EXHIBIT 2.0
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EUROBANCSHARES, INC.
HATO REY, PUERTO RICO
EUROBANK
HATO REY, PUERTO RICO
AND
THE BANK & TRUST COMPANY OF PUERTO RICO
HATO REY, PUERTO RICO
DATED AS OF FEBRUARY 24, 2004
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TABLE OF CONTENTS
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ARTICLE I. ACQUISITION OF B&T BY EUROBANCSHARES .............................................................. 2
Section 1.01 The Merger ................................................................................. 2
Section 1.02 Effects of the Merger ...................................................................... 2
Section 1.03 Certificate of Incorporation and Bylaws .................................................... 2
Section 1.04 Directors and Officers ..................................................................... 2
Section 1.05 Conversion of the B&T Stock. ............................................................... 2
Section 1.06 Excluded Assets ............................................................................ 11
Section 1.07 Organization of Special Purpose Vehicle. ................................................... 11
Section 1.08 Lease Termination and Potential Escrow of Funds ............................................ 15
Section 1.09 Merger Consideration Schedule and Escrow. .................................................. 16
Section 1.10 Shareholders' Meeting ...................................................................... 16
Section 1.11 Dissenting Shareholders .................................................................... 16
Section 1.12 Delivery of Consideration; Exchange of Certificates ........................................ 17
Section 1.13 Alternate Acquisition Proposal ............................................................. 17
ARTICLE II. THE CLOSING AND THE CLOSING DATE ........................................................... 17
Section 2.01 Time and Place of the Closing and Closing Date ............................................. 17
Section 2.02 Actions to be Taken at the Closing by B&T .................................................. 18
Section 2.03 Actions to be Taken at the Closing by EuroBancshares and Eurobank .......................... 19
Section 2.04 Further Assurances ......................................................................... 20
Section 2.05 Effective Date ............................................................................. 20
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF B&T ...................................................... 20
Section 3.01 Organization and Qualification ............................................................. 21
Section 3.02 Execution and Delivery ..................................................................... 21
Section 3.03 B&T Capitalization ......................................................................... 21
Section 3.04 Compliance with Laws, Permits and Instruments .............................................. 22
Section 3.05 B&T Financial Statements ................................................................... 22
Section 3.06 B&T Call Reports ........................................................................... 22
Section 3.07 Litigation ................................................................................. 23
Section 3.08 Consents and Approvals ..................................................................... 23
Section 3.09 Undisclosed Liabilities .................................................................... 23
Section 3.10 Title to Assets ............................................................................ 23
Section 3.11 Absence of Certain Changes or Events ....................................................... 24
Section 3.12 Leases, Contracts and Agreements ........................................................... 26
Section 3.13 Taxes ...................................................................................... 27
Section 3.14 Insurance .................................................................................. 27
Section 3.15 No Adverse Change .......................................................................... 28
Section 3.16 Proprietary Rights ......................................................................... 28
Section 3.17 Transactions with Certain Persons and Entities ............................................. 28
Section 3.18 Evidences of Indebtedness .................................................................. 28
Section 3.19 Employee Relationships ..................................................................... 29
Section 3.20 Condition of Assets ........................................................................ 29
Section 3.21 Environmental Compliance ................................................................... 29
Section 3.22 Regulatory Compliance ...................................................................... 30
Section 3.23 Absence of Certain Business Practices ...................................................... 30
Section 3.24 Proxy Statement ............................................................................ 30
Section 3.25 Dissenting Shareholders .................................................................... 31
Section 3.26 Books and Records .......................................................................... 31
Section 3.27 Forms of Instruments, Etc .................................................................. 31
Section 3.28 Fiduciary Responsibilities ................................................................. 31
Section 3.29 Guaranties ................................................................................. 31
Section 3.30 Voting Trust or Buy-Sell Agreements ........................................................ 31
Section 3.31 Employee Benefit Plans ..................................................................... 31
Section 3.32 Corporate Trust Operations. ................................................................ 33
Section 3.33 Representations Not Misleading ............................................................. 35
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EUROBANCSHARES AND EUROBANK 35
Section 4.01 Organization and Qualification of EuroBancshares ........................................... 35
Section 4.02 Organization and Qualification of Eurobank ................................................. 35
Section 4.03 Execution and Delivery ..................................................................... 35
Section 4.04 EuroBancshares Capitalization .............................................................. 36
Section 4.05 Eurobank Capitalization .................................................................... 36
Section 4.06 Compliance with Laws, Permits and Instruments .............................................. 36
Section 4.07 Litigation ................................................................................. 36
Section 4.08 Consents and Approvals ..................................................................... 37
Section 4.09 EuroBancshares Financial Statements ........................................................ 37
Section 4.10 Proxy Statement ............................................................................ 37
Section 4.11 Financing .................................................................................. 37
Section 4.12 Representations Not Misleading ............................................................. 37
Section 4.13 No Adverse Change .......................................................................... 38
ARTICLE V. COVENANTS OF B&T ........................................................................... 38
Section 5.01 Best Efforts ............................................................................... 38
Section 5.02 Information for Applications and Statements ................................................ 38
Section 5.03 Required Acts of B&T ....................................................................... 38
Section 5.04 Prohibited Acts of B&T ..................................................................... 39
Section 5.05 Due Diligence Review; Right to Terminate. .................................................. 42
Section 5.06 Invitations to and Attendance at Directors' and Committee Meetings ......................... 44
Section 5.07 Additional Financial Statements and Tax Returns ............................................ 44
Section 5.08 Untrue Representations ..................................................................... 44
Section 5.09 Litigation and Claims ...................................................................... 44
Section 5.10 Notice of Material Adverse Changes ......................................................... 44
Section 5.11 Acquisition Proposals. ..................................................................... 44
Section 5.12 Consents and Approvals ..................................................................... 46
Section 5.13 Environmental Investigation; Right to Terminate Agreement. ................................. 46
Section 5.14 Conforming Accounting and Reserve Policies; Restructuring Expenses. ........................ 48
Section 5.15 Proxies 49
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Section 5.16 Formation and Organization of the Special Purpose Vehicle .................................. 49
Section 5.17 Termination of Change in Control and Employee Contracts .................................... 49
Section 5.18 Exercise or Termination of Stock Options ................................................... 49
Section 5.19 Employee Plans ............................................................................. 49
Section 5.20 Closing of B&T Branches .................................................................... 49
Section 5.21 Director's and Officer's Insurance ......................................................... 50
Section 5.22 Disposition and Establishment of Participation Interest in Certain B&T Loan ................ 50
Section 5.23 Disposition or Establishment of Repayment Plan for Certain B&T Loan ........................ 50
Section 5.24 Settlement of Certain Litigation Matters ................................................... 50
Section 5.25 Termination of Certain Relationships ....................................................... 50
ARTICLE VI. COVENANTS OF EUROBANCSHARES AND EUROBANK ................................................... 51
Section 6.01 Best Efforts ............................................................................... 51
Section 6.02 Information for Applications and Statements ................................................ 51
Section 6.03 Untrue Representations ..................................................................... 51
Section 6.04 Litigation and Claims ...................................................................... 51
Section 6.05 Regulatory and Other Approvals ............................................................. 51
Section 6.06 Notice of Material Adverse Change .......................................................... 52
Section 6.07 Employee Matters. .......................................................................... 52
Section 6.08 Request for Tax Ruling ..................................................................... 52
ARTICLE VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF B&T ............................................. 53
Section 7.01 Compliance with Representations, Warranties and Agreements ................................. 53
Section 7.02 Shareholder Approvals ...................................................................... 53
Section 7.03 Government and Other Approvals ............................................................. 53
Section 7.04 No Litigation .............................................................................. 53
Section 7.05 Revenue Ruling from the Department of Treasury ............................................. 54
Section 7.06 Fairness Opinion ........................................................................... 54
Section 7.07 Designation of Preferred Stock ............................................................. 54
ARTICLE VIII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EUROBANCSHARES AND EUROBANK .................... 54
Section 8.01 Compliance with Representations, Warranties and Agreements ................................. 54
Section 8.02 Shareholder Approvals ...................................................................... 54
Section 8.03 Government and Other Approvals ............................................................. 55
Section 8.04 No Litigation .............................................................................. 55
Section 8.05 No Material Adverse Change ................................................................. 55
Section 8.06 Director Support Agreements ................................................................ 55
Section 8.07 Releases of Directors and Officers ......................................................... 55
Section 8.08 Termination of Change in Control and Employee Contracts .................................... 56
Section 8.09 Exercise or Termination of Stock Options ................................................... 56
Section 8.10 Long-Term Lease Arrangement ................................................................ 56
Section 8.11 Option to Terminate Service Contracts ...................................................... 56
Section 8.12 Auditor Opinion ............................................................................ 56
Section 8.13 Administrative and Regulatory Actions ...................................................... 56
Section 8.14 Securities Laws Exemptions ................................................................. 56
Section 8.15 Revenue Ruling from the Department of Treasury ............................................. 57
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Section 8.16 Closing of B&T Branches .................................................................... 57
Section 8.17 Formation and Organization of the Special Purpose Vehicle .................................. 57
Section 8.18 Closing Financial Statements ............................................................... 57
Section 8.19 Legal Opinion .............................................................................. 57
Section 8.20 Guaranty Agreement ......................................................................... 58
Section 8.21 Fairness Opinion ........................................................................... 58
Section 8.22 Disposition or Establishment of Participation Interest in Certain B&T Loan ................. 58
Section 8.23 Disposition or Establishment of Repayment Plan for Certain B&T Loan ........................ 58
Section 8.24 Director's and Officer's Insurance ......................................................... 58
ARTICLE IX. TERMINATION AND ABANDONMENT ................................................................ 58
Section 9.01 Right of Termination ....................................................................... 58
Section 9.02 Notice of Termination ...................................................................... 59
Section 9.03 Effect of Termination ...................................................................... 59
ARTICLE X. CONFIDENTIAL INFORMATION ................................................................... 60
Section 10.01 Definition of "Recipient," "Disclosing Party" and "Representative" ......................... 60
Section 10.02 Definition of "Subject Information" ........................................................ 60
Section 10.03 Confidentiality ............................................................................ 60
Section 10.04 Securities Law Concerns .................................................................... 61
Section 10.05 Return of Subject Information .............................................................. 61
Section 10.06 Specific Performance/Injunctive Relief ..................................................... 61
ARTICLE XI. MISCELLANEOUS .............................................................................. 61
Section 11.01 Survival of Representations and Warranties; Indemnification. ............................... 61
Section 11.02 Expenses ................................................................................... 62
Section 11.03 Brokerage Fees and Commissions ............................................................. 62
Section 11.04 Entire Agreement ........................................................................... 62
Section 11.05 Further Cooperation ........................................................................ 63
Section 11.06 Severability ............................................................................... 63
Section 11.07 Notices .................................................................................... 63
Section 11.08 GOVERNING LAW .............................................................................. 64
Section 11.09 Multiple Counterparts ...................................................................... 64
Section 11.10 Certain Definitions ........................................................................ 65
Section 11.11 Specific Performance ....................................................................... 66
Section 11.12 Attorneys' Fees and Costs .................................................................. 66
Section 11.13 Rules of Construction ...................................................................... 66
Section 11.14 Binding Effect; Assignment ................................................................. 66
Section 11.15 Public Disclosure .......................................................................... 67
Section 11.16 Extension; Waiver .......................................................................... 67
Section 11.17 Amendments ................................................................................. 67
Section 11.18 Delivery of Schedules to Confidential Disclosure Memorandum ................................ 67
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EXHIBITS
Exhibit A - Director Support Agreement
Exhibit B - Voting Agreement and Irrevocable Proxy
Exhibit C - Form of Director Release
Exhibit D - Form of Officer Release
Exhibit E - Form of Legal Opinion
Exhibit F - Form of Certificate of Designation of Preferred Stock
Exhibit G - List of Directors and Executive Officers of Eurobank
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of the 24th day of February, 2004, by and among EUROBANCSHARES, INC., a
corporation organized under the laws of the Commonwealth of Puerto Rico (the
"Commonwealth") and registered as a bank holding company with its principal
offices in Hato Rey, Puerto Rico ("EuroBancshares"), EUROBANK, a commercial bank
organized under the laws of the Commonwealth with its principal offices in Hato
Rey, Puerto Rico ("Eurobank"), and THE BANK & TRUST COMPANY OF PUERTO RICO, a
commercial bank organized under the laws of the Commonwealth with its principal
offices in Hato Rey, Puerto Rico ("B&T").
W I T N E S S E T H:
WHEREAS, EuroBancshares owns all of the issued and outstanding shares of
voting common stock, par value $1.00 per share, of Eurobank;
WHEREAS, EuroBancshares proposes to acquire (i) all of the issued and
outstanding shares of voting common stock, par value $2.50 per share, of B&T
(the "B&T Common Stock"), (ii) all of the issued and outstanding shares of
Series A 7.50% non-cumulative, convertible, perpetual, monthly income, preferred
stock, par value $10.00 per share, of B&T (the "Series A Preferred Stock"), and
(iii) all of the issued and outstanding shares of Series B 9.625%
non-cumulative, non-convertible, term monthly, preferred stock, par value $10.00
per share, of B&T with a liquidation preference of $25.00 (the "Series B
Preferred Stock," and together with the B&T Common Stock and the Series A
Preferred Stock, the "B&T Stock"), through the merger of B&T with and into
Eurobank (the "Merger");
WHEREAS, EuroBancshares, Eurobank, and B&T believe that the Merger, as
provided for and subject to the terms and conditions set forth in this Agreement
and all exhibits, schedules and supplements hereto, is in the best interests of
EuroBancshares, Eurobank, B&T and their respective shareholders;
WHEREAS, EuroBancshares, Eurobank, and B&T desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the execution and delivery of this Agreement and certain
additional agreements related to the transactions contemplated hereby;
WHEREAS, the respective boards of directors of EuroBancshares, Eurobank,
and B&T have approved this Agreement and the proposed transactions substantially
on the terms and conditions set forth in this Agreement; and
WHEREAS, the parties intend the Merger to be treated as a "tax free
reorganization" within the meaning of Section 1112(g)(1)(A) of the Internal
Revenue Code of Puerto Rico.
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual representations, warranties, covenants and agreements contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the conditions set
forth below, EuroBancshares, Eurobank, and B&T undertake, promise, covenant and
agree with each other as follows:
ARTICLE I.
ACQUISITION OF B&T BY EUROBANCSHARES
Section 1.01 The Merger. Subject to the terms and conditions of this
Agreement, B&T shall be merged with and into Eurobank pursuant to the provisions
of the Puerto Rico Banking Law (the "Banking Law").
Section 1.02 Effects of the Merger. The Merger shall have the effects set
forth in Section 91 of the Banking Law. Following the Merger, Eurobank shall
continue as the bank resulting from the Merger (the "Resulting Bank"), and the
separate corporate existence of B&T shall cease. The name of the Resulting Bank
shall be "Eurobank." The existing offices and facilities of Eurobank and B&T
immediately preceding the Merger shall be the offices and facilities of the
Resulting Bank following the Merger. At the Effective Date, all rights, title
and interests to all real estate and other property owned by each of B&T and
Eurobank shall be allocated to and vested in the Resulting Bank without
reversion or impairment, without further act or deed, and without any transfer
or assignment having occurred, but subject to any existing liens or encumbrances
thereon. At the Effective Date, all liabilities and obligations of B&T and
Eurobank shall be allocated to the Resulting Bank, and the Resulting Bank shall
be the primary obligor therefor and no other party to the Merger shall be liable
therefor. At the Effective Date (as defined in Section 2.05 of this Agreement),
any proceeding pending by or against either B&T or Eurobank may be continued as
if the Merger did not occur, or the Resulting Bank may be substituted in the
proceedings.
Section 1.03 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation and Bylaws of Eurobank as in effect immediately prior to the
Effective Date shall be unchanged and unaffected as a result of the Merger and
will continue to be the Certificate of Incorporation and Bylaws, respectively,
of Eurobank, until amended or repealed as provided therein or by applicable law.
Section 1.04 Directors and Officers. The directors and officers of
Eurobank immediately prior to the Effective Date shall continue to serve as the
directors and officers of Eurobank following the Merger in accordance with the
Certificate of Incorporation and Bylaws of Eurobank, as in effect at that time,
or as otherwise provided by law. A list of the directors and executive officers
of Eurobank is attached hereto as Exhibit G to this Agreement.
Section 1.05 Conversion of the B&T Stock.
A. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any holder of B&T Stock ("B&T
Shareholders"), each B&T Shareholder (other than shareholders who have
perfected their dissenters' rights) who:
(i) is a bona fide resident of the Commonwealth or any
country other than the United States of America; and
(ii) owns, individually and not jointly with any other person
or entity (unless such shareholder is a natural person and owns the
shares jointly with his
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or her spouse who has the same home as such shareholder), at least
1,500 shares of B&T Common Stock;
shall be entitled to receive from EuroBancshares, in exchange for the shares of
B&T Common Stock owned by such B&T Shareholder as of the Effective Date, a
number of shares of common stock of EuroBancshares, par value $0.01 per share
(the "EuroBancshares Common Stock"), equal to the product of (a) the aggregate
number of shares of B&T Common Stock owned by such B&T Shareholder, multiplied
by (b) the Common Stock Exchange Ratio (as defined below) (the "Common Stock
Consideration"); provided, however, that in lieu of receiving the Common Stock
Consideration, such B&T Shareholder may elect, at or prior to the Shareholders'
Meeting (as defined in Section 1.10), to receive the Common Stock Cash
Consideration described below; provided, further, that in the event that the
number of shares of B&T Common Stock held by B&T Shareholders that are entitled
to receive Common Stock Cash Consideration pursuant to Section 1.05B below
(whether by election pursuant to this Section 1.05A or otherwise) exceeds
thirty- four percent (34%) of the total number of issued and outstanding shares
of B&T Common Stock as of the Effective Time, then EuroBancshares shall reduce
the amount of Common Stock Cash Consideration to be paid to such shareholders
(on a pro rata basis) such that the total number of shares of B&T Common Stock
that will be converted into the right to receive Common Stock Cash Consideration
is equal to no more than thirty-four percent (34%) of the number of shares of
B&T Common Stock issued and outstanding immediately prior to the Effective Date
of the Merger, and shall issue to such shareholders a number of shares of
EuroBancshares Common Stock computed in accordance with the Common Stock
Exchange Ratio described above. For purposes of clarification, in the event that
a B&T Shareholder elects to receive Common Stock Cash Consideration pursuant to
this Section 1.05A, such B&T Shareholder shall not be entitled to receive any
shares of EuroBancshares Common Stock as part of the Common Stock Consideration,
except to the extent that shares of EuroBancshares Common Stock are issued to
such shareholders as a result of the over-allotment of the Common Stock Cash
Consideration as described above. Notwithstanding the foregoing, in the event
that any B&T Shareholder that satisfies the conditions set forth above but fails
to properly certify to EuroBancshares and Eurobank, at or prior to the
Shareholders' Meeting, that such shareholder is a bona fide resident of the
Commonwealth or any country other than the United States, then EuroBancshares
may, in its sole discretion, disqualify such shareholder from receiving Common
Stock Consideration described in this Section 1.05A and permit such shareholder
to receive only the Common Stock Cash Consideration described in Section 1.05B
below. Notwithstanding the foregoing, no fractional shares of EuroBancshares
Common Stock shall be issued. In lieu thereof, each holder of B&T Common Stock
entitled to a fractional share of EuroBancshares Common Stock shall be paid an
amount in cash equal to the product of (a) the fractional share of
EuroBancshares Common Stock that such holder would otherwise have been entitled
to receive, multiplied by (b) the EuroBancshares FMV (as defined below).
B. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any B&T Shareholder, each B&T Shareholder
(other than shareholders who have perfected their dissenters' rights) who
properly elects, pursuant to Section 1.05A above,
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to receive the Common Stock Cash Consideration, each B&T Shareholder that is
disqualified by EuroBancshares or Eurobank from receiving Common Stock
Consideration in accordance with Section 1.05A above, and each B&T Shareholder
(other than shareholders who have perfected their dissenters' rights) who :
(i) is not a bona fide resident of the Commonwealth or any
country other than the United States of America; and
(ii) owns one or more shares of B&T Common Stock;
shall be entitled to receive cash in an amount equal to the product of (a) the
Common Stock Consideration that such shareholder would otherwise have been
entitled to receive if such shareholder had met the conditions specified in
clauses (i) and (ii) of Section 1.05A above, multiplied by (b) the
EuroBancshares FMV (the "Common Stock Cash Consideration").
C. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any further
action on the part of any B&T Shareholders, each B&T Shareholder (other than
shareholders who have perfected their dissenters' rights) who:
(i) is a bona fide resident of the Commonwealth or any
country other than the United States of America; and
(ii) owns, individually and not jointly with any other person
or entity (unless such shareholder is a natural person and owns the
shares jointly with his or her spouse who has the same home as such
shareholder), one or more shares of Series A Preferred Stock;
shall be entitled to receive from EuroBancshares, in exchange for the shares of
Series A Preferred Stock owned by such B&T Shareholder as of the Effective Date,
a number of shares of Series A preferred stock of EuroBancshares having such
rights and preferences set forth on Exhibit F ("EuroBancshares Preferred
Stock"), equal to the number of shares of Series A Preferred Stock owned by such
B&T Shareholder as of the Effective Date ("Series A Preferred Stock
Consideration"); provided, however, that in lieu of receiving the Series A
Preferred Stock Consideration, such B&T Shareholder may elect, at or prior to
the Shareholders' Meeting, to receive either of the following:
(i) a number of shares of EuroBancshares Common Stock equal
to the product of (a) the aggregate number of shares of Series A
Preferred Stock owned by such B&T Shareholder multiplied by (b) the
Series A Exchange Ratio (as defined below) (the "Series A Common
Stock Consideration"); or
(ii) the Series A Cash Consideration, described below;
provided, however, that in the event that the holders of more than
fifty percent (50%) of the issued and outstanding shares of Series A
Preferred Stock become entitled to receive the Series A Cash
Consideration pursuant to Section 1.05D below (whether by election
pursuant to this Section 1.05C or otherwise), then
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EuroBancshares shall reduce the amount of Series A Cash
Consideration to be paid to such shareholders (on a pro rata basis)
such that the total number of shares of Series A Preferred Stock
that will be converted into the right to receive Series A Cash
Consideration is equal to no more than fifty percent (50%) of the
number of shares of Series A Preferred Stock issued and outstanding
immediately prior to the Effective Date of the Merger, and shall
issue to such shareholders a number of shares of EuroBancshares
Preferred Stock computed in accordance with the Series A Exchange
Ratio described above.
For purposes of clarification, in the event that a B&T Shareholder elects
to receive either Series A Common Stock Consideration or Series A Cash
Consideration pursuant to this Section 1.05C, such B&T Shareholder shall
not be entitled to receive any shares of EuroBancshares Preferred Stock as
part of the Series A Preferred Stock Consideration, except to the extent
that shares of EuroBancshares Preferred Stock are issued to such
shareholders as a result of the over-allotment of Series A Cash
Consideration as described in the immediately preceding section.
Notwithstanding the foregoing, in the event that any B&T Shareholder that
satisfies the conditions set forth above but fails to properly certify to
EuroBancshares and Eurobank, at or prior to the Shareholders' Meeting,
that such shareholder is a bona fide resident of the Commonwealth or any
country other than the United States, then EuroBancshares may, in its sole
discretion, disqualify such shareholder from (i) receiving Series A
Preferred Stock Consideration described in this Section 1.05C or (ii)
electing to receive Series A Common Stock Consideration described in this
Section 1.05C, and may permit such shareholder to receive only the Series
A Cash Consideration described in Section 1.05D below. Notwithstanding the
foregoing, no fractional shares of EuroBancshares Common Stock or
EuroBancshares Preferred Stock shall be issued. In lieu thereof, each
holder of Series A Preferred Stock entitled to a fractional share of
EuroBancshares Common Stock shall be paid an amount in cash equal to the
product of (a) the fractional share of EuroBancshares Common Stock that
such holder would otherwise have been entitled to receive, multiplied by
(b) the EuroBancshares FMV, and each holder of Series A Preferred Stock
entitled to a fractional share of EuroBancshares Preferred Stock shall be
paid an amount in cash equal to the product of (a) the fractional share of
EuroBancshares Preferred Stock that such holder would otherwise have been
entitled to receive, multiplied by (b) $25.00.
D. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any B&T Shareholder, each B&T Shareholder
(other than shareholders who have perfected their dissenters' rights) who
properly elects pursuant to Section 1.05C above, to receive the Series A
Cash Consideration, each B&T Shareholder that is disqualified by
EuroBancshares or Eurobank from receiving Series A Preferred Stock
Consideration and Series A Common Stock Consideration in accordance with
Section 1.05C above, and each B&T Shareholder (other than shareholders who
have perfected their dissenters' rights) who :
(i) is not a bona fide resident of the Commonwealth or any
country other than the United States of America; and
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(ii) owns one or more shares of Series A Preferred Stock;
shall be entitled to receive cash in an amount equal to $23.12 for each
share of Series A Preferred Stock owned by such shareholder (the "Series A
Cash Consideration").
E. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any B&T Shareholder, each B&T Shareholder
(other than shareholders who have perfected their dissenters' rights) who:
(i) is a bona fide resident of the Commonwealth or any
country other than the United States of America; and
(ii) owns one or more shares of Series B Preferred Stock;
shall be entitled to receive from EuroBancshares, in exchange for each
share of Series B Preferred Stock owned by such B&T Shareholder, (a) one
(1) share of EuroBancshares Preferred Stock, plus (b) cash in an amount
equal to $1.34 per share (the "Series B Preferred Stock Consideration");
provided, however, that in lieu of receiving the Series B Preferred Stock
Consideration, such B&T Shareholder may elect, at or prior to the
Shareholders' Meeting (as defined in Section 1.10), to receive the Series
B Cash Consideration described below; provided, further, that in the event
that the holders of more than thirty-four percent (34%) of the issued and
outstanding shares of Series B Preferred Stock become entitled to receive
the Series B Cash Consideration pursuant to Section 1.05F below (whether
by election pursuant to this Section 1.05E or otherwise), then
EuroBancshares shall reduce the amount of Series B Cash Consideration to
be paid to such shareholders (on a pro rata basis) such that the total
number of shares of Series B Preferred Stock that will be converted into
the right to receive Series B Cash Consideration is equal to no more than
thirty- four percent (34%) of the number of shares of Series B Preferred
Stock issued and outstanding immediately prior to the Effective Date of
the Merger, and shall issue to such shareholders one (1) share of
EuroBancshares Preferred Stock in exchange for each remaining share of
Series B Preferred Stock that is not converted into the right to receive
Series B Cash Consideration. Notwithstanding the foregoing, in the event
that any B&T Shareholder that satisfies the conditions set forth above but
fails to properly certify to EuroBancshares and Eurobank, at or prior to
the Shareholders' Meeting, that such shareholder is a bona fide resident
of the Commonwealth or any country other than the United States, then
EuroBancshares may, in its sole discretion, disqualify such shareholder
from receiving Series B Preferred Stock Consideration described in this
Section 1.05E and permit such shareholder to receive only the Series B
Cash Consideration described in Section 1.05F below. For purposes of
clarification, in the event that a B&T Shareholder elects to receive the
Series B Cash Consideration pursuant to this Section 1.05E, such B&T
Shareholder shall not be entitled to receive the Series B Preferred Stock
Consideration. Notwithstanding the foregoing, no fractional shares of
EuroBancshares Preferred Stock shall be issued. In lieu thereof, each
holder of Series B Preferred Stock entitled to a fractional share of
EuroBancshares Preferred Stock shall be paid an amount in cash equal to
the product of (a) the fractional share of EuroBancshares Preferred Stock
that such holder would otherwise have been entitled to receive, multiplied
by (b) $25.00.
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F. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any B&T Shareholder, each B&T Shareholder
(other than shareholders who have perfected their dissenters' rights) who
properly elects pursuant to Section 1.05E above, to receive the Series
BCash Consideration, each B&T Shareholder that is disqualified by
EuroBancshares or Eurobank from receiving Series B Preferred Stock
Consideration in accordance with Section 1.05E above, and each B&T
Shareholder (other than shareholders who have perfected their dissenters'
rights) who :
(i) is not a bona fide resident of the Commonwealth or any
country other than the United States of America; and
(ii) owns one or more shares of Series B Preferred Stock;
shall be entitled to receive cash in an amount equal to $26.34 per share
(the "Series BCash Consideration, " and collectively with the Common
Stock Consideration, the Common Stock Cash Consideration, the Series A
Common Stock Consideration, the Series A Preferred Stock Consideration,
the Series A Cash Consideration, and the Series B Preferred Stock
Consideration, the "Merger Consideration").
G. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any B&T Shareholder, each share of Series C
Preferred Stock (as defined in Section 3.03), and each outstanding and
unexercised option to acquire shares of B&T Stock, shall be cancelled and
retired and shall cease to exist, and no exchange or payment shall be made
therefor.
H. At the Effective Date and except as otherwise set forth herein
or under applicable law, by virtue of this Agreement and without any
further action on the part of any B&T Shareholder, each share of B&T Stock
that, immediately prior to the Effective Date, is held as treasury stock
of B&T shall be cancelled and retired and shall cease to exist, and no
exchange or payment shall be made therefor.
I. For purposes of this Section 1.05, the following definitions
shall apply:
(i) "Series A Exchange Ratio" shall mean (a) $23.12 divided
by (b) the EuroBancshares FMV.
(ii) "Series A Merger Consideration" shall mean the sum of
(i) the aggregate amount of Series A Cash Consideration paid to B&T
Shareholders with respect to their Series A Preferred Stock pursuant
to Section 1.05D; (ii) the product of (A) the aggregate number of
shares of EuroBancshares Common Stock delivered to B&T Shareholders
with respect to their shares of Series A Preferred Stock pursuant to
Section 1.05C, multiplied by (B) the EuroBancshares FMV; plus (iii)
the product of (A) the aggregate number of shares of EuroBancshares
Preferred Stock delivered to B&T Shareholders with respect to their
shares of Series A Preferred Stock pursuant to Section 1.05C,
multiplied by (B) $25.00.
7
(iii) "Common Stock Book Value " shall mean Tangible Net Book
Value minus the Series A Merger Consideration.
(iv) "Common Stock Exchange Ratio " shall mean, for any B&T
Shareholder, (a) the Common Stock Book Value of B&T, determined as
of the Effective Date, divided by the EuroBancshares FMV, divided by
(b) the aggregate number of shares of B&T Common Stock issued and
outstanding immediately prior to the Effective Date.
(v) "Tangible Net Book Value" shall mean the stockholders'
equity of B&T, determined in accordance with generally accepted
accounting principles ("GAAP") (excluding the Series B Preferred
Stock), determined as of the Effective Date, plus an amount equal to
the following:
(a) the net operating losses of B&T as of December 31,
2003 (the "Current NOL's") that can be used by EuroBancshares
or Eurobank during the next four (4) years as determined by
KPMG, multiplied by 22.5%;
(b) the net operating losses of B&T, created after
December 31, 2003 (the "Future NOL's," and together with the
Current NOL's, the "NOL's"), multiplied by 22.5%, which amount
shall not exceed $1,000,000;
less the following:
(a) all intangible assets to the extent included
within stockholders' equity, except non- mortgage servicing
assets (except to the extent that such non- mortgage servicing
assets are impaired as determined below) to the extent
eligible for inclusion in Tier I Core Capital pursuant to
Section 325.5 of the rules and regulations promulgated by the
FDIC. Any non-mortgage servicing asset or other asset subject
to impairment according to SFAS No. 140, Accounting for
Transfers and Servicing of Financial assets and Extinguishment
of Liabilities, shall be evaluated for corresponding
impairment test as of March 1, 2004;
(b) interest-only strips and nonfinancial equity
investments required to be deducted from "Tier I" or "Core
Capital" under Subpart A (12 CFR 352.2(v)) to the extent
included within stockholders' equity;
(c) the total amount of B&T's NOL's, multiplied by
39%;
(d) unrealized holding losses on held-for-maturity
equity securities;
(e) with respect to each B&T Federal Home Loan Bank
("FHLB") advance, an amount equal to the penalty and costs (in
excess of the principal amount of such advance plus accrued
interest to the date of
8
repayment) related to the prepayment of such FHLB advance as
of the Closing Date;
(f) a discount to cover the expenses to be incurred
after the Closing Date related to the termination or
liquidation of B&T operations set forth on Schedule
1.05I(v)(f) of the Confidential Disclosure Memorandum, which
schedule shall be revised as of the Closing Date to (1)
eliminate costs that the parties agree will no longer be
incurred (such as payments to employees that are no longer
employed by B&T on the Closing Date), (2) refine the amounts
set forth thereon to accurately reflect the actual costs and
expenses associated with the items set forth on such schedule,
including, without limitation, any adjustments necessary to
reflect any costs and expenses incurred by B&T, EuroBancshares
or Eurobank in connection with their compliance with the
Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Section 2101 et seq. ("WARN Act"), with respect to any former
employee of B&T that is to be terminated by EuroBancsha res or
Eurobank within the first three (3) months following the
Closing Date, and (3) include the amounts, if any,
contemplated by Section 5.24;
(g) an aggregate amount of cash equal to the product
of (i) $1.34 multiplied by (ii) the number of issued and
outstanding shares of Series B Preferred Stock as of the
Effective Date;
(h) the sum of (i) the book value (net of specific
reserves) of any Excluded Assets, Non-Performing Assets (as
defined below), cash, furniture and equipment transferred to
the Special Purpose Vehicle (as defined below) pursuant to
Section 1.07C, and (ii) $3,876,000;
(i) any accrued interest and fees on all non-accrual
loans and leases or any loans and leases that are ninety (90)
days past due as of the Closing Date ("Non-Performing
Assets");
(j) any outstanding items not reconciled on B&T's
balance sheet accounts (as well as those items that may have
been reconciled but are considered uncollectible) or otherwise
which EuroBancshares believes would be inappropriate for an
Exchange Act company to maintain under GAAP, which
adjustments, entries and other changes are recommended by a
majority of the members of a committee comprised of those
individuals listed on Schedule 1.05I(v)(j) of the Confidential
Disclosure Memorandum (the "Joint Committee"), or, in the
event that a majority decision cannot be reached within five
(5) business days following the Closing Date, by KPMG in its
management letter or otherwise, and such other corrections
thereto as may be set forth in any management letter from
KPMG;
(k) all incurred but unpaid or nonaccured fees and
expenses of all attorneys, accountants, investment bankers and
other advisors and
9
agents for B&T for services rendered solely in connection with
the transactions contemplated by this Agreement and all other
incurred but unpaid or nonaccured fees and expenses associated
with the transactions contemplated by this Agreement;
(l) all costs to be incurred after the Closing Date
associated with the cancellation or termination of contracts
and other agreements referenced in Section 8.08 and Section
8.11 (other than the leases identified on Schedule 1.05I(v)(m)
of the Confidential Disclosure Memorandum and the agreements
that EuroBancshares or Eurobank have agreed or may prior to
the Closing Date agree to assume, which agreements as of the
date hereof are identified on Schedule 1.05I(v)(l) of the
Confidential Disclosure Memorandum) over and above those costs
and expenses as listed on Schedule 1.05I(v)(f) of the
Confidential Disclosure Memorandum;
(m) without duplication with Section 1.05I(v)(f), all
payments required to be made after the Closing Date under the
leases identified on Schedule 1.05I(v)(m) of the Confidential
Disclosure Memorandum that have not been terminated prior to
the Closing Date, which amounts payable under such leases are
set forth on Schedule 1.05I(v)(m) of the Confidential
Disclosure Memorandum, and the aggregate of which is set forth
on Schedule 1.05I(v)(f) of the Confidential Disclosure
Memorandum;
(n) an amount agreed by EuroBancshares and B&T to
cover unanticipated costs relating to the Merger arising as a
result of any amendment to this Agreement ; and
(o) an amount equal to the book value of the leasehold
improvements and the furniture, fixtures and equipment
relating to the B&T branch facilities located in the
Municipality of Xxxxx; provided, however, that no such
deduction shall be made from the Tangible Net Book Value if,
prior to the Closing Date, B&T has executed a long-term lease
agreement (not less than five (5) years) relating to such
branch facilities, on terms and conditions acceptable to
EuroBancshares.
(vi) "EuroBancshares FMV" shall mean the fair market value of
a share of EuroBancshares Common Stock, which the parties agree
shall be $16.25.
J. The shares of the B&T Stock issued and outstanding at the
Effective Date shall, by operation of law and without any action on the
part of the holder thereof, unless dissenters' rights under applicable law
are being perfected with respect thereto, be converted into the right to
receive the Merger Consideration.
K. In accordance with Section 1.12, each B&T Shareholder shall be
required to surrender his shares to Eurobank, which shall act as exchange
agent (the "Exchange Agent"), and upon such surrender, each such holder
shall be entitled to receive from
10
EuroBancshares, the Merger Consideration which such holder is entitled to
receive as described in Section 1.05 of this Agreement. Until so
surrendered, each such outstanding certificate representing shares of B&T
Stock shall be deemed for all purposes, subject only to dissenters' rights
under applicable law, to evidence solely the right to receive such Merger
Consideration from EuroBancshares.
L. Set forth on Schedule 1.05L of the Confidential Disclosure
Memorandum is a Merger Consideration calculation worksheet that the
parties agree shall be used to calculate the Merger Consideration to be
paid to the B&T Shareholders as described in this Agreement. For
illustrative purposes only, also set forth on Schedule 1.05L of the
Confidential Disclosure Memorandum is a calculation of the Merger
Consideration assuming the Closing had occurred on December 31, 2003.
Section 1.06 Excluded Assets. Set forth on Schedule 1.06 of the
Confidential Disclosure Memorandum is a list of certain loans and leases of B&T
(which loans and leases may be listed individually and/or by category) which
EuroBancshares and Eurobank have identified as having additional loss potential
(each an "Excluded Asset," and collectively the "Excluded Assets"). At the
Closing, EuroBancshares and Eurobank shall deliver to B&T an updated Schedule
1.06 of the Confidential Disclosure Memorandum, which schedule shall have been
revised solely to remove any Excluded Asset that has been repaid in full or
otherwise has become secured by additional collateral of a type and amount
satisfactory to EuroBancshares and Eurobank, in their sole discretion. On the
Closing Date, the Excluded Assets shall be transferred to the Special Purpose
Vehicle in accordance with Section 1.07.
Section 1.07 Organization of Special Purpose Vehicle.
A. On or prior to the Closing Date, B&T shall establish or cause
to be established a corporation under the laws of the Commonwealth (the
"Special Purpose Vehicle"). The President and Chairman of the Board
(collectively, the "Executive Officers") of the Special Purpose Vehicle
shall act as representatives of the Special Purpose Vehicle in any
dealings with EuroBancshares and Eurobank. EuroBancshares and Eurobank
shall be promptly notified of any change in the Executive Officers of the
Special Purpose Vehicle. The Executive Officers shall use their best
efforts to achieve the objective of maximizing collections on and
preserving the value of the assets held by the Special Purpose Vehicle, in
accordance with prudent and reasonable commercial practices and procedures
appropriate to the sale and liquidation of non-performing assets and
excess assets and equipment, for the benefit of EuroBancshares and
Eurobank pursuant to the indemnification provisions set forth in Section
11.01 and for the benefit of the shareholders of the Special Purpose
Vehicle upon distribution or liquidation of its assets; provided, however,
that the Executive Officers shall have no personal liability to the
Special Purpose Vehicle, EuroBancshares or Eurobank (except for instances
of willful misconduct) and the Special Purpose Vehicle shall indemnify the
Executive Officers from any and all losses incurred by the Executive
Officers pertaining to the operation and management of the Special Purpose
Vehicle. In performing their functions hereunder and deciding what actions
to take hereunder, the Executive Officers may consider the external costs
of collection, potential liabilities, likelihood of recoveries, and other
relevant factors.
11
B. On or prior to the Closing Date, the Executive Officers shall
cause the Special Purpose Vehicle to establish an interest bearing money
market account bearing interest at 1.25% per annum at Eurobank (the "SPV
Account"), in which all cash of the Special Purpose Vehicle shall be
deposited. On the Closing Date, the Special Purpose Vehicle shall enter
into an indemnification and security agreement in form and substance
acceptable to EuroBancshares and B&T (the "Indemnification Agreement"),
which shall secure the indemnification obligations of B&T set forth in
Section 11.01, (i) up to an aggregate limit of $1,000,000 (provided,
however, that such limit shall be reduced to an aggregate $500,000 with
respect to any claims brought or notified in writing after six (6) months
following the Closing Date), with respect to a breach by B&T of the
representations, warranties, covenants and other agreements set forth in
this Agreement and the other agreements contemplated hereby, (ii) without
limit as to amount, with respect to losses resulting from third party
actions described in Schedule 1.07B(ii) of the Confidential Disclosure
Memorandum, and (iii) up to an amount agreed upon by a majority of the
members of the Joint Committee on or before six (6) months after the
Closing Date or, absent such agreement, an amount established by a third
party acceptable to a majority of the members of the Joint Committee on or
before six (6) months after the Closing Date, with respect to the matters
described on Schedule 1.07B(iii) of the Confidential Disclosure
Memorandum. Pursuant to the terms of the Indemnification Agreement,
EuroBancshares and Eurobank shall be granted a security interest in the
assets of the Special Purpose Vehicle in an amount equal to $1,000,000 for
the first six (6) months following the Closing Date and $500,000 plus an
amount equal to the amount established pursuant to clause (iii) above and
the amount, if any, reserved to cover any third party actions described in
Schedule 1.07B(ii) of the Confidential Disclosure Memorandum thereafter
until termination of the Indemnification Agreement. Notwithstanding the
foregoing, the indemnification limits set forth in this Section 1.07B
shall be exclusive of any legal fees, costs and related legal expenses
incurred in connection with any matter described in Section 11.01;
provided, however, that in no event shall the total indemnification
liability of the Special Purpose Vehicle relating to a breach by B&T of
the representations, warranties, covenants and other agreements set forth
in this Agreement and the other agreements contemplated hereby exceed an
aggregate of $1,000,000; provided, further, that, with respect to any such
breaches by B&T, any amounts paid to EuroBancshares and Eurobank pursuant
to the Indemnification Agreement during the first six months following the
Closing Date, up to the first $500,000, shall not reduce the $500,000
indemnification limit thereafter, and any amounts paid during the first
six months following the Closing Date in excess of $500,000 shall reduce
the $500,000 indemnification limit thereafter on a dollar for dollar
basis. The Indemnification Agreement will expire one (1) year following
the Closing Date, except with respect to claims brought or notified by
EuroBancshares or Eurobank in writing to the Special Purpose Vehicle prior
to the first anniversary of the Closing Date. In the event that any claim
is brought or notified in writing prior to the first anniversary of the
Closing Date, then the Special Purpose Vehicle shall reserve an amount
(not in excess of the limit provided above, if applicable) agreed by a
majority of the members of the Joint Committee or, absent such agreement,
an amount established by a third party acceptable to a majority of the
members of the Joint Committee, sufficient to cover all expenses and
losses incurred and that may be incurred by EuroBancshares and Eurobank in
connection with such claim (the aggregate of all such reserved amounts
plus
12
the amount, if any, established pursuant to clause (iii) above being
referred to as the "SPV Reserve"). In establishing the amount comprising
the SPV Reserve, the Joint Committee and any third party appointed by the
members of the Joint Committee shall take into consideration the opinion
of the attorneys handling the relevant claims.
C. On the Closing Date, B&T shall transfer the following items to
the Special Purpose Vehicle in exchange for all of the shares of common
stock of the Special Purpose Vehicle, and shall immediately thereafter
distribute such shares to the holders of B&T Common Stock:
(i) an amount in cash (which amount shall not exceed
$200,000) as may be determined by B&T in its sole discretion, which
amount shall be used to fund the on-going operations of the Special
Purpose Vehicle;
(ii) the Excluded Assets, together with or net of their
related specific reserves, as the case may might be, as determined
by B&T;
(iii) subject to Section 1.07H and Section 1.07I, the
furniture and equipment of B&T set forth on Schedule 1.07C(iii) of
the Confidential Disclosure Memorandum;
(iv) the causes of action of, including all counterclaims
against, B&T, in the litigation matter described on Schedule
1.07C(iv) of the Confidential Disclosure Memorandum, regarding which
the Special Purpose Vehicle shall hold EuroBancshares and Eurobank
harmless;
(v) all Non-Performing Assets of B&T as of the Closing Date,
together with or net of their related specific reserves, as
determined by B&T that (A) subject to Section 1.07D, are fully
charged-off, or (B) relate to the boat financing, automobile or
equipment leasing, or insurance premium financing; and
(vi) the excess, if any, of the estimated costs and expenses
related to the termination or liquidation of B&T operations as set
forth on Schedule 1.05I(v)(f) of the Confidential Disclosure
Memorandum over the actual costs and expenses associated with the
termination and liquidation of such operations, which amount shall
be paid by EuroBancshares or Eurobank to the Special Purpose Vehicle
on the first (1st) anniversary following the Closing Date.
D. Notwithstanding the provisions set forth in Section 1.07C(v)
above, B&T shall not transfer to the Special Purpose Vehicle any
charged-off loan made to any person to which there is a separate loan or
extension of credit from B&T that is not transferred to the Special
Purpose Vehicle or is not otherwise charged-off prior to the Closing Date
(the "Related Performing Loan"). In pursuing the collection of the Related
Performing Loan, B&T acknowledges that EuroBancshares and Eurobank shall
be authorized and permitted to negotiate the terms of the related
charged-off loan, including, without limitation, any settlement of such
charged-off loan, to the extent they deem advisable and in the best
interests of facilitating the prompt and timely collections on the Related
Performing Loan. Following the Closing Date and within ten (10) days
following the date on which
13
any Related Performing Loan is fully paid and collected, EuroBancshares or
Eurobank shall transfer to the Special Purpose Vehicle the related
charged-off loan and any money collected with respect thereto, to the
extent not applied to the payment of the Related Performing Loan.
Notwithstanding any provision in this Agreement to the contrary, nothing
in this Agreement shall be construed as to create any duty upon
EuroBancshares or Eurobank to the Special Purpose Vehicle or its
shareholders to collect or maximize collections on any asset that may be
transferred to the Special Purpose Vehicle in accordance with this Section
1.07D.
E. Prior to the first (1st) anniversary of the Closing Date, no
distributions shall be made to the shareholders of the Special Purpose
Vehicle and the Special Purpose Vehicle shall be restricted from selling
or transferring any of its assets to an Affiliate of the Special Purpose
Vehicle without the prior written permission of EuroBancshares or Eurobank
; provided, however, that the Special Purpose Vehicle may make any such
distributions to its shareholders after the first six (6) months following
the Closing Date so long as each of the following conditions are met: (i)
the Special Purpose Vehicle has reserved in accordance with Section 1.07B
an amount (not in excess of the limits set forth in Section 1.07B, if
applicable) sufficient to cover all expenses and losses incurred and that
may be incurred by EuroBancshares and Eurobank in connection with the
matters described in Schedule 1.07B(iii) of the Confidential Disclosure
Memorandum and in connection with all claims that have been brought or
notified in writing prior to such time, and (ii) the Special Purpose
Vehicle maintains a balance in the SPV Account in an amount equal to
$500,000 plus the amount of the SPV Reserve. Subject to Section 1.07F, at
any time and from time to time on or after the first (1st) anniversary of
the Closing Date, the Executive Officers may cause the Special Purpose
Vehicle to distribute all or part of the assets of the Special Purpose
Vehicle, excluding the SPV Reserve, to its shareholders. At any time prior
to the termination of the Indemnification Agreement that the aggregate
balance in the SPV Account is less than $1,000,000 (prior to the six month
anniversary of the Closing Date) or $500,000 plus the amount of the SPV
Reserve (on or after the six month anniversary of the Closing Date), the
Special Purpose Vehicle shall deposit ninety percent (90%) of all
collections into the SPV Account, with the remaining portion of such
collections to be available to the Special Purpose Vehicle to fund the
ongoing costs and expenses of operation.
F. In the event that, prior to the first (1st) anniversary of the
Closing Date, EuroBancshares, Eurobank or their Related Parties
(collectively, the "Indemnified Parties") have incurred a loss, brought a
claim, or have given notice of a potential third party claim or a claim
resulting from a breach by B&T of any of the representations, warranties,
covenants and other agreements set forth in this Agreement and the other
agreements contemplated hereby (the "Indemnified Liabilities"), then the
Special Purpose Vehicle shall pay to EuroBancshares or Eurobank, from the
SPV Reserve and from any other assets of the Special Purpose Vehicle, an
amount equal to all costs, expenses, fees and losses incurred in
connection with such claim. Pursuant to the terms of the Indemnification
Agreement, the Special Purpose Vehicle shall pay to the Indemnified
Parties any amounts due pursuant to this Section 1.07F within fifteen (15)
business days following the delivery of appropriate written evidence of
payment of an Indemnified Liability by any one of the Indemnified Parties.
Upon the final resolution of all such
14
claims and potential claims, any remaining funds in the SPV Reserve shall
be released from the SPV Reserve.
G. Until such time as the Indemnification Agreement may be
terminated, the Executive Officers shall cause the Special Purpose Vehicle
to give notice to two (2) designees of EuroBancshares and/or Eurobank, and
shall invite such persons to attend all regular and special meetings of
the board of directors of the Special Purpose Vehicle and all regular and
special meetings of any senior management committee of the Special Purpose
Vehicle.
H. Following the Closing Date and until the closing of such
branch facilities as contemplated herein, the Special Purpose Vehicle
shall provide EuroBancshares and Eurobank with access to and use of all
office facilities and furniture, fixtures and equipment relating to any
branch facilities of B&T that are to be closed in accordance with Section
8.16.
I. For a period of thirty (30) days following the C losing Date,
EuroBancshares and Eurobank shall have the option, by delivering written
notice to the Special Purpose Vehicle, to purchase any or all of the
furniture, fixtures and equipment or leasehold improvements previously
transferred to the Special Purchase Vehicle and relating to any former
branch or division of B&T to be operated by EuroBancshares or Eurobank
after the Closing Date (excluding artwork) at the book value as of the
Closing Date.
Section 1.08 Lease Termination and Potential Escrow of Funds. In the event
that as of the Closing Date, one or more of the leases set forth on Schedule
1.05I(v)(m) of the Confidential Disclosure Memorandum has not been terminated,
B&T shall deposit, on the Closing Date, an amount in cash equal to the total
amount required to be paid pursuant to each such lease after the Closing Date,
as set forth on Schedule 1.05I(v)(m) of the Confidential Disclosure Memorandum,
into an interest-bearing money market escrow account bearing interest at 1.25%
per annum (the "Escrow Account") held at Eurobank. Eurobank shall withdraw from
the Escrow Account (A) such amounts as may be required to fund any and all
operating and maintenance costs related to such lease and expenses as they
become due (except for costs related to any branch or office used by
EuroBancshares or Eurobank after the Closing Date, for the time they are so
used, which costs shall be paid by EuroBancshares or Eurobank), (B) such amounts
as may be required to fund any and all rent payments to be made pursuant to such
lease as they become due (except for rent related to any branch or office used
by EuroBancshares or Eurobank after the Closing Date, for the time they are so
used, which rent shall be paid by EuroBancshares or Eurobank), and (C) such
amounts as are requested by the Special Purpose Vehicle to pay any lease
cancellation or termination costs and expenses. Upon receipt by EuroBancshares
and Eurobank of a full and unconditional termination and release of any such
lease, EuroBancshares shall cause Eurobank to deliver to the Special Purpose
Vehicle an amount equal to the difference, if any, between (i) the amounts
originally deposited in such Escrow Account associated with such lease, minus
(ii) the actual costs and expenses incurred in connection with such lease
(except for costs and expenses related to any branch or office used by
EuroBancshares or Eurobank after the Closing Date, for the time they are so
used, which costs and expenses shall be paid by EuroBancshares or Eurobank)
after the Closing Date.
15
Section 1.09 Merger Consideration Schedule and Escrow.
A. Subject to Section 1.11 of this Agreement, the cash portion of
the Merger Consideration to be paid to the B&T Shareholders shall be
delivered at Closing in immediately available funds.
B. As soon as practicable following the final determination of
the aggregate cash consideration to be paid to the former shareholders of
B&T but in no event later than twenty (20) days following the Closing
Date, EuroBancshares shall deposit or cause the be deposited an amount in
cash equal to such cash consideration into an interest-bearing escrow
account (the "Escrow Account") maintained by Eurobank, which amount shall
be used by the Exchange Agent to satisfy the cash portion of the Merger
Consideration due to such former B&T shareholders in accordance with
Section 1.05.
Section 1.10 Shareholders' Meeting. B&T, acting through its Board of
Directors, shall, in accordance with applicable law:
A. Duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders' Meeting") as soon as practicable (but no
later than thirty- five (35) days following the mailing of the Proxy
Statement mentioned below) for the purposes of approving and adopting the
Merger and this Agreement and the transactions contemplated hereby;
B. Require no greater than the minimum vote of the B&T Stock
required by applicable law and the charter of B&T in order to approve the
Merger and this Agreement ;
C. Subject to its fiduciary duties to the shareholders of B&T,
include in the Proxy Statement (defined in Section 1.10D below) the
recommendation of its Board of Directors that the shareholders of B&T vote
in favor of the approval and adoption of the Merger and this Agreement and
the transactions contemplated hereby; and
D. Cause the Proxy Statement to be mailed to the shareholders of
B&T as soon as practicable, and, subject to its fiduciary duties, use its
best efforts to obtain the approval and adoption of the Merger and this
Agreement by shareholders holding at least the minimum number of shares of
B&T Stock entitled to vote at the Shareholders' Meeting necessary to
approve the Merger and this Agreement under applicable law. The letter to
shareholders, notice of meeting, proxy statement, offering circular for
the shares of EuroBancshares Common Stock and EuroBancshares Preferred
Stock to be issued by EuroBancshares, and form of proxy to be distributed
to shareholders in connection with the Merger and this Agreement shall be
in form and substance satisfactory to EuroBancshares and are collectively
referred to herein as the "Proxy Statement."
Section 1.11 Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, shares of B&T Stock that are outstanding immediately
prior to the Effective Date and that are held by B&T Shareholders who have not
voted such shares in favor of the Merger and who shall have otherwise complied
with the terms and provisions of Section 91(i) of the Banking Law (each a
"Dissenting Shareholder") shall be entitled to those rights and remedies set
16
forth in Section 91(i) of the Banking Law; provided, however, in the event that
a B&T Shareholder fails to perfect, withdraws or otherwise loses any such right
or remedy granted by the Banking Law, such shares of B&T Stock shall be
converted into and represent only the right to receive the consideration
specified in Section 1.05 and Section 1.06 of this Agreement.
Section 1.12 Delivery of Consideration; Exchange of Certificates. As soon
as practicable following the Closing Date, the Exchange Agent shall send to each
holder of one or more certificates representing shares of B&T Stock
("Certificates"), a letter of transmittal and instructions for use in exchanging
such holder's Certificates for the Merger Consideration. If any record
shareholder of B&T is unable to locate any Certificate evidencing the B&T Stock,
such shareholder shall submit to the Exchange Agent an affidavit of lost
certificate and indemnification agreement in form acceptable to EuroBancshares
and, if required by EuroBancshares, a surety bond in an amount equal to the
amount to be delivered to such shareholder, in lieu of such Certificate. Within
five (5) business days following the later of (i) the receipt by the Exchange
Agent of such Certificates and a properly executed letter of transmittal from a
former B&T shareholder, or (ii) the final determination of the aggregate Merger
Consideration to be paid to the former shareholders of B&T, the Exchange Agent
shall deliver to such shareholder the Merger Consideration to which such
shareholder is entitled pursuant to Section 1.05 of this Agreement.
Notwithstanding the foregoing, neither the Exchange Agent nor any other party to
this Agreement shall be liable to any holder of Certificates representing the
B&T Stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law. No interest shall be payable with
respect to the payment of the cash portion of the Merger Consideration.
Section 1.13 Alternate Acquisition Proposal. Notwithstanding any provision
in this Agreement to the contrary, EuroBancshares and Eurobank shall be
permitted, in their sole discretion, to restructure the proposed transactions
contemplated by this Agreement such that the Merger will be treated as a "tax
free reorganization" within the meaning of Section 1112(g)(1)(A) of the Internal
Revenue Code of Puerto Rico; provided, however, EuroBancshares and Eurobank
shall only be permitted to restructure the proposed transactions to the extent
that there is no change in the amount or nature of the Merger Consideration to
be received by the B&T Shareholders.
ARTICLE II.
THE CLOSING AND THE CLOSING DATE
Section 2.01 Time and Place of the Closing and Closing Date. On a date
determined by EuroBancshares (herein called the "Closing Date"), which date
shall be within five (5) business days after the receipt of all necessary
regulatory, corporate and other approvals and the expiration of any mandatory
waiting periods (unless extended as provided below), a meeting (the "Closing")
will take place at which the parties to this Agreement will exchange
certificates, letters and other documents in order to determine whether all of
the conditions set forth in ARTICLE VII and ARTICLE VIII of this Agreement have
been satisfied or waived or whether any condition exists that would permit a
party to this Agreement to terminate this Agreement. Notwithstanding the
preceding sentence, the parties hereto may agree to extend the Closing Date to
take place on the first business day following the last day of the month
following the satisfaction of the conditions set forth above. If no such
condition then exists or if no party elects to exercise any right it may have to
terminate this Agreement, then and thereupon the
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appropriate parties shall execute such documents and instruments as may be
necessary or appropriate in order to effect the transactions contemplated by
this Agreement. The Closing shall take place at a location mutually agreeable to
the parties hereto.
Section 2.02 Actions to be Taken at the Closing by B&T. At the Closing,
B&T shall execute and acknowledge (where appropriate) and deliver to
EuroBancshares and Eurobank, such documents and certificates necessary to carry
out the terms and provisions of this Agreement, including without limitation,
the following (all of such actions constituting conditions precedent to
EuroBancshares' and Eurobank's obligations to close hereunder):
A. True, correct and complete copies of the Certificate of
Incorporation of B&T and all amendments thereto, duly certified as of a
recent date by the Puerto Rico Office of the Commissioner of Financial
Institutions ("OCFI");
B. Good standing and existence certificates of a recent date,
issued by the appropriate officials of the Commonwealth, duly certifying
as to the existence and good standing of B&T in the Commonwealth and all
other jurisdictions where it is qualified to do business;
C. A certificate, dated as of a recent date, issued by the
Federal Deposit Insurance Corporation (the "FDIC "), duly certifying that
the deposits of B&T are insured by the FDIC pursuant to the Federal
Deposit Insurance Act (the "FDIA");
D. A certificate, dated as of the Closing Date, duly executed by
the Secretary or an Assistant Secretary of B&T, acting solely in his
capacity as an officer of B&T, pursuant to which B&T shall certify (i) the
due adoption by the Board of Directors of B&T of corporate resolutions
attached to such certificate authorizing the execution and delivery of
this Agreement and the other agreements and documents contemplated hereby,
and the taking of all actions contemplated hereby and thereby; (ii) the
due adoption by the shareholders of B&T of resolutions attached to such
certificate authorizing the transactions contemplated by this Agreement
and the other agreements and documents contemplated hereby and the taking
of all actions contemplated hereby and thereby; (iii) the incumbency and
true signatures of those officers of B&T duly authorized to act on its
behalf in connection with the transactions contemplated by this Agreement
and to execute and deliver this Agreement and other agreements and
documents contemplated hereby and the taking of all actions contemplated
hereby and thereby on behalf of B&T; and (iv) that the copy of the Bylaws
of B&T attached to such certificate is true and correct and such Bylaws
have not been amended except as reflected in such copy;
E. A certificate duly executed by a duly authorized officer of
B&T, acting solely in his capacity as an officer of B&T, dated as of the
Closing Date, pursuant to which B&T shall certify that all of the
representations and warranties made in Article III of this Agreement are
true and correct on and as of the date of such certificate as if made on
such date and except as expressly permitted by this Agreement there shall
have been no Material Adverse Change (as defined in Section 11.10E of this
Agreement) since December 31, 2003;
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F. All consents required to be obtained by B&T from third parties
to consummate the transactions contemplated by this Agreement, including,
but not limited to, those listed on Schedule 3.08 of the Confidential
Disclosure Memorandum; and
G. All other documents required to be delivered to EuroBancshares
or Eurobank by B&T under the provisions of this Agreement, and all other
documents, certificates and instruments as are reasonably requested by
EuroBancshares or Eurobank.
Section 2.03 Actions to be Taken at the Closing by EuroBancshares and
Eurobank. At the Closing, EuroBancshares and Eurobank shall execute and
acknowledge (where appropriate) and deliver to B&T, such documents and
certificates necessary to carry out the terms and provisions of this Agreement,
including without limitation, the following (all of such actions constituting
conditions precedent to B&T's obligations to close hereunder):
A. True, correct and complete copies of EuroBancshares'
Certificate of Incorporation and all amendments thereto, duly certified as
of a recent date by the Puerto Rico Department of State;
B. True, correct and complete copies of Eurobank's Certificate of
Incorporation and all amendments thereto, duly certified as of a recent
date by the OCFI;
C. Good standing and existence certificates of a recent date,
issued by the appropriate state officials, duly certifying as to the
existence and good standing of EuroBancshares in the Commonwealth and all
other jurisdictions where it is qualified to do business;
D. Good standing and existence certificates of a recent date,
issued by the appropriate state officials, duly certifying as to the
existence and good standing of Eurobank in the Commonwealth and all other
jurisdictions where it is qualified to do business;
E. A certificate, dated as of the Closing Date, executed by the
Secretary or an Assistant Secretary of EuroBancshares, acting solely in
his capacity as an officer of EuroBancshares, pursuant to which
EuroBancshares shall certify (i) the due adoption by the Board of
Directors of EuroBancshares of corporate resolutions attached to such
certificate authorizing the execution and delivery of this Agreement and
the other agreements and documents contemplated hereby and the taking of
all actions contemplated hereby and thereby; (ii) the incumbency and true
signatures of those officers of EuroBancshares duly authorized to act on
its behalf in connection with the transactions contemplated by this
Agreement and to execute and deliver this Agreement and other agreements
and documents contemplated hereby and the taking of all actions
contemplated hereby and thereby on behalf of EuroBancshares; and (iii)
that the copy of the Bylaws of EuroBancshares attached to such certificate
is true and correct and such Bylaws have not been amended except as
reflected in such copy;
F. A certificate, dated as of the Closing Date, executed by the
Secretary or an Assistant Secretary of Eurobank, acting solely in his
capacity as an officer of Eurobank, pursuant to which Eurobank shall
certify (i) the due adoption by the Board of Directors of
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Eurobank of corporate resolutions attached to such certificate authorizing
the execution and delivery of this Agreement and the other agreements and
documents contemplated hereby and the taking of all actions contemplated
hereby and thereby; (ii) the incumbency and true signatures of those
officers of Eurobank duly authorized to act on its behalf in connection
with the transactions contemplated by this Agreement and to execute and
deliver this Agreement and other agreements and documents contemplated
hereby and the taking of all actions contemplated hereby and thereby on
behalf of Eurobank; and (iii) that the copy of the Bylaws of Eurobank
attached to such certificate is true and correct and such Bylaws have not
been amended except as reflected in such copy;
G. A certificate, dated as of the Closing Date, executed by a
duly authorized officer of EuroBancshares, acting solely in his capacity
as an officer of EuroBancshares, pursuant to which EuroBancshares shall
certify that all of the representations and warranties made in Article IV
of this Agreement are true and correct in all material respects on and as
of the date of such certificate as if made on such date;
H. A certificate, dated as of the Closing Date, executed by a
duly authorized officer of Eurobank, acting solely in his capacity as an
officer of Eurobank, pursuant to which Eurobank shall certify that all of
the representations and warranties made in Article IV of this Agreement
are true and correct in all material respects on and as of the date of
such certificate as if made on such date;
I. All consents required to be obtained by EuroBancshares or
Eurobank from third parties to consummate the transactions contemplated by
this Agreement; and
J. All other documents required to be delivered to B&T by
EuroBancshares and Eurobank under the provisions of this Agreement, and
all other documents, certificates and instruments as are reasonably
requested by B&T.
Section 2.04 Further Assurances. At any time and from time to time after
the Closing, at the request of any party to this Agreement and without further
consideration, any party so requested will execute and deliver such other
instruments and take such other action as the requesting party may reasonably
deem necessary or desirable in order to effectuate the transactions contemplated
hereby. In the event that, at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each party
hereto shall take or cause to be taken all such action.
Section 2.05 Effective Date. The "Effective Date" as that term is used in
this Agreement means the effective date of the Merger, which shall also be the
Closing Date.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF B&T
Subject to the limitations contained herein, B&T hereby makes the
representations and warranties set forth in this ARTICLE III to EuroBancshares
and Eurobank. B&T agrees at the Closing to provide EuroBancshares and Eurobank
with supplemental schedules reflecting any material changes thereto between the
date of this Agreement and the Closing Date.
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Section 3.01 Organization and Qualification. B&T is a commercial bank duly
organized, validly existing and in good standing under the laws of the
Commonwealth. B&T has all requisite corporate power and authority (including all
licenses, franchises, permits and other governmental authorizations as are
legally required) to carry on its business as now being conducted, to own, lease
and operate its properties and assets as now owned, leased or operated and to
enter into and to carry on the business and activities now conducted by it. True
and complete copies of the Certificate of Incorporation and Bylaws of B&T, as
amended to date, have been delivered to EuroBancshares and Eurobank. B&T is an
insured bank as defined in the FDIA. B&T does not own or control any Affiliate
or Subsidiary. The nature of the business of B&T does not require it to be
qualified to do business in any jurisdiction other than the Commonwealth. Except
as disclosed on Schedule 3.01 of the Confidential Disclosure Memorandum, B&T has
no equit y interest, direct or indirect, in any other bank or corporation or in
any partnership, joint venture or other business enterprise or entity, except as
acquired through settlement of indebtedness, foreclosure, the exercise of
creditors' remedies or in a fiduciary capacity, and the business carried on by
B&T has not been conducted through any other direct or indirect Subsidiary or
Affiliate of B&T.
Section 3.02 Execution and Delivery. B&T has taken all corporate action
necessary to authorize the execution, delivery and (provided the required
regulatory and shareholder approvals are obtained) performance of this Agreement
and the other agreements and documents contemplated hereby to which it is a
party. This Agreement has been, and the other agreements and documents
contemplated hereby, have been or at Closing will be, duly executed by B&T and
each constitutes the legal, valid and binding obligation of B&T, enforceable in
accordance with its respective terms and conditions, except as enforceability
may be limited by bankruptcy, conservatorship, insolvency, moratorium,
reorganization, receivership or similar laws and judicial decisions affecting
the rights of creditors generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
Section 3.03 B&T Capitalization. The entire authorized capital stock of
B&T consists solely of (i) 15,000,000 shares of B&T Common Stock, par value
$2.50 per share, of which 5,472,211 shares are issued and outstanding, (ii)
212,631 shares of Series A Preferred Stock, par value $10.00 per share, of which
63,998 shares are issued and outstanding, (iii) 600,000 shares of Series B
Preferred Stock, par value $10.00 per share, of which 600,000 shares are issued
and outstanding, and (iv) 1,400,000 shares of Series C 8% non-cumulative,
convertible, perpetual, monthly income, preferred stock, par value $10.00 per
share, of B&T ("Series C Preferred Stock"), of which no shares are issued and
outstanding. Except as set forth on Schedule 3.03 of the Confidential Disclosure
Memorandum, there are no (A) other outstanding equity securities of any kind or
character, or (B) outstanding subscriptions, options, convertible securities,
rights, warrants, calls or other agreements or commitments of any kind issued or
granted by, or binding upon, B&T to purchase or otherwise acquire any security
of or equity interest in B&T, obligating B&T to issue any shares of, restricting
the transfer of or otherwise relating to shares of its capital stock of any
class. All of the issued and outstanding shares of B&T Common Stock, Series A
Preferred Stock, and Series B Preferred Stock have been duly authorized, validly
issued and are fully paid and nonassessable, and have not been issued in
violation of the preemptive rights of any person. Such shares of B&T Common
Stock, Series A Preferred Stock, and Series B Preferred Stock have been issued
in compliance with the securities laws of the United States and other
jurisdictions having applicable securities laws. There are no restrictions
applicable to the payment of dividends on the shares of B&T Common Stock, Series
A Preferred Stock, and
21
Series B Preferred Stock except pursuant to applicable laws and regulations, and
all dividends declared prior to the date of this Agreement have been paid.
Section 3.04 Compliance with Laws, Permits and Instruments. B&T has in all
material respects performed and abided by all obligations required to be
performed by it to the date hereof, and has complied with, and is in compliance
with, and is not in default (or with the giving of notice or the passage of time
will be in default) under, or in violation of, (i) any provision of the
Certificate of Incorporation or Bylaws of B&T, (ii) any provision of any
mortgage, indenture, lease, contract, agreement or other instrument applicable
to B&T or its assets, operations, properties or businesses now conducted or
heretofore conducted, or (iii) any permit, concession, grant, franchise,
license, authorization, judgment, writ, injunction, order, decree, award,
statute, Commonwealth, federal, state or local law, ordinance, rule or
regulation of any court, arbitrator or any Commonwealth, federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality applicable to B&T or its assets, operations, properties or
businesses now conducted or heretofore conducted.
The execution, delivery and (provided the required regulatory and
shareholder approvals are obtained) performance of this Agreement and the other
agreements contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby will not conflict with, or result, by itself or
with the giving of notice or the passage of time, in any violation of or default
or loss of a benefit under, (i) any provision of the Certificate of
Incorporation or Bylaws of B&T, (ii) any material mortgage, indenture, lease,
contract, agreement or other instrument applicable to B&T or its assets,
operations, properties or businesses, or (iii) any material permit, concession,
grant, franchise, license, authorization, judgment, writ, injunction, order,
decree, statute, law, ordinance, rule or regulation applicable to B&T or its
assets, operations, properties or businesses.
Section 3.05 B&T Financial Statements. B&T has furnished to EuroBancshares
and Eurobank true and complete copies of the audited consolidated financial
statements of B&T for the years ended December 31, 2001 and 2002, and of the
unaudited financial statements of B&T for the year ended December 31, 2003 (the
"Financial Statements"). The Financial Statements (including any related notes)
were prepared in conformity with GAAP, applied on a consistent basis, except as
otherwise noted therein, and the accounting records underlying the Financial
Statements accurately and fairly reflect in all material respects the
transactions of B&T.
Section 3.06 B&T Call Reports. B&T has furnished EuroBancshares and
Eurobank with a true and complete copy of its Reports of Condition and Income as
of December 31, 2003, September 30, 2003 and June 30, 2003 (the "Call Reports").
The Call Reports fairly present, in all material respects, the financial
position of B&T and the results of its operations at the date and for the period
indicated in conformity with the Instructions for the Preparation of Call
Reports as promulgated by applicable regulatory authorities. The Call Reports do
not contain any items of special or nonrecurring income or any other income not
earned in the ordinary course of business except as expressly specified therein.
B&T has calculated its allowance for loan losses in accordance with regulatory
accounting principles ("RAP") as applied to banking institutions and in
accordance with all applicable rules and regulations. To the best knowledge of
B&T, the allowance for loan losses account for B&T is, and as of the Closing
Date should be, adequate in all material respects to provide for all losses, net
of recoveries relating to loans previously charged off, on all outstanding loans
of B&T.
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Section 3.07 Litigation. Except as set forth on Schedule 3.07 of the
Confidential Disclosure Memorandum, there are no actions, claims, suits,
investigations, reviews or other legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to the knowledge of B&T,
threatened against or affecting B&T at law or in equity, or by or before any
Commonwealth, federal, state or municipal court or other governmental or
administrative department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that in any manner involve B&T or any of its properties or
capital stock that might reasonably be anticipated to result in a Material
Adverse Change or materially and adversely affect the transactions contemplated
by this Agreement, and B&T does not know or have any reason to be aware of any
basis for the same. No legal action, suit or proceeding or judicial,
administrative or governmental investigation is pending or, to the knowledge of
B&T, threatened against B&T that questions or might question the validity of
this Agreement or the agreements contemplated hereby, or any actions taken or to
be taken by B&T pursuant hereto or thereto or seeks to enjoin or otherwise
restrain the transactions contemplated hereby or thereby.
Section 3.08 Consents and Approvals. B&T's Board of Directors (at a
meeting duly called and held) has resolved to recommend to its shareholders
approval and adoption of the Merger and this Agreement. Except as disclosed in
Schedule 3.08 of the Confidential Disclosure Memorandum, no approval, consent,
order or authorization of, or registration, declaration or filing with, any
governmental authority or other third party is required on the part of B&T in
connection with the execution, delivery or performance of this Agreement or the
agreements contemplated hereby, or the consummation by B&T of the transactions
contemplated hereby or thereby.
Section 3.09 Undisclosed Liabilities. B&T has no material liability or
obligation, accrued, absolute, contingent or otherwise and whether due or to
become due (including, without limitation, unfunded obligations under any
Employee Benefit Plan (as defined in Section 3.31 of this Agreement) or
liabilities for Commonwealth, federal, state or local taxes or assessments or
liabilities under any tax sharing agreements (as described in Section 3.17 of
this Agreement)) that are not reflected in or disclosed in the Financial
Statements or the Call Reports, except (A) those liabilities and expenses
incurred in the ordinary course of business and consistent with prudent business
practices since the date of the Financial Statements or the Call Reports,
respectively, (B) obligations under contracts listed on Schedule 3.12 of the
Confidential Disclosure Memorandum (other than obligations arising under change
in control provisions or monetary obligations arising under other termination
provisions), which obligations must be described in sufficient detail on such
schedule so as to allow such liabilities and obligations of B&T to be easily
identifiable by EuroBancshares and Eurobank, in their sole discretion, or (C) as
disclosed on Schedule 3.09 of the Confidential Disclosure Memorandum. Except as
disclosed on Schedule 3.09 of the Confidential Disclosure Memorandum, B&T is not
liable or will not become liable for any change in control bonus or similar
payment to any person in connection with the proposed Merger.
Section 3.10 Title to Assets. True and complete copies of all existing
deeds, leases and title insurance policies for all real property owned or leased
by B&T, including all other real estate, and all existing mortgages, deeds of
trust, security agreements and other documents describing encumbrances to which
such property is subject have been made available to EuroBancshares and
Eurobank. B&T has good and indefeasible title to all the assets and properties
owned by it and used or useful in the operation of B&T's business, including,
without
23
limitation, all personal and intangible properties owned by it and reflected in
the Financial Statements or the Call Reports or acquired subsequent thereto,
subject to no liens, mortgages, security interests, encumbrances or charges of
any kind except (A) as described in Schedule 3.10 of the Confidential Disclosure
Memorandum, (B) as noted in the Financial Statements or the Call Reports or as
set forth in the documents delivered to EuroBancshares and Eurobank pursuant to
this Section 3.10, (C) statutory liens not yet delinquent, (D) consensual
landlord liens, (E) minor defects and irregularities in title and encumbrances
that do not materially impair the use thereof for the purpose for which they are
held, (F) pledges of assets in the ordinary course of business to secure public
funds deposits, (G) those assets and properties disposed of for fair value in
the ordinary course of business since the dates of the Financial Statements or
the Call Reports, and (H) liens created in connection with repurchase agreements
and other borrowings in the ordinary course of business and consistent with past
practices and safe and sound banking principles.
Section 3.11 Absence of Certain Changes or Events. Except as disclosed on
Schedule 3.11 of the Confidential Disclosure Memorandum or as permitted in
writing by EuroBancshares and Eurobank, since December 31, 2003, B&T has
conducted its business only in the ordinary course and has not:
A. Incurred any material obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except
deposits taken and federal funds purchased and current liabilities for
trade or business obligations, none of which, individually or in the
aggregate, result in a Material Adverse Change;
B. Discharged or satisfied any lien, charge or encumbrance or
paid any obligation or liability, whether absolute or contingent, due or
to become due, except in the ordinary course of business consistent with
normal banking practices;
C. Except for scheduled dividends on its Series A Preferred Stock
and its Series B Preferred Stock and otherwise as set forth on Schedule
3.11C of the Confidential Disclosure Memorandum, declared or made any
payment of dividends or other distribution to its shareholders, or
purchased, retired or redeemed, or obligated itself to purchase, retire or
redeem, any of its shares of capital stock or other securities;
D. Issued, reserved for issuance, granted, sold or authorized the
issuance of any shares of its capital stock or other securities or
subscriptions, options, warrants, calls, rights or commitments of any kind
relating to the issuance thereto;
E. Acquired any capital stock or other equity securities or
acquired any ownership interest in any bank, corporation, partnership or
other entity (except through settlement of indebtedness, foreclosure, or
the exercise of creditors' remedies or in a fiduciary capacity);
F. Mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction any of its property,
business or assets, tangible or intangible except (i) as described in
Schedule 3.11F of the Confidential Disclosure Memorandum, (ii) statutory
liens not yet delinquent, (iii) consensual landlord liens, (iv) minor
defects and irregularities in title and encumbrances that do not
materially impair the use thereof for the purpose for which they are held,
(v) pledges of assets to secure
24
public funds deposits, (vi) those assets and properties disposed of for
fair value since the dates of the Financial Statements or the Call
Reports, and (vii) in connection with repurchase agreements and other
borrowings in the ordinary course of business and consistent with past
practices and safe and sound banking principles;
G. Sold, transferred, leased to others or otherwise disposed of
any of its assets (except for assets disposed of for fair value) or
canceled or compromised any debt or claim, or waived or released any right
or claim, which individually or in the aggregate would constitute a
Material Adverse Change;
H. Terminated, canceled or surrendered, or received any notice of
or threat of termination or cancellation of any contract, lease or other
agreement or suffered any damage, destruction or loss which, individually
or in the aggregate, would constitute a Material Adverse Change;
I. Disposed of, permitted to lapse, transferred or granted any
rights under, or entered into any settlement regarding the breach or
infringement of, any United States or foreign license or Proprietary Right
(as defined in Section 3.16) or modified any existing rights with respect
thereto;
J. Made any change in the rate of compensation, commission, bonus
or other direct or indirect remuneration payable, paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay, to or for the benefit
of any of its shareholders, directors, officers, employees or agents, or
entered into any employment or consulting contract or other agreement with
any director, officer or employee or adopted, amended in any material
respect or terminated any pension, employee welfare, retirement, stock
purchase, stock option, stock appreciation rights, termination, severance,
income protection, golden parachute, savings or profit-sharing plan
(including trust agreements and insurance contracts embodying such plans),
any deferred compensation, or collective bargaining agreement, any group
insurance contract or any other incentive, welfare or employee benefit
plan or agreement maintained by it for the benefit of its directors,
employees or former employees, except in the ordinary course of business
and consistent with past practices and safe and sound banking principles,
and except normal periodic increases (not in excess of 10%) in the
compensation payable to officers or salaried employees, consistent with
past practices and made in the ordinary course of business; provided,
however, that B&T shall accrue all bonuses to be paid to such parties and
no such changes shall be pursuant to any agreement or understanding that
will continue past the Closing Date;
K. Except for improvements or betterments relating to Properties
(as defined in Section 11.10), made any capital expenditures or capital
additions or betterments in excess of an aggregate of $50,000;
L. Instituted, had instituted against it, settled or agreed to
settle any litigation, action or proceeding before any court or
governmental body relating to its property other than routine collection
suits instituted by it to collect amounts owed or suits in which the
amount in controversy is less than $10,000;
25
M. Suffered any change, event or condition that, in any case or
in the aggregate, has caused or may result in a Material Adverse Change,
or any Material Adverse Change in earnings or costs or relations with its
employees (provided, however, that B&T shall continue to have the right to
terminate employees in accordance with its existing policies and
procedures), agents, depositors, loan customers, correspondent banks or
suppliers;
N. Except for the transactions contemplated by this Agreement or
as otherwise permitted hereunder, entered into any transaction, or entered
into, modified or amended any contract or commitment, other than in the
ordinary course of business and consistent with past practices and safe
and sound banking principles;
O. Entered into or given any promise, assurance or guarantee of
the payment, discharge or fulfillment of any undertaking or promise made
by any person, firm or corporation;
P. Sold, or knowingly disposed of, or otherwise divested itself
of the ownership, possession, custody or control, of any corporate books
or records of any nature that, in accordance with sound business practice,
normally are retained for a period of time after their use, creation or
receipt, except at the end of the normal retention period;
Q. Made any, or acquiesced with any, change in any accounting
methods, principles or material practices except as required by GAAP or
RAP;
R. Purchased or sold (provided, however, that payment at maturity
is not deemed a sale) any Investment Securities (as defined in Section
11.10) other than in the ordinary course of business and consistent with
past practices and safe and sound banking principles;
S. Made, renewed, extended the maturity of, or altered any of the
material terms of any loan to any single borrower and his related
interests in excess of the principal amount of $100,000; or
T. Entered into any agreement or made any commitment whether in
writing or otherwise to take any of the types of action described in
subsections A. through S. above.
Section 3.12 Leases, Contracts and Agreements. Schedule 3.12 of the
Confidential Disclosure Memorandum sets forth an accurate and complete
description of all leases, subleases, licenses, contracts and agreements to
which B&T is a party or by which B&T is bound that obligate or may obligate B&T
in the aggregate for an amount in excess of $50,000 over the entire term of any
such agreement or related contracts of a similar nature which in the aggregate
obligate or may obligate B&T for an amount in excess of $50,000 over the entire
term of such related contracts (the "Contracts"). B&T has delivered true and
correct copies of all Contracts to EuroBancshares and Eurobank. For the purposes
of this Agreement, the Contracts shall be deemed not to include loans made by,
repurchase agreements made by, spot foreign exchange transactions of, bankers
acceptances of or deposits by B&T, but does include unfunded loan
26
commitments and letters of credit issued by B&T where the borrowers' total
direct and indirect indebtedness to B&T is in excess of $150,000. No
participations or loans have been sold that have buy back, recourse or guaranty
provisions that create contingent or direct liabilities of B&T. To the knowledge
of B&T, all of the Contracts are legal, valid and binding obligations of the
parties to the Contracts enforceable in accordance with their terms, subject to
the effects of bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and to general equitable
principles, and are in full force and effect. Except as described in Schedule
3.12 of the Confidential Disclosure Memorandum, all rent and other payments by
B&T under the Contracts are current, there are no existing material defaults by
B&T under the Contracts and no termination, condition or other event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a material default by B&T.
B&T has a good and indefeasible leasehold interest in each parcel of real
property leased by it free and clear of all mortgages, pledges, liens,
encumbrances and security interests.
Section 3.13 Taxes. B&T has duly and timely filed with the appropriate
Commonwealth, federal, state and local governmental agencies all tax returns and
reports required to be filed, including, without limitation, income, excise,
property, sales, use, franchise, value added, unemployment, employees' income
withholding and social security taxes, imposed by the United States or by any
foreign country or by any state, municipality, subdivision or instrumentality of
the United States or of any foreign country, or by any other taxing authority,
and has paid, or has established adequate reserves for the payment of, all taxes
and assessments that are or are claimed to be due, payable or owed by B&T, or
for which B&T may have liability, whether as a result of its own activities or
by virtue of its affiliation with other entities and all interest and penalties
thereon, whether disputed or not. All such tax returns and reports are
accurately prepared and all deposits required by law to be made by B&T with
respect to employees' withholding taxes have been duly made. B&T is not and has
not been delinquent in the payment of any foreign or domestic tax, assessment or
governmental charge or deposit and has no tax deficiency or claim outstanding,
proposed or assessed against it, and there is no basis for any such deficiency
or claim. Within the last four (4) years, no B&T tax return filed with any
Commonwealth, federal, state or local governmental agency has been audited or
examined and no such audit is currently pending or threatened. B&T has not been
granted any extension of time with respect to the date on which any tax return
was or is due to be filed by or with respect to B&T, or any waiver or agreement
by any such entity for the extension of time for the assessment or collection of
any tax. B&T has not committed any violation of any applicable Commonwealth,
federal, state, local or foreign tax laws.
The amounts set up as provisions for current or deferred taxes on the
Financial Statements and the Call Reports are sufficient for the payment of all
unpaid Commonwealth, federal, state, county, local, foreign or other taxes
(including any interest or penalties) of or on behalf of B&T applicable to the
periods covered by B&T's financial statements, and all years and periods prior
thereto. True and complete copies of the federal and Puerto Rico income tax
returns of B&T as filed with the Internal Revenue Service (the "IRS ") for the
years ended December 31, 2001 and 2002, have been delivered to EuroBancshares
and Eurobank.
Section 3.14 Insurance. Schedule 3.14 of the Confidential Disclosure
Memorandum contains an accurate and complete list and brief description of all
policies of insurance, including fidelity and bond insurance, of B&T. Except as
set forth on Schedule 3.14 of the Confidential
27
Disclosure Memorandum, all such policies (A) are sufficient for compliance by
B&T with all requirements of law and all agreements to which B&T is a party, (B)
are valid, outstanding and enforceable except as enforceability may be limited
by bankruptcy, conservatorship, insolvency, moratorium, reorganization,
receivership, or similar laws and judicial decisions affecting the rights of
creditors generally and by general principles of equity (whether applied in a
proceeding at law or equity), (C) will not in any significant respect be
affected by, and will not terminate or lapse by reason of, the transactions
contemplated by this Agreement, and (D) are presently in full force and effect,
no notice has been received of the cancellation, or threatened or proposed
cancellation, of any such policy and there are no unpaid premiums due thereon.
To the best of its knowledge, B&T is not in default with respect to the
provisions of any such policy and has not failed to give any notice or present
any claim thereunder in a due and timely fashion. Each material property of B&T
is insured for the benefit of B&T in amounts deemed adequate by B&T's management
against risks customarily insured against. Except as set forth on Schedule 3.14
of the Confidential Disclosure Memorandum, there have been no claims under any
fidelity bonds of B&T within the last three (3) years and B&T is not aware of
any facts that would form the basis of a claim under such bonds.
Section 3.15 No Adverse Change. Except as disclosed in the representations
and warranties made in this ARTICLE III, there has not been any Material Adverse
Change since December 31, 2003, nor has any event or condition occurred that has
resulted in, or has a reasonable possibility of resulting in the future, in a
Material Adverse Change.
Section 3.16 Proprietary Rights. B&T does not own or require the use of
any patent, patent application, patent right, invention, process, trademark
(whether registered or unregistered), trademark application, trademark right,
trade name, service name, service xxxx, copyright or any trade secret
("Proprietary Rights") for the business or operations of B&T. To the best
knowledge of B&T, B&T is not infringing upon or otherwise acting adversely to,
and has not in the past three (3) years infringed upon or otherwise acted
adversely to, any Proprietary Right owned by any other person or persons. There
is no claim or action by any such person pending, or to the knowledge of B&T
threatened, with respect thereto.
Section 3.17 Transactions with Certain Persons and Entities. B&T does not
owe any amount to (excluding deposit liabilities), or have any loan, contract,
lease, commitment or other obligation from or to any of the present or former
directors or officers (other than compensation for current services not yet due
and payable and reimbursement of expenses arising in the ordinary course of
business) of B&T, and none of such persons owes any amount to B&T. There are no
agreements, instruments, commitments, extensions of credit, tax sharing or
allocation agreements or other contractual agreements of any kind between or
among B&T, whether on its own behalf or in its capacity as trustee or custodian
for the funds of any employee benefit plan (as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and any of its
Affiliates.
Section 3.18 Evidences of Indebtedness. All evidences of indebtedness and
leases that are reflected as assets of B&T are legal, valid and binding
obligations of the respective obligors thereof, enforceable in accordance with
their respective terms (except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors generally and
the availability of injunctive relief, specific performance and other equitable
remedies) and are not subject to any known or threatened defenses, offsets or
counterclaims that
28
may be asserted against B&T or the present holder thereof, except as disclosed
in Schedule 3.18 of the Confidential Disclosure Memorandum; provided, however,
that the foregoing sentence shall not be deemed to be a representation or
warranty of collectibility of any of the assets. The credit files of the Bank
contain all material information (excluding general, local or national industry,
economic or similar conditions) known to B&T that is reasonably required to
evaluate in accordance with generally prevailing practices in the banking
industry the collectibility of the loan portfolio of B&T (including loans that
will be outstanding if any of them advances funds they are obligated to
advance). All SBA and other governmental guaranties of loans made by B&T are
legal, valid and binding obligations of the respective guarantors and B&T has
taken all necessary actions to preserve and maintain the validity and
enforceability of such guaranties. B&T has disclosed all of the substandard,
doubtful, loss, nonperforming or problem loans on the internal watch list of
B&T, a copy of which as of December 31, 2003, has been provided to
EuroBancshares and Eurobank.
Section 3.19 Employee Relationships. B&T has complied with all applicable
material laws relating to its relationships with its employees, and B&T believes
that the relationships between B&T and its employees are good. Except as
disclosed on Schedule 3.19 of the Confidential Disclosure Memorandum, B&T has no
knowledge that any person identified on Schedule 6.07B of the Confidential
Disclosure Memorandum has any present plans to terminate their employment with
B&T.
Section 3.20 Condition of Assets. All furniture, fixtures and equipment
used by B&T are in good operating condition, ordinary wear and tear excepted,
and conform with all material ordinances, regulations, zoning and other laws,
whether Commonwealth, federal, state or local. B&T's premises and equipment are
not in need of maintenance or repairs other than ordinary routine maintenance
and repairs that are not material in nature or cost.
Section 3.21 Environmental Compliance. Except as disclosed on Schedule
3.21 of the Confidential Disclosure Memorandum:
A. B&T, its operations and all of its Properties are in material
compliance with all Environmental Laws (as defined in Section 11.10). B&T
is not aware of, nor has B&T received notice of, any past, present, or
future conditions, events, activities, practices or incidents that may
interfere with or prevent the compliance of B&T with all Environmental
Laws.
B. B&T has obtained all material permits, licenses and
authorizations that are required under all Environmental Laws.
C. No Hazardous Materials (as defined in Section 11.10) exist on,
about or within any of the Properties, nor have any Hazardous Materials
previously existed on, about or within or been used, generated, stored,
transported, disposed of, on or released from any of the Properties. The
use that B&T makes and intends to make of the Properties will not result
in the use, generation, storage, transportation, accumulation, disposal or
release of any Hazardous Material on, in or from any of the Properties.
D. There is no action, suit, proceeding, investigation, or
inquiry before any court, administrative agency or other governmental
authority pending or, to the
29
knowledge of B&T, threatened against B&T, relating in any way to any
Environmental Law. B&T has no liability for remedial action under any
Environmental Law. B&T has not received any request for information by any
governmental authority with respect to the condition, use or operation of
any of the Properties nor has B&T received any notice of any kind from any
governmental authority or other person with respect to any violation of or
claimed or potential liability of any kind under any Environmental Law
(including, without limitation, any letter, notice or inquiry from any
person or governmental entity informing B&T that it is or may be liable in
any way under CERCLA (as defined in Section 11.10) or requesting
information to enable such a determination to be made).
Section 3.22 Regulatory Compliance. All reports, records, registrations,
statements, notices and other documents or information required to be filed by
B&T with any Commonwealth, federal or state regulatory authority, including,
without limitation, the OCFI, the FDIC and the IRS have been duly and timely
filed and all information and data contained in such reports, records or other
documents are substantially true, accurate, correct and complete. Except as set
forth on Schedule 3.22 of the Confidential Disclosure Memorandum and that
certain Order to Cease and Desist dated as of September 16, 2003, issued by the
FDIC in the matter of B&T (the "C&D Order"), B&T is not now and has not been
within the last four (4) years subject to any commitment letter, memorandum of
understanding, cease and desist order, written agreement or other formal or
informal administrative action with any such regulatory bodies. Except as set
forth on Schedule 3.22 of the Confidential Disclosure Memorandum, B&T is in
compliance with the terms of the C&D Order. B&T does not believe any such
regulatory bodies have any present intent to place B&T under any such
administrative action. Except as set forth on Schedule 3.22 of the Confidential
Disclosure Memorandum and the C&D Order, there are no actions or proceedings
pending or threatened against B&T by or before any such regulatory bodies or any
other nation, state or subdivision thereof, or any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Section 3.23 Absence of Certain Business Practices. To the best knowledge
of B&T, none of B&T, nor any officer, employee or agent of B&T, nor any other
person acting on their behalf, has, directly or indirectly, within the past five
(5) years, given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other person who is or may be in a position
to help or hinder the business of B&T (or assist B&T in connection with any
actual or proposed transaction) that (A) might subject B&T to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (B) if
not given in the past, might have resulted in a Material Adverse Change or (C)
if not continued in the future might result in a Material Adverse Change or
might subject B&T to suit or penalty in any private or governmental litigation
or proceeding.
Section 3.24 Proxy Statement. None of the information supplied or to be
supplied by B&T, or any of its directors, officers, employees or agents for
inclusion in the Proxy Statement, or any amendment thereof or supplement
thereto, will be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or at the
time of the Shareholders' Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Shareholders' Meeting. All documents that B&T is
30
responsible for filing with any regulatory or governmental agency in connection
with the Merger will comply in all material respects with the provisions of
applicable law.
Section 3.25 Dissenting Shareholders. B&T has no knowledge of any plan or
intention on the part of any B&T Shareholders to make written demand for payment
of the fair value of their shares of the B&T Stock in the manner provided by
applicable law.
Section 3.26 Books and Records. The minute books, stock certificate books
and stock transfer ledgers of B&T (A) have been kept accurately in the ordinary
course of business, (B) are complete and correct in all material respects, (C)
the transactions entered therein represent bona fide transactions, and (D) there
have been no transactions involving the business of B&T that properly should
have been set forth therein and that have not been accurately so set forth.
Section 3.27 Forms of Instruments, Etc. B&T has made, and will make,
available to EuroBancshares and Eurobank copies of all standard forms of notes,
mortgages, deeds of trust and other routine documents of a like nature used on a
regular and recurring basis by B&T in the ordinary course of its business.
Section 3.28 Fiduciary Responsibilities. B&T has performed in all material
respects all of its respective duties as a trustee, custodian, guardian or as an
escrow agent in a manner that complies in all material respects with all
applicable laws, regulations, orders, agreements, instruments and common law
standards, where the failure to so perform would result in a Material Adverse
Change or materially and adversely affect the transactions contemplated by this
Agreement, and B&T has no reason to be aware of any basis for the same.
Section 3.29 Guaranties. Except for items in the process of collection in
the ordinary course of B&T's business, none of the obligations or liabilities of
B&T are guaranteed by any other person, firm or corporation, nor, except in the
ordinary course of business, according to prudent business practices and in
compliance with applicable law, has B&T guaranteed the obligations or
liabilities of any other person, firm or corporation.
Section 3.30 Voting Trust or Buy-Sell Agreements. B&T is not aware of any
agreement between any of its shareholders relating to a right of first refusal
with respect to the purchase or sale by any such shareholder of capital stock of
B&T or any voting agreement or voting trust with respect to shares of capital
stock of B&T.
Section 3.31 Employee Benefit Plans.
A. Set forth on Schedule 3.31 of the Confidential Disclosure
Memorandum is a complete and correct list of all "employee benefit plans "
(as defined in Section 3(3) of ERISA), all specified fringe benefit plans
as defined in Section 6039D of the Code, and all other bonus, incentive,
compensation, deferred compensation, profit sharing, stock option, stock
appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary
continuation, retirement, pension, health, life insurance, disability,
group insurance, vacation, holiday, sick leave, fringe benefit or welfare
plan, or any other similar plan, agreement, policy or understanding
(whether written or oral, qualified or nonqualified, currently effective
or terminated), and any trust, escrow or other agreement related thereto,
which (a) is
31
currently or has been at any time within the last sixty (60) months,
maintained or contributed to by B&T or any Subsidiary of B&T, or with
respect to which B&T or any Subsidiary of B&T has any liability, or (b)
provides benefits, or describes policies or procedures applicable to any
officer, employee, service provider, former officer or former employee of
B&T or any Subsidiary of B&T, or the dependents of any thereof, regardless
of whether funded or unfunded (herein collectively the "Employee Plans "
and each individually an "Employee Plan").
B. No Employee Plan is a defined benefit plan within the meaning
of Section 3(35) of ERISA. B&T has delivered or made available to
EuroBancshares and Eurobank true, accurate and complete copies of the
documents comprising each Employee Plan and any related trust agreements,
annuity contracts, insurance policies or any other funding instruments (
"Funding Arrangements"), any contracts with independent contractors
(without limitation, actuaries investment managers, etc.) that relate to
any Employee Plan, the Form 5500 filed in each of the three (3) most
recent plan years with respect to each Employee Plan, and related
schedules and opinions, and such other documents, records or other
materials related thereto reasonably requested by EuroBancshares or
Eurobank. There have been no prohibited transactions (described under
Section 406 of ERISA or Section 4975(c) of the Code) breaches of fiduciary
duty or any other breaches or violations of any law applicable to the
Employee Plans and related Funding Arrangements that would subject
EuroBancshares, Eurobank, B&T or any of their respective Subsidiaries to
any taxes, penalties or other liabilities. Each Employee Plan that is
represented to be qualified under Section 401(a) of the Code has a current
favorable determination letter, does not have any amendments for which the
remedial amendment period under Code Section 401(b) has expired, and has
been operated in compliance with applicable law, and in accordance with
its terms, and all reports, descriptions and filings required by the Code,
ERISA or any government agency with respect to each Employee Plan have
been timely and completely filed or distributed. Each Employee Plan has
been operated in compliance with applicable law or in accordance with its
terms and any related trust is exempt from federal income tax under
Section 501(a) of the Code. There are no pending claims, lawsuits or
actions relating to any Employee Plan (other than ordinary course claims
for benefits) and, to the best knowledge of B&T, none are threatened. No
written or oral representations have been made to any employee or former
employee of B&T or any Subsidiary of B&T promising or guaranteeing any
employer payment or funding for the continuation of medical, dental, life
or disability coverage for such person, their dependent, or any
beneficiary for any period of time beyond the end of the current plan year
or beyond termination of employment, (except to the extent of coverage
required under Section 4980B of the Code). Compliance with FAS 106 will
not create any material change to the Financial Statements. Except as
required in connection with qualified plan amendments required by tax law
changes, the consummation of the transactions contemplated by this
Agreement will not accelerate the time of payment or vesting, or increase
the amount, of compensation due to any employee, officer, former employee
or former officer of B&T or any Subsidiary of B&T. Except as disclosed on
Schedule 3.31 of the Confidential Disclosure Memorandum, there are no
contracts or arrangements providing for payments that will be
nondeductible or subject to excise tax under Code Sections 4999 or 280G,
nor will EuroBancshares or Eurobank be required to "gross up" or otherwise
compensate any person because of the limits contained in such Code
sections. There are no surrender
32
charges, penalties, or other costs or fees that would be imposed by any person
against B&T, an Employee Plan, or any other person, including without
limitation, an Employee Plan, or any other person, including an Employee Plan
participant or beneficiary as a result of the consummation of the transactions
contemplated by this Agreement with respect to any insurance, annuity or
investment contracts or other similar investment held by any Employee Plan.
C. With respect to each "employee benefit plan" (as defined in
ERISA) maintained or contributed to or required to be contributed to,
currently or in the past, by any trade or business with which B&T or any
Subsidiary of B&T is required by any of the rules contained in the Code or
ERISA to be treated as a single employer ("Controlled Group Plans"):
(i) All Controlled Group Plans which are "group health
plans" (as defined in the Code and ERISA) have been operated to the
Closing such that failures to operate such group health plans in
full compliance with Part 6 of Subtitle B of Title 1 of ERISA and
Sections 4980B and 4980D of the Code would not subject B&T or any
Subsidiary of B&T to liability;
(ii) There is no Controlled Group Plan that is a defined
benefit plan (as defined in Section 3(35) of ERISA), nor has there
been in the last five (5) calendar years); and
(iii) There is no Controlled Group Plan that is a "multiple
employer plan" or "multi-employer plan" (as either such term is
defined in ERISA), nor has there been since 1974.
D. B&T and each Subsidiary of B&T is completely insured for all
health insurance claims. No event has occurred or circumstances exist that
could result in a material increase in premium costs of Employee Plans
that are insured or a material increase in self-insured costs.
E. All Employee Plan documents, annual reports or returns,
audited or unaudited financial statements, actuarial valuations, summary
annual reports, and summary plan descriptions issued with respect to the
Employee Plans are correct, complete, and current in all material
respects, have been timely filed, and there have been no changes in the
information set forth therein.
F. All contributions (including, without limitations, all
employer contributions, employee salary reduction contributions and all
premiums or other payments (other than claims)) that are due to have been
paid to or with respect to each Employee Plan and all contributions (other
than claims) for any period ending on or before the Effective Date that
are not yet due have been paid to each such Employee Plan.
Section 3.32 Corporate Trust Operations.
A. B&T has properly administered each of its fiduciary accounts
("Fiduciary Accounts") with respect to its corporate trust operations
("Corporate Trust Business")
33
and other accounts for which B&T serves as fiduciary with respect to the
Corporate Trust Business, including, but not limited to, accounts for
which it serves as a trustee, agent, custodian, personal agent, guardian,
conservator or investment advisor with respect to the Corporate Trust
Business, in accordance with all material terms of the governing documents
and applicable state, federal or Commonwealth law and regulation and
common law. Neither B&T nor any of its directors, officers or employees,
has committed any material breach of trust with respect to any Fiduciary
Account, and the accountings for each such Fiduciary Account are true and
correct in all material respects and accurately reflect the assets of such
Fiduciary Account in all material respects.
B. Attached hereto as Schedule 3.32B of the Confidential
Disclosure Memorandum (the "Schedule of Contracts") is a true and accurate
copy of each form of indenture, trustee/paying agent/registrar agreement
and XXX Simplifier Agreement to which B&T is a party with respect to its
Corporate Trust Business. B&T has in place an indenture and a
trustee/paying agent/registrar agreement in substantially one of the forms
attached as Schedule 3.32B of the Confidential Disclosure Memorandum and
XXX Simplifier Agreement in substantially the form attached as a part of
Schedule 3.32B of the Confidential Disclosure Memorandum for each XXX
account serviced by its corporate trust division. The indentures,
trustee/paying agent/registrar agreements and associated collateral
agreements and XXX Simplifier Agreements are each a "Contract" for
purposes hereof. Unless otherwise set forth on Schedule 3.32B of the
Confidential Disclosure Memorandum, no consent is required from any third
party in order for such Contract to be assigned, assumed or otherwise
transferred to EuroBancshares or Eurobank pursuant to the transactions
contemplated by this Agreement. B&T is in material compliance with the
terms and conditions of each Contract and each Contract is in full force
and effect, enforceable in accordance with its terms and no breach has
occurred with respect to such Contracts. Except as set forth on Schedule
3.32B of the Confidential Disclosure Memorandum, there are no disputes
pending, or to the best of B&T's knowledge, threatened with respect to any
of the Contracts or with any terminated or expired Contract. An updated
Schedule of Contracts and Schedule 3.32B of the Confidential Disclosure
Memorandum containing information current as of the close of business no
more than five (5) Business Days prior to the Closing Date shall be
delivered to EuroBancshares and Eurobank at the Closing.
C. Attached hereto as Schedule 3.32C of the Confidential
Disclosure Memorandum (the "Schedule of Receivables") is a true and
accurate schedule of all receivables owned by B&T in connection with the
Corporate Trust Business ("Corporate Trust Receivables"), including, but
not limited to, accrued interest receivable on the assets relating to the
Corporate Trust Business, sinking fund receivables, and XXX institutional
maintenance fee receivables. Each receivable set forth on Schedule 3.32C
of the Confidential Disclosure Memorandum is a valid and binding
obligation of the maker thereof enforceable in accordance with its terms,
except that the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and that the
remedy of specific performance and injunctive relief or other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be
brought. B&T owns each receivable free and clear of all liens, claims and
encumbrances. An updated Schedule of Receivables and Schedule
34
3.32C of the Confidential Disclosure Memorandum containing information
current as of the close of business no more than five (5) Business Days
prior to the Closing Date shall be delivered to EuroBancshares and
Eurobank by B&T at the Closing.
Section 3.33 Representations Not Misleading. To the best knowledge of B&T,
all material facts relating to the business operations, properties, assets,
liabilities (contingent or otherwise) and financial condition of B&T have been
disclosed to EuroBancshares and Eurobank in or in connection with this
Agreement. No representation or warranty by B&T contained in this Agreement, nor
any statement, exhibit or schedule furnished to EuroBancshares or Eurobank by
B&T under and pursuant to, or in anticipation of this Agreement, contains or
will contain on the Closing Date any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which it was or
will be made, not misleading and such representations and warranties would
continue to be true and correct following disclosure to any governmental
authority having jurisdiction over B&T or its properties of the facts and
circumstances upon which they were based. Except as disclosed herein, there is
no matter that materially adversely affects B&T or B&T's ability to perform the
transactions contemplated by this Agreement or the other agreements contemplated
hereby, or to the knowledge of B&T, will in the future result in a Material
Adverse Change. No information material to the Merger, and that is necessary to
make the representations and warranties herein contained not misleading, has
been withheld by B&T.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF EUROBANCSHARES AND
EUROBANK
EuroBancshares and Eurobank hereby make the representations and warranties
set forth in this Article IV to B&T.
Section 4.01 Organization and Qualification of EuroBancshares.
EuroBancshares is a financial holding company registered under the Bank Holding
Company Act of 1956, as amended. EuroBancshares is a corporation, duly
organized, validly existing and in good standing under all laws, rules, and
regulations applicable to corporations located in the Commonwealth.
EuroBancshares has all requisite corporate power and authority (including all
licenses, franchises, permits and other governmental authorizations as are
legally required) to carry on its business as now being conducted, to own, lease
and operate its properties and assets as now owned, leased or operated and to
enter into and carry out its obligations under this Agreement.
Section 4.02 Organization and Qualification of Eurobank. Eurobank is a
commercial bank duly organized, validly existing and in good standing under the
laws of the Commonwealth. Eurobank has all requisite corporate power and
authority (including all licenses, franchises, permits and other governmental
authorizations as are legally required) to carry on its business as now being
conducted, to own, lease and operate its properties and assets as now owned,
leased or operated and to enter into and to carry out its obligations under this
Agreement.
Section 4.03 Execution and Delivery. Each of EuroBancshares and Eurobank
has taken all corporate action necessary to authorize the execution, delivery
and (provided the required regulatory approvals are obtained) performance of
this Agreement and the other agreements and
35
documents contemplated hereby to which it is a party. This Agreement has been,
and the other agreements and documents contemplated hereby, have been or at
Closing will be, duly executed by EuroBancshares and Eurobank and each
constitutes the valid and binding obligation of EuroBancshares and Eurobank,
enforceable in accordance with its respective terms and conditions, except as
enforceability may be limited by bankruptcy, conservatorship, insolvency,
moratorium, reorganization, receivership or similar laws and judicial decisions
affecting the rights of creditors generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
Section 4.04 EuroBancshares Capitalization. The authorized capital stock
of EuroBancshares consists of (i) 150,000,000 shares of common stock, par value
$0.01 per share, of which 6,998,698 shares are issued and outstanding, and (ii)
20,000,000 shares of preferred stock, par value $0.01 per share, of which no
shares are issued and outstanding. All of such issued shares are validly issued,
fully paid and nonassessable. Except as set forth in the footnotes to
EuroBancshares' financial statements or stock options granted in the ordinary
course of business, EuroBancshares does not have outstanding, and is not bound
by, any subscriptions, options, warrants, calls, commitments or agreements to
issue any additional shares of its capital stock, including any right of
conversion or exchange under any outstanding security or other instrument, and
EuroBancshares is not obligated to issue any shares of its capital stock for any
purpose. There are no unsatisfied preemptive rights in respect to the capital
stock of EuroBancshares.
Section 4.05 Eurobank Capitalization. The authorized capital stock of
Eurobank consists of (i) 12,500,000 shares of common stock, par value $1.00 per
share, of which 6,778,421 shares are issued and outstanding, and (ii) 1,000,000
shares of preferred stock, par value $10.00 per share, of which 12,500 shares
are issued and outstanding. All of such issued shares are validly issued, fully
paid and nonassessable. Eurobank does not have outstanding, and is not bound by,
any subscriptions, options, warrants, calls, commitments or agreements to issue
any additional shares of its capital stock, including any right of conversion or
exchange under any outstanding security or other instrument, and Eurobank is not
obligated to issue any shares of its capital stock for any purpose. There are no
unsatisfied preemptive rights in respect to the capital stock of Eurobank.
Section 4.06 Compliance with Laws, Permits and Instruments. The execution,
delivery and (provided the required regulatory approvals are obtained)
performance of this Agreement and the other agreements contemplated hereby, and
the consummation of the transactions contemplated hereby and thereby, will not
conflict with, or result, by itself or with the giving of notice or the passage
of time, in any violation of or default or loss of a benefit under, (A) any
provision of the Certificate of Incorporation or Bylaws of EuroBancshares or
Eurobank, (B) any material provision of any mortgage, indenture, lease,
contract, agreement or other instrument applicable to EuroBancshares or Eurobank
or any of their respective assets, operations, properties or businesses now
conducted or heretofore conducted or (C) any statute, law, ordinance, rule or
regulation applicable to EuroBancshares or Eurobank.
Section 4.07 Litigation. No legal action, suit or proceeding or judicial,
administrative or governmental investigation is pending or, to the knowledge of
EuroBancshares or Eurobank, threatened against EuroBancshares or Eurobank that
questions or might question the validity of this Agreement or the agreements
contemplated hereby, or any actions taken or to be taken by
36
EuroBancshares or Eurobank pursuant hereto or thereto or seeks to enjoin or
otherwise restrain the transactions contemplated hereby or thereby.
Section 4.08 Consents and Approvals. Except for regulatory approvals of or
notices to the Board of Governors of the Federal Reserve System, the FDIC and
the OCFI, no approval, consent, order or authorization of, or registration,
declaration or filing with, any governmental authority or other third party is
required on the part of EuroBancshares or Eurobank in connection with the
execution, delivery or performance of this Agreement or the agreements
contemplated hereby, or the consummation by EuroBancshares or Eurobank of the
transactions contemplated hereby or thereby. As of the date of this Agreement,
neither EuroBancshares nor Eurobank has reason to believe that they will not
receive regulatory approval of the transactions contemplated hereby.
Section 4.09 EuroBancshares Financial Statements. EuroBancshares has
furnished to B&T true and complete copies of the audited financial statements of
EuroBancshares for the years ended December 31, 2001 and 2002, and of the
unaudited financial statements of EuroBancshares for the year ended December 31,
2003 (the "EuroBancshares Financial Statements"). The EuroBancshares Financial
Statements (including any related notes) were prepared in conformity with GAAP,
applied on a consistent basis, except as otherwise noted therein, and the
accounting records underlying the EuroBancshares Financial Statements accurately
and fairly reflect in all material respects the transactions of EuroBancshares.
Section 4.10 Proxy Statement. None of the information supplied or to be
supplied by EuroBancshares or Eurobank or any of their respective directors,
officers, employees or agents for inclusion in the Proxy Statement, or any
amendment thereof or supplement thereto, will be false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, or at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Shareholders' Meeting. All
documents that EuroBancshares and Eurobank are responsible for filing with any
regulatory or governmental agency in connection with the Merger will comply in
all material respects with the provisions of applicable law.
Section 4.11 Financing. EuroBancshares has previously investigated its
financing options and whether outside financing will be necessary in connection
with the transactions contemplated by this Agreement. As of the date of this
Agreement, EuroBancshares has no reason to believe that it will not be able to
obtain financing on terms acceptable to EuroBancshares, if necessary.
Section 4.12 Representations Not Misleading. No representation or warranty
by EuroBancshares or Eurobank contained in this Agreement, or any statement,
exhibit or schedule furnished to B&T by EuroBancshares or Eurobank under and
pursuant to, or in anticipation of this Agreement, contains or will contain on
the Closing Date any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which it was or will be made, not
misleading and such representations and warranties would continue to be true and
correct
37
following disclosure to any governmental authority having jurisdiction over
EuroBancshares or Eurobank of the facts and circumstances upon which they were
based.
Section 4.13 No Adverse Change. Except as disclosed in the representations
and warranties made in this ARTICLE IV, there has not been any Material Adverse
Change since December 31, 2003, nor has any event or condition occurred that has
resulted in, or has a reasonable possibility of resulting in the future, in a
Material Adverse Change.
ARTICLE V.
COVENANTS OF B&T
B&T hereby makes the covenants set forth in this Article V to
EuroBancshares and Eurobank.
Section 5.01 Best Efforts. B&T will use its best efforts to cause the
consummation of the transactions contemplated hereby in accordance with the
terms and conditions of this Agreement.
Section 5.02 Information for Applications and Statements. B&T will
promptly furnish to EuroBancshares and Eurobank all information concerning B&T,
including, but not limited to, financial statements, required for inclusion in
(A) any proxy statement to be used by B&T in connection with the approval of the
shareholders of B&T of the transactions contemplated hereby, the offering
circular for the shares of EuroBancshares Common Stock and EuroBancshares
Preferred Stock to be issued by EuroBancshares, which proxy statement and
offering circular shall be prepared by EuroBancshares with the assistance of
B&T, and (B) any application or statement to be made by EuroBancshares or
Eurobank or filed by EuroBancshares or Eurobank with any governmental body in
connection with the transactions contemplated by this Agreement, or in
connection with any unrelated transactions during the pendency of this
Agreement, and B&T represents and warrants that all information so furnished for
such statements and applications shall be true and correct in all material
respects and shall not omit any material fact required to be stated therein or
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading. B&T shall fully cooperate with EuroBancshares
and Eurobank in the filing of any applications or other documents necessary to
consummate the transactions contemplated by this Agreement, including the
Merger.
Section 5.03 Required Acts of B&T. Prior to the Closing, B&T shall, unless
otherwise permitted in writing by EuroBancshares and Eurobank:
A. Operate only in the ordinary course of business and consistent
with normal banking practices;
B. Except as required by normal business practices, use all
reasonable efforts to preserve its business organization intact and to
retain its present customers, depositors, suppliers, correspondent banks,
officers, directors, employees and agents;
C. Act in a manner intended to preserve or attempt to preserve
its goodwill;
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D. Perform all of its obligations under contracts, leases and
documents relating to or affecting its assets, properties and business
except such obligations as B&T may in good faith reasonably dispute;
E. Except as required by normal business practices, maintain all
offices, machinery, equipment, materials, supplies, inventories, vehicles
and other properties owned, leased or used by it (whether under its
control or the control of others), in good operating condition and repair,
ordinary wear and tear excepted;
F. Maintain in full force and effect all insurance policies now
in effect or renewals thereof and, except as required by normal business
practices that do not jeopardize insurance coverage, give all notices and
present all claims under all insurance policies in due and timely fashion;
G. Timely file all reports required to be filed with governmental
authorities and observe and conform to all applicable laws, rules,
regulations, ordinances, codes, orders, licenses and permits, except those
being contested in good faith by appropriate proceedings;
H. Timely file all tax returns required to be filed by it and
promptly pay all taxes, assessments, governmental charges, duties,
penalties, interest and fines that become due and payable, except those
being contested in good faith by appropriate proceedings;
I. Withhold from each payment made to each of its employees the
amount of all taxes (including, but not limited to, federal income taxes,
FICA taxes and state and local income and wage taxes) required to be
withheld therefrom and pay the same to the proper tax receiving officers;
J. Continue to follow and implement policies, procedures and
practices regarding the identification, monitoring, classification and
treatment of all assets in substantially the same manner as it has in the
past and consistent with the C&D Order; and
K. Account for all transactions in accordance with GAAP (unless
otherwise instructed by RAP, in which instance account for such
transaction in accordance with RAP), maintain the allowance for loan
losses account for B&T in an adequate amount to provide for all losses,
net of recoveries relating to loans previously charged off, on all
outstanding loans of B&T, and make all adjustments, entries and other
changes that may be recommended by KPMG in its management letter or
otherwise, and such other corrections to its financial statements as may
be set forth in any management letter from KPMG.
Section 5.04 Prohibited Acts of B&T. Except as otherwise permitted in this
Agreement, after the date of this Agreement and prior to the Closing, B&T shall
not, without the prior written consent of EuroBancshares and Eurobank:
A. Introduce any new material method of management or operation;
39
B. Take any action that could reasonably be anticipated to result
in a Material Adverse Change;
C. Take or fail to take any action that would reasonably cause or
permit the representations and warranties made in Article III hereof to be
inaccurate at the time of the Closing or preclude B&T from making such
representations and warranties at the time of the Closing;
D. Mortgage, pledge or subject to lien, charge, security interest
or any other encumbrance or restriction any of its property, business or
assets, tangible or intangible except in the ordinary course of business
and consistent with normal banking practices;
E. Cause or allow the loss of insurance coverage, unless replaced
with coverage which is substantially similar (in amount and insurer) to
that now in effect;
F. Incur any obligation or liability, whether absolute or
contingent, except in the ordinary course of business consistent with
normal banking practices;
G. Discharge or satisfy any lien, charge or encumbrance or pay
any obligation or liability, whether absolute or contingent, due or to
become due, except in the ordinary course of business consistent with
normal banking practices;
H. Issue, reserve for issuance, grant, sell or authorize the
issuance of any shares of its capital stock or other securities or
subscriptions, options, warrants, calls, rights or commitments of any kind
relating to the issuance thereto, other than pursuant to the exercise of
options or conversion of convertible securities outstanding as of the date
of this Agreement;
I. Purchase or redeem any of its stock or options thereon or
declare or pay any dividend or other distribution on B&T's outstanding
capital stock;
J. Change its Certificate of Incorporation or Bylaws or its
authorized capital stock;
K. Sell, transfer, lease to others or otherwise dispose of any of
its assets or cancel or compromise any debt or claim, or waive or release
any right or claim, which, individually or in the aggregate, would
constitute a Material Adverse Change, except in the ordinary course of
business and consistent with past practices and safe and sound banking
principles;
L. Enter into any transaction other than in the ordinary course
of business;
M. Except in the ordinary course of the Bank's business and
consistent with past practices, enter into or give any promise, assurance
or guarantee of the payment, discharge or fulfillment of any undertaking
or promise made by any other person, firm or corporation;
N. Sell or knowingly dispose of, or otherwise divest itself of
the ownership, possession, custody or control, of any corporate books or
records of any nature that, in
40
accordance with sound business practice, normally are retained for a
period of time after their use, creation or receipt, except at the end of
the normal retention period;
O. Make any change in the rate of compensation, commission, bonus
or other direct or indirect remuneration payable, or pay or agree or
orally promise to pay, conditionally or otherwise, any bonus, extra
compensation, extra pension or extra severance or extra vacation pay, to
or for the benefit of any of its shareholders, directors, officers,
employees or agents, or enter into any employment or consulting contract
(other than as contemplated by this Agreement) or other agreement with any
director, officer or employee or adopt, amend in any material respect or
terminate any pension, employee welfare, retirement, stock purchase, stock
option, stock appreciation rights, termination, severance, income
protection, golden parachute, savings or profit-sharing plan (including
trust agreements and insurance contracts embodying such plans), any
deferred compensation, or collective bargaining agreement, any group
insurance contract or any other incentive, welfare or employee benefit
plan or agreement maintained by it for the benefit of its directors,
employees or former employees, except in the ordinary course of business
and consistent with past practices and safe and sound banking principles,
and except normal periodic increases (not in excess of 10%) in the
compensation payable to officers or salaried employees, consistent with
past practices and made in the ordinary course of business; provided,
however, that B&T shall accrue all bonuses to be paid to such parties and
no such changes shall be pursuant to any agreement or understanding that
will continue past the Closing Date.
P. Engage in any transaction with any affiliated person or create
any liability of B&T owed to such persons other than in the form of loans,
deposits, wages, salaries and reimbursement of expenses created in the
ordinary course of business and consistent with past practices;
Q. Acquire any capital stock or other equity securities or
acquire any equity or ownership interest in any bank, corporation,
partnership or other entity (except through settlement of indebtedness,
foreclosure, or the exercise of creditors' remedies or in a fiduciary
capacity);
R. Terminate, cancel or surrender any contract, lease or other
agreement or suffer any damage, destruction or loss that, in any case or
in the aggregate, would constitute a Material Adverse Change;
S. Dispose of, permit to lapse, transfer or grant any rights
under, or breach or infringe upon, any United States or foreign license or
Proprietary Right or modify any existing rights with respect thereto,
except in the ordinary course of business and consistent with past
practices and safe and sound banking principles;
T. Except for improvements or betterments relating to Properties,
make any capital expenditures or capital additions or betterments in
excess of an aggregate of $50,000;
U. Hire or employ any person with an annual salary equal to or
greater than $40,000;
41
V. Make any, or acquiesce with any, change in any accounting
methods, principles or material practices, except as required by GAAP or
RAP;
W. Between the date of the Agreement and the Closing Date,
purchase or sell any Investment Securities (except in the ordinary course
of business and consistent with past practices and safe and sound banking
principles as disclosed in the investment reports included in the monthly
report to B&T's Board of Directors); provided, however, that B&T shall
obtain the approval of its Board of Directors prior to any sale of
Investment Securities;
X. Other than advances under revolving or term loans within the
pre-approved lending limits of such loans and such other loans that are
fully secured by certificates of deposit or liquid, readily marketable
collateral, make or alter any of the material terms of any loan to any
single borrower and his related interests in excess of the principal
amount of $50,000, or renew or extend the maturity of any loan to any
single borrower and his related interests in excess of the principal
amount of $50,000; provided, however, that upon a specific request by B&T
to alter any of the material terms of any such loan, including, without
limitation, any request to grant an increase to any revolving or term loan
or any release of collateral, EuroBancshares shall have a period of
forty-eight (48) hours to either approve or deny such request, and the
failure of EuroBancshares to either approve or deny such request within
such time period shall be deemed an approval of such request by
EuroBancshares; or
Y. Make, or renew or extend the maturity of, or alter any of the
material terms of any classified loan.
Section 5.05 Due Diligence Review; Right to Terminate.
A. Subject to the provisions of ARTICLE X, for a period of
fifteen (15) days following the date of this Agreement (the "Initial
Review Period"), B&T shall afford the officers, directors, employees,
attorneys, accountants, investment bankers and authorized representatives
of EuroBancshares and Eurobank full access during normal business to all
of the Properties, books, contracts, commitments, personnel and records of
B&T, permit EuroBancshares and Eurobank to make such inspections
(including without limitation with regard to such Properties physical
inspection of the surface and subsurface thereof and any structure
thereon) as they may require, and furnish to EuroBancshares and Eurobank
during such period all such information concerning B&T and its affairs as
EuroBancshares and Eurobank may reasonably request, so that EuroBancshares
and Eurobank may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of B&T, in
EuroBancshares' and Eurobank's sole discretion.
B. Notwithstanding the foregoing, for a period of twenty-one (21)
days following the date of this Agreement (the "Trust Review Period"), B&T
shall afford the officers, directors, employees, attorneys, accountant s,
investment bankers and authorized representatives of EuroBancshares and
Eurobank full access during normal business to all of the Properties,
books, contracts, commitments, personnel and records of B&T that relate to
the Corporate Trust Business, permit EuroBancshares and Eurobank to make
such inspections (including without limitation with regard to such
Properties physical
42
inspection of the surface and subsurface thereof and any structure
thereon) as they may require, and furnish to EuroBancshares and Eurobank
during such period all such information concerning the Corporate Trust
Business of B&T and its affairs as EuroBancshares and Eurobank may
reasonably request, so that EuroBancshares and Eurobank may have full
opportunity to make such reasonable investigation as it shall desire to
make of the affairs of the Corporate Trust Business of B&T, in
EuroBancshares' and Eurobank's sole discretion.
C. If as a result of such review, EuroBancshares or Eurobank
becomes aware of information (other than information relating to credit
quality, the allowance for loan losses, or B&T's investment portfolio
(each from a financial perspective and not with respect to any legal or
accounting matters or any matter relating to the perfection of security
interests)) relating to B&T that leads EuroBancshares or Eurobank to
determine, in their sole and absolute discretion, that it is not in the
best interests of EuroBancshares or Eurobank to proceed with the Merger,
EuroBancshares and Eurobank may terminate this Agreement by delivering to
B&T a written notice of termination no later than 6:00 p.m., Hato Rey,
Puerto Rico time on the twenty- first (21st) day following the execution
of this Agreement (the "Due Diligence Termination Date"); provided,
however, that the Due Diligence Termination Date shall be extended to the
twenty-seventh (27th) day following the execution of this Agreement with
respect to any matter relating to the Corporate Trust Business of B&T.
Subject to Section 5.08 and Section 5.10, EuroBancshares and Eurobank
acknowledge that they have concluded their due diligence with respect to
credit quality, the allowance for loan losses and B&T's investment
portfolio (each from a financial perspective and not with respect to any
legal or accounting matters or any matters relating to the perfection of
security interests), and that therefore they may not exercise the
termination right set forth in this Section 5.05A as a result of any
finding in any of these areas.
D. Subject to the provisions of ARTICLE X, from and after the
expiration of the Initial Review Period, B&T shall afford the officers,
directors, employees, attorneys, accountants, investment bankers and
authorized representatives of EuroBancshares and Eurobank full access
during normal business hours during the period prior to the Effective Date
or the termination of this Agreement to all of the Properties, books,
contracts, commitments, personnel and records of B&T, permit
EuroBancshares and Eurobank to make such inspections (including without
limitation with regard to such Properties physical inspection of the
surface and subsurface thereof and any structure thereon) as they may
require, and furnish to EuroBancshares and Eurobank during such period all
such information concerning B&T and its affairs as EuroBancshares and
Eurobank may reasonably request, so that EuroBancshares and Eurobank may
have full opportunity to make such reasonable investigation as it shall
desire to make of the affairs of B&T, including, without limitation,
access sufficient to verify the value of the assets and the liabilities of
B&T and the satisfaction of the conditions precedent to EuroBancshares'
and Eurobank 's obligations described in ARTICLE VIII of this Agreement.
B&T agrees at any time, and from time to time, to furnish to
EuroBancshares and Eurobank as soon as practicable, any additional
information that EuroBancshares or Eurobank may reasonably request. No
investigation by EuroBancshares, Eurobank or their respective
representatives shall affect the representations and warranties set forth
herein.
43
Section 5.06 Invitations to and Attendance at Directors' and Committee
Meetings. B&T shall give notice to two (2) designees of EuroBancshares and/or
Eurobank, and shall invite such persons to attend all regular and special
meetings of the board of directors of B&T and all regular and special meetings
of any senior management committee (including but not limited to the executive
committee and the loan and discount committee of B&T) of B&T; provided, however,
that EuroBancshares' and/or Eurobank 's designees shall excuse themselves from
the portion of any meeting at which the Agreement is discussed. If the Merger is
finally disapproved by any appropriate regulatory authority or if this Agreement
is terminated pursuant to its terms, EuroBancshares' and/or Eurobank's designees
will no longer be entitled to notice of and permission to attend such meetings.
Section 5.07 Additional Financial Statements and Tax Returns. B&T shall
promptly furnish, when available, EuroBancshares and Eurobank with (A) unaudited
financial statements of B&T as of and for the period ended December 31, 2003
(and for each subsequent quarter-ending during the term of this Agreement), (B)
true and complete copies of the Report of Condition and Income of B&T as of
December 31, 2003 (and for each subsequent quarter-ending during the term of
this Agreement), (C) audited financial statements of B&T as of and for the year
ended December 31, 2003, and (D) a true and complete copy of the Federal income
tax return of B&T as filed with the IRS for the year ended December 31, 2003.
Section 5.08 Untrue Representations. B&T shall promptly notify
EuroBancshares and Eurobank in writing if B&T becomes aware of any fact or
condition that makes untrue, or shows to have been untrue, in any material
respect, any schedule or any other information furnished to EuroBancshares or
Eurobank or any representation or warranty made in or pursuant to this Agreement
or that results in B&T's failure to comply with any covenant, condition or
agreement contained in this Agreement.
Section 5.09 Litigation and Claims. B&T shall promptly notify
EuroBancshares and Eurobank in writing of any litigation, or of any claim,
controversy or contingent liability that might be expected to become the subject
of litigation, against B&T or affecting any of its properties, if such
litigation or potential litigation might, in the event of an unfavorable
outcome, result in a Material Adverse Change, and B&T shall promptly notify
EuroBancshares and Eurobank of any legal action, suit or proceeding or judicial,
administrative or governmental investigation, pending or, to the knowledge of
B&T, threatened against B&T that questions or might question the validity of
this Agreement or the agreements contemplated hereby, or any actions taken or to
be taken by B&T pursuant hereto or thereto or seeks to enjoin or otherwise
restrain the transactions contemplated hereby or thereby.
Section 5.10 Notice of Material Adverse Changes. B&T shall promptly notify
EuroBancshares and Eurobank in writing if any change shall have occurred or been
threatened (or any development shall have occurred or been threatened involving
a prospective change) in the business, financial condition, operations or
prospects of B&T that has or may reasonably be expected to have or lead to a
Material Adverse Change.
Section 5.11 Acquisition Proposals.
A. B&T agrees that it will not, and will cause its officers,
directors, agents, advisors and affiliates not to, solicit, encourage,
initiate, participate in or knowingly
44
facilitate inquiries and proposals with respect to, or engage in
negotiations concerning, or provide any confidential or nonpublic
information or data to, or have any discussions with, any person relating
to, any Acquisition Proposal (as defined below); provided, however, in the
event that B&T receives an unsolicited bona fide Acquisition Proposal and
B&T's board of directors concludes in good faith after consultation with
its legal advisors that such Acquisition Proposal constitutes a Superior
Proposal (as defined below), B&T may, and may permit its representatives
to, furnish or cause to be furnished nonpublic information and participate
in such negotiations or discussions to the extent that B&T's board of
directors concludes in good faith (and based on the written advice of
counsel) that failure to take such actions would result in a violation of
its fiduciary duties under applicable law; provided, further, that prior
to providing any nonpublic information permitted to be provided pursuant
to the previous clause, it will have entered into a confidentiality
agreement with such third party on terms no more favorable to such person
than contained in the confidentiality provisions of this Agreement,
including ARTICLE X. B&T will promptly (within one business day) advise
EuroBancshares and Eurobank following the receipt of any Acquisition
Proposal and the substance thereof (including the identity of the person
making such Acquisition Proposal), and will keep EuroBancshares and
Eurobank apprised of any related developments, discussions and
negotiations (including the terms and conditions of the Acquisition
Proposal) on a current basis.
B. If B&T enters into a letter of intent or definitive agreement
regarding an Acquisition Proposal with any other person or entity (other
than a party hereto) prior to the Effective Date and subsequently
terminates this Agreement prior to Closing, B&T covenants and agrees that
it shall pay to EuroBancshares upon demand at any time the principal sum
of $200,000 ("Termination Fee"); provided, however, that the obligation to
make the payment provided for herein shall not apply to EuroBancshares or
Eurobank if they had the right to terminate the Agreement pursuant to
ARTICLE IX and they did, in fact, exercise its right to terminate the
Agreement pursuant to ARTICLE IX. Such payment shall compensate
EuroBancshares and Eurobank for their direct and indirect costs and
expenses in connection with the transactions contemplated by this
Agreement, including their management time devoted to negotiation and
preparation for the Merger and their loss as a result of the Merger not
being consummated. B&T acknowledges and agrees that it would be
impracticable or extremely difficult to fix the actual damages resulting
from the foregoing events and, therefore, has agreed upon the foregoing
payment as liquidated damages which shall not be deemed to be in the
nature of a penalty.
C. Any Termination Fee that becomes payable pursuant to Section
5.11B shall be paid immediately, via wire transfer to an account
designated by EuroBancshares.
D. Notwithstanding any provision of Section 5.11B, any
Termination Fee that becomes payable pursuant to Section 5.11B and is not
paid immediately (i) shall be increased by any costs and expenses actually
incurred in connection with the collection under and enforcement of this
Section 5.11 and (ii) shall bear interest on such unpaid portion of the
Termination Fee, commencing on the date that the Termination Fee became
due, at a rate per annum equal to 10%.
45
E. For purposes of this Section 5.11, the following definitions
shall apply:
(i) "Acquisition Proposal, " means a tender or exchange
offer, proposal for a merger, consolidation or other business
combination involving B&T, or any proposal or offer to acquire in
any manner more than 15% of the voting power in, or more than 15% of
the business, assets or deposits of B&T, other than transactions
contemplated by this Agreement.
(ii) "Superior Proposal" means a bona fide written
Acquisition Proposal which the board of directors of B&T concludes
in good faith to be substantially more favorable from a financial
point of view to the shareholders than the Merger and the other
transactions contemplated hereby, (i) after receiving advice of its
legal advisors, (ii) after taking into account the likelihood of
consummation of such transaction on the terms set forth therein (as
compared to, and with due regard for, the terms herein), and (iii)
after taking into account all legal (with the advice of outside
counsel), financial (including the financial terms of any such
proposal), regulatory and other aspects of such proposal and any
other relevant factors permitted to be taken into account under
applicable law.
Section 5.12 Consents and Approvals. B&T shall use its best efforts to
obtain all consents and approvals from third parties, including those listed on
Schedule 3.08 of the Confidential Disclosure Memorandum, at the earliest
practicable time.
Section 5.13 Environmental Investigation; Right to Terminate Agreement.
A. EuroBancshares, Eurobank, and their respective consultants,
agents and representatives, at the sole cost and expense of EuroBancshares
and Eurobank, shall have the right to the same extent that B&T has such
right, but not the obligation or responsibility, to inspect any Property,
including, without limitation, conducting asbestos surveys and sampling,
environmental assessments and investigation, and other environmental
surveys and analyses including soil and ground sampling ("Environmental
Inspections ") at any time on or prior to March 15, 2004. EuroBancshares
or Eurobank shall notify B&T prior to any physical inspections of the
Property, and B&T may place reasonable restrictions on the time of such
inspections. If, as a result of any such Environmental Inspection, further
investigation ("secondary investigation") including, without limitation,
test borings, soil, water and other sampling is deemed desirable by
EuroBancshares or Eurobank, EuroBancshares or Eurobank shall (i) notify
B&T of any Property for which it intends to conduct such a secondary
investigation and the reasons for such secondary investigation, and (ii)
at the sole cost and expense of EuroBancshares and Eurobank, commence such
secondary investigation, on or prior to March 31, 2004. EuroBancshares or
Eurobank shall give reasonable notice to B&T of such secondary
investigations, and B&T may place reasonable time and place restrictions
on such secondary investigations.
B. B&T agrees to indemnify and hold harmless EuroBancshares and
Eurobank for any claims for damage to property, or injury or death to
persons, made as a result of any Environmental Inspection or secondary
investigation conducted by EuroBancshares, Eurobank or their respective
agents, which damage or injury is
46
attributable to the negligent actions of B&T or its agents. EuroBancshares
and Eurobank agree to indemnify and hold harmless B&T for any claims for
damage to property, or injury or death to persons, attributable to the
negligent actions of EuroBancshares, Eurobank, or their respective agents
in performing any Environmental Inspection or secondary investigation
except to the extent caused in whole or in part by the negligence of B&T.
Neither EuroBancshares nor Eurobank shall have any liability or
responsibility of any nature whatsoever for the results, conclusions or
other findings related to any Environmental Inspection, secondary
investigation or other environmental survey. If this Agreement is
terminated, then except as otherwise required by law, reports to any
governmental authority of the results of any Environmental Inspection,
secondary investigation or other environmental survey shall not be made by
EuroBancshares or Eurobank. Neither EuroBancshares nor Eurobank shall make
such report prior to Closing unless required to do so by law, and in such
case will give B&T reasonable notice of such intentions.
C. EuroBancshares and Eurobank shall have the right to terminate
this Agreement if (i) the factual substance of any warranty or
representation set forth in Section 3.21 is not materially true and
accurate; (ii) the results of such Environmental Inspection, secondary
investigation or other environmental survey are in good faith disapproved
by EuroBancshares or Eurobank because the environmental inspection,
secondary investigation or other environmental survey identifies material
violations or potential violations of Environmental Laws; (iii) B&T has
refused to allow EuroBancshares or Eurobank to conduct an Environmental
Inspection or secondary investigation in a manner that EuroBancshares or
Eurobank reasonably considers necessary; (iv) the Environmental
Inspection, secondary investigation or other environmental survey
identifies any past or present event, condition or circumstance that would
or potentially would require substantial remedial or cleanup action or
result in a Material Adverse Change; (v) the Environmental Inspection,
secondary investigation or other environmental survey identifies the
presence of any underground or above ground storage tank in, on or under
any Property that is not shown to be in compliance with all Environmental
Laws applicable to the tank either now or at a future time certain, or
that has had a release of petroleum or some other Hazardous Material that
has not been cleaned up to the satisfaction of the relevant governmental
authority or any other party with a legal right to compel cleanup; or (vi)
the Environmental Inspection, secondary investigation or other
environmental survey identifies the presence of any asbestos-containing
material in, on or under any Property, the removal of which would result
in a Material Adverse Change. On or prior to April 30, 2004,
EuroBancshares or Eurobank shall advise B&T in writing as to whether
EuroBancshares and Eurobank intend to terminate this Agreement because
EuroBancshares or Eurobank disapproves of the results of the Environmental
Inspection, secondary investigation or other environmental survey. B&T
shall have the opportunity to correct any objected to violations or
conditions to EuroBancshares' and Eurobank's reasonable satisfaction prior
to May 31, 2004. In the event that B&T fails to demonstrate its
satisfactory correction of the violations or conditions to EuroBancshares
and Eurobank, EuroBancshares or Eurobank may terminate the Agreement at
any time after June 15, 2004. In the event that this Agreement is
terminated in accordance with this Section 5.13, EuroBancshares or
Eurobank shall provide B&T with a copy of all inspection reports and
surveys upon which EuroBancshares or Eurobank has relied to terminate this
Agreement.
47
D. B&T agrees to make available to EuroBancshares, Eurobank and
their respective consultants, agents and representatives all document s
and other material relating to environmental conditions of any Property
including, without limitation, the results of other environmental
inspections and surveys. B&T also agrees that all engineers and
consultants who prepared or furnished such reports may discuss such
reports and information with EuroBancshares and Eurobank and shall be
entitled to certify the same in favor of EuroBancshares, Eurobank and
their respective consultants, agents and representatives and make all
other data available to EuroBancshares, Eurobank and their respective
consultants, agents and representatives.
Section 5.14 Conforming Accounting and Reserve Policies; Restructuring
Expenses.
A. Notwithstanding that B&T believes that it has established all
reserves and taken all provisions for possible loan losses required by
GAAP and applicable laws, rules and regulations, B&T recognizes that
Eurobank may have adopted different loan, accrual and reserve policies
(including loan classifications and levels of reserves for possible loan
losses). From and after the date of this Agreement to the Effective Date,
B&T and Eurobank shall consult and cooperate with each other with respect
to conforming, as specified in a written notice from Eurobank to B&T,
based upon such consultation and as hereinafter provided, the loan,
accrual and reserve policies of B&T to those policies of Eurobank.
B. In addition, from and after the date of this Agreement to the
Effective Date, B&T and Eurobank shall consult and cooperate with each
other with respect to determining, as specified in a written notice from
Eurobank to B&T, based upon such consultation and as hereinafter provided,
appropriate accruals, reserves and charges to establish and take in
respect of excess equipment write-off or write-down of various assets and
other appropriate charges and accounting adjustments taking into account
the parties' business plans following the Merger.
C. B&T and Eurobank shall consult and cooperate with each other
with respect to determining, as specified in a written notice from
Eurobank to B&T, based upon such consultation and as hereinafter provided,
the amount and the timing for recognizing for financial accounting
purposes the expenses of the Merger and the restructuring charges related
to or to be incurred in connection with the Merger.
D. Subject to Section 1.06, at the request of Eurobank, B&T shall
establish and take such reserves and accruals as Eurobank shall request to
conform B&T's loan, accrual and reserve policies to Eurobank 's policies,
shall establish and take such accruals, reserves and charges in order to
implement such policies in respect of excess facilities and equipment
capacity, severance costs, litigation matters, write-off or write-down of
various assets and other appropriate accounting adjustments, and to
recognize for financial accounting purposes such expenses of the Merger
and restructuring charges related to or to be incurred in connection with
the Merger; provided, however, that B&T shall not be required to take any
such action that is not consistent with GAAP.
E. No accrual or other adjustment made by B&T pursuant to the
provisions of Section 1.06 or this Section 5.14 shall constitute an
acknowledgement by B&T or
48
create any implication, for any purpose, that such accrual or adjustment
was necessary for any purpose other than to comply with the provisions of
Section 1.06 or this Section 5.14. No accrual or other adjustment made by
B&T pursuant to the provisions of this Section 5.14 that would not have
been made but for the provisions of this Section 5.14 shall be taken into
consideration or otherwise affect the calculation of B&T Tangible Net Book
Value for purposes of the calculation of the Merger Consideration. Nothing
in this Section 5.14 shall be deemed to affect B&T's obligation to charge
off or make accruals to its loans in the ordinary course of business and
consistent with past practices and safe and sound banking principles.
Section 5.15 Proxies. Within ten (10) days of the date of this Agreement,
B&T and each of the persons set forth on Schedule 5.15 of the Confidential
Disclosure Memorandum shall execute the Voting Agreement and Irrevocable Proxy
in the form attached hereto as Exhibit B, and B&T acknowledges that such persons
have agreed that they will vote the shares of B&T Stock owned by them in favor
of this Agreement and the Merger and the transactions contemplated hereby and
thereby, subject to required regulatory approvals.
Section 5.16 Formation and Organization of the Special Purpose Vehicle. On
or prior to the Closing Date, B&T will incorporate, charter and organize the
Special Purpose Vehicle as a corporation under the laws of the Commonwealth, and
B&T shall cause the Special Purpose Vehicle to execute and deliver the
Indemnification Agreement to EuroBancshares and Eurobank.
Section 5.17 Termination of Change in Control and Employee Contracts. B&T
shall take all such actions as may be necessary to cause each of the agreements
listed on Schedule 8.08 of the Confidential Disclosure Memorandum to be
terminable within thirty (30) days following the Effective Date.
Section 5.18 Exercise or Termination of Stock Options. B&T shall (i) use
its best efforts to cause the holders of all outstanding and unexercised options
to exercise their stock options and acquire shares of B&T Stock prior to the
Effective Date, (ii) to the extent that such options are not validly exercised
prior to the Effective Date, take such other actions permitted under the stock
option agreements to cause such options to terminate on or prior to the
Effective Date, and (iii) obtain an agreement from each option holder releasing
EuroBancshares and Eurobank from any and all liability with respect to such
options.
Section 5.19 Employee Plans. At the request of EuroBancshares or Eurobank,
B&T agrees to take all appropriate actions, prior to the Effective Date, to
cause its employee pension plans, as defined in Section 3(2) of ERISA, and its
employee welfare benefit plans, as defined in Section 3(1) of ERISA, to be
terminated, frozen, amended or merged into similar employee pension plans or
employee welfare benefit plans maintained by EuroBancshares or Eurobank, as
determined by EuroBancshares and Eurobank in their sole discretion, subject to
compliance with applicable law, so long as any such action preserves the rights
of the participants in such plans (including, without limitation, vesting
rights).
Section 5.20 Closing of B&T Branches. At the request of EuroBancshares or
Eurobank, B&T shall take all such steps as may be necessary to complete the
closing of those branches of B&T set forth on Schedule 5.20 of the Confidential
Disclosure Memorandum within forty (40) days following the Closing Date,
including, without limitation, the filing of any
49
applications or other documents necessary to obtain the approval of any
regulatory or other governmental authority required in connection with the
closing of such branches and the provision of any required customer notices at
such branches; provided, however, that EuroBancshares and Eurobank shall be
afforded a reasonable period of time following the Closing Date, which time
shall be not less than forty (40) days following the Closing Date, to remove
from the premises any furniture, equipment and other assets and property owned
by EuroBancshares and Eurobank.
Section 5.21 Director's and Officer's Insurance. Prior to the Closing
Date, B&T shall obtain tail insurance coverage, including a lender liability
endorsement and an errors & omissions policy relating to B&T's Corporate Trust
Business ("D&O Insurance"), under its existing director's and officer's
insurance policy for a period of three (3) years following the Closing Date that
will serve to reimburse the present and former directors and officers of B&T
with respect to claims against such directors and officers arising from facts or
events which occurred prior to the Closing Date; provided, however, that the
full cost of the premium associated with such D&O Insurance shall be paid in
full or otherwise reserved by B&T prior to the Closing.
Section 5.22 Disposition and Establishment of Participation Interest in
Certain B&T Loan. Prior to the Closing Date, B&T shall take all necessary and
appropriate steps to sell, transfer or otherwise dispose of that certain loan
set forth on Schedule 5.22 of the Confidential Disclosure Memorandum; provided,
however, that in connection with such sale, transfer or other disposition and
upon the approval of the board of directors of B&T, EuroBancshares and Eurobank,
B&T shall be permitted to purchase a participation interest in such loan in an
amount not to exceed $3,000,000.
Section 5.23 Disposition or Establishment of Repayment Plan for Certain
B&T Loan. Prior to the Closing Date, B&T shall take all necessary and
appropriate steps to sell, transfer, dispose of, or otherwise resolve or shall
establish an acceptable repayment plan with respect to that certain loan set
forth on Schedule 5.23 of the Confidential Disclosure Memorandum, in any case to
the satisfaction of EuroBancshares and Eurobank, in their sole discretion.
Section 5.24 Settlement of Certain Litigation Matters. Prior to the
Closing Date, B&T shall take all necessary and appropriate steps to either (i)
obtain a final and non-appealable judgment with respect to all litigation
matters, including all claims related thereto, set forth on Schedule 5.24 of the
Confidential Disclosure Memorandum, or (ii) settle such litigation matters with
all claims against B&T and its Affiliates being dismissed with prejudice;
provided, however, that in the event that any such matters have not been so
resolved, the amount (including, without limitation, all legal fees costs and
other related expenses) relating to such matters set forth on Schedule 5.24 of
the Confidential Disclosure Memorandum, which amount shall be determined by a
majority of the members of the Joint Committee or, absent such agreement, by a
third party acceptable to a majority of the members of the Joint Committee,
shall be deducted from Tangible Net Book Value pursuant to Section
1.05I(v)(f)(3).
Section 5.25 Termination of Certain Relationships. Prior to the Closing
Date, B&T shall give notice to the persons listed on Schedule 5.25 of the
Confidential Disclosure Memorandum that the contract described therein shall
terminate on the Closing Date.
50
ARTICLE VI.
COVENANTS OF EUROBANCSHARES AND EUROBANK
EuroBancshares and Eurobank hereby make the covenants set forth in this
ARTICLE VI to B&T.
Section 6.01 Best Efforts. Each of EuroBancshares and Eurobank agrees to
use its best efforts to cause the consummation of the transactions contemplated
hereby in accordance with the terms and conditions of this Agreement.
Section 6.02 Information for Applications and Statements. Each of
EuroBancshares and Eurobank will promptly furnish to B&T all information
concerning EuroBancshares and Eurobank, including, but not limited to, financial
statements, required for inclusion in (A) any proxy statement to be used by B&T
in connection with the approval of the shareholders of B&T of the transactions
contemplated hereby, which proxy statement shall be prepared by EuroBancshares
with the assistance of B&T and shall be in form and substance satisfactory to
EuroBancshares and B&T, and (B) any application or statement to be made by B&T
or filed by B&T with any governmental body in connection with the transactions
contemplated by this Agreement, or in connection with any unrelated transactions
during the pendency of this Agreement, and each of EuroBancshares and Eurobank
represents and warrants that all information so furnished for such statements
and applications shall be true and correct in all material respects and shall
not omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. Each of EuroBancshares and Eurobank shall otherwise fully
cooperate with B&T in the filing of any applications or other documents
necessary to consummate the transactions contemplated by this Agreement,
including the Merger.
Section 6.03 Untrue Representations. EuroBancshares or Eurobank shall
promptly notify B&T in writing if EuroBancshares or Eurobank becomes aware of
any fact or condition that makes untrue, or shows to have been untrue, in any
material respect, any schedule or any other information furnished to B&T or any
representation or warranty made in or pursuant to this Agreement or that results
in EuroBancshares' or Eurobank's failure to comply with any covenant, condition
or agreement contained in this Agreement.
Section 6.04 Litigation and Claims. EuroBancshares or Eurobank shall
promptly notify B&T of any legal action, suit or proceeding or judicial,
administrative or governmental investigation, pending or, to the knowledge of
EuroBancshares or Eurobank, threatened against EuroBancshares or Eurobank that
questions or might question the validity of this Agreement or the agreements
contemplated hereby, or any actions taken or to be taken by EuroBancshares or
Eurobank pursuant hereto or thereto or seeks to enjoin or otherwise restrain the
transactions contemplated hereby or thereby.
Section 6.05 Regulatory and Other Approvals. EuroBancshares or Eurobank
shall promptly, but in no event later than forty- five (45) days following the
date of this Agreement, file or cause to be filed applications for all
regulatory approvals required to be obtained by EuroBancshares or Eurobank in
connection with this Agreement and the other agreements contemplated hereby,
including, without limitation, (i) any application as may be required by
EuroBancshares or Eurobank to establish an International Banking Entity ("IBE")
subsidiary of
51
Eurobank under the International Banking Center Regulatory Act, and such other
applications as may be necessary to permit Eurobank to sell or otherwise
transfer the IBE to EuroBancshares, and (ii) any application as may be necessary
for Eurobank to close one of its branch locations in Ponce, Puerto Rico and
relocate the operations of such branch to the Ponce branch of B&T.
EuroBancshares or Eurobank shall promptly furnish B&T with copies of all such
regulatory filings and all correspondence for which confidential treatment has
not been requested. EuroBancshares and Eurobank shall use their best efforts to
obtain all such regulatory approvals and any other approvals from third parties,
including those identified in Section 4.08, at the earliest practicable time.
Section 6.06 Notice of Material Adverse Change. EuroBancshares or Eurobank
shall promptly notify B&T in writing if any change shall have occurred or been
threatened (or any development shall have occurred or been threatened involving
a prospective change) in the business, financial condition, operations or
prospects of EuroBancshares that has or may reasonably be expected to have or
lead to a Material Adverse Change relating to EuroBancshares, or that would
adversely affect, prevent or delay consummation of the transactions contemplated
by this Agreement or the other agreements contemplated hereby.
Section 6.07 Employee Matters.
A. Following the Closing Date, Eurobank may provide officers and
other employees of B&T, who become employees of Eurobank following the
Merger, the right to participate in Eurobank's employee benefit plans as
are then in effect for employees of Eurobank on the same basis as
similarly situated employees of Eurobank, subject to any applicable
vesting requirements. In the event that EuroBancshares determines, in its
sole discretion, that its employee pension plans may be amended to permit
B&T employees who become employees of EuroBancshares to roll over their
401(k) accounts into EuroBancshares' employee pension plans without
creating any liability to EuroBancshares or Eurobank, then EuroBancshares
shall amend such employee pension plans accordingly.
B. At the Closing, EuroBancshares and Eurobank shall pay to each
employee of B&T listed on Schedule 6.07B of the Confidential Disclosure
Memorandum that remains an employee of B&T as of the Closing Date, a
retention bonus equal to the amount set forth opposite such employee's
name on Schedule 6.07B of the Confidential Disclosure Memorandum.
Section 6.08 Request for Tax Ruling. EuroBancshares shall promptly prepare
and file with the Department of Treasury of Puerto Rico a request for a ruling
to the effect that (A) the Merger will be treated as a "tax free reorganization"
within the meaning of Section 1112(g)(1)(A) of the Internal Revenue Code of
Puerto Rico, and (B) all or substantially all of the NOL's of B&T shall survive
the Closing Date and will be available to Eurobank to offset its income and
reduce its future tax liabilities to the same extent that such NOL's would
otherwise be available to B&T.
52
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF B&T
All obligations of B&T under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part by B&T:
Section 7.01 Compliance with Representations, Warranties and Agreements.
All representations and warranties made by EuroBancshares and Eurobank in this
Agreement or in any document or schedule delivered to B&T pursuant hereto shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing with the same force and
effect as if such representations and warranties were made at and as of the
Closing, except with respect to those representations and warranties
specifically made as of an earlier date (in which case such representations and
warranties shall be true as of such earlier date). EuroBancshares and Eurobank
shall have performed or complied in all material respects with all agreements,
terms, covenants and conditions required by this Agreement to be performed or
complied with by EuroBancshares and Eurobank prior to or at the Closing.
Section 7.02 Shareholder Approvals. The holders of the B&T Stock entitled
to vote on the Merger and this Agreement shall have approved the Merger and this
Agreement in accordance with Section 91 of the Banking Law.
Section 7.03 Government and Other Approvals. EuroBancshares and Eurobank
shall have received approvals, acquiescence or consents of the transactions
contemplated by this Agreement, from all necessary governmental agencies and
authorities and other third parties, including but not limited to the Federal
Reserve Bank of New York, the FDIC, and the OCFI, and all applicable waiting
periods shall have expired, and the approvals and consents of all third parties
required to consummate this Agreement and the other agreements contemplated
hereby, and the transactions contemplated hereby and thereby, including all
consents described on Schedule 3.08 of the Confidential Disclosure Memorandum
and in Section 4.08. Such approvals and the transactions contemplated hereby
shall not have been contested or threatened to be contested by any Commonwealth,
federal or state governmental authority or by any other third party (except
shareholders asserting statutory dissenters' appraisal rights) by formal
proceedings.
Section 7.04 No Litigation. No action shall have been taken, and no
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to the acquisition by any Commonwealth,
federal, state or foreign government or governmental authority or by any court,
domestic or foreign, including the entry of a preliminary or permanent
injunction, that would (A) make the Agreement or any other agreement
contemplated hereby, or the transactions contemplated hereby or thereby illegal,
invalid or unenforceable, (B) impose material limits in the ability of any party
to this Agreement to consummate the Agreement or any other agreement
contemplated hereby, or the transactions contemplated hereby or thereby, or (C)
if the Agreement or any other agreement contemplated hereby, or the transactions
contemplated hereby or thereby are consummated, subject B&T or subject any
officer, director, shareholder or employee of B&T to criminal or civil
liability. No action or proceeding before any court or governmental authority,
domestic or foreign, by any government or governmental authority or by any other
person, domestic or foreign, shall be
53
threatened, instituted or pending that would reasonably be expected to result in
any of the consequences referred to in clauses (A) through (C) above.
Section 7.05 Revenue Ruling from the Department of Treasury.
EuroBancshares and Eurobank shall have received a ruling from the Puerto Rico
Department of Treasury to the effect that (A) the Merger will be treated as a
"tax free reorganization" within the meaning of Section 1112(g)(1)(A) of the
Internal Revenue Code of Puerto Rico, and (B) all or substantially all of the
NOL's of B&T shall survive the Closing Date and will be available to Eurobank to
offset its income and reduce its future tax liabilities to the same extent that
such NOL's would otherwise be available to B&T.
Section 7.06 Fairness Opinion. B&T shall have received from Xxxxx, Xxxxxx
& Company an unqualified written opinion (which opinion shall be completed and
delivered to EuroBancshares and Eurobank within twenty-one (21) days following
the date of this Agreement) to the effect that the Merger and the Merger
Consideration to be paid to the shareholders of B&T under the terms of this
Agreement is fair to the B&T Shareholders from a financial point of view.
Section 7.07 Designation of Preferred Stock. EuroBancshares shall have
designated a series of preferred stock with such rights and preferences as set
forth on Exhibit F, which shares of preferred stock are intended to be issued to
the B&T Shareholders owning shares Series B Preferred Stock in accordance with
Section 1.05C.
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EUROBANCSHARES AND
EUROBANK
All obligations of EuroBancshares and Eurobank under this Agreement are
subject to the fulfillment, prior to or at the Closing, of each of the following
conditions, any or all of which may be waived in whole or in part by
EuroBancshares and Eurobank.
Section 8.01 Compliance with Representations, Warranties and Agreements.
All representations and warranties made by B&T in this Agreement or in any
document or schedule delivered to EuroBancshares or Eurobank pursuant hereto
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Closing with the same force
and effect as if such representations and warranties were made at and as of the
Closing, except with respect to those representations and warranties
specifically made as of an earlier date (in which case such representations and
warranties shall be true as of such earlier date). B&T shall have performed or
complied in all material respects with all agreements, terms, covenants and
conditions required by this Agreement to be performed or complied with by B&T
prior to or at the Closing.
Section 8.02 Shareholder Approvals. The holders of the B&T Stock entitled
to vote on the Merger and this Agreement shall have approved the Merger and this
Agreement in accordance with Section 91 of the Banking Law and no B&T
Shareholder or group of B&T Shareholders owning ten percent (10%) or more of the
issued and outstanding shares of B&T Common Stock or B&T Series B Preferred
Stock shall have exercised his or her dissenters' rights with respect to the
Merger.
54
Section 8.03 Government and Other Approvals. EuroBancshares and Eurobank
shall have received approvals, acquiescence or consents, all on terms and
conditions acceptable to EuroBancshares and Eurobank in their sole and
reasonable discretion, of the transactions contemplated by this Agreement
(including, without limitation, (i) any approvals necessary for the
establishment by Eurobank of an IBE subsidiary, (ii) any approvals as may be
necessary for the sale or transfer of the IBE to EuroBancshares, (iii) any
approvals as may be necessary for Eurobank to close one of its branches in
Ponce, Puerto Rico and relocate the operations of such branch to the Ponce
branch of B&T, and (iv) any approvals necessary to close those branches of B&T
set forth on Schedule 5.20 of the Confidential Disclosure Memorandum) from all
necessary governmental agencies and authorities, including but not limited to
the Federal Reserve Bank of New York, the FDIC, and the OCFI, and all applicable
waiting periods shall have expired, and the approvals and consents of all third
parties required to consummate this Agreement and the other agreements
contemplated hereby, and the transactions contemplated hereby and thereby,
including all consents described on Schedule 3.08 of the Confidential Disclosure
Memorandum and in Section 4.08. Such approvals and the transactions contemplated
hereby shall not have been contested or threatened to be contested by any
Commonwealth, federal or state governmental authority or by any other third
party (except shareholders asserting statutory dissenters' appraisal rights) by
formal proceedings. It is understood that, if such contest is brought by formal
proceedings, EuroBancshares and Eurobank may, but shall not be obligated to,
answer and defend such contest or otherwise pursue this transaction over such
objection.
Section 8.04 No Litigation. No action shall have been taken, and no
statute, rule, regulation or order shall have been promulgated, enacted,
entered, enforced or deemed applicable to this Agreement, the Merger, or the
transactions contemplated hereby or thereby by any Commonwealth, federal, state
or foreign government or governmental authority or by any court, domestic or
foreign, including the entry of a preliminary or permanent injunction, that
would (A) make this Agreement or any other agreement contemplated hereby, or the
transactions contemplated hereby or thereby illegal, invalid or unenforceable,
(B) require the divestiture of a material portion of the assets of B&T, (C)
impose material limits in the ability of any party to this Agreement to
consummate the Agreement or any other agreement contemplated hereby, or the
transactions contemplated hereby or thereby, (D) otherwise result in a Material
Adverse Change or (E) if this Agreement or any other agreement contemplated
hereby, or the transactions contemplated hereby or thereby are consummated,
subject EuroBancshares or Eurobank or subject any officer, director, shareholder
or employee of EuroBancshares or Eurobank to criminal or civil liability. No
action or proceeding before any court or governmental authority, domestic or
foreign, by any government or governmental authority or by any other person,
domestic or foreign, shall be threatened, instituted or pending that would
reasonably be expected to result in any of the consequences referred to in
clauses (A) through (E) above.
Section 8.05 No Material Adverse Change. There shall have been no Material
Adverse Change since December 31, 2003.
Section 8.06 Director Support Agreements. EuroBancshares and Eurobank
shall have received from each director listed on Schedule 8.06 of the
Confidential Disclosure Memorandum a Director Support Agreement, the form of
which is attached hereto as Exhibit A.
Section 8.07 Releases of Directors and Officers. EuroBancshares and
Eurobank shall have received from each of the directors of B&T, an instrument,
the form of which is attached
55
hereto as Exhibit C, dated the Closing Date, releasing B&T from any and all
claims of such directors (except to their deposits and accounts). EuroBancshares
and Eurobank shall have received from each of the officers of B&T, an
instrument, the form of which is attached hereto as Exhibit D, dated the Closing
Date, releasing B&T from any and all claims of such officers (except to their
deposits and accounts).
Section 8.08 Termination of Change in Control and Employee Contracts. Set
forth on Schedule 8.08 of the Confidential Disclosure Memorandum is a correct
and complete list of all existing change in control, employment, and other
similar agreements of relating to or otherwise affecting B&T. As of the
Effective Date, all such agreements listed on Schedule 8.08 of the Confidential
Disclosure Memorandum shall be terminable by EuroBancshares or Eurobank within
thirty (30) days following the Effective Date.
Section 8.09 Exercise or Termination of Stock Options. On or prior to the
date of the Shareholders' Meeting, B&T shall have (i) caused the holders of all
outstanding and unexercised options to acquire shares of B&T Stock to exercise
or otherwise cause the termination or cancellation of such stock options, and
(ii) obtained an agreement from each option holder releasing EuroBancshares and
Eurobank from any and all liability with respect to such options.
Section 8.10 Long-Term Lease Arrangement. As of the Effective Date,
EuroBancshares shall have executed a long-term lease agreement (not less than
five (5) years) related to the B&T branch facilities located at San Xxxxxxxx
Plaza or shall have received the consent of the landlords of such facilities to
the assumption by EuroBancshares or Eurobank of such lease.
Section 8.11 Option to Terminate Service Contracts. All B&T contracts
relating to equipment or services, including those related to MIS programs,
shall be cancelable at the option or EuroBancshares or Eurobank within thirty
(30) days following the Effective Date.
Section 8.12 Auditor Opinion. EuroBancshares shall have received an
opinion or similar advise from its independent external auditors that after
market valuation of all assets and liabilities as required by GAAP resulting
goodwill, after the Merger, if any (excess of Merger Consideration over assets
minus liabilities acquired), shall not exceed $500,000.
Section 8.13 Administrative and Regulatory Actions. EuroBancshares and
Eurobank shall have received such assurances as they deem necessary or
appropriate in their sole discretion that any order, directive, agreement,
understanding or administrative action of any type regarding B&T or any of its
affiliates, including but not limited to the C&D Order, and also including any
assessment of civil money penalties, whether with the FDIC, the OCFI or any
other governmental authority applicable to B&T, shall be of no further force and
effect against and shall not impose, prior to or after the Effective Date, any
liability to EuroBancshares, Eurobank, or to any of their respective officers or
directors, for failure to perform, or for noncompliance with, any terms of any
such regulatory order, directive, agreement or administrative action.
Section 8.14 Securities Laws Exemptions. EuroBancshares shall have
received satisfactory evidence that the offering of the EuroBancshares Common
Stock and EuroBancshares Preferred Stock pursuant to this Agreement shall have
qualified for an
56
exemption from registration under the Securities Act of 1933, as amended, and
any applicable Commonwealth or state securities laws.
Section 8.15 Revenue Ruling from the Department of Treasury.
EuroBancshares and Eurobank shall have received a ruling from the Puerto Rico
Department of Treasury to the effect that (A) the Merger will be treated as a
"tax free reorganization" within the meaning of Section 1112(g)(1)(A) of the
Internal Revenue Code of Puerto Rico, and (B) all or substantially all of the
NOL's of B&T shall survive the Closing Date and will be available to Eurobank to
offset its income and reduce its future tax liabilities to the same extent that
such NOL's would otherwise be available to B&T.
Section 8.16 Closing of B&T Branches. B&T shall have taken all such steps
as may be necessary to complete the closing of certain branches of B&T as has
been requested by EuroBancshares or Eurobank in accordance with Section 5.20 and
shall have received all approvals, acquiescence or consents, all on terms and
conditions acceptable to EuroBancshares and Eurobank in their sole and
reasonable discretion, necessary to complete the closing of such branches within
forty (40) days following the Closing Date; provided, however, that
EuroBancshares and Eurobank shall be afforded a reasonable period of time
following the Closing Date, which time shall be not less than forty (40) days
following the Closing Date, to remove from the premises any furniture, equipment
and other assets and property owned by EuroBancshares and Eurobank.
Section 8.17 Formation and Organization of the Special Purpose Vehicle.
B&T shall have incorporated, chartered and organized the Special Purpose Vehicle
as a corporation under the laws of the Commonwealth.
Section 8.18 Closing Financial Statements. At least five (5) business days
prior to the Closing Date, B&T shall provide EuroBancshares and Eurobank with
drafts of B&T financial statements presenting the financial condition of B&T as
of the close of business on the last day of the last month ended prior to the
Closing Date and B&T's results of operations for the period January 1, 2004
through the close of business on the last day of the last month ended prior to
the Closing Date (the "Closing Financial Statements"), which Closing Financial
Statements shall be finalized on the Closing Date. Such Closing Financial
Statements shall have been prepared in all material respects in accordance with
GAAP and regulatory accounting principles and other applicable legal and
accounting requirements, and reflect all period-end accruals and other
adjustments, including, without limitation, the accrual of all fees and expenses
of all attorneys, accountants, investment bankers and other advisors and agents
for B&T for services rendered solely in connection with the transactions
contemplated by this Agreement and the accrual of all other fees and expenses
associated with the transactions contemplated hereby. Such financial statements
shall be accompanied by a certificate of B&T Chief Financial Officer, dated as
of the Closing Date, to the foregoing effect and to the effect that such
financial statements continue to reflect accurately, as of the date of the
certificate, the financial condition of B&T in all material respects.
Section 8.19 Legal Opinion. EuroBancshares and Eurobank shall have
received an opinion of counsel from X'Xxxxx & Xxxxxx, addressing each of the
matters identified in Exhibit E.
57
Section 8.20 Guaranty Agreement. EuroBancshares and Eurobank shall have
received an executed Indemnification Agreement from the Special Purpose Vehicle.
Section 8.21 Fairness Opinion. EuroBancshares and Eurobank shall have
received from Xxxxxxx Financial Advisors, Inc. an unqualified written opinion
(which opinion shall be completed and delivered to B&T within twenty-one (21)
days following the date of this Agreement) to the effect that the Merger and the
Merger Consideration to be paid to the shareholders of B&T under the terms of
this Agreement is fair to the shareholders of EuroBancshares from a financial
point of view.
Section 8.22 Disposition or Establishment of Participation Interest in
Certain B&T Loan. B&T shall have sold, transferred or otherwise disposed of that
certain loan set forth on Schedule 5.22 of the Confidential Disclosure
Memorandum and shall have delivered to EuroBancshares and Eurobank satisfactory
evidence releasing B&T from liability with respect to such loan; provided,
however, that in the event that B&T has purchased a participation interest in
such loan, which participation interest shall not exceed $3,000,000, the board
of directors of EuroBancshares and Eurobank shall have previously approved any
such participation interest.
Section 8.23 Disposition or Establishment of Repayment Plan for Certain
B&T Loan. B&T shall have sold, transferred, disposed of, or otherwise resolved
or established an acceptable repayment plan with respect to that certain loan
set forth on Schedule 5.23 of the Confidential Disclosure Memorandum and shall
have delivered to EuroBancshares and Eurobank satisfactory evidence releasing
B&T from liability with respect to such loan, in any case to the satisfaction of
EuroBancshares and Eurobank, in their sole discretion.
Section 8.24 Director's and Officer's Insurance. B&T shall have obtained
D&O Insurance, including a lender liability endorsement and an errors &
omissions policy relating to B&T's Corporate Trust Business, under its existing
director's and officer's insurance policy for a period of three (3) years
following the Closing Date that will serve to reimburse the present and former
directors and officers of B&T with respect to claims against such directors and
officers arising from facts or events which occurred prior to the Closing Date
and all premiums associated with such D&O Insurance have been paid in full or
otherwise reserved by B&T.
ARTICLE IX.
TERMINATION AND ABANDONMENT
Section 9.01 Right of Termination. This Agreement and the transactions
contemplated hereby may be terminated and abandoned at any time prior to or at
the Closing (notwithstanding approval thereof by the shareholders of B&T), as
follows, and in no other manner:
A. By the mutual consent of B&T, EuroBancshares and Eurobank,
duly authorized by the board of directors of each of B&T, EuroBancshares
and Eurobank.
B. By either B&T or EuroBancshares and Eurobank if the conditions
precedent to such parties' obligations to close specified in ARTICLE VII
and ARTICLE VIII, respectively, hereof have not been met or waived by June
30, 2004, or such later date as has been approved by B&T, EuroBancshares
and Eurobank.
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C. By either B&T or EuroBancshares and Eurobank if any of the
transactions contemplated by this Agreement are disapproved by any
regulatory authority whose approval is required to consummate such
transactions or if any court of competent jurisdiction in the Commonwealth
or the United States or other Commonwealth or United States (federal or
state) governmental body shall have issued an order, decree or ruling or
taken any other action restraining, enjoining, invalidating or otherwise
prohibiting the Agreement or the transactions contemplated hereby and such
order, decree, ruling or other action shall have been final and
nonappealable.
D. By EuroBancshares and Eurobank if they reasonably determine,
in good faith and after consulting with counsel, there is substantial
likelihood that any necessary regulatory approval will not be obtained or
will be obtained only upon a condition or conditions that make it
inadvisable to proceed with the transactions contemplated by this
Agreement.
E. By EuroBancshares and Eurobank if there shall have been any
Material Adverse Change with respect to B&T.
F. By B&T if there s hall have been any Material Adverse Change
with respect to EuroBancshares.
G. By EuroBancshares and Eurobank in accordance with Section 5.05
or Section 5.13.
H. By EuroBancshares and Eurobank if B&T shall fail to comply in
any material respect with any of its covenants or agreements contained in
this Agreement or in any other agreement contemplated hereby, and such
failure shall not have been cured within a period of thirty (30) calendar
days after written notice from EuroBancshares or Eurobank, or if any of
the representations or warranties of B&T contained herein or therein shall
be inaccurate in any material respect.
I. By B&T if EuroBancshares or Eurobank shall fail to comply in
any material respect with any of their respective covenants or agreements
contained in this Agreement or in any other agreement contemplated hereby
and such failure shall not have been cured within a period of thirty (30)
calendar days after notice from B&T, or if any of the representations or
warranties of EuroBancshares or Eurobank contained herein or therein shall
be inaccurate in any material respect.
J. By B&T if (i) B&T's board of directors receives an Acquisition
Proposal and concludes in good faith that such Acquisition Proposal is a
Superior Proposal and (ii) B&T pays the Termination Fee in accordance with
Section 5.11.
Section 9.02 Notice of Termination. The power of termination provided for
by Section 9.01 hereof may be exercised only by a notice given in writing, as
provided in Section 11.07 of this Agreement.
Section 9.03 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to the provisions of Section 9.01 hereof,
no party to this Agreement shall have any further liability or obligation in
respect of this Agreement, except that (A) each
59
party shall be responsible for their expenses and costs pursuant to Section
11.02 hereof, (B) the provisions of ARTICLE X hereof shall remain applicable,
(C) the provisions of Section 5.11 hereof shall remain applicable, and (D) each
party shall be liable for any willful and material breach of its
representations, warranties and covenants.
ARTICLE X.
CONFIDENTIAL INFORMATION
Section 10.01 Definition of "Recipient," "Disclosing Party" and
"Representative ". For purposes of this Article X, the term "Recipient" shall
mean the party receiving the Subject Information (as defined in Section 10.02)
and the term "Disclosing Party" shall mean the party furnishing the Subject
Information. The terms "Recipient" or "Disclosing Party", as used herein,
include: (1) all persons and entities related to or affiliated in any way with
the Recipient or the Disclosing Party, as the case may be, and (2) any person or
entity controlling, controlled by or under common control with the Recipient or
the Disclosing Party, as the case may be. The term "Representative " as used
herein, shall include all directors, officers, shareholders, employees,
representatives, advisors, attorneys, accountants and agents of any of the
foregoing. The term "person" as used in this ARTICLE X shall be broadly
interpreted to include, without limitation, any corporation, company, group,
partnership, governmental agency or individual.
Section 10.02 Definition of "Subject Information". For purposes of this
ARTICLE X, the term "Subject Information" shall mean all information furnished
to the Recipient or its Representatives (whether prepared by the Disclosing
Party, its Representatives or otherwise and whether or not identified as being
non public, confidential or proprietary) by or on behalf of the Disclosing Party
or its Representatives relating to or involving the business, operations or
affairs of the Disclosing Party or otherwise in possession of the Disclosing
Party. The term "Subject Information" shall not include information that (A) was
already in the Recipient's possession at the time it was first furnished to
Recipient by or on behalf of Disclosing Party, provided that such information is
not known by the Recipient to be subject to another confidentiality agreement
with or other obligation of secrecy to the Disclosing Party, its Subsidiaries or
another party, or (B) becomes generally available to the public other than as a
result of a disclosure by the Recipient or its Representatives, or (C) becomes
available to the Recipient on a non-confidential basis from a source other than
the Disclosing Party, its Representative or otherwise, provided that such source
is not known by the Recipient to be bound by a confidentiality agreement with or
other obligation of secrecy to the Disclosing Party, its Representative or
another party.
Section 10.03 Confidentiality. Each Recipient hereby agrees that the
Subject Information will be used solely for the purpose of reviewing and
evaluating the transactions contemplated by this Agreement and the other
agreements contemplated hereby, and that the Subject Information will be kept
confidential by the Recipient and the Recipient's Representatives; provided,
however, that (A) any of such Subject Information may be disclosed to the
Recipient's Representatives (including, but not limited to, the Recipient's
accountants, attorneys and investment bankers) who need to know such information
for the purpose of evaluating any such possible transaction between the
Disclosing Party and the Recipient (it being understood that such
Representatives shall be informed by the Recipient of the confidential nature of
such information and that the Recipient shall direct and cause such persons to
treat such
60
information confidentially); and (B) any disclosure of such Subject Information
may be made to which the Disclosing Party consents in writing prior to any such
disclosure by Recipient.
Section 10.04 Securities Law Concerns. Each Recipient hereby acknowledges
that the Recipient is aware, and the Recipient will advise the Recipient's
Representatives who are informed as to the matters that are the subject of this
Agreement, that the United States securities laws prohibit any person who has
received material, non-public information from an issuer of securities from
purchasing or selling securities of such issuer or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
Section 10.05 Return of Subject Information. In the event of termination
of this Agreement, for any reason, the Recipient shall promptly return to the
Disclosing Party all written material containing or reflecting any of the
Subject Information other than information contained in any application, notice
or other document filed with any governmental agency and not returned to the
Recipient by such governmental agency. In making any such filing, the Recipient
will request confidential treatment of such Subject Information included in any
application, notice or other document filed with any governmental agency.
Section 10.06 Specific Performance/Injunctive Relief. Each Recipient
acknowledges that the Subject Information constitutes valuable, special and
unique property of the Disclosing Party critical to its business and that any
breach of ARTICLE X of this Agreement by it will give rise to irreparable injury
to the Disclosing Party that is not compensable in damages. Accordingly, each
Recipient agrees that the Disclosing Party shall be entitled to obtain specific
performance and/or injunctive relief against the breach or threatened breach of
ARTICLE X of this Agreement by the Recipient or its Representatives. Each
Recipient further agrees to waive, and use its reasonable efforts to cause its
Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedies. Such remedies shall not be deemed the
exclusive remedies for a breach of ARTICLE X of this Agreement, but shall be in
addition to all other remedies available at law or in equity to the Disclosing
Party.
ARTICLE XI.
MISCELLANEOUS
Section 11.01 Survival of Representations and Warranties; Indemnification.
A. The parties hereto agree that all of their respective
representations and warranties contained in this Agreement shall survive
the Closing Date for a period of one (1) year. Notwithstanding the
foregoing, any claim with respect to a breach of representation or
warranty and any third party claim shall survive the time it would
otherwise terminate under this Section 11.01 if notice of the claim,
inaccuracy or breach shall have been given to the party against whom such
indemnity may be sought prior to such time.
B. On and following the Closing Date, the Special Purpose Vehicle
shall indemnify, save and hold harmless EuroBancshares and Eurobank, and
each of their respective officers, directors, shareholders and
representatives and their respective heirs, successors and assigns
(collectively, the "Related Parties"), from and against, and shall
61
reimburse EuroBancshares, Eurobank, and their Related Parties (without any
contribution right against B&T, EuroBancshares, Eurobank or their Related
Parties) with respect to any and all damages, liabilities, losses,
obligations, actions, suits, disbursements, claims, deficiencies,
penalties, interest, expenses, fines, assessments, charges and costs
(including, without limitation, reasonable attorneys' fees and expert
witness' fees, costs of investigation and court costs) of every kind
imposed on, incurred by or asserted against EuroBancshares, Eurobank, or
their Related Parties in any way relating to or arising from or out of (i)
a breach by B&T of any representation, warranty, covenant or other
agreement set forth in this Agreement or the other agreements contemplated
hereby, (ii) a claim by any third party described in Schedule 1.07B(ii) of
the Confidential Disclosure Memorandum against EuroBancshares or Eurobank
arising out of any action or inaction of B&T arising prior to the Closing
Date, or (iii) the matters described in Schedule 1.07B(iii) of the
Confidential Disclosure Memorandum.
C. EuroBancshares', Eurobank's and the Related Parties' remedies
under this Section 11.01 or otherwise for breach of any representation,
warranty, covenant, or other agreement set forth in this Agreement or the
other agreements contemplated hereby shall be limited to (i) termination
of this Agreement pursuant to Section 9.01, (ii) after the Closing Date,
their rights pursuant to the Indemnification Agreement, and (iii) upon
termination of this Agreement in accordance with Section 9.01, rights
under applicable law for any willful and material breach by B&T.
Section 11.02 Expenses. EuroBancshares and Eurobank shall pay all of their
expenses and costs (including, without limitation, all counsel fees and
expenses) and B&T shall pay all of its expenses and costs (including, without
limitation, all counsel fees and expenses), incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby.
Section 11.03 Brokerage Fees and Commissions. Each of EuroBancshares and
Eurobank hereby represents to B&T that no agent, representative or broker has
represented EuroBancshares or Eurobank in connection with the transactions
described in this Agreement. B&T shall not have any responsibility or liability
for any fees, expenses or commissions payable to any agent, representative or
broker of EuroBancshares or Eurobank, and EuroBancshares and Eurobank hereby
agree to indemnify and hold B&T harmless for any amounts owed to any agent,
representative or broker of EuroBancshares or Eurobank. B&T hereby represents to
EuroBancshares and Eurobank that no agent, representative or broker has
represented B&T or any or all of the shareholders in connection with the
transactions described in this Agreement. Neither EuroBancshares nor Eurobank
shall have any responsibility or liability for any fees, expenses or commissions
payable to any agent, representative or broker of B&T or any shareholder of B&T
and B&T hereby agrees to indemnify and hold EuroBancshares and Eurobank harmless
for any amounts owed to any agent, representative or broker of B&T or any
shareholder of B&T.
Section 11.04 Entire Agreement. This Agreement and the other agreements,
documents, schedules and instruments executed and delivered by the parties to
each other at the Closing constitute the full understanding of the parties, a
complete allocation of risks between them and a complete and exclusive statement
of the terms and conditions of their agreement relating to the subject matter
hereof and supersede any and all prior agreements, whether written or oral, that
may exist between the parties with respect thereto. Except as otherwise
specifically provided in
62
this Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement the
terms or conditions of this Agreement shall be binding unless hereafter or
contemporaneously herewith made in writing and signed by the party to be bound,
and no modification shall be effected by the acknowledgment or acceptance of
documents containing terms or conditions at variance with or in addition to
those set forth in this Agreement.
Section 11.05 Further Cooperation. The parties agree that they will, at
any time and from time to time after the Closing, upon request by the other and
without further consideration, do, perform, execute, acknowledge and deliver all
such further acts, deeds, assignments, assumptions, transfers, conveyances,
powers of attorney, certificates and assurances as may be reasonably required in
order to fully consummate the transactions contemplated hereby in accordance
with this Agreement or to carry out and perform any undertaking made by the
parties hereunder.
Section 11.06 Severability. In the event that any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws, then (A) such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision were not a part hereof; (B) the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by such illegal,
invalid or unenforceable provision or by its severance from this Agreement; and
(C) there shall be added automatically as a part of this Agreement a provision
as similar in terms to such illegal, invalid or unenforceable provision as may
be possible and still be legal, valid and enforceable.
Section 11.07 Notices. Any and all payments (other than payments at the
Closing), notices, requests, instructions and other communications required or
permitted to be given under this Agreement after the date hereof by any party
hereto to any other party may be delivered personally or by nationally
recognized overnight courier service or sent by mail or (except in the case of
payments) by telex or facsimile transmission, at the respective addresses or
transmission numbers set forth below and shall be effective (A) in the case of
personal delivery, telex or facsimile transmission, when received; (B) in the
case of mail, upon the earlier of actual receipt or five (5) business days after
deposit in the United States Postal Service, first class certified or registered
mail, postage prepaid, return receipt requested; and (C) in the case of
nationally-recognized overnight courier service, one (1) business day after
delivery to such courier service together with all appropriate fees or charges
and instructions for such overnight delivery. The parties may change their
respective addresses and transmission numbers by written notice to all other
parties, sent as provided in this Section 11.07. All communications must be in
writing and addressed as follows:
IF TO B&T:
Xx. Xxxxxx X. Xxxxx
Chairman of the Board
The Bank & Trust Company of Puerto Rico
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Telecopy: (000) 000-0000
63
With a copy to:
Xxxx Xxxxx and Xxxxx Xxxxxxxxxxx
X'Xxxxx & Xxxxxx
American International Plaza, Eighth Floor
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Telecopy: (000) 000-0000
IF TO EUROBANCSHARES OR EUROBANK:
Xx. Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Chairman of the Board and CEO
EuroBancshares, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Telecopy: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Jenkens & Xxxxxxxxx,
a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
and
Xxxx X. Xxxxxxxx, Esq.
Jenkens & Xxxxxxxxx,
a Professional Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Section 11.08 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PUERTO RICO
(INCLUDING THOSE LAWS RELATING TO CHOICE OF LAW) APPLYING TO CONTRACTS ENTERED
INTO AND TO BE PERFORMED WITHIN THE COMMONWEALTH OF PUERTO RICO, WITHOUT REGARD
FOR THE PROVISIONS THEREOF REGARDING CHOICE OF LAW.
Section 11.09 Multiple Counterparts. For the convenience of the parties
hereto, this Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all counterparts hereof so executed by the
parties hereto, whether or not such counterpart shall bear the execution of each
of the parties hereto, shall be deemed to be, and shall be
64
construed as, one and the same Agreement. A telecopy or facsimile transmission
of a signed counterpart of this Agreement shall be sufficient to bind the party
or parties whose signature(s) appear thereon.
Section 11.10 Certain Definitions.
A. "Affiliate" means, with respect to any person, any person
that, directly or indirectly, controls, is controlled by, or is under
common control with, such person in question. For the purposes of this
definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect to
any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by
contract or otherwise.
B. "Environmental Laws" mean all federal, state and local laws,
regulations, statutes, ordinances, codes, rules, decisions, orders or
decrees relating or pertaining to the public health and safety or the
environment, or otherwise governing the generation, use, handling,
collection, treatment, storage, transportation, recovery, recycling,
removal, discharge or disposal of Hazardous Materials, including, without
limitation, (i) the Solid Waste Disposal Act, 42 U.S.C. 6901 et seq., as
amended ("SWDA," also known as "RCRA" for a subsequent amending act),
(ii) the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"), (iii) the
Clean Water Act, 33 U.S.C. Section 1251 et seq., as amended ("CWA"), (iv)
the Clean Air Act, 42 U.S.C. Section 7401 et seq., as amended ("CAA"), (v)
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., as
amended ("TSCA"), (vi) the Emergency Planning and Community Right to Know
Act, 15 U.S.C. Section 2601 et seq., as amended ("EPCRKA"), and (vii) the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., as
amended.
C. "Hazardous Material" means, without limitation, (i) any
"hazardous wastes" as defined under RCRA, (ii) any "hazardous substances
as defined under CERCLA, (iii) any toxic pollutants as defined under CWA,
(iv) any hazardous air pollutants as defined under CAA, (v) any hazardous
chemicals as defined under TSCA, (vi) any hazardous substances or
extremely hazardous substances as defined under EPCRKA, (vii) asbestos,
(viii) polychlorinated biphenyls, (ix) underground storage tanks, whether
empty, filled or partially filled with any substance, (x) any substance
the presence of which on the property in question is prohibited under any
Environmental Law, and (xi) any other substance which under any
Environmental Law requires special handling or notification of or
reporting to any federal, state or local governmental entity in its
generation, use, handling, collection, treatment, storage, re-cycling,
treatment, transportation, recovery, removal, discharge or disposal.
D. The term "Property" or "Properties" shall include all real
property owned or leased by B&T, including, but not limited to properties
that B&T has foreclosed on as well as their respective premises and all
improvements and fixtures thereon.
E. "Material Adverse Change" means any material adverse change
in the financial condition, assets, properties, liabilities (absolute,
accrued, contingent or
65
otherwise), reserves, business or results of operations or prospects of
B&T or EuroBancshares, as applicable. An event or change affecting the
banking industry as a whole shall not be considered a Material Adverse
Change unless it affects B&T or EuroBancshares, as applicable, to a
greater degree than other similar size bank holding companies or banks.
F. "Subsidiary" means, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity or any partnership, joint
venture or other enterprise in which any entity has, directly or
indirectly, any equity interest.
G. "Investment Securities" means all securities held by B&T and
reflected as an asset of B&T in accordance with RAP.
Section 11.11 Specific Performance. Each of the parties hereto
acknowledges that the other parties would be irreparably damaged and would not
have an adequate remedy at law for money damages in the event that any of the
covenants contained in this Agreement were not performed in accordance with its
terms or otherwise were materially breached. Each of the parties hereto
therefore agrees that, without the necessity of proving actual damages or
posting bond or other security, the other party shall be entitled to temporary
and/or permanent injunction or injunctions to prevent breaches of such
performance and to specific enforcement of such covenants in addition to any
other remedy to which they may be entitled, at law or in equity.
Section 11.12 Attorneys' Fees and Costs. In the event attorneys' fees or
other costs are incurred to secure performance of any of the obligations herein
provided for, or to establish damages for the breach thereof, or to obtain any
other appropriate relief, whether by way of prosecution or defense, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
costs incurred therein.
Section 11.13 Rules of Construction. Each use herein of the masculine,
neuter or feminine gender shall be deemed to include the other genders. Each use
herein of the plural shall include the singular and vice versa, in each case as
the context requires or as it is otherwise appropriate. The word "or" is used in
the inclusive sense. All articles and sections referred to herein are articles
and sections, respectively, of this Agreement and all exhibits and schedules
referred to herein are exhibits and schedules, respectively, attached to this
Agreement. Descriptive headings as to the contents of particular sections are
for convenience only and shall not control or affect the meaning, construction
or interpretation of any provision of this Agreement. Any and all schedules,
exhibits, annexes, statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are and shall be incorporated
herein by reference hereto as though fully set forth herein verbatim.
Section 11.14 Binding Effect; Assignment. All of the terms, covenants,
representations, warranties and conditions of this Agreement shall be binding
upon, and inure to the benefit of and be enforceable by, the parties hereto and
their respective successors, representatives and permitted assigns. Nothing
expressed or referred to herein is intended or shall be construed to give any
person other than the parties hereto any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provision herein contained,
it being the intention of the parties hereto that this Agreement, the assumption
of obligations and statements of
66
responsibilities hereunder, and all other conditions and provisions hereof are
for the sole benefit of the parties to this Agreement and for the benefit of no
other person. Nothing in this Agreement shall act to relieve or discharge the
obligation or liability of any third party to any party to this Agreement, nor
shall any provision give any third party any right of subrogation or action over
or against any party to this Agreement. No party to this Agreement shall assign
this Agreement, by operation of law or otherwise, in whole or in part, without
the prior written consent of the other parties. Any assignment made or attempted
in violation of this Section 11.14 shall be void and of no effect.
Section 11.15 Public Disclosure. None of B&T, EuroBancshares or Eurobank
will make, issue or release any announcement, statement, press release,
acknowledgment or other public disclosure of the existence of, or reveal the
terms, conditions or the status of, this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties to
this Agreement; provided, however, that notwithstanding the foregoing, B&T,
EuroBancshares and Eurobank will be permitted to make any public disclosures or
governmental filings as legal counsel may deem necessary to maintain compliance
with or to prevent violations of applicable Commonwealth, federal or state laws
or regulations or that may be necessary to obtain regulatory approval for the
transactions contemplated hereby.
Section 11.16 Extension; Waiver. At any time prior to the Closing Date,
the parties may (A) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (B) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto, or (C) waive
compliance with any of the agreements or conditions contained herein. Such
action shall be evidenced by a signed written notice given in the manner
provided in Section 11.07 hereof. No party to this Agreement shall by any act
(except by a written instrument given pursuant to Section 11.07 hereof) be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising any right, power or privilege hereunder by any party
hereto shall operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver of any
party of any right or remedy on any one occasion shall not be construed as a bar
to any right or remedy that such party would otherwise have on any future
occasion or to any right or remedy that any other party may have hereunder.
Section 11.17 Amendments. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Board of
Directors of EuroBancshares, Eurobank and B&T at any time before or after
adoption of this Agreement by the shareholders of B&T but, after any submission
of this Agreement to such shareholders for approval, no amendment shall be made
that decreases the consideration to be paid for the B&T Stock as set forth in
Section 1.05 or that materially and adversely affects the rights of B&T's
shareholders hereunder without the requisite approval of such shareholders. This
Agreement may be amended, modified or supplemented only by an instrument in
writing executed by the party against which enforcement of the amendment,
modification or supplement is sought.
Section 11.18 Delivery of Schedules to Confidential Disclosure Memorandum.
In order to provide for the prompt execution of this Agreement, the parties
hereto agree that with respect to the schedules to this Agreement:
67
A. Full and complete originals of all of the schedules to the
Confidential Disclosure Memorandum (other than those delivered or
deliverable by EuroBancshares or Eurobank) shall be delivered to
EuroBancshares and Eurobank in accordance with Section 11.07, within
fourteen (14) days after the date of this Agreement.
B. EuroBancshares and Eurobank will have until the twenty- first
(21st) day following the date of this Agreement to review such schedules
to determine whether they disclose information relating to B&T that leads
EuroBancshares or Eurobank to determine, in their sole and absolute
discretion, that it is not in their best interests to proceed with the
Merger. If such schedules do not disclose any information that leads
EuroBancshares or Eurobank to determine, in their sole and absolute
discretion, that it is not in their best interests to proceed with the
Merger, then this Agreement shall remain in full force and effect and the
parties shall proceed in accordance with their respective rights and
obligations hereunder. If such schedules disclose any information that
leads EuroBancshares or Eurobank, in their sole and absolute discretion,
that it is not in their best interests to proceed with the Merger,
EuroBancshares and Eurobank shall have the unconditional right to
terminate this Agreement and all of its obligations hereunder by providing
B&T notice of such termination in accordance with the terms of Section
11.07 of the Agreement no later than 6:00 p.m., Hato Rey, Puerto Rico time
on the twenty- first (21st) day following the date of this Agreement.
C. For purposes of this Agreement, the "Confidential Disclosure
Memorandum" shall mean the written information entitled "Confidential
Disclosure Memorandum" delivered in connection with this Agreement
describing in reasonable detail the matters contained therein and, with
respect to each disclosure made therein, specifically referencing each
Section or subsection of this Agreement under which such disclosure is
being made. The parties hereby agree that the information contained in the
Confidential Disclosure Memorandum is privileged and confidential in
nature and, except as otherwise required by law, shall not be disclosed
without the consent of the party furnishing such information. Information
disclosed with respect to any one or more Sections or subsections of this
Agreement shall be deemed to be disclosed for all other purposes under
this Agreement.
[Signature Page Follows]
68
[Signature Page to Agreement and Plan of Merger]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
EUROBANCSHARES, INC.
By: /s/ Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
----------------------------------------
Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Chairman of the Board, CEO and President
EUROBANK
By: /s/ Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
--------------------------------------------
Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Chairman of the Board, CEO and President
THE BANK & TRUST COMPANY OF PUERTO RICO
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Xxxxxx X. Xxxxx
Chairman of the Board
69
EXHIBIT A
DIRECTOR SUPPORT AGREEMENT
DIRECTOR SUPPORT AGREEMENT
THIS DIRECTOR SUPPORT AGREEMENT (the "Agreement") is made and entered into
as of the ___ day of _______________, 2004, by and between EUROBANCSHARES, INC.,
a corporation organized under the laws of the Commonwealth of Puerto Rico
("EuroBancshares"), and _______________, a director (the "Director") of THE BANK
& TRUST COMPANY OF PUERTO RICO, a commercial bank organized under the laws of
the Commonwealth of Puerto Rico ("B&T").
WITNESSETH:
WHEREAS, EuroBancshares, Eurobank ("Eurobank"), a commercial bank
organized under the laws of the Commonwealth of Puerto Rico and wholly-owned
subsidiary of EuroBancshares, and B&T have entered into that certain Agreement
and Plan of Merger, dated as of February 24, 2004 (the "Merger Agreement"),
pursuant to which EuroBancshares will acquire all of the issued and outstanding
shares of capital stock of B&T in exchange for cash and stock, through the
merger of B&T with and into Eurobank. Terms with their initial letter
capitalized and not otherwise defined herein shall have the meanings given them
in the Merger Agreement ; and
WHEREAS, in connection with consummation of the transactions contemplated
by the Merger Agreement, EuroBancshares and the Director have agreed to enter
into this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and intending to be legally bound hereby, EuroBancshares and
the Director agree as follows:
1. Director Support. The Director agrees to use his reasonable efforts
to refrain from harming the goodwill of EuroBancshares, B&T, and their
respective subsidiaries, and their respective customer and client relationships.
2. Director Covenants.
(a) For and in consideration of the consummation of the Merger and
the other transactions contemplated by the Merger Agreement, Director agrees
that for a period of one (1) year from the date of this Agreement, Director
shall not, directly or indirectly, individually or as an employee, partner,
officer, director or shareholder or in any other capacity whatsoever:
(i) solicit the banking business of any current customers of
B&T; or
(ii) (A) prior to the Effective Date of the Merger, recruit,
hire, assist others in recruiting or hiring, discuss
employment with, or refer others concerning employment,
any person who is, or within the preceding twelve (12)
months was, an employee of B&T, and (B) after the
Effective Date of the Merger, recruit, hire, assist
others in recruiting or hiring, discuss employment with,
or refer others concerning employment, any person who is
an employee of EuroBancshares or Eurobank at the time
and who was an employee
1
of B&T within the preceding twelve (12) months, so long
as the Director's inducements are not the reason the
employee is no longer employed by B&T, Eurobank or
EuroBancshares. Notwithstanding the foregoing and
subject to certain conditions as may be imposed by
EuroBancshares or Eurobank in their sole discretion, the
Special Purpose Vehicle shall be permitted to retain any
current or former employee of B&T, EuroBancshares or
Eurobank on a consulting basis to assist in collection
efforts with respect to certain assets of the Special
Purpose Vehicle.
(b) If any court of competent jurisdiction should determine
that any term or terms of this covenant are too broad in terms of time,
geographic area, lines of commerce or otherwise, such court shall modify and
revise any such term or terms so that they comply with applicable law.
(c) The Director agrees that (i) this Agreement is entered
into in connection with the sale to EuroBancshares of the goodwill of the
business of B&T; (ii) the Director is receiving valuable consideration in this
Agreement and in the Merger pursuant to the Merger Agreement, (iii) the
restrictions imposed upon Director by this Agreement are essential and necessary
to ensure that EuroBancshares acquire the goodwill of B&T, and (iv) all the
restrictions (including particularly the time and geographical limitations) set
forth in this Agreement are fair and reasonable.
3. Termination. This Agreement shall terminate following the end of the
noncompete period described in Section 2(a) above.
4. Effective Date. This Agreement shall become effective at the
Effective Date of the Merger as defined in the Merger Agreement. If the Merger
Agreement is terminated in accordance with its terms, then this Agreement shall
not become effective and shall be of no further force and effect.
5. Injunctive Relief. EuroBancshares and the Director hereby
acknowledge and agree that EuroBancshares and B&T will be irreparably damaged if
the provisions of this Agreement are not specifically enforced. Accordingly,
EuroBancshares or B&T shall be entitled to an injunction restraining any
violation of this Agreement by Director (without any bond or other security
being required), or any other appropriate decree of specific performance. Such
remedies shall not be exclusive and shall be in addition to any other remedy
that EuroBancshares or B&T may have at law or in equity.
6. Assignability. This Agreement shall not be assigned by any party
without the prior written consent of the other parties.
7. Parties Bound. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns, except as otherwise expressly provided herein.
8. Applicable Law. This Agreement is being executed and delivered in
the Commonwealth of Puerto Rico, and the substantive laws of Puerto Rico shall
govern the validity,
2
construction, and enforcement of this Agreement. The parties consent to the
venue and jurisdiction of any federal or Puerto Rican court sitting in San Xxxx,
Puerto Rico, in any action brought to enforce the terms of this Agreement. The
parties irrevocably and unconditionally submit to the jurisdiction (both subject
matter and personal) of any such court and irrevocably and unconditionally waive
(1) any objection any party might now or hereafter have to the venue in any such
court and (2) any claim that any action or proceeding brought in any such court
has been brought in an inconvenient forum.
9. Legal Construction. If any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, any provision shall be fully severable, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein, and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of such illegal, invalid
or unenforceable provision, there shall be added automatically as a part of this
Agreement, a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be valid and enforceable.
10. Notice. Unless otherwise provided herein, any and all payments,
notices, requests, instructions and other communications required or permitted
to be given under this Agreement after the date hereof by any party hereto to
any other party may be delivered personally or by nationally recognized
overnight courier service or sent by mail or (except in the case of payments) by
telex or facsimile transmission, at the respective addresses or transmission
numbers set forth below and shall be effective (a) in the case of personal
delivery, telex or facsimile transmission, when received; (b) in the case of
mail, upon the earlier of actual receipt or five (5) business days after deposit
in the United States Postal Service, first class certified or registered mail,
postage prepaid, return receipt requested; and (c) in the case of
nationally-recognized overnight courier service, one (1) business day after
delivery to such courier service together with all appropriate fees or charges
and instructions for such overnight delivery. The parties may change their
respective addresses and transmission numbers by written notice to all other
parties, sent as provided in this Section 10. All communications must be in
writing and addressed as follows:
IF TO THE DIRECTOR:
_____________________________
_____________________________
_____________________________
_____________________________
IF TO EUROBANCSHARES :
Xx. Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Chairman of the Board and CEO
EuroBancshares, Inc.
3
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Facsimile: (000) 000-0000
11. No Delay, Waiver, Etc. No delay on the part of the parties hereto in
exercising any power or right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any power or right hereunder preclude
other or further exercise thereof or the exercise of any other power or right.
12. Costs and Fees. In the event of litigation under this Agreement, the
non-prevailing party shall be liable for all reasonable litigation costs and
attorneys' fees incurred by the prevailing party in connection with the
enforcement of any of such prevailing party's rights or remedies against the
non-prevailing party.
13. Entire Agreement. This Agreement supercedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a continuing waiver of any provision
hereof by such party.
14. Headings. The descriptive headings of the several sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING O UT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
[Signature Page Follows]
4
[Signature Page to Director Support Agreement]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
THE DIRECTOR: ________________________________
____________
EUROBANCSHARES : EUROBANCSHARES, INC.
By:_____________________________
Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Chairman of the Board and CEO
5
EXHIBIT B
VOTING AGREEMENT AND IRREVOCABLE PROXY
VOTING AGREEMENT AND IRREVOCABLE PROXY
THIS VOTING AGREEMENT AND IRREVOCABLE PROXY (the "Agreement") dated as
of _______________, 2004, is executed by and among THE BANK & TRUST COMPANY OF
PUERTO RICO, a commercial bank organized under the laws of the Commonwealth of
Puerto Rico ("B&T"), EUROBANCSHARES, INC., a corporation organized under the
laws of the Commonwealth of Puerto Rico ("EuroBancshares"), Xxxxxx Xxxxxxxxx
Xxxxxxx, Xx., as a proxy, _____________, as a substitute proxy, and certain
other shareholders of B&T set forth on the signature page hereto (together with
_________, referred to herein individually as a "Shareholder" and collectively
as the "Shareholders").
WITNESSETH:
WHEREAS, EuroBancshares, Eurobank, a commercial bank organized under
the laws of the Commonwealth of Puerto Rico and wholly-owned subsidiary of
EuroBancshares ("Eurobank"), and B&T have executed that certain Agreement and
Plan of Merger, dated as of February 24, 2004 (the "Merger Agreement "),
pursuant to which EuroBancshares will acquire all of the issued and outstanding
shares of B&T in exchange for cash and stock, through the merger of B&T with and
into Eurobank (herein, the "Merger"). Terms with their initial letter
capitalized and not otherwise defined herein shall have the meanings given them
in the Merger Agreement;
WHEREAS, Section 5.15 of the Merger Agreement requires that B&T deliver
to EuroBancshares the irrevocable proxies of the Shareholders; and
WHEREAS, B&T and EuroBancshares are relying on the irrevocable proxies
in incurring expenses in reviewing B&T's business, in preparing a proxy
statement and offering circular to be distributed to B&T's shareholders in
accordance with Section 5.02 of the Merger Agreement ("Proxy Statement"), in
proceeding with the filing of applications for regulatory approvals, and in
undertaking other actions necessary for the consummation of the Merger.
NOW, THEREFORE, for and in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, B&T, EuroBancshares and the Shareholders undertake, promise,
covenant and agree with each other as follows:
1. As of the date hereof, the Shareholders beneficially own, and
own of record, (i) that number of shares of common stock, par value $2.50 per
share, of B&T (the "B&T Common Stock"), (ii) that number of shares of Series A
7.50% non-cumulative, convertible, perpetual, monthly income, preferred stock,
par value $10.00 per share, of B&T (the "Series A Preferred Stock"), and (iii)
that number of shares of Series B 9.625% non-cumulative, non-convertible, term
monthly, preferred stock, par value $10.00 per share, of B&T with a liquidation
preference of $25.00 (the "Series B Preferred Stock," and collectively with the
B&T Common Stock and the Series A Preferred Stock, the "B&T Stock"), set forth
below their names on the signature pages hereto (all such shares and any shares
hereafter acquired by the Shareholders prior to the termination of this
Agreement being referred to herein as the "Shares"). The Shareholders have the
full legal capacity and authority to execute, deliver and perform this Agreement
in accordance with its terms. The Shareholders hereby agree to vote at the
1
shareholders' meeting referred to in Section 1.08 of the Merger Agreement (the
"Meeting") such Shareholder's Shares and to direct the vote of all such Shares
or to give written consent as to all such Shareholder's Shares to an action in
lieu of the Meeting in favor of approval and adoption of the Merger and the
Merger Agreement and all of the agreements and transactions contemplated by the
Merger Agreement.
2. If B&T conducts a meeting of, solicits written consents from
or otherwise seeks a vote of its shareholders with respect to any Acquisition
Transaction (as that term is defined below) or any other matter which may
contradict any provision of this Agreement or the Merger Agreement, or may
prevent EuroBancshares or B&T from consummating the Merger, then the
Shareholders shall vote the Shares in the manner most favorable to consummation
of the Merger and the transactions contemplated by the Merger Agreement.
"Acquisition Transaction" shall, with respect to B&T, mean any
of the following: (i) a merger, consolidation, share exchange or any similar
transaction (other than the Merger) of any company or entity with B&T, (ii) a
purchase, lease or other acquisition of all or substantially all the assets of
B&T, (iii) a purchase or other acquisition of "beneficial ownership" by any
"person" or "group" (as such terms are defined in Section 13(d)(3) of the
Securities Exchange Act of 1934) (including by way of merger, consolidation,
share exchange, or otherwise) which would cause such person or group to become
the beneficial owner of securities representing 25% or more of the voting power
of B&T after the date of this Agreement, (iv) a tender or exchange offer to
acquire securities representing 25% or more of the voting power of B&T, (v) a
public proxy or consent solicitation made to stockholders of B&T seeking proxies
in opposition to any proposal relating to any of the transactions contemplated
by this Agreement, or (vi) the making of a bona fide offer or proposal to the
Board of Directors or shareholders of B&T, to engage in one or more of the
transactions referenced in clauses (i) through (v) above.
3. In order to better effect the provisions of Sections 1, 2 and
5 of this Agreement, each Shareholder hereby revokes any previously executed
proxies and hereby constitutes and appoints Xxxxxx Xxxxxxxxx Xxxxxxx, Xx., with
full power of substitution, his or her true and lawful proxy and attorney-in-
fact (the "Proxy Holder") to vote at the Meeting or to give written consent to
an action in lieu of the Meeting as to, all of such Shareholder's Shares in
favor of the approval of the Merger and the Merger Agreement and the
transactions contemplated by the Merger Agreement, however, that this proxy
shall not apply with respect to any vote on the Merger or the Merger Agreement
if the Merger Agreement is modified so as to reduce the amount of consideration
to be received by the Shareholders or the tax consequences of the receipt
thereof under the Merger Agreement in its present form.
4. Xxxxxx Xxxxxxxxx Xxxxxxx, Xx., by his execution below, hereby
appoints __________ as substitute proxy to act as the Proxy Holder under this
Agreement; provided, however, that such appointment of _______________ as Proxy
Holder is subject to revocation by Xxxxxx Xxxxxxxxx Xxxxxxx, Xx. at any time
upon notice to B&T. ______________, by his execution below as substitute Proxy
Holder, agrees to vote all of the Shareholders' Shares at the Meeting or to give
written consent to an action in lieu of the Meeting, in favor of the approval of
the Merger and the Merger Agreement and the transactions contemplated by the
Merger Agreement, with such modifications to the Merger and the Merger Agreement
as the parties may make; provided, however, that this proxy shall not apply with
respect to any vote on the Merger
2
or the Merger Agreement if the Merger Agreement is modified so as to reduce the
amount of consideration to be received by the Shareholders or the tax
consequences of the receipt thereof under the Merger Agreement in its present
form.
5. Each Shareholder hereby covenants and agrees that, until this
Agreement is terminated in accordance with its terms, each Shareholder will not,
and will not agree to, directly or indirectly, without the prior written consent
of EuroBancshares, (i) sell, assign, transfer or dispose of any of such
Shareholder's Shares, unless the buyer, assignee or transferee of such
Shareholder's Shares executes and delivers an amendment to this Agreement
whereby such recipient becomes bound by the terms of this Agreement, (ii)
hypothecate such shares under terms that would prevent the voting thereof, (iii)
deposit such Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or grant any proxy with respect thereto
except as herein provided, or (iv) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect sale,
assignment, transfer or other disposition of any of the Shares, unless the
proposed buyer, assignee or transferee of such Shareholder's Shares executes and
delivers an amendment to this Agreement whereby such recipient becomes bound by
the terms of this Agreement.
Notwithstanding any of the foregoing, any Shareholder may (i) make such
gifts of such Shareholder's Shares as such Shareholder may choose to make so
long as the recipient of such Shareholder's Shares executes and delivers an
amendment to this Agreement whereby such recipient becomes bound by the terms of
this Agreement, and (ii) convert their shares of Series A Preferred Stock to the
number of shares of B&T Common Stock to which they are entitled; provided,
however, that any shares of B&T Common Stock received by a Shareholder a result
of the conversion of Series A Preferred Stock shall become subject to the terms
of this Agreement.
6. This proxy shall be limited strictly to the power to vote the
Shares in the manner set forth in Section 3 and shall not extend to any other
matters.
7. The Shareholders acknowledge that B&T and EuroBancshares are
relying on this Agreement in incurring expenses in reviewing B&T's business, in
preparing the Proxy Statement, in proceeding with the filing of applications for
regulatory approvals, and in undertaking other actions necessary for the
consummation of the Merger and that THE PROXY GRANTED HEREBY IS COUPLED WITH AN
INTEREST AND IS IRREVOCABLE TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW. The
Shareholders and B&T acknowledge that the performance of this Agreement is
intended to benefit EuroBancshares.
8. This Agreement and the irrevocable proxy granted pursuant
hereto shall continue in effect until the earlier to occur of (i) the
termination of the Merger Agreement, as it may be amended or extended from time
to time, or (ii) the consummation of the transactions contemplated by the Merger
Agreement.
9. The vote of the Proxy Holder shall control in any conflict
between his vote of the Shares and a vote by the Shareholders of the Shares, and
B&T agrees to recognize the vote of the Proxy Holder instead of the vote of the
Shareholders in the event the Shareholders do not vote in favor of the approval
of the Merger and the Merger Agreement as set forth in Section 1 hereof.
3
10. In the event that a Shareholder transfers a certificate
representing any of the Shares prior to the Meeting, B&T shall require such
certificate to bear the following endorsement, noted conspicuously thereon:
The shares of stock represented by this certificate are subject to the
terms of a Voting Agreement and Irrevocable Proxy dated
_______________, 2004, a copy of which is on file in the principal
office of The Bank & Trust Company of Puerto Rico.
11. This Agreement may not be modified, amended, altered or
supplemented with respect to a particular Shareholder except upon the execution
and delivery of a written agreement executed by B&T, EuroBancshares and such
Shareholder.
12. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. A telecopy or facsimile transmission of
a signed counterpart of this Agreement shall be sufficient to bind the party or
parties whose signature(s) appear thereon.
13. This Agreement, together with the Merger Agreement and the
agreements contemplated thereby, embody the entire agreement and understanding
of the parties hereto in respect to the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to such subject matter contained herein.
14. All notices, requests, demands and other communications
required or permitted hereby shall be in writing and shall be deemed to have
been duly given if delivered by hand or mail, certified or registered mail
(return receipt requested) with postage prepaid to the addresses of the parties
hereto set forth on below their signature on the signature pages hereof or to
such other address as any party may have furnished to the others in writing in
accordance herewith.
15. THIS AGREEMENT AND THE RELATIONS AMONG THE PARTIES HERETO
ARISING FROM THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO.
[Signature Page Follows]
4
[Signature Page to Voting Agreement and Irrevocable Proxy]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date above written.
EUROBANCSHARES, INC.
By: ___________________________________
Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Chairman of the Board, CEO and
President
PROXY HOLDER:
By: ___________________________________
Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
Address for EuroBancshares and the
Proxy Holder:
EuroBancshares, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Facsimile: (000) 000-0000
THE BANK & TRUST COMPANY OF PUERTO
RICO
By: ___________________________________
Xxxxxx Xxxxx
Chairman of the Board
SUBSTITUTE PROXY HOLDER:
By: ___________________________________
___________
SHAREHOLDERS:
____ shares of B&T Common Stock _______________________________________
____ shares of Series A Preferred Stock
____ shares of Series B Preferred Stock
____ shares of B&T Common Stock _______________________________________
____ shares of Series A Preferred Stock
____ shares of Series B Preferred Stock
5
___ shares of B&T Common Stock ___________________________________
___ shares of Series A Preferred Stock
___ shares of Series B Preferred Stock
___ shares of B&T Common Stock ___________________________________
___ shares of Series A Preferred Stock
___ shares of Series B Preferred Stock
___ shares of B&T Common Stock ___________________________________
___ shares of Series A Preferred Stock
___ shares of Series B Preferred Stock
___ shares of B&T Common Stock ___________________________________
___ shares of Series A Preferred Stock
___ shares of Series B Preferred Stock
Address for The Bank & Trust
Company of Puerto Rico the
Substitute Proxy Holder and all the
Shareholders:
The Bank & Trust Company of Puerto Rico
000 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Facsimile: _______________
6
EXHIBIT C
FORM OF DIRECTOR RELEASE
RELEASE
(DIRECTOR)
This Release (the "Release"), dated as of _______________, 2004, is
made by _______________ (the "Director"), in favor of The Bank & Trust Company
of Puerto Rico, a commercial bank organized under the laws of the Commonwealth
of Puerto Rico ("B&T").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement "), dated as of February 24, 2004, by and among
EuroBancshares, Inc., a corporation organized under the laws of the Commonwealth
of Puerto Rico ("EuroBancshares"), Eurobank, a commercial bank organized under
the laws of the Commonwealth of Puerto Rico and wholly-owned subsidiary of
EuroBancshares ("Eurobank"), and B&T, it is a condition to the consummation of
the transactions contemplated by the Merger Agreement that the Director shall
have executed and delivered to B&T an instrument releasing B&T from any and all
claims of such Director (except to their deposits and accounts);
WHEREAS, the purpose of this Release is to serve as the instrument
referred to in Section 8.08 of the Merger Agreement as discussed above;
WHEREAS, the Director desires to enter into this Release in
consideration of the matters set forth herein;
NOW, THEREFORE, for and in consideration of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the Director agrees as follows:
Attached hereto is a list of all loans outstanding from B&T to the
Director. The Director acknowledges that, to the best of his knowledge, there
are no existing claims or defenses, personal or otherwise, or rights of set off
whatsoever against B&T, except as a result of the Director's separate capacity
as an officer or as a depositor with B&T. The Director for himself and on behalf
of his heirs and assigns (the "Director Releasing Parties") releases, acquits
and forever discharges B&T and its predecessors, successors, assigns, officers,
directors, employees, agents and servants, and all persons, natural or
corporate, in privity with them or any of them, from any and all claims or
causes of action of any kind whatsoever, at common law, statutory or otherwise,
which the Director Releasing Parties, or any of them, has now, known or unknown,
now existing or that may hereafter arise in respect of any and all agreements
and obligations incurred on or prior to the date hereof, or in respect of any
event occurring or circumstances existing on or prior to the date hereof;
provided, however, that B&T shall not be released from any obligations or
liabilities to the Director (i) pursuant to the provisions of the certificate of
incorporation or bylaws of B&T regarding the indemnification of directors; (ii)
in connection with any deposits, accounts, fees, accrued benefits or other
written contractual obligations of B&T to the Director; and (iii) with respect
to the Director's separate capacity as an officer of B&T, if applicable.
1
It is expressly understood and agreed that the terms hereof are
contractual and not merely recitals, and that the agreements herein contained
and the consideration herein transferred is to compromise doubtful and disputed
claims, and that no releases made or other consideration given hereby or in
connection herewith shall be construed as an admission of liability, all
liability being expressly denied by B&T. The Director hereby represents and
warrants that the consideration hereby acknowledged for entering into this
Release and the transactions contemplated hereby is greater than the value of
all claims, demands, actions and causes of action herein relinquished, released,
renounced, abandoned, acquitted, waived and/or discharged, and that this Release
is in full settlement, satisfaction and discharge of any and all such claims,
demands, actions, and causes of action that the Director may have or be entitled
to against B&T, and its predecessors, assigns, legal representatives, officers,
directors, employees, attorneys and agents other than obligations or liabilities
to the Director (i) pursuant to the provisions of the certificate of
incorporation or bylaws of B&T regarding the indemnification of directors; (ii)
in connection with any deposits, accounts, fees, accrued benefits or other
written contractual obligations of B&T to the Director; and (iii) with respect
to the Director's separate capacity as an Officer of B&T, if applicable.
The Director represents and warrants that he has full power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorize the execution, delivery and performance of
this Release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and this
Release constitutes a valid and binding obligation of the Director in the
capacity in which executed. The Director further represents and warrants that he
has entered into this Release freely of his own accord and without reliance on
any representations of any kind or character not set forth herein. The Director
enters into this release upon the advice of and in concurrence with his or her
own legal counsel.
This Release shall be construed and enforced in accordance with the
laws of the Commonwealth of Puerto Rico, and to the extent applicable, the laws
of the United States. If any provision of this Release or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable to any extent, such provision shall be deemed severable, the
remainder of this Release and the application of all other provisions shall not
be affected thereby and shall be enforced to the greatest extent permitted by
law. This Release is executed as of the date first above written. As used
herein, the singular includes the plural, the masculine includes the feminine
and neuter, and vice versa.
[Signature Page Follows]
2
[Signature Page to Release]
THE DIRECTOR:
__________________________________
Printed Name: ____________________
COMMONWEALTH OF PUERTO RICO Section
Section
CITY OF HATO REY Section
This instrument was acknowledged before me on _______________, 2004, by
_______________, Individually.
___________________________________________________
Notary Public in and for the Commonwealth of Puerto Rico
Printed Name:______________________________________
My Commission Expires:_____________________________
3
EXHIBIT D
FORM OF OFFICER RELEASE
RELEASE
(OFFICER)
This Release (the "Release"), dated as of _______________, 2004, is
made by ____________________ (the "Officer"), in favor of The Bank & Trust
Company of Puerto Rico, a commercial bank organized under the laws of the
Commonwealth of Puerto Rico ("B&T").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement"), dated as of February 24, 2004, by and among
EuroBancshares, Inc., a corporation organized under the laws of the Commonwealth
of Puerto Rico ("EuroBancshares"), Eurobank, a commercial bank organized under
the laws of the Commonwealth of Puerto Rico and wholly-owned subsidiary of
EuroBancshares ("Eurobank"), and B&T, it is a condition to the consummation of
the transactions contemplated by the Merger Agreement that the Officer shall
have executed and delivered to EuroBancshares and Eurobank an instrument
releasing B&T from any and all claims of such Officer (except to their deposits
and accounts);
WHEREAS, the purpose of this Release is to serve as the instrument
referred to in Section 8.08 of the Merger Agreement as discussed above;
WHEREAS, the Officer desires to enter into this Release in
consideration of the matters set forth herein;
NOW, THEREFORE, for and in consideration of $1.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby expressly
acknowledged, the Officer agrees as follows:
Attached hereto is a list of all loans outstanding from B&T to the
Officer. The Officer acknowledges that, to the best of his knowledge, there are
no existing claims or defenses, personal or otherwise, or rights of set off
whatsoever against B&T, except (i) as a result of the Officer's separate
capacity as a director or as a depositor with B&T or other written contractual
obligations of B&T to the Officer, (ii) for salary or bonus due to such Officer
in the ordinary course of business, or (iii) in connection with medical claims
not yet filed. The Officer for himself and on behalf of his heirs and assigns
(the "Officer Releasing Parties") releases, acquits and forever discharges B&T
and its predecessors, successors, assigns, officers, directors, employees,
agents and servants, and all persons, natural or corporate, in privity with them
or any of them, from any and all claims or causes of action of any kind
whatsoever, at common law, statutory or otherwise, which the Officer Releasing
Parties, or any of them, has now, known or unknown, now existing or that may
hereafter arise in respect of any and all agreements and obligations incurred on
or prior to the date hereof, or in respect of any event occurring or
circumstances existing on or prior to the date hereof; provided, however, that
B&T shall not be released from any obligations or liabilities to the Officer (i)
pursuant to the provisions of the certificate of incorporation or bylaws of B&T
regarding the indemnification of officers; (ii) in connection with any deposits
or accounts of the Officer or other written contractual obligations of B&T to
the Officer; (iii) with respect to the Officer's separate capacity as a director
of B&T,
1
if applicable; (iv) any accrued compensation and benefits; and (v) in connection
with medical claims not yet filed.
It is expressly understood and agreed that the terms hereof are
contractual and not merely recitals, and that the agreements herein contained
and the consideration herein transferred is to compromise doubtful and disputed
claims, and that no releases made or other consideration given hereby or in
connection herewith shall be construed as an admission of liability, all
liability being expressly denied by B&T. The Officer hereby represents and
warrants that the consideration hereby acknowledged for entering into this
Release and the transactions contemplated hereby is greater than the value of
all claims, demands, actions and causes of action herein relinquished, released,
renounced, abandoned, acquitted, waived and/or discharged, and that this Release
is in full settlement, satisfaction and discharge of any and all such claims,
demands, actions, and causes of action that the Officer may have or be entitled
to against B&T, and its predecessors, assigns, legal representatives, officers,
directors, employees, attorneys and agents other than obligations or liabilities
to the Officer (i) pursuant to the provisions of the certificate of
incorporation or bylaws of B&T regarding the indemnification of officers; (ii)
in connection with any deposits or accounts of the Officer or other written
contractual obligations of B&T to the Officer existing on the date of this
Release; (iii) with respect to the Officer's separate capacity as a director of
B&T, if applicable, (iv) any accrued compensation and benefits; and (v) in
connection with any medical claims not yet filed.
The Officer represents and warrants that he has full power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorize the execution, delivery and performance of
this Release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and this
Release constitutes a valid and binding obligation of the Officer in the
capacity in which executed. The Officer further represents and warrants that he
has entered into this Release freely of his own accord and without reliance on
any representations of any kind or character not set forth herein. The Officer
enters into this release upon the advice of and in concurrence with his or her
own legal counsel.
This Release shall be construed and enforced in accordance with the
laws of the Commonwealth of Puerto Rico, and to the extent applicable, the laws
of the United States. If any provision of this Release or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable to any extent, such provision shall be deemed severable, the
remainder of this Release and the application of all other provisions shall not
be affected thereby and shall be enforced to the greatest extent permitted by
law. This Release is executed as of the date first above written. As used
herein, the singular includes the plural, the masculine includes the feminine
and neuter, and vice versa.
[Signature Page Follows]
2
[Signature Page to Release]
THE OFFICER:
__________________________________
Printed Name: ____________________
COMMONWEALTH OF PUERTO RICO Section
Section
CITY OF HATO REY Section
This instrument was acknowledged before me on _______________, 2004, by
_______________, Individually.
___________________________________________________
Notary Public in and for the Commonwealth of Puerto Rico
Printed Name:______________________________________
My Commission Expires:_____________________________
3
EXHIBIT E
FORM OF LEGAL OPINION
FORM OF LEGAL OPINION
(i) B&T (A) is validly existing as a banking corporation in good
standing under the laws of the Commonwealth of Puerto Rico, with full corporate
power and authority to own its properties and conduct the business it transacts,
and (B) holds all approvals, authorizations, orders, licenses, certificates and
permits from governmental authorities necessary for the conduct of its business,
except where the failure to hold such approvals, authorizations, orders,
licenses, certificates or permits would not, singularly or in the aggregate,
have a Material Adverse Effect.
(ii) B&T has all requisite power and authority under applicable law
and its certificate of incorporation and by-laws to execute and deliver the
Merger Agreement and to consummate the transactions contemplated thereby; all
acts and other proceedings required to be taken by or on the part of B&T under
applicable law and its certificate of incorporation and by-laws to execute and
deliver the Merger Agreement and to consummate the transactions contemplated
therein have been duly and validly taken; and the Merger Agreement has been duly
executed and delivered by, and constitutes the valid and binding obligation of
B&T enforceable against B&T in accordance with its terms, subject to the effect
of (a) any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or other law relating to or affecting creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iii) Based solely on an examination of the stock ledger of B&T and
an officer's certificate of B&T, the authorized capital stock of B&T consists
solely of (a) 15,000,000 shares of common stock, par value $2.50 per share, of
which 5,472,211 shares are issued and outstanding, (b) 212,631 shares of Series
A preferred stock, par value $10.00 per share, of which 63,998 shares are issued
and outstanding, (c) 600,000 shares of Series B preferred stock, par value
$10.00 per share, of which 600,000 shares are issued and outstanding, and (d)
1,400,000 shares of Series C preferred stock, par value $10.00 per share, of
which no shares are issued and outstanding.
(iv) Based solely on an examination of the stock ledger of B&T, of
the agreements identified by B&T to counsel and to Eurobank, and of an officer's
certificate of B&T, except as previously disclosed in writing to EuroBancshares
and Eurobank, there are no (a) other outstanding equity securities of any kind
or character, or (b) outstanding subscriptions, contracts, options, convertible
securities, preemptive rights, warrants, calls or other agreements or
commitments of any kind issued or granted by, binding upon or otherwise
obligating B&T to issue, sell or otherwise dispose of, or to purchase, redeem or
otherwise acquire, any shares of capital stock of B&T.
(v) The execution and delivery by B&T of the Merger Agreement does
not and the consummation of the transactions contemplated thereby will not
contravene or violate any provision of or constitute a default under (a) the
articles of incorporation or bylaws of B&T, or (b) to the best of our knowledge
and except as disclosed in the Merger Agreement, any Puerto Rico law or
regulation applicable to B&T.
1
(vi) All approvals, consents, orders, authorizations,
registrations, declarations and filings required to be made or obtained by B&T
under applicable law and its certificate of incorporation and by-laws prior to
the Closing in connection with the execution, delivery and performance of the
Merger Agreement and the consummation of the transactions contemplated by the
Merger Agreement have been made or obtained.
2
EXHIBIT F
FORM OF CERTIFICATE OF DESIGNATION OF PREFERRED STOCK
CERTIFICATE OF DESIGNATION
OF THE BOARD OF DIRECTORS OF EUROBANCSHARES, INC.
NONCUMULATIVE PREFERRED STOCK, SERIES A
We, the undersigned, President and Secretary of EuroBancshares, Inc.
(hereinafter called "EuroBancshares"), a corporation organized under the laws of
the Commonwealth of Puerto Rico, do hereby certify that, pursuant to the
authority conferred upon the Board of Directors of EuroBancshares by the
Certificate of Incorporation of EuroBancshares, the Board of Directors on
_______________, 2004 adopted the following resolutions creating a series of
__________ shares of Serial Preferred Stock designated as the "Noncumulative
Preferred Stock, Series A."
WHEREAS, EuroBancshares, Eurobank ("Eurobank"), a commercial
bank duly organized and existing under the laws of the Commonwealth of
Puerto Rico, and The Bank & Trust Company of Puerto Rico, a commercial
bank duly organized and existing under the laws of the Commonwealth of
Puerto Rico ("B&T"), are parties to that certain Agreement and Plan of
Merger dated as of February 24, 2004 (the "Merger Agreement") pursuant
to which EuroBancshares will acquire all of the issued and outstanding
shares of capital stock of B&T through the merger of B&T with and into
Eurobank (the "Merger");
WHEREAS, pursuant to the terms of the Merger Agreement,
certain shareholders of B&T that own one or more shares of (i) Series A
7.50% noncumulative, convertible, perpetual, monthly income, preferred
stock, par value $10.00 per share, of B&T, or (ii) Series B 9.625%
noncumulative, nonconvertible, term monthly, preferred stock, par value
$10.00 per share, of B&T ("B&T Preferred Stock") will be entitled to
receive a number of shares of Noncumulative Preferred Stock, Series A
of EuroBancshares as described in the Merger Agreement ; and
WHEREAS, the Board of Directors of EuroBancshares deems it
advisable and in the best interests of EuroBancshares and its
shareholders to designate a series of preferred stock of EuroBancshares
to be issued to holders of the B&T Series B Preferred Stock pursuant to
the Merger.
NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority
expressly granted to and vested in the Board of Directors of
EuroBancshares in accordance with the provisions of its Certificate of
Incorporation, a series of Serial Preferred Stock of EuroBancshares be
and it hereby is created.
FURTHER RESOLVED, that the Board of Directors has determined
that the preferences and relative, participating, optional or other
special rights of the shares of such series of preferred stock, and the
qualifications, limitations or restrictions thereof, as stated and
expressed herein, are under the circumstances prevailing on the date
hereof fair and equitable to all the existing shareholders of
EuroBancshares.
FURTHER RESOLVED, that the designation and amount of such
series and the voting powers, preferences and relative, participating,
optional or other special rights of the shares of such series of
preferred stock, and the qualifications, limitations or restrictions
thereof are as follows:
A. DESIGNATION AND AMOUNT
The shares of such series of preferred stock shall be
designated as the "Noncumulative Preferred Stock Series A "
(hereinafter called the "Series A Preferred Stock"), and the number of
authorized shares constituting such series shall be __________, par
value $__________ per share.
B. DIVIDENDS
1. Holders of record of the Series A Preferred Stock
("Holders") will be entitled to receive, when, as and if declared by
the Board of Directors of EuroBancshares or an authorized committee
thereof (the "Board of Directors"), out of funds of EuroBancshares
legally available therefor, monthly noncumulative cash dividends
payable on the last day of each calendar month (each a "Dividend
Payment Date") at a rate per annum equal to 6.825% (the "Dividend
Rate").
2. Dividends on the Series A Preferred Stock will accrue
from their date of original issuance and will be payable (when, as and
if declared by the Board of Directors of EuroBancshares out of funds of
EuroBancshares legally available therefor) in arrears in United States
dollars commencing on _______________, 2004, and on each Dividend
Payment Date thereafter to the holders of record of the Series A
Preferred Stock as they appear on the books of EuroBancshares on the
fifteenth day of the month for which the dividends are payable. In the
event that any date on which dividends are payable is not a Business
Day (as defined below), then payment of the dividend payable on such
date will be made on the next succeeding Business Day without any
interest or other payment in respect of any such delay, except that, if
such Business Day is in the next succeeding calendar year, such payment
will be made on the Business Day immediately preceding the relevant
date of payment, in each case with the same force and effect as if made
on such date. A "Business Day" is a day other than a Saturday, Sunday
or any other day on which banking institutions in San Xxxx, Puerto Rico
are permitted or required by any applicable law to close.
3. Dividends on the Series A Preferred Stock will be
noncumulative. EuroBancshares is not obligated or required to declare
or pay dividends on the Series A Preferred Stock, even if it has funds
available for the payment of such dividends. If the Board of Directors
of EuroBancshares does not declare a dividend payable on a Dividend
Payment Date in respect of the Series A Preferred Stock, then the
holders of such Series A Preferred Stock shall have no right to receive
a dividend in respect of the dividend period ending on such Dividend
Payment Date and EuroBancshares will have no obligation to pay the
dividend accrued for such dividend period or to pay any interest
thereon, whether or not
2
dividends on such Series A Preferred Sock are declared for any future
dividend period.
4. The amount of dividends payable for any dividend
period will be computed on the basis of the actual number of days in
the dividend period concerned divided by 360.
5. Subject to any applicable fiscal or other laws and
regulations, each dividend payment will be made by dollar check drawn
on a bank in San Xxxx, Puerto Rico and mailed to the record holder
thereof at such holder's address as it appears on the register for such
Series A Preferred Stock.
6. So long as any shares of the Series A Preferred Stock
remain outstanding, EuroBancshares shall not declare, set apart or pay
any dividend or make any other distribution of assets (other than
dividends paid or other distributions made in stock of EuroBancshares
ranking junior to the Series A Preferred Stock as to the payment of
dividends and the distribution of assets upon liquidation, dissolution
or winding up of EuroBancshares) on, or redeem, purchase, set apart or
otherwise acquire (except upon conversion or exchange for stock of
EuroBancshares ranking junior to the Series A Preferred Stock as to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of EuroBancshares), shares of common stock or
of any other class of stock of EuroBancshares ranking junior to the
Series A Preferred Stock as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of
EuroBancshares, unless (i) all accrued and unpaid dividends on the
Series A Preferred Stock for the twelve monthly dividend periods ending
on the immediately preceding Dividend Payment Date shall have been paid
or are paid contemporaneously and the full monthly dividend on the
Series A Preferred Stock for the then current month has been or is
contemporaneously declared and paid or declared and set apart for
payment, and (ii) EuroBancshares has not defaulted in the payment of
the redemption price of any shares of Series A Preferred Stock called
for redemption.
7. When dividends are not paid in full on the Series A
Preferred Stock and any other shares of stock of EuroBancshares ranking
on a parity as to the payment of dividends with the Series A Preferred
Stock, all dividends declared upon the Series A Preferred Stock and any
such other shares of stock of EuroBancshares will be declared pro rata
so that the amount of dividends declared per share on the Series A
Preferred Stock and any such other shares of stock will in all cases
bear to each other the same ratio that the accrued dividends per share
on the Series A Preferred Stock for the then current dividend period
bears to the accrued dividends per share on such other shares of stock
(which shall not include any accrual in respect of unpaid dividends for
prior dividend periods if such preferred stock does not have a
cumulative dividend).
3
8. Holders of record of the Series A Preferred Stock
will not be entitled to any dividend, whether payable in cash, property
or stock, in excess of the dividends provided for herein on the shares
of Series A Preferred Stock.
C. CONVERSION
1. The Series A Preferred Stock will not be convertible
into or exchange able for any other securities of EuroBancshares.
D. REDEMPTION AT THE OPTION OF EUROBANCSHARES
1. The shares of the Series A Preferred Stock will be
redeemable in whole or in part at any time and from time to time at the
option of EuroBancshares, with the consent of the Board of Governors of
the Federal Reserve System (the "Federal Reserve") to the extent
required by D. 6 below, upon not less than thirty nor more than sixty
days' notice by mail, at the redemption price of $__________ per share,
plus accrued and unpaid dividends from the dividend payment date
immediately preceding the redemption date (without any cumulation for
unpaid dividends for prior dividend periods on the Series A Preferred
Stock) to the date fixed for redemption.
2. In the event that less than all of the outstanding
shares of the Series A Preferred Stock are to be redeemed in any
redemption at the option of EuroBancshares, the total number of shares
to be redeemed in such redemption shall be determined by the Board of
Directors and the shares to be redeemed shall be allocated pro rata or
by lot as may be determined by the Board of Directors or by such other
method as the Board of Directors may approve and deem equitable,
including any method to conform to any rule or regulation of any
national or regional stock exchange or automated quotation system upon
which the shares of the Series A Preferred Stock may at the time be
listed or eligible for quotation.
3. Notice of any proposed redemption shall be given by
EuroBancshares by mailing a copy of such notice to the holders of
record of the shares of Series A Preferred Stock to be redeemed, at
their address of record, not more than sixty nor less than thirty days
prior to the redemption date. The notice of redemption to each holder
of shares of Series A Preferred Stock shall specify the number of
shares of Series A Preferred Stock to be redeemed, the redemption date
and the redemption price payable to such holder upon redemption, and
shall state that from and after said date dividends thereon will cease
to accrue. If less than all the shares owned by a holder are then to be
redeemed at the option of EuroBancshares, the notice shall also specify
the number of shares of Series A Preferred Stock which are to be
redeemed and the numbers of the certificates representing such shares.
Any notice which is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the stockholder
receives such notice; and failure duly to give such notice by mail, or
any defect in such notice, to the holders of any stock designated for
redemption shall not affect
4
the validity of the proceedings for the redemption of any other shares
of Series A Preferred Stock.
4. Notice having been mailed as aforesaid, from and
after the redemption date (unless default be made in the payment of the
redemption price for any shares to be redeemed), all dividends on the
shares of Series A Preferred Stock called for redemption shall cease to
accrue and all rights of the holders of such shares as stockholders of
EuroBancshares by reason of the ownership of such shares (except the
right to receive the redemption price, on presentation and surrender of
the respective certificates representing the redeemed shares), shall
cease on the redemption date, and such shares shall not after the
redemption date be deemed to be outstanding. In case less than all the
shares represented by any such certificate are redeemed, a new
certificate shall be issued without cost to the holder thereof
representing the unredeemed shares.
5. Any shares of the Series A Preferred Stock which
shall at any time have been redeemed shall, after such redemption, have
the status of authorized but unissued shares of preferred stock,
without designation as to series, until such shares are once more
designated as part of a particular series by the Board of Directors.
6. To the extent required to have the Series A Preferred
Stock treated as Tier 1 capital for regulatory capital purposes or
otherwise required by applicable regulations of the Federal Reserve,
the shares of Series A Preferred Stock may not be redeemed by
EuroBancshares without the prior consent of the Federal Reserve.
E. LIQUIDATION PREFERENCE
1. Upon any voluntary or involuntary liquidation,
dissolution, or winding up of EuroBancshares, the then record holders
of shares of Series A Preferred Stock will be entitled to receive out
of the assets of EuroBancshares available for distribution to
shareholders, before any distribution is made to holders of common
stock or any other equity securities of EuroBancshares ranking junior
upon liquidation to the Series A Preferred Stock, distributions upon
liquidation in the amount of $__________ per share plus an amount equal
to any accrued and unpaid dividends (without any cumulation for unpaid
dividends for prior dividend periods on the Series A Preferred Stock)
for the current dividend period to the date of payment. Such amount
shall be paid to the holders of the Series A Preferred Stock prior to
any payment or distribution to the holders of the common stock of
EuroBancshares or of any other class of stock or series thereof of
EuroBancshares ranking junior to the Series A Preferred Stock in
respect of dividends or as to the distribution of assets upon
liquidation.
2. If upon any voluntary or involuntary liquidation,
dissolution or winding up of EuroBancshares, the amounts payable with
respect to the Series A Preferred Stock and any other shares of stock
of EuroBancshares ranking as to
5
any such distribution on a parity with the Series A Preferred Stock are
not paid in full, the holders of the Series A Preferred Stock and of
such other shares will share ratably in any such distribution of assets
of EuroBancshares in proportion to the full liquidation preferences to
which each is entitled. After payment of the full amount of the
liquidation preference to which they would otherwise be entitled, the
holders of shares of Series A Preferred Stock will not be entitled to
any further participation in any distribution of assets of
EuroBancshares.
3. Neither the consolidation or merger of EuroBancshares
with any other corporation, nor any sale, lease or conveyance of all or
any part of the property or business of EuroBancshares, shall be deemed
to be a liquidation, dissolution, or winding up of EuroBancshares.
F. VOTING RIGHTS
1. Except as described below or otherwise required by
applicable law, holders of the Series A Preferred Stock will not be
entitled to receive notice of or attend or vote at any meeting of
stockholders of EuroBancshares.
2. If EuroBancshares does not pay dividends in full on
the Series A Preferred Stock for eighteen consecutive monthly dividend
periods, the holders of the outstanding shares of the Series A
Preferred Stock, together with the holders of any other shares of stock
of EuroBancshares having the right to vote for the election of
directors solely in the event of any failure to pay dividends, acting
as a single class without regard to series, will be entitled, by
written notice to EuroBancshares given by the holders of a majority in
liquidation preference of such shares or by ordinary resolution passed
by the holders of a majority in liquidation preference of such shares
present in person or by proxy at a separate general meeting of such
holders convened for the purpose, to appoint two additional members of
the Board of Directors of EuroBancshares, to remove any such member
from office and to appoint another person in place of such member. Not
later than 30 days after such entitlement arises, if written notice by
a majority of the holders of such shares has not been given as provided
for in the preceding sentence, the Board of Directors or an authorized
committee thereof will convene a separate general meeting for the above
purpose. If the Board of Directors or such authorized committee fails
to convene such meeting within such 30-day period, the holders of 10%
of the outstanding shares of the Series A Preferred Stock and any such
other stock will be entitled to convene such meeting. The provisions of
the Certificate of Incorporation and Bylaws of EuroBancshares relating
to the convening and conduct of general meetings of shareholders will
apply with respect to any such separate general meeting. Any member of
the Board of Directors so appointed shall vacate office if, following
the event which gave rise to such appointment, EuroBancshares shall
have resumed the payment of dividends in full on the Series A Preferred
Stock and each such other series of stock for twelve consecutive
monthly dividend periods. EuroBancshares shall take such action as may
be required to give effect to the voting rights provided herein.
6
3. Any amendment, alteration or repeal of the rights,
preferences and privileges of the Series A Preferred Stock by way of
amendment of EuroBancshares' Certificate of Incorporation whether by
merger or otherwise (including, without limitation, the authorization
or issuance of any shares of EuroBancshares ranking, as to dividend
rights or rights on liquidation, winding up and dissolution, senior to
the Series A Preferred Stock) which would materially and adversely
affect the powers, preferences or special rights of the Series A
Preferred Stock shall not be effective (unless otherwise required by
applicable law) except with the consent in writing of the holders of at
least two thirds of the outstanding aggregate liquidation preference of
the outstanding shares of the Series A Preferred Stock or with the
sanction of a special resolution passed at a separate general meeting
by the holders of at least two thirds of the aggregate liquidation
preference of the outstanding shares of the Series A Preferred Stock.
Notwithstanding the foregoing, EuroBancshares may, without the consent
or sanction of the holders of the Series A Preferred Stock, authorize
and issue shares of EuroBancshares ranking, as to dividend rights and
rights on liquidation, winding up and dissolution, on a parity with or
junior to the Series A Preferred Stock. The foregoing voting provisions
shall not apply if, at or prior to the time when the act with respect
to which such vote would otherwise be required shall be effected, all
outstanding shares of the Series A Preferred Stock shall have been
redeemed or called for redemption upon proper notice and sufficient
funds shall have been deposited in trust to effect such redemption.
4. No vote of the holders of the Series A Preferred
Stock will be required for EuroBancshares to redeem or purchase and
cancel the Series A Preferred Stock in accordance with the Certificate
of Incorporation of EuroBancshares.
5. EuroBancshares will cause a notice of any meeting at
which holders of the Series A Preferred Stock are entitled to vote to
be mailed to each record holder of Series A Preferred Stock. Each such
notice will include a statement setting forth (i) the date of such
meeting, (ii) a description of any resolution to be proposed for
adoption at such meeting on which such holders are entitled to vote,
and (iii) instructions for deliveries of proxies.
6. Except as set forth in this Section F, holders of
Series A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled
to vote as set forth herein) for taking any corporate action.
G. RANK
The Series A Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (i)
senior to all classes of common stock of EuroBancshares and to all
other equity securities issued by EuroBancshares the terms of which
specifically provide that such equity securities will rank junior to
the Series A Preferred Stock (or to a number of series of
7
preferred stock which includes the Series A Preferred Stock); (ii) on a
parity with all other equity securities issued by EuroBancshares the
terms of which specifically provide that such equity securities will
rank on a parity with the Series A Preferred Stock (or with a number of
series of preferred stock which includes the Series A Preferred Stock);
and (iii) subject to the provisions of F.2 hereof, junior to all equity
securities issued by EuroBancshares the terms of which specifically
provide that such equity securities will rank senior to the Series A
Preferred Stock (or to a number of series of preferred stock which
includes the Series A Preferred Stock). For this purpose, the term
"equity securities" does not include debt securities convertible into
or exchangeable for equity securities.
H. FORM OF CERTIFICATE FOR SERIES A PREFERRED STOCK; TRANSFER AND
REGISTRATION
1. The Series A Preferred Stock shall be issued in
registered form only. EuroBancshares may treat the record holder of a
share of Series A Preferred Stock, including any holder that holds such
share on behalf of any other person, as such record holder appears on
the books of the registrar for the Series A Preferred Stock, as the
sole owner of such share for all purposes.
2. The transfer of a share of Series A Preferred Stock
may be registered upon the surrender of the certificate evidencing the
share of Series A Preferred Stock to be transferred, together with the
form of transfer endorsed on it duly completed and executed, at the
office of the transfer agent and registrar.
3. Registration of transfers of shares of Series A
Preferred Stock will be effected without charge by or on behalf of
EuroBancshares, but upon payment (or the giving of such indemnity as
the transfer agent and registrar may require) in respect of any tax or
other governmental charges which may be imposed in relation to it.
4. EuroBancshares will not be required to register the
transfer of a share of Series A Preferred Stock after such share has
been called for redemption.
I. REPLACEMENT OF LOST CERTIFICATES
If any certificate for a share of Series A Preferred Stock is
mutilated or alleged to have been lost, stolen or destroyed, a new
certificate representing the same share shall be issued to the holder
upon request subject to delivery of the old certificate or, if alleged
to have been lost, stolen or destroyed, compliance with such conditions
as to evidence, indemnity and the payment of out-of-pocket expenses of
EuroBancshares in connection with the request as the Board of Directors
of EuroBancshares may determine.
J. NO PREEMPTIVE RIGHTS
Holders of the Series A Preferred Stock will have no
preemptive or preferential rights to purchase any securities of
EuroBancshares.
8
K. NO REPURCHASE AT THE OPTION OF HOLDERS; MISCELLANEOUS
Holders of Series A Preferred Stock will have no right to
require EuroBancshares to redeem or repurchase any shares of Series A
Preferred Stock, and the shares of Series A Preferred Stock are not
subject to any sinking fund or similar obligation. EuroBancshares may,
at its option, purchase shares of the Series A Preferred Stock from
holders thereof from time to time, by tender, in privately negotiated
transactions or otherwise.
The undersigned hereby certify that the foregoing resolutions were duly
authorized in accordance with the provisions of the Puerto Rico General
Corporation Law of 1995.
[Signature Page Follows]
9
[Signature Page to Certificate of Designation]
IN WITNESS WHEREOF, EuroBancshares has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by its President and its
Assistant Secretary, this ___ the day of ______________, 2004.
EUROBANCSHARES, INC.
By: _____________________________
Xxxxxx Xxxxxxxxx Xxxxxxx, Xx.
President
[CORPORATE SEAL]
By: _____________________________
Xxxxxx Xxxxxxx
Secretary
10
EXHIBIT G
LIST OF DIRECTORS AND EXECUTIVE OFFICERS OF EUROBANK
NAMES AND ADDRESSES OF DIRECTORS
Xx. Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx.
Condominio Crown Plaza
0000 Xxxxx Xxxxxxxx, Xxx. 0
Xxx Xxxx, XX 00000
Mr. Xxxxx Xxxxxxxxx Xxxxxxx
Xx. Xxxxxxxx
Xxxx, 000, Xx. 0
Xxx Xxxxxxx, XX 00000
Mr. Xxxxx Xxxxxxxx
Xxxxxx xx Xxxxx
Xxxxxxx #X-0
Xxx Xxxx, XX 00000
Xx. Xxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx Xx Xxxxx
Xxxxxx #00
Xxxxxx, XX 00000
Xx. Xxxxxxx Xxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxxx #00
Xxx Xxxx, XX 00000
Mr. Xxxxxxx Xxxxxx Xxxxxx
Condominio Playa Xxxxxxxxx
Amapola Girona XX0
Xxxx Xxxxx, XX 00000
Xx. Xxxx Xxxxx-Xxxxxxx
XXXX S.S.
Ctra. Ajalvir
Daganzo XX 0, 00000
Xxxxxxx, Xxxxxx, Xxxxxx
Xxxxx Xxxxx-Xxxxxxxxx, Esq.
XX Xxx 0000
Xxxxxx, XX 000000
Xx. Xxxxxxx Xxxx-Xxxxxxxxx
Condominio Sunside, Xxxxx 00X
Xxxxxxx Xxxxxxx #0000
Xxxxxxx, XX 00000
NAMES AND ADDRESSES OF SENIOR EXECUTIVE OFFICERS
Xx. Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx.
Condominio Crown Plaza
0000 Xxxxx Xxxxxxxx, Xxx. 0
Xxx Xxxx, XX 00000
Xx. Xxxxxx Xxxxxxx
Xxxxx Xxx Xxxx
Xxxxxxxx #X-00
Xxx Xxxx, XX 00000
Xx. Xxxxx X. Xxxxxxx
Portofino Xxxx. 00X
Xxxx Xxxxxx #0
Xxxxxxxx, XX 00000
Xx. Xxxxx Xxxxx
Parques de San Xxxxxxx
Xxxxx 00 XXX
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxxxxx-Xxxxxxx
Urb. Sabanera
Xxxxxx Xxxxxxxxx #000
Xxxxx, XX 00000
