and adversely affect the
business, operations, financial condition, property or
assets of the Surviving Bank or otherwise impair the
value of the Bank to Purchaser in a manner which is
material and adverse to Purchaser and its subsidiaries
taken as a whole (a "Burdensome Condition").
(e) Agreements regarding Company Option Plans.
Agreements, substantially in the form attached as
Exhibit II hereto, shall have been executed and
delivered by directors, officers and employees of the
Company or the Bank who hold, as of the date of this
Agreement, in the aggregate not less than 90% of the
outstanding stock options under the Company Option
Plans.
(f) Termination of Employment Agreement. The
Employment Agreement, dated as of May 1, 1993, by and
between the Bank and F. Xxxxxxx XxXxxxxx, Xx., shall
have been terminated by all necessary action of each
party thereto, and none of the terms or provisions
thereof shall be of any further force or effect.
(g) Legal Opinion. Purchaser shall have received
the opinion of counsel to the Company and the Bank,
dated the Closing Date, in a form that is customary for
transactions of this type.
SECTION 7.03. Conditions to Obligations of the Company and
the Bank. The obligations of the Company and the Bank to effect
the Holding Company Merger are also subject to the following
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Purchaser and Merger
Sub in this Agreement which is qualified as to
materiality shall be true and correct and each such
representation or warranty that is not so qualified
shall be true and correct in all material respects, in
each case as of the date of this Agreement and (except
to the extent such representations and warranties speak
as of an earlier date) as of the Effective Date and the
Company shall have received a certificate signed by the
Chief Executive or Chief Financial Officer of Purchaser
to such effect dated as of the Effective Date.
44
(b) Agreements and Covenants. Purchaser and
Merger Sub shall have performed in all material
respects all obligations and complied in all material
respects with all of the respective agreements or
covenants to be performed or complied by such party
under this Agreement and the Company shall have
received a certificate signed by the Chief Executive or
Chief Financial Officer of Purchaser to such effect
dated as of the Effective Date.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Holding Company Merger, the Bank Merger and the other
transactions contemplated by this Agreement or the Bank Merger
Agreement may be abandoned at any time prior to the Effective
Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated in this Agreement by
the stockholders of the Company:
(a) by mutual written consent duly authorized by
the Boards of Directors of Purchaser, Merger Sub, the
Company and the Bank;
(b) by either Purchaser and Merger Sub or the
Company and the Bank if (i) the Effective Time shall
not have occurred on or before December 31, 1997;
provided, however, that the right to terminate this
Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any
material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective
Time to occur on or before such date;
(c) by either Purchaser and Merger Sub or the
Company and the Bank (i) ninety days after the date on
which any request or application for a regulatory
approval required to consummate the Holding Company
Merger or the Bank Merger shall have been denied or
withdrawn at the request or recommendation of the
Governmental Entity which must grant such requisite
regulatory approval, unless within the ninety day
period following such denial or withdrawal a petition
for rehearing or an amended application has been filed
with such Governmental Entity; provided, however, that
no party shall have the right to terminate this
Agreement pursuant to this Section 8.01(c) (i) if such
denial or request or recommendation for withdrawal
shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein
or (ii) if any court of competent jurisdiction or other
governmental authority shall have issued an order,
decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Holding Company
Merger or the Bank Merger and such order, decree,
ruling or other action shall have become final and
nonappealable;
45
(d) by either Purchaser and Merger Sub or the
Company and the Bank (provided that the terminating
party is not then in material breach of any
representation, warranty, covenant or other agreement
contained herein) if there shall have been a material
breach of any of the representations or warranties set
forth in this Agreement on the part of the other party,
which breach by its nature cannot be cured prior to the
Effective Time or within thirty business days following
receipt by the breaching party of written notice of
such breach from the other party hereto;
(e) by either Purchaser and Merger Sub or the
Company and the Bank (provided that the terminating
party is not then in material breach of any
representation, warranty, covenant or other agreement
contained herein) if there shall have been a material
breach of any of the covenants or agreements set forth
in this Agreement on the part of the other party, which
breach shall not have been cured within thirty business
days following receipt by the breaching party of
written notice of such breach from the other party
hereto;
(f) by Purchaser and Merger Sub or the Company and
the Bank (provided, that if the terminating party is
the Company or the Bank, the Company and the Bank shall
not be in material breach of any of their obligations
under Section 6.01) if any approval of the stockholders
of the Company required for the consummation of the
Holding Company Merger shall not have been obtained by
reason of the failure to obtain the required vote at a
duly held meeting of stockholders or at any adjournment
or postponement thereof; or
(g) by Purchaser, if the Company Board shall not
have publicly recommended to the stockholders of the
Company that such stockholders vote in favor of the
approval of this Agreement, the Holding Company Merger
and the other transactions contemplated hereby or shall
have withdrawn, modified or amended such recommendation
in a manner adverse to Purchaser.
SECTION 8.02. Effect of Termination; Expenses.
(a) In the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement
shall forthwith become void, and there shall be no
liability on the part of any party hereto, except (i)
as set forth in Section 9.03 and (ii) nothing herein
shall relieve any party from any liabilities or damages
arising out of its gross negligence or willful breach
of any provision of this Agreement.
(b) If this Agreement is terminated as a result of
any breach of a representation, warranty, covenant or
other agreement which is caused by the gross negligence
or willful breach of a party hereto, such party shall
be liable to the other party for all out-of-pocket
costs and expenses, including, without limitation, the
reasonable fees and expenses of lawyers, accountants
and investment bankers, incurred by such other party in
connection with the entering into of this Agreement and
the carrying out of any and all acts contemplated
hereunder ("Expenses"). The payment of Expenses is not
an exclusive remedy, but is in addition to any other
rights or remedies
46
available the parties hereto at law or in equity.
(c) As a condition of Purchaser's willingness, and
in order to induce Purchaser, to enter into this
Agreement and to reimburse Purchaser for incurring the
costs and expenses related to entering into this
Agreement and consummating the transactions
contemplated by this Agreement, the Bank will make a
cash payment to Purchaser of $500,000 (the "Expense
Fee") if and only if:
(i) (x) Purchaser or the Company and the Bank has
terminated this Agreement pursuant to Section 8.01(f),
or (y) Purchaser has terminated this Agreement pursuant
to Section 8.01(g), or (z) Purchaser has terminated
this Agreement pursuant to Sections 8.01(d) or 8.01(e)
and the breach of the representation, warranty,
covenant or agreement was caused by the willful conduct
or gross negligence of the Company or the Bank, and
(ii) (x) within twelve months of any such
termination or other event specified in (i) above, (A)
the Company or the Bank shall have entered into an
agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person other than
Purchaser or any affiliate of Purchaser or (B) the
Company Board or any committee thereof shall have
authorized, approved, recommended, publicly proposed or
failed to publicly oppose an Acquisition Transaction or
recommended that stockholders of the Company authorize,
approve or accept any Acquisition Transaction with any
person other than Purchaser or any affiliate of
Purchaser, or (y) in the case of Sections 8.01(f) or
8.01(g), at the time of such termination or event
giving rise to such termination, it shall have been
publicly announced that any person (other than
Purchaser or any affiliate of Purchaser) shall have (A)
made, or disclosed an intention to make, a bona tide
offer to engage in an Acquisition Transaction, or (B)
filed an application (or given a notice), whether in
draft or final form, under the BHC Act or the Change in
Bank Control Act of 1978, for approval to engage in an
Acquisition Transaction.
If the Expense Fee is to be paid, it shall be subject to an
upward adjustment as set forth below:
In the event that the per share consideration to the
Company, to the Bank or to the stockholders of the Bank
(including any dividend or distribution following a sale of
assets) in an Acquisition Transaction contemplated by Section
8.02(c)(ii)(x) above (the "Acquisition Consideration") exceeds
the Fixed Consideration, then the Expense Fee shall be increased
by an amount equal to the product of 738,528 (the "Number")
multiplied by the excess of the Acquisition Consideration over
the Fixed Consideration. The Number shall be subject to equitable
and proportionate adjustment in the event of any change in
Company Common Stock by reason of any stock issuance, stock
dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction such that the Number
shall equal 19.99% of the Company Common Stock then outstanding
after the occurrence of any such event. The Fixed Consideration
shall also be subject to equitable and proportionate adjustment
in the event
47
of any change in Company Common Stock by reason of any stock
dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction.
Any payment required under this Section B.02(c) will be (i)
payable by the Company and the Bark to Purchaser (by wire
transfer of immediately available funds to an account designated
by Purchaser) within five business days after demand by Purchaser
and (ii) net of any other payments made by the Company and the
Bank to Purchaser pursuant to the provisions of Section 8.02(b).
In the event of a termination under circumstances that would
trigger a payment under this Section 8.02(c), (i) in the absence
of gross negligence or willful breach of any provision of this
Agreement by the Company, the Bank or any of their subsidiaries,
this Section 8.02(c) shall be the exclusive remedy of Purchaser,
and (ii) any standstill provisions contained in the
Confidentiality Agreement shall terminate.
For purposes of this Agreement, "Acquisition Transaction"
shall mean (i) a merger, consolidation or similar transaction
involving the Company, the Bank or any of their subsidiaries,
(ii) the disposition, by sale, lease, exchange or otherwise, of
assets of the Company, the Bank or any of their subsidiaries
representing 14.9% or more of the consolidated assets of the
Company, the Bank or any of their subsidiaries, in a single
transaction or series of transactions, other than sales of
mortgages into the secondary market in the ordinary course of
business consistent with past practice, (iii) the issuance, sale
or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction)
securities by the Company or the Bank representing 14.9% or more
of the voting power of the Company, the Bank or any of their
subsidiaries, (iv) any person (other than Purchaser or any
affiliate of Purchaser) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act) or shall have filed
a registration statement under the Securities Act, with respect
to, a tender offer or exchange offer to purchase any shares of
Company Stock such that, upon consummation of such offer, such
person would own or control 14.9% or more of the then outstanding
shares of Company Common Stock, or (v) any person (other than
Purchaser or any affiliate of Purchaser) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of, or the right to acquire
beneficial ownership of, or any "group" (as such term is defined
under the Exchange Act) shall have been formed which shall have
acquired beneficial ownership of, or the right to acquire
beneficial ownership of, 14.9% or more of the then outstanding
shares of Company Common Stock.
(d) Except as otherwise provided in this Section 8.02, all
costs and expenses incurred in connection with this Agreement,
the Bank Merger Agreement and the transactions contemplated
hereby and thereby shall be paid by the party incurring such
expenses, whether or not any of the transactions contemplated by
this Agreement is consummated.
SECTION 8.03. Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective
Time; provided, however, that, after the approval and adoption of
this Agreement and the transactions contemplated hereby, no
amendment may be made which would reduce the
48
amount or change the type of consideration into which each Share
shall be converted upon consummation of the Holding Company
Merger. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective
Time, any party hereto may (i) extend the time for the
performance of any obligation or other act of any other party
hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after the
approval and adoption of this Agreement and the approval of the
transactions contemplated hereby by the stockholders of the
Company there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any
portion thereof which would reduce the amount or change the form
of the consideration into which each Share shall be converted
upon consummation of the Holding Company Merger delivered to the
Company's stockholders hereunder other than as contemplated by
this Agreement. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or
parties to be bound thereby, but such extension or waiver or
failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Closing. Subject to the terms and conditions
of this Agreement, the closing of the Holding Company Merger (the
"Closing") will take place at 9:00 a.m. on a date to be specified
by the parties, within ten business days after the satisfaction
or waiver (subject to applicable law) of the latest to occur of
the conditions set forth in Article VII hereof, other than the
delivery of officers certificates which are expected to be
delivered at the Closing (the "Closing Date"), at the offices of
Xxxxxxx, Procter & Xxxx LLP, One Exchange Place, Boston,
Massachusetts, unless another time, date or place is agreed to in
writing by the parties hereto.
SECTION 9.02. Alternative Structure. Notwithstanding
anything to the contrary contained in this Agreement, prior to
the Effective Time, Purchaser shall be entitled to revise the
structure of the Holding Company Merger, the Bank Merger and the
other transactions contemplated hereby and thereby, provided,
that (i) there are no material adverse federal or state income
tax consequences to the Company, the Bank and its stockholders as
a result of the modification; (ii) the consideration to be paid
to the holders of the Shares under this Agreement is not thereby
changed in kind or reduced in amount; and (iii) such modification
will not be likely to jeopardize receipt of any required
regulatory approvals relating to the consummation of the Holding
Company Merger and the Bank Merger. This Agreement and any
related documents shall be appropriately amended in order to
reflect any such revised structure.
49
SECTION 9.03. Non-Survival of Representations, Warranties
and Agreements. The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 8.01, as the
case may be, except that the agreements set forth in Articles I
and II and Sections 6.06 and 6.07 shall survive the Effective
Time indefinitely and those set forth in the last sentence of
Section 6.04(a) and in Sections 6.04(b), Article VIII and Article
IX hereof shall survive termination indefinitely.
SECTION 9.04. Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by cable, telecopy, telegram
or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 9.04):
if to Purchaser or Merger Sub:
Citizens Bank of Connecticut
00 Xxxxxx X'Xxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Xxxxxxx, Procter & Xxxx LLP
Xxx Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Pisa, P.C.
and Xxxx X. Xxx, P.C.
if to the Company or the Bank:
BNH Bancshares, Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: President
50
with a copy to:
Tyler, Xxxxxx & Xxxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq. and
Xxxxxxx X. Xxxxxx, III, Esq.
SECTION 9.05. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a specified person means a person
who directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with, such
specified person, including, without limitation, any partnership
or joint venture in which the Company (either alone, or through
or together with any subsidiary) has, directly or indirectly, an
interest of 5% or more;
(b) "beneficial owner" with respect to any Shares means
a person who shall be deemed to be the beneficial owner of such
Shares (i) which such person or any of its affiliates or
associates (as such term is deemed in Rule 12b-2 promulgated
under the Exchange Act) beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of
its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any payment
is due, any day on which the Bank is open for business;
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "knowledge" as used herein in the context of the
Company shall mean knowledge of the Company, the Bank and their
subsidiaries.
(f) "Material Adverse Effect", when used in connection
with the Company, the
51
Bank or any of their subsidiaries, shall mean any change or
effect that is or, in the reasonable judgment of the parties
hereto, would be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of the
Company, the Bank and their subsidiaries taken as a whole.
(g) "person" means an individual, corporation,
partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of
the Exchange Act), trust, association or entity or government,
political subdivision, agency or instrumentality of a government;
and
(h) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, the Bank, the Surviving Bank, Purchaser or
any other person means an affiliate controlled by such person,
directly or indirectly, through one or more intermediaries,
except as otherwise defined herein.
SECTION 9.06. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated by this Agreement is
not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a
mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.07. Entire Agreement. This Agreement (including
the Disclosure Schedule and the Exhibits) constitutes, and the
Bank Merger Agreement when the same is executed by Purchaser and
the Bank will constitute, the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter
hereof except for the Confidentiality Agreement.
SECTION 9.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned
by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
SECTION 9.09. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
52
SECTION 9.10. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that the
provisions contained in this Agreement were not performed in
accordance with its specific terms or was overwise 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 thereof 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.
SECTION 9.11. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Connecticut applicable to contracts executed in and to
be performed in that State. All actions and proceedings arising
out of or relating to this Agreement shall be heard and
determined in any state or federal court sitting in the City of
Boston.
SECTION 9.12. Headings. The table of contents and
descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.13. Interpretation. When a reference is made in
this Agreement to Sections, Exhibits, Annexes or Schedules, such
reference shall be to a Section of or Exhibit, Annex or Schedule
to this Agreement unless otherwise indicated. Whenever the words
"include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date
hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to be April 8, 1997.
SECTION 9.14. Counterparts. This Agreement may be executed
(including by facsimile) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
* * * * *
53
IN WITNESS WHEREOF, Purchaser, the Company and the Bank have
caused this Agreement to be executed as a sealed instrument as of
the date first written above by their respective officers
thereunto duly authorized.
Attest: CITIZENS BANK OF CONNECTICUT
/s/Xxxxx X. Xxxxxxxxx By:/s/Xxxxxx X. Xxxxxxxxx
----------------------- ------------------------
Secretary Title: President
Attest: BNH BANCSHARES, INC.
/s/Xxxxxx X. Xxxxxx By:/s/F. Xxxxxxx XxXxxxxx
----------------------- ------------------------
Secretary Title: President
Attest: BANK OF NEW HAVEN
/s/Xxxxxx X. Xxxxxx By:/s/F. Xxxxxxx XxXxxxxx
----------------------- ------------------------
Secretary Title: President
DOCSC\501266.8
