EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
by and among
CAMDEN NATIONAL CORPORATION,
CAMDEN ACQUISITION SUBSIDIARY, INC.,
KSB BANCORP, INC.,
and
KINGFIELD SAVINGS BANK
Dated as of July 27, 1999
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TABLE OF CONTENTS
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ARTICLE I - CERTAIN DEFINITIONS.......................................... 1
1.1 Certain Definitions.......................................... 1
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ARTICLE II - THE MERGER; EFFECTS OF THE MERGER........................... 8
2.1 The Merger................................................... 8
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2.2 Charter and Bylaws........................................... 8
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2.3 Closing...................................................... 9
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2.4 Effectiveness and Effects of the Merger...................... 9
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2.5 Tax Consequences............................................. 9
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2.6 Accounting Treatment......................................... 9
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2.7 Board of Directors........................................... 9
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ARTICLE III - MERGER CONSIDERATION; EXCHANGE PROCEDURES.................. 10
3.1 Merger Consideration......................................... 10
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3.2 Rights as Stockholders; Stock Transfers...................... 10
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3.3 Fractional Shares............................................ 10
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3.4 Exchange Procedures.......................................... 11
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3.5 Anti-Dilution Provisions..................................... 12
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3.6 Treasury Shares.............................................. 12
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3.7 Options...................................................... 12
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ARTICLE IV - THE SUBSEQUENT MERGER; EFFECTS OF THE SUBSEQUENT MERGER..... 13
4.1 Subsequent Merger............................................ 13
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4.2 Charter...................................................... 13
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4.3 Bylaws....................................................... 14
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4.4 Board of Directors........................................... 14
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4.5 Cancellation of Shares....................................... 14
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ARTICLE V - REPRESENTATIONS AND WARRANTIESOF KSB AND THE BANK........... 14
5.1 Organization and Qualification; Subsidiaries................. 14
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5.2 Certificate of Incorporation; By-Laws; Corporate Records..... 15
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5.3 Capitalization............................................... 15
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5.4 Authority.................................................... 16
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5.5 No Conflict.................................................. 17
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5.6 Consents and Approvals....................................... 17
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5.7 Compliance................................................... 18
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(i)
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5.8 SEC Reports and Bank Reports................................. 18
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5.9 Financial Statements......................................... 19
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5.10 Absence of Certain Changes or Events......................... 20
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5.11 Absence of Litigation........................................ 22
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5.12 Employee Benefit Plans....................................... 22
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5.13 Labor Matters................................................ 23
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5.14 Property and Leases.......................................... 24
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5.15 Taxes........................................................ 24
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5.16 Certain Contracts............................................ 26
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5.17 Loan Portfolio............................................... 27
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5.18 Investment Securities........................................ 27
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5.19 Derivative Transactions...................................... 28
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5.20 Insurance.................................................... 28
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5.21 Environmental Matters........................................ 29
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5.22 Intellectual Property........................................ 30
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5.23 Administration of Fiduciary Accounts......................... 30
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5.24 Agreements with Bank Regulators.............................. 31
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5.25 Material Interests of Certain Persons........................ 31
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5.26 Brokers' Fees; Opinions...................................... 31
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5.27 Joint Proxy Statement........................................ 31
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5.28 State Takeover Laws.......................................... 32
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5.29 Year 2000.................................................... 32
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5.30 Disclosure................................................... 33
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ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF CAMDEN AND CASI........... 33
6.1 Corporate Organization....................................... 33
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6.2 Authority.................................................... 33
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6.3 No Conflict.................................................. 34
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6.4 Capitalization............................................... 34
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6.5 Consents and Approvals....................................... 35
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6.6 Joint Proxy Statement........................................ 35
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6.7 SEC Reports and Bank Reports................................. 35
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6.8 Financial Statements......................................... 36
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6.9 Compliance................................................... 36
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6.10 Absence of Certain Changes or Events......................... 37
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6.11 Employee Benefit Plans....................................... 37
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6.12 Environmental................................................ 38
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6.13 Agreements with Bank Regulators.............................. 39
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6.14 Year 2000.................................................... 40
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6.15 Brokers' Fees................................................ 40
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(ii)
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6.16 Disclosure................................................... 40
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ARTICLE VII - CONDUCT OF BUSINESS PENDINGTHE MERGER...................... 40
7.1 Covenants of KSB and the Bank................................ 41
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7.2 Camden Products and Services................................. 45
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7.3 System Conversions........................................... 45
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7.4 Certain Changes and Adjustments.............................. 45
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7.5 ALCO Management.............................................. 46
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7.6 Covenants of Camden.......................................... 46
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7.7 Affiliate Agreements......................................... 46
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7.8 Takeover Laws................................................ 47
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7.9 No Rights Triggered.......................................... 47
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7.10 Shares Listed................................................ 47
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ARTICLE VIII - ADDITIONAL AGREEMENTS..................................... 47
8.1 Stockholder Approvals........................................ 47
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8.2 Registration Statement....................................... 48
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8.3 Regulatory Matters........................................... 49
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8.4 Access to Information........................................ 50
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8.5 No Solicitation.............................................. 51
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8.6 Employee Benefits Matters.................................... 52
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8.7 Directors' and Officers' Insurance........................... 53
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8.8 Financial and Other Statements............................... 53
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8.9 Further Action............................................... 54
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8.10 Public Announcements......................................... 54
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8.11 Additional Agreements........................................ 54
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8.12 Update of Disclosure Schedules............................... 55
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8.13 Current Information.......................................... 55
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8.14 Bank Merger.................................................. 56
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8.15 Post-Closing Governance...................................... 56
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ARTICLE IX - CONDITIONS TO THE MERGER.................................... 57
9.1 Conditions to Each Party's Obligations to Effect the Merger.. 57
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9.2 Conditions to Obligations of Camden and CASI................. 58
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ARTICLE X - TERMINATION, AMENDMENT AND WAIVER........................... 60
10.1 Termination.................................................. 60
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10.2 Effect of Termination........................................ 63
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(iii)
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10.3 Amendment.................................................... 65
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10.4 Waiver....................................................... 65
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ARTICLE XI - GENERAL PROVISIONS.......................................... 65
11.1 Alternative Structure........................................ 65
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11.2 Non-Survival of Representations, Warranties and Agreements... 66
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11.3 Notices...................................................... 66
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11.4 Severability................................................. 67
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11.5 Entire Agreement............................................. 67
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11.6 Assignment................................................... 67
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11.7 Parties in Interest.......................................... 67
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11.8 Specific Performance......................................... 67
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11.9 Governing Law................................................ 68
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11.10 Headings..................................................... 68
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11.11 Interpretation............................................... 68
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11.12 Counterparts................................................. 68
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EXHIBIT A-1 Form of Affiliate Letter to Camden
EXHIBIT A-2 Form of Affiliate Letter to KSB
EXHIBIT B Bank Holding Companies Index Group
EXHIBIT C Form of Bank Merger Agreement
EXHIBIT D Form of Voting Agreement
(iv)
AGREEMENT AND PLAN OF MERGER, dated as of July 27, 1999 (this "Agreement"),
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by and between CAMDEN NATIONAL CORPORATION, a Maine corporation ("Camden"),
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CAMDEN ACQUISITION SUBSIDIARY, INC., a Delaware corporation and wholly owned
subsidiary of Camden ("CASI"), which has been formed for the specific and sole
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purpose of consummating the Merger (as such term is defined below), KSB BANCORP,
INC., a Delaware corporation ("KSB"), and KINGFIELD SAVINGS BANK, a Maine-
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chartered savings bank and wholly owned subsidiary of KSB (the "Bank").
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WITNESSETH:
WHEREAS, the Boards of Directors of Camden, CASI and KSB have determined
that it is in the best interests of their respective corporations and their
stockholders to consummate the strategic business merger transactions provided
for herein, in which (i) CASI will, subject to the terms and conditions set
forth herein, merge (the "Merger") with and into KSB such that KSB is the
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surviving corporation in the Merger and continues its corporate existence under
the laws of the State of Delaware as a wholly owned subsidiary of Camden, and
(ii) KSB (as the surviving corporation from the Merger) will, subject to the
terms and conditions set forth herein, merge (the "Subsequent Merger," and
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together with the Merger, the "Mergers") with and into Camden such that Camden
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is the surviving corporation in the Subsequent Merger and continues its
corporate existence under the laws of the State of Maine;
WHEREAS, in connection with the execution of this Agreement, KSB and Camden
are entering into a stock option agreement, with KSB as issuer and Camden as
grantee (the "KSB Option Agreement"); and
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WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Mergers and also to prescribe certain
conditions to the Mergers;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I - CERTAIN DEFINITIONS
1.1 Certain Definitions. As used in this Agreement, the following terms
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shall have the meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 7.7(a).
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"Agreement" shall have the meaning set forth in the preamble to this
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Agreement.
"AMEX" shall mean The American Stock Exchange.
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"Bank Board" shall have the meaning set forth in Section 5.4(b).
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"Bank Common Stock" shall have the meaning set forth in Section 5.3(b).
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"Bank Examinations" shall have the meaning set forth in Section 5.8(b).
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"Bank Meeting" shall have the meaning set forth in Section 8.1.
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"Bank Merger" shall have the meaning set forth in Section 8.14.
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"Bank Merger Agreements" shall have the same meaning set forth in Section
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8.14.
"Bank Regulators" shall have the meaning set forth in Section 5.8(b).
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"Bank Shares" shall have the meaning set forth in Section 5.3(b).
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"BHCA" shall have the meaning set forth in Section 5.1(a).
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"Burdensome Condition" shall have the meaning set forth in Section 9.2(d).
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"Business Day" shall mean any day on which the principal offices of the SEC
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in Washington, D.C. is open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in the City of Augusta, Maine.
"Camden" shall have the meaning set forth in the preamble to this
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Agreement.
"Camden Common Stock" shall have the meaning set forth in Section 3.1(a).
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"Camden ERISA Affiliate" shall have the meaning set forth in Section 6.11.
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"Camden Floor Price" shall have the meaning set forth in Section 10.1(i).
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"Camden Index Ratio" shall have the meaning set forth in Section 10.1(i).
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"Camden Meeting" shall have the meaning set forth in Section 8.1.
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"Camden National Bank" shall mean Camden National Bank, a wholly-owned
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subsidiary of Camden and a bank organized under the laws of the United States.
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"Camden Plans" shall have the meaning set forth in Section 6.11(a).
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"Camden Ratio" shall have the meaning set forth in Section 10.1(i).
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"Camden SEC Reports" shall have the meaning set forth in Section 6.7.
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"CASI" shall have the meaning set forth in the preamble to this Agreement.
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"CASI Common Stock" shall have the meaning set forth in Section 3.1(b).
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"CASI Meeting" shall have the meaning set forth in the Section 8.1.
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"Certificate of Merger" shall have the meaning set forth in Section 2.1.
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"Closing" shall have the meaning set forth in Section 2.3.
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"Closing Date" shall have the meaning set forth in Section 2.3.
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"COBRA" shall have the meaning set forth in Section 5.12(d).
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"Code" shall have the meaning set forth in Section 5.15(b).
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"Confidentiality Agreement" shall have the meaning set forth in Section
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8.4(a).
"Control" (including the terms "controlled by" and "under common control
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with") shall mean the possession, directly or indirectly or as trustee or
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executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
"CRA" shall have the meaning set forth in Section 5.7.
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"DGCL" shall mean the Delaware General Corporation Law.
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"Disclosure Schedule" shall mean a schedule prepared by KSB and the Bank or
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Camden and CASI, as applicable, setting forth, among other things, items the
disclosure of which is necessary or appropriate in relation to any or all of
their respective representations and warranties.
"Effective Date" shall have the meaning set forth in Section 2.4.
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"Effective Time" shall have the meaning set forth in Section 2.4.
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"Environment" shall have the meaning set forth in Section 5.21(f).
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"EPA" shall have the meaning set forth in Section 5.21(a).
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"ERISA" shall have the meaning set forth in Section 5.12(a).
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"ESOP" shall have the meaning set forth in Section 5.12(c).
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"Exchange Act" shall have the meaning set forth in Section 5.6(a).
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"Exchange Agent" shall have the meaning set forth in Section 3.4(a).
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"Exchange Fund" shall have the meaning set forth in Section 3.4(a).
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"Exchange Ratio" shall have the meaning set forth in Section 3.1(a).
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"Expense Fee" shall have the meaning set forth in Section 10.2(c).
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"Expenses" shall have the meaning set forth in Section 10.2(b).
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"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
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"FDIC" shall have the meaning set forth in Section 5.1(a).
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"FRB" shall have the meaning set forth in Section 5.1(a).
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"GAAP" shall have the meaning set forth in Section 2.6.
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"Governmental Entity" shall have the meaning set forth in Section 5.6(a).
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"Hazardous Material" shall have the meaning set forth in Section 5.21(f).
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"HSR Act" shall have the meaning set forth in Section 5.6(a).
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"Information Technology" means all computer software, computer hardware
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(whether general or specific purpose) and other similar or related items of
automated, computerized, or software systems that are used or relied on by KSB
or the Bank in the conduct of their respective businesses.
"Injunction" shall have the meaning set forth in Section 9.1(c).
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"IRS" shall have the meaning set forth in Section 5.15(a).
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"Joint Proxy Statement" shall have the meaning set forth in Section 8.2(a).
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"knowledge" shall mean actual knowledge of all of the directors, executive
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officers of KSB or the Bank who knew or should know as to the matters referenced
herein, and includes any facts, matters or circumstances set forth in any
written notice from any Governmental Entity or any other material written notice
received by KSB or the Bank, and also includes any matter of which Camden
informs KSB or the Bank in writing prior to the date hereof or to which KSB or
the Bank acknowledges or agrees.
"KSB" shall have the meaning set forth in the preamble to this Agreement.
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"KSB Board" shall have the meaning set forth in Section 5.4(a).
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"KSB Common Stock" shall have the meaning set forth in Section 3.1(a).
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"KSB Compensation and Benefit Plans" shall mean the Compensation and
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Benefit Plans of KSB.
"KSB Contract" shall have the meaning set forth in Section 5.16(a).
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"KSB Employees" shall have the meaning set forth in Section 8.6(a).
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"KSB ERISA Affiliate" shall have the meaning set forth in Section 5.12(a).
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"KSB Meeting" shall have the meaning set forth in Section 8.1.
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"KSB Option Agreement" shall have the meaning set forth in the preamble to
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this Agreement.
"KSB Preferred Stock" shall have the meaning set forth in Section 5.3(a).
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"KSB SEC Reports" shall have the meaning set forth in Section 5.8(a).
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"KSB Stock Option" shall have the meaning set forth in Section 3.7(a).
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"KSB Stock Option Plans" shall have the meaning set forth in Section
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3.7(a).
"Liaison Committee" shall have the meaning set forth in Section 8.13(a).
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"Liens" shall have the meaning set forth in Section 5.14(a).
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"Loan Property" shall have the meaning set forth in Section 5.21(f).
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"Loans" shall have the meaning set forth in Section 5.17.
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"Maine Superintendent" shall have the meaning set forth in Section 5.6(a).
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"Material Adverse Effect" shall mean with respect to Camden or KSB,
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respectively, any effect that (i) is material and adverse to the financial
position, results of operations, assets or business of Camden and its
Subsidiaries taken as a whole, or KSB and its Subsidiaries taken as a whole,
respectively, or (ii) would materially impair the ability of Camden or KSB,
respectively, to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Mergers, the
Bank Merger and the other transactions contemplated by this Agreement; provided,
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however, that Material Adverse Effect shall not be deemed to include the impact
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of (a) changes in banking, corporate and similar laws of general applicability
or interpretations thereof by courts or governmental authorities, (b) changes in
generally accepted accounting principles or regulatory accounting requirements
applicable to banks or savings associations and their holding companies
generally, (c) actions or omissions of Camden or its Subsidiaries or KSB or its
Subsidiaries taken with the prior written consent of Camden or KSB, as
applicable, in contemplation of the transactions contemplated hereby, and (d)
the effects of the Mergers and compliance by either party with the provisions of
this Agreement on the financial position, results of operations, assets or
business of such party and its Subsidiaries, or the other party and its
Subsidiaries, as the case may be.
"MBCA" shall have the meaning set forth in Section 4.1.
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"Meeting" shall have the meaning set forth in Section 8.1.
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"Merger" shall have the meaning set forth in the recitals to this
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Agreement.
"Merger Consideration" shall have the meaning set forth in Section 2.1.
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"Mergers" shall have the meaning set forth in the recitals to this
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Agreement.
"New Certificates" shall have the meaning set forth in Section 3.4(a).
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"OCC" shall mean the Office of the Comptroller of the Currency.
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"Oil" shall have the meaning set forth in Section 5.21(f).
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"Old Certificates" shall have the meaning set forth in Section 3.4(a).
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"OREO" shall have the meaning set forth in Section 5.9(a).
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"Participation Facility" shall have the meaning set forth in Section
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5.21(a).
"Permitted Liens" shall have the meaning set forth in Section 5.14(a).
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"Person" or "person" shall mean any individual, bank, corporation,
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partnership, limited liability company, association, joint-stock company,
business trust or unincorporated organization.
"Plans" shall have the meaning set forth in Section 5.12(a).
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"Registration Statement" shall have the meaning set forth in Section
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8.2(a).
"Requisite Regulatory Approvals" shall have the meaning set forth in
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Section 9.1(b).
"Rights" shall mean, with respect to any person, securities or obligations
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convertible into or exchangeable for, or giving any person any right to
subscribe for or acquire, or any options, calls or commitments relating to,
shares of stock of such person.
"SEC" shall have the meaning set forth in Section 5.8(a).
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"Securities Act" shall have the meaning set forth in Section 5.8(a).
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"Starting Date" shall have the meaning set forth in Section 10.1(i).
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"Subsequent Effective Time" shall have the meaning set forth in Section
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4.1.
"Subsequent Merger" shall have the meaning set forth in the recitals to
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this Agreement.
"Subsidiary" and "Significant Subsidiary" shall have the respective
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meanings set forth in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiaries" shall mean all of a party's Subsidiaries and Significant
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Subsidiaries.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
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"Takeover Laws" shall have the meaning set forth in Section 5.28.
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"Taxes" shall have the meaning set forth in Section 5.15(c)
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"Treasury Shares" shall have the meaning set forth in Section 3.1(a).
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"United Bank" shall mean United Bank, a banking organization chartered
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under the laws at the State of Maine and a wholly-owned Subsidiary of Camden.
"Year 2000 Compliant" means that the Information Technology is designed to
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be used prior to, during and after the calendar year 2000 A.D., and the
Information Technology used during each such time period will accurately
receive, provide and process date/time data (including calculating, comparing
and sequencing) from, into and between the 20th and 21st centuries, including
the years 1999 and 2000 and leap-year calculations, and will not malfunction,
cease to function, or provide invalid or incorrect results as a result of
date/time data, to the extent that any other information technology, used in
combination with the Information Technology, properly exchanges date/time data
with it.
"Year 2000 Plan" shall have the meaning set forth in Section 5.29.
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"Year 2000 Regulatory Requirements" shall have the meaning set forth in
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Section 5.29.
ARTICLE II - THE MERGER; EFFECTS OF THE MERGER
2.1 The Merger. At the Effective Time, upon the terms and subject to the
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conditions of this Agreement, CASI shall merge with and into KSB, the separate
corporate existence of CASI shall cease and KSB shall survive and continue its
corporate existence under the laws of the State of Delaware as a wholly owned
subsidiary of Camden (KSB, as the surviving corporation in the Merger, being
sometimes referred to herein as the "Surviving Corporation"). The parties shall
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prepare and execute a certificate of merger (the "Certificate of Merger") in
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order to comply in all respects with the requirements of the DGCL and with the
provisions of this Agreement. Camden may at any time change the method of
effecting the strategic business merger transactions with KSB and CASI provided
for herein (including without limitation the provisions of this Article II) if
and to the extent it deems such change to be desirable, including without
limitation to provide for a merger of KSB into Camden or a wholly owned
subsidiary of Camden; provided, however, that no such change shall (A) alter or
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change the amount or kind of consideration to be issued to holders of KSB Common
Stock as provided for in this Agreement (the "Merger Consideration"), (B)
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adversely affect the tax treatment of KSB's stockholders as a result of
receiving the Merger Consideration or (C) materially impede or delay
consummation of the Merger. KSB and CASI agree to, and to cause their
Subsidiaries to, appropriately amend this Agreement and any related documents in
order to reflect such revised method of effecting the strategic business merger
transactions with KSB and CASI provided for herein to the extent deemed
necessary or desirable by Camden in its reasonable judgment.
2.2 Charter and Bylaws. The Certificate of Merger shall provide that, at
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the Effective Time, the charter of the Surviving Corporation shall be the
charter of CASI, as such
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charter may be amended, and set forth in the Certificate of Merger or any
certificate of amendment filed prior to the Effective Time. The bylaws of the
Surviving Corporation shall be the bylaws of CASI at the Effective Time.
2.3 Closing. The closing of the Merger (the "Closing") will occur at
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10:00 a.m., Boston time, on the date to be specified by the parties in
accordance with the terms of this Agreement (the "Closing Date"), at the offices
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of Xxxxxxx, Procter & Xxxx XXX, Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
unless another date or place is agreed to in writing by the parties.
2.4 Effectiveness and Effects of the Merger. On the Closing Date, or at
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such time as may otherwise be agreed by the parties, CASI and KSB shall execute
and file with the Secretary of State of the State of Delaware the Certificate of
Merger in accordance with the DGCL. Subject to the satisfaction or waiver of
the conditions set forth in Article VIII, the Merger shall become effective (the
"Effective Time") upon the occurrence of the filing of the Certificate of Merger
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with the Secretary of State of the State of Delaware pursuant to Section 252 of
the DGCL, or such other time, if any, as may be specified in the Certificate of
Merger. The Merger shall have the effects prescribed in Sections 259 and 261 of
the DGCL. The date on which the Effective Time occurs is referred to herein as
the "Effective Date."
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2.5 Tax Consequences. It is intended that both the Merger and the
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Subsequent Merger be consummated pursuant to one integrated plan which qualifies
as a reorganization under Section 368(a)(1)(A) of the Code. This Agreement
shall constitute a "plan of reorganization" for purposes of Section 368 of the
Code.
2.6 Accounting Treatment. It is intended that the Merger be accounted for
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as a "pooling of interests" under generally accepted accounting principles
("GAAP"). The parties acknowledge and agree that (i) Camden intends to take all
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measures it deems necessary to cause the transaction to be accounted for as a
"pooling of interests" transaction and (ii) neither such measures nor any
consequence or result thereof shall be deemed to have a Material Adverse Effect
for the purposes of this Agreement. It is further understood that in the event
that Camden determines in its sole discretion not to take such measures as to
achieve "pooling of interests" accounting treatment, accounting for the
transaction on a "purchase accounting" basis shall not be deemed to have a
Material Adverse Effect.
2.7 Board of Directors. At the Effective Time, the Board of Directors of
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the Surviving Corporation shall be those persons serving as directors of CASI
immediately prior to the Effective Time, such persons to serve until the earlier
of their resignation or removal or until their respective successors are duly
appointed or elected and qualified, as the case may be.
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ARTICLE III - MERGER CONSIDERATION; EXCHANGE PROCEDURES
3.1 Merger Consideration. Subject to the provisions of this Agreement, at
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the Effective Time, automatically by virtue of the Merger and without any action
on the part of any party or stockholder:
(a) Outstanding KSB Common Stock. Each share (excluding shares held
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by KSB or by Camden, other than in a fiduciary capacity ("Treasury Shares")) of
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the common stock, par value $.01 per share, of KSB (the "KSB Common Stock")
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issued and outstanding immediately prior to the Effective Time shall be
converted into and become the right to receive 1.136 shares (subject to
adjustment as set forth herein, the "Exchange Ratio") of common stock, no par
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value, of Camden (the "Camden Common Stock").
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(b) Outstanding CASI Common Stock. Each share of the common stock,
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par value $.01 per share, of CASI ("CASI Common Stock") issued and outstanding
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immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of the KSB Common Stock.
(c) Outstanding Camden Common Stock. Each share of Camden Common
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Stock issued and outstanding immediately prior to the Effective Time shall
remain outstanding following the Effective Time.
3.2 Rights as Stockholders; Stock Transfers. At the Effective Time,
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holders of KSB Common Stock shall cease to be, and shall have no rights as,
stockholders of KSB, other than to receive any dividend or other distribution
with respect to such KSB Common Stock with a record date occurring prior to the
Effective Time and to receive the Merger Consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of KSB of shares of KSB Common Stock, other than transfers of KSB
Common Stock that have occurred prior to the Effective Time.
3.3 Fractional Shares. Notwithstanding any other provision hereof, no
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fractional shares of Camden Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Camden shall pay to each holder of KSB Common Stock who would otherwise be
entitled to a fractional share of Camden Common Stock (after aggregating all Old
Certificates delivered by such holder) an amount in cash to be paid in lieu of
fractional shares (without interest) determined by multiplying such fraction by
the average of the last sale prices of Camden Common Stock, as reported by the
AMEX Composite Transactions reporting system (as reported in The Wall Street
Journal or, if not reported therein, in another authoritative source), for the
five AMEX trading days immediately preceding the Effective Date.
10
3.4 Exchange Procedures.
-------------------
(a) Prior to the Effective Time, Camden shall deposit, or shall cause
to be deposited, with a bank or trust company selected by Camden and reasonably
acceptable to KSB (the "Exchange Agent"), for the benefit of the holders of
--------------
certificates representing shares of KSB Common Stock immediately prior to the
Effective Time ("Old Certificates"), for exchange in accordance with this
----------------
Article III, certificates representing the shares of Camden Common Stock ("New
---
Certificates") and an estimated amount of cash to be paid in lieu of fractional
------------
shares (such cash and New Certificates, together with any dividends or
distributions with respect thereto (without any interest thereon), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to this
-------------
Article III in exchange for outstanding shares of KSB Common Stock.
(b) As promptly as practicable after the Effective Time, and in any
event within seven business days thereafter, Camden shall send or cause to be
sent to each holder of record of shares (other than Treasury Shares) of KSB
Common Stock immediately prior to the Effective Time transmittal materials for
use in exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Camden shall cause the New Certificates, into which
shares of a stockholder's KSB Common Stock are convertible from and after the
Effective Time, and/or any check in respect of any fractional share interests or
dividends or distributions which such person shall be entitled to receive, to be
delivered to such stockholder upon delivery to the Exchange Agent of Old
Certificates representing such shares of KSB Common Stock (or indemnity
reasonably satisfactory to Camden and the Exchange Agent, if any of such
certificates are lost, stolen or destroyed) owned by such stockholder. No
interest will be paid on any such cash to be paid pursuant to this Article III
upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto or any affiliate thereof shall be liable to any former holder of
KSB Common Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to Camden Common
Stock with a record date occurring after the Effective Time shall be paid to the
holder of any unsurrendered Old Certificate representing shares of KSB Common
Stock converted in the Merger into the right to receive shares of such Camden
Common Stock until the holder thereof shall surrender such Old Certificate,
together with the necessary transmittal materials, in accordance with this
Article III. Subject to applicable law, after the surrender of an Old
Certificate in accordance with this Article III, the record holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Camden Common Stock for which such Old Certificate was exchangeable.
11
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of KSB for twelve (12) months after the Effective Time shall be
paid to Camden, subject to the rights of such stockholders to receive payments
from any such portion of the Exchange Fund in accordance with the terms of this
Article III. Any stockholders of KSB who have not theretofore complied with
this Article III shall thereafter look only to Camden for payment of the shares
of Camden Common Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on the Camden Common Stock deliverable in respect of
each share of KSB Common Stock such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
3.5 Anti-Dilution Provisions. In the event Camden or KSB changes (or
------------------------
establishes a record date for changing) the number of, or provides for the
exchange of, shares of Camden Common Stock or KSB Common Stock issued and
outstanding prior to the Effective Date as a result of a stock split, stock
dividend, recapitalization, reclassification, reorganization or similar
transaction with respect to the outstanding Camden Common Stock or KSB Common
Stock and the record date therefor shall be prior to the Effective Date, the
Exchange Ratio shall be proportionately and appropriately adjusted.
By way of illustration, if Camden shall declare a stock dividend of 10%
payable with respect to a record date on or prior to the Effective Date, the
Exchange Ratio shall be adjusted upward by 10% and shall be equal to 1.250.
3.6 Treasury Shares. Each of the shares of KSB Common Stock constituting
---------------
Treasury Shares immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.7 Options.
-------
(a) At the Effective Time, all employee and director stock options to
purchase shares of KSB Common Stock (each, a "KSB Stock Option"), which are then
----------------
outstanding and unexercised, shall cease to represent a right to acquire shares
of KSB Common Stock, and shall be converted automatically into options to
purchase shares of Camden Common Stock, and Camden shall assume each such KSB
Stock Option subject to the terms of any of the stock option plans listed under
"Stock Plans" in Section 3.7 of KSB's Disclosure Schedule (collectively, the
"KSB Stock Option Plans"), and the agreements evidencing grants thereunder;
-----------------------
provided, however, that from and after the Effective Time, (i) the number of
-------- -------
shares of Camden Common Stock purchasable upon exercise of any such KSB Stock
Option shall be equal to the number of shares of KSB Common Stock that were
purchasable under such KSB Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounding to the nearest whole share (with .5
being rounded up), and (ii) the per share exercise price under each such KSB
Stock Option shall be adjusted by dividing the per share exercise price of each
such KSB Stock Option by the Exchange Ratio, rounding to the nearest
cent. The terms of each KSB Stock Option shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split, stock
dividend, recapitalization or other similar transaction with respect to Camden
Common Stock on or subsequent to the Effective Date. Notwithstanding the
foregoing, the number of shares and the per share exercise price of each KSB
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424(a) of the Code. Accordingly, with respect to any incentive stock
options, fractional shares shall be rounded down to the nearest whole number of
shares and where necessary the per share exercise price shall be rounded up to
the nearest cent.
(b) At or prior to the Effective Time, Camden shall reserve for
issuance the number of shares of Camden Common Stock necessary to satisfy
Camden's obligations under Section 3.7(a). At the Effective Time, or as soon as
practicable thereafter, and in any event within fifteen business days
thereafter, Camden shall file with the SEC a registration statement on Form S-8
or other appropriate form under the Securities Act with respect to the shares of
Camden Common Stock subject to options to acquire Camden Common Stock issued
pursuant to Section 3.7(a) hereof, and shall use its best efforts to maintain
the current status of the prospectus contained therein, as well as comply with
any applicable state securities or "blue sky" laws, for so long as such options
remain outstanding.
ARTICLE IV - THE SUBSEQUENT MERGER; EFFECTS OF THE
SUBSEQUENT MERGER
4.1 Subsequent Merger. As soon as practicable following the Effective
-----------------
Time, Camden shall, and it shall cause KSB (as the Surviving Corporation in the
Merger) to, effect the Subsequent Merger by executing and filing (i) articles of
merger with the Secretary of State of the State of Maine pursuant to the Maine
Business Corporation Act (Title 13-A) (the "MBCA") and (ii) a certificate of
----
merger with the Secretary of State of the State of Delaware pursuant to the
DGCL. The Subsequent Merger shall become effective at the time (the "Subsequent
----------
Effective Time") specified in both (i) the articles of merger filed with the
--------------
Secretary of State of the State of Maine pursuant to Section 904 of the MBCA and
(ii) the certificate of merger filed with the Secretary of State of the State of
Delaware pursuant to Section 252 of the DGCL. As a result of the Subsequent
Merger, the separate corporate existence of KSB shall cease and Camden shall be
the surviving corporation and continue its corporate existence under the laws of
the State of Maine. The Subsequent Merger shall have the effects prescribed in
Section 905 of the MBCA and Sections 259 and 261 of the DGCL.
4.2 Charter. The charter of the surviving corporation from the Subsequent
-------
Merger shall be the charter of Camden immediately prior to the Subsequent
Effective Time.
13
4.3 Bylaws. The bylaws of the surviving corporation from the Subsequent
------
Merger shall be the bylaws of Camden immediately prior to the Subsequent
Effective Time.
4.4 Board of Directors. At the Subsequent Effective Time, the Board of
------------------
Directors of the surviving corporation shall be those persons serving as
directors of Camden immediately prior to the Subsequent Effective Time, as
constituted in accordance with Section 8.15 hereof, such persons to serve until
the earlier of their resignation or removal or until their respective successors
are duly appointed or elected and qualified, as the case may be.
4.5 Cancellation of Shares. Each share of KSB Common Stock issued and
----------------------
outstanding immediately prior to the Subsequent Effective Time shall, by virtue
of the Subsequent Merger and without any action on the part of Camden, be
canceled without receipt of any consideration thereof by Camden.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
OF KSB AND THE BANK
KSB and the Bank hereby jointly and severally represent and warrant to
Camden and CASI that:
5.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) KSB is a corporation duly organized, validly existing and in good
standing under the DGCL and a bank holding company registered with the Board of
Governors of the Federal Reserve System (the "FRB") under the Bank Holding
---
Company Act of 1956, as amended (the "BHCA"). The Bank is a state chartered
----
savings bank duly organized, validly existing and in good standing under the
laws of the State of Maine. The deposit accounts of the Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent
----
permitted by law and all premiums and assessments required in connection
therewith have been paid by the Bank. Each of KSB and the Bank has the
requisite power and authority and all necessary governmental approvals to own,
lease and operate all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to do business
and is in good standing in each jurisdiction where the nature of the business
conducted by it or the character or location of the properties and assets owned,
leased or operated by it makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified and be in good standing would
not, either individually or in the aggregate, have a Material Adverse Effect.
(b) Except for the Bank, KSB does not have any Subsidiaries or
directly or indirectly own five percent or more of the capital stock or other
equity or similar interest in, or
14
any interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
5.2 Certificate of Incorporation; By-Laws; Corporate Records. KSB and the
--------------------------------------------------------
Bank each has heretofore made available to Camden a complete and correct copy of
the Certificate of Incorporation and the By-Laws or equivalent organizational
documents, each as amended to date, of KSB and the Bank. Such Certificate of
Incorporation, By-Laws and equivalent organizational documents are in full force
and effect. Neither KSB nor the Bank is in violation of any provision of its
Certificate of Incorporation or equivalent organizational documents or of its
By-Laws. The minute books of KSB and the Bank contain in all material respects
true and complete records of all meetings held and true and complete records of
all corporate actions taken of their respective stockholders and boards of
directors (including committees of their respective boards of directors).
5.3 Capitalization.
--------------
(a) The authorized capital stock of KSB consists of 2,400,000 shares
of KSB Common Stock and 200,000 shares of authorized but unissued preferred
stock, $.01 par value per share (the "KSB Preferred Stock"). As of the date
-------------------
hereof, (a) 1,321,265 shares of KSB Common Stock are issued and outstanding, all
of which are duly authorized, validly issued, fully paid, nonassessable and free
of preemptive rights, with no personal liability attaching to the ownership
thereof, (b) 20,404 shares of KSB Common Stock are held in the treasury of KSB,
(c) no shares of KSB Common Stock are held by any of its subsidiaries, (d)
94,108 shares of KSB Common Stock are reserved for future issuance pursuant to
KSB Stock Option Plans, and (e) 262,932 shares of KSB Common Stock are reserved
for future issuance pursuant to the KSB Option Agreement. As of the date hereof,
no shares of KSB Preferred Stock are issued and outstanding. All shares of KSB
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof.
(b) The authorized capital stock of the Bank consists of 1,000 shares
of Common Stock, par value $1.00 per share ("Bank Common Stock") (shares of Bank
-----------------
Common Stock being hereinafter collectively referred to as "Bank Shares"). As
-----------
of the date hereof, (a) 1,000 Bank Shares are issued and outstanding and owned
by KSB, all of which are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof and (b) no Bank Shares are held in the
treasury of the Bank, and (c) no Bank Shares are held by any other person.
(c) Except for KSB Stock Option Plans and the KSB Option Agreement,
there are no outstanding subscriptions, options, warrants, calls or other
rights, agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock
15
of KSB or the Bank or obligating KSB or the Bank to issue or sell any shares of
capital stock of, or other equity interests in, KSB or the Bank. There are no
outstanding contractual obligations of KSB or the Bank to repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity interests in,
KSB or the Bank. The names of the optionees, the date of each option to purchase
shares of KSB Common Stock granted, the number of shares subject to each such
option, the expiration date of each such option, and the price at which each
such option may be exercised under KSB Stock Option Plans are set forth in
Section 5.3 of the Disclosure Schedule
5.4 Authority.
---------
(a) KSB has full corporate power and authority to execute and deliver
this Agreement and the KSB Option Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the KSB Option
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of KSB are necessary to authorize this Agreement and the KSB Option
Agreement or the performance of its obligations hereunder and thereunder or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of the then
outstanding shares of KSB Common Stock) and thereby. The Board of Directors of
KSB (the "KSB Board") has approved this Agreement by unanimous vote and has
---------
directed that this Agreement and the transactions contemplated hereby, including
the Merger, be submitted to KSB's stockholders for approval at a meeting of such
stockholders. This Agreement has been duly and validly executed and delivered
by KSB and constitutes a legal, valid and binding obligation of KSB, enforceable
against KSB in accordance with its terms.
(b) The Bank has full corporate power and authority to execute and
deliver this Agreement and the Bank Merger Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Bank Merger Agreements, the performance of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of the Bank are necessary to
authorize this Agreement or the Bank Merger Agreements or the performance of its
obligations hereunder or thereunder or to consummate the transactions
contemplated hereby or thereby (other than, with respect to the Bank Merger, the
approval and adoption of the Bank Merger Agreements by the Surviving Corporation
as the sole stockholder of the Bank). The Board of Directors of the Bank (the
"Bank Board") has approved this Agreement by unanimous vote and has directed
----------
that the Bank Merger Agreements and the transactions contemplated thereby,
including the Bank Merger, be submitted to KSB as the sole stockholder of the
Bank for its
16
approval. This Agreement has been duly and validly executed and delivered by the
Bank and constitutes a legal, valid and binding obligation of the Bank,
enforceable against the Bank in accordance with its terms. The Bank Merger
Agreements, upon execution and delivery by the Bank, will be duly and validly
executed and delivered by the Bank and will constitute a legal, valid and
binding obligation of the Bank, enforceable against the Bank in accordance with
its terms.
5.5 No Conflict. Neither the execution, delivery and performance of this
-----------
Agreement or the KSB Option agreement by KSB, nor the consummation by KSB of the
transactions contemplated hereby or thereby, nor the execution, delivery and
performance of this Agreement or the Bank Merger Agreements by the Bank, nor the
consummation by the Bank of the transactions contemplated hereby or thereby, nor
compliance by KSB or the Bank with any of the terms or provisions hereof or
thereof, will, (i) conflict with, violate or result in a breach of the
Certificate of Incorporation or By-Laws or equivalent organizational documents
of KSB, the Bank or any of their subsidiaries, (ii) conflict with, violate or
result in a breach of any material provision of any statute, code, ordinance,
law, rule, regulation, order, writ, judgment, injunction or decree applicable to
KSB or the Bank or by which any property or asset of KSB or the Bank is bound or
affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of KSB or the Bank pursuant
to, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which KSB or the Bank is a party or by
which KSB or the Bank or any property or asset of KSB or the Bank is bound or
affected, except, in the case of clause (iii) above, for any such conflicts,
violations, breaches, defaults or other occurrences which would not be deemed
material.
5.6 Consents and Approvals.
----------------------
(a) The execution, delivery and performance of this Agreement and the
KSB Option Agreement by KSB, and the execution, delivery and performance of this
Agreement and the Bank Merger Agreements by the Bank, does not require any
consent, approval, authorization or permit of, or filing with or notification
to, any court, administrative agency or commission or other governmental or
regulatory authority or instrumentally, domestic or foreign, including, without
limitation, any Bank Regulator (as hereinafter defined) (each a "Governmental
------------
Entity"), except (i) for applicable requirements, if any, of the Securities
------
Exchange Act of 1934, as amended (the "Exchange Act"), state takeover laws, the
------------
pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), and filing and recordation of appropriate merger documents as
-------
required by the DGCL, (ii) for consents and approvals of
17
or filings, registrations or negotiations with the FRB, the FDIC and the
Superintendent of the Bureau of Banking of the State of Maine (the "Maine
-----
Superintendent"), and (iii) the filings required by the Bank Merger Agreements.
--------------
KSB and the Bank are not aware of any reason why the approvals, consents and
waivers of Governmental Entities referred to herein and in Section 8.3 should
not be obtained.
(b) The execution, delivery and performance of this Agreement and the
KSB Option Agreement by KSB, and the execution, delivery and performance of this
Agreement and the Bank Merger Agreements by the Bank, does not require any
consent, approval, authorization or permit of, or filing with or notification
to, any third party, except where failure to obtain any such consent, approval,
authorization or permit, or to make any such filing or notification, would not
prevent or significantly delay consummation of the Merger or the Bank Merger, or
otherwise prevent KSB or the Bank from performing its obligations under this
Agreement and the KSB Option Agreement or the Bank from performing its
obligations under the Bank Merger Agreements, or would not, either individually
or in the aggregate, be material.
5.7 Compliance. KSB and the Bank hold, and have at all times held, all
----------
material licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to all, and,
except as disclosed in Section 5.7 of the Disclosure Schedule, have complied
with and are not in conflict with, or in default or violation of, (a) any
statute, code, ordinance, law, rule, regulation, order, writ, judgment,
injunction or decree, published policies and guidelines of any Governmental
Entity, applicable to KSB or the Bank or by which any property or asset of KSB
or the Bank is bound or affected or (b) any note, bond, mortgage, indenture,
deed of trust, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which KSB or the Bank is a party or by which KSB or
the Bank or any property or asset of KSB or the Bank is bound or affected,
except for any such non-compliance, conflicts, defaults or violations that would
not, individually or in the aggregate, be material; and neither KSB nor the Bank
knows of, or has received notice of, any material violation of any of the above.
Without limiting the generality of the foregoing, neither KSB nor the Bank has
been advised of the existence of any facts or circumstances which would cause
the Bank to be deemed not to be in satisfactory compliance with the applicable
provisions of the MBCA and, as applicable to the Bank, the Community
Reinvestment Act of 1977, as amended (the "CRA"), and the regulations
---
promulgated thereunder.
5.8 SEC Reports and Bank Reports.
----------------------------
(a) KSB has filed, and made available to Camden, true and complete
copies of all forms, reports and documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") since January 1, 1996, and has
---
heretofore delivered to Camden, in the form filed with the SEC, true and
complete copies of (i) its Annual Reports on Form 10-KSB for the fiscal years
ended December 31, 1996, December 31, 1997 and December 31,
18
1998, respectively, (ii) its Quarterly Reports on Form 10-QSB since January 1,
1996, (iii) all proxy statements relating to KSB's meetings of stockholders
(whether annual or special) held since January 1, 1996, (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on Form
10-QSB not referred to in clause (ii) above) filed by KSB with the SEC since
January 1, 1996, and (v) all communications mailed by KSB to its stockholders
since January 1, 1996 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii), (iv) and (v) above being referred to herein,
collectively, as the "SEC Reports"). As of their respective dates, the SEC
---
Reports (A) complied in all material respects as to form with the requirements
-------
of the Securities Act of 1933, as amended (the "Securities Act") and the
---------- ---
Exchange Act, as the case may be, and the rules and regulations thereunder and
(B) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. KSB has timely filed all SEC Reports and other documents
required to be filed by it under the Securities Act and the Exchange Act.
Neither the Bank nor any of their other subsidiaries is required to file any
form, report or other document with the SEC. KSB has made available to Camden
true and complete copies of all amendments and modifications that have not been
filed by KSB with the SEC to all agreements, documents and other instruments
that previously had been filed by KSB with the SEC and are currently in effect.
(b) KSB, the Bank and their subsidiaries each has timely filed and
made available to Camden true and complete copies of all forms, reports and
documents required to be filed by each of them with all appropriate federal or
state governmental or regulatory authorities charged with the supervision of
banks or bank holding companies or engaged in the insurance of bank deposits,
including without limitation, the FRB, the FDIC and the Maine Superintendent
("Bank Regulators") since January 1, 1996, and has paid all fees and assessments
-----------------
due and payable in connection therewith. Such reports as of their respective
date of filing complied in all material respects with the requirements of all
laws, rules and regulations enforced or promulgated by such Bank Regulators.
Except for normal periodic examinations conducted by the FRB, the FDIC, the
Maine Superintendent or any other Bank Regulator in the regular course of the
business of KSB and the Bank (the "Bank Examinations"), no Bank Regulator has
-----------------
initiated any proceeding or, to the knowledge of KSB and the Bank, investigation
into the business or operations of KSB or the Bank since December 31, 1995.
Except as disclosed on Section 5.8(b) of the Disclosure Schedule, KSB and the
Bank have resolved all violations, criticisms or exceptions by any Bank
Regulator with respect to any Bank Examination.
5.9 Financial Statements.
--------------------
(a) Each of the consolidated financial statements of KSB and the Bank,
including, in each case, the notes thereto, contained in the SEC Reports was
prepared, and the financial statements referred to in Section 8.8 hereof will be
prepared, in accordance with
19
GAAP (except as may be indicated in the notes thereto) and each fairly presents,
and the financial statements referred to in Section 8.8 hereof each will fairly
present, the consolidated financial position, results of operations and changes
in financial position of KSB and the Bank as at the respective dates thereof and
for the respective periods indicated therein, subject, in the case of unaudited
statements, to normal and recurring year-end adjustments normal in nature and
not material in amount. Each of the consolidated financial statements of KSB and
the Bank, including, in each case, the notes thereto, contained in the SEC
Reports comply, and the financial statements referred to in Section 8.8 hereof
will comply, with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto. Without limiting the
generality of the foregoing, (x) the allowance for possible loan losses included
in the consolidated financial statements of KSB and the Bank contained in the
SEC Reports was, and the allowance for possible loan losses to be included in
the financial statements referred to in Section 8.8 hereof will be, determined
in accordance with GAAP and is, and will be, adequate to provide for losses
relating to or inherent in the loan and lease portfolios of KSB and the Bank as
of the balance sheet date reflected in each such KSB SEC Report (including
without limitation commitments to extend credit), and (y) the Other Real Estate
Owned ("OREO") included in the consolidated financial statements of KSB and the
----
Bank contained in the SEC Reports was, and the OREO included in the financial
statements referred to in Section 8.8 hereof will be, carried net of reserves at
the lower of cost or market value in accordance with GAAP or the regulations or
other requirements of the SEC, the FDIC and the Maine Superintendent. The books
and records of KSB and the Bank are true and complete in all material respects
and have been, and are being, maintained in all material respects in accordance
with applicable legal and accounting requirements.
(b) The consolidated balance sheets of KSB and the Bank as at
December 31, 1998, contained in the SEC Reports, including the notes thereto,
each makes, and the consolidated balance sheets contained in the financial
statements referred to in Section 8.8 will make, adequate provision for, reflect
or disclose all material liabilities and obligations of every nature (whether
accrued, absolute, contingent or otherwise and whether due or to become due) of
KSB and the Bank as of December 31, 1998, and except as and to the extent set
forth on such consolidated balance sheets or as set forth in Section 5.9(b) of
the Disclosure Schedule, neither KSB nor the Bank has any material liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise and
whether due or to become due) which would be required to be provided for,
reflected or disclosed on a balance sheet, or in the notes thereto, prepared in
accordance with GAAP. To the knowledge of KSB and the Bank, no facts or
circumstances exist which would give either KSB or the Bank reason to believe
that a material liability or obligation that, in accordance with GAAP applied on
a consistent basis, should have been reflected or disclosed on such balance
sheet, was not so reflected or disclosed.
5.10 Absence of Certain Changes or Events. Except as disclosed in Section
------------------------------------
5.10 of the Disclosure Schedule, since December 31, 1998, except as contemplated
by this Agreement
20
or as disclosed in any SEC Report filed since December 31, 1998 and prior to the
date of this Agreement, KSB and the Bank have conducted their businesses only in
the ordinary course and in a manner consistent with past practice and, since
December 31, 1998, there has not been (a) either individually or in the
aggregate, any Material Adverse Effect, and to the knowledge of KSB and the
Bank, no fact or condition exists which is reasonably likely to cause such a
Material Adverse Effect in the future, (b) any material damage, destruction or
loss with respect to any property or asset of KSB or the Bank, (c) any change by
KSB or the Bank in its accounting methods, principles or practices, other than
changes required by applicable law or GAAP or regulatory accounting as concurred
in by KSB's independent accountants, (d) any revaluation by KSB or the Bank of
any asset, including, without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable, other than in the
ordinary course of business consistent with past practice, (e) any entry into,
or renewal of, by KSB or the Bank into any contract or commitment of more than
$50,000 or with a term of more than one year, (f) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
KSB or the Bank or any redemption, purchase or other acquisition of any of its
securities, (g) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards pursuant to
the KSB Stock Option Plan or otherwise), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any directors, officers or employees of KSB or the Bank, or any grant
of severance or termination pay, or any contract or arrangement entered into to
make or grant any severance or termination pay, any payment of any bonus, or the
taking of any action not in the ordinary course of business with respect to the
compensation or employment of directors, officers or employees of KSB or the
Bank, (h) any strike, work stoppage, slowdown or other labor disturbance, (i)
any material election made by KSB or the Bank for federal or state income tax
purposes, (j) any change in the credit policies or procedures of KSB or the
Bank, the effect of which was or is to make any such policy or procedure less
restrictive in any material respect, (k) any material liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise and whether due
or to become due), including without limiting the generality of the foregoing,
liabilities as guarantor under any guarantees or liabilities for taxes, (l) any
forgiveness or cancellation of any indebtedness or contractual obligation other
than in the ordinary course of business consistent with past practice, (m) any
mortgage, pledge, lien or lease of any assets, tangible or intangible, of KSB or
the Bank other than in the ordinary course of business consistent with past
practice, (n) any acquisition or disposition of any assets or properties, or any
contract for any such acquisition or disposition entered into; provided that (A)
--------
no single acquisition or disposition of an asset or property shall exceed
$100,000, and (B) all acquisitions and dispositions of assets or properties by
KSB and the Bank shall in no event exceed $300,000 in the aggregate, or (o) any
lease of real or personal property entered into, other than in connection with
foreclosed property or in the ordinary course of business consistent with past
practice.
21
5.11 Absence of Litigation. Except as set forth in Section 5.11 of the
---------------------
Disclosure Schedule, neither KSB nor the Bank is a party to any, and there are
no pending, or to the knowledge of KSB and the Bank, threatened legal,
administrative, arbitral or other claims, actions, proceedings or investigations
of any nature, against KSB or the Bank or any property or asset of KSB or the
Bank, before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, and no facts or circumstances have come
to KSB's or the Bank's attention which have caused either of them to believe
that a material claim, action, proceeding or investigation against or affecting
KSB or the Bank could reasonably be expected to occur. Neither KSB nor the Bank,
nor any property or asset of KSB or the Bank, is subject to any order, writ,
judgment, injunction, decree, determination or award which restricts its ability
to conduct business in any area.
5.12 Employee Benefit Plans.
----------------------
(a) Section 5.12 of the Disclosure Schedule sets forth a true and
complete list of all Plans maintained or contributed to by the Bank during the
six years preceding this Agreement. The term "Plans" means all employee benefit
-----
plans, arrangements or agreements that are maintained or contributed to, or that
were maintained or contributed to at any time during the six years preceding the
date of this Agreement, by KSB or the Bank or by any trade or business, whether
or not incorporated (a "KSB ERISA Affiliate"), all of which together with KSB or
-------------------
the Bank would be deemed a "single employer" within the meaning of Section 4001
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
-----
(b) KSB and the Bank have heretofore delivered to Camden true and
complete copies of each of the Plans and all related documents, including but
not limited to (i) all required Forms 5500 and all related schedules for such
Plans (if applicable) for each of the last two years, (ii) the actuarial report
for such Plan (if applicable) for each of the last two years, and (iii) the most
recent determination letter from the IRS (if applicable) for such Plan.
(c) (i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code, (ii) each of the Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been maintained so as to qualify
from the effective date of such Plan to the Effective Time, (iii) with respect
to each Plan which is subject to Title IV of ERISA, the present value of
"benefit liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under
such Plan, based upon the actuarial assumptions currently prescribed by the
Pension Benefit Guaranty Corporation for plan termination, did not, as of its
latest valuation date, exceed by a material amount the then current value of the
assets of such Plan allocable to such accrued benefits, and there has been no
"accumulated funding deficiency" (whether or not waived), (iv) no Plan provides
benefits, including without limitation death, medical or other benefits (whether
or not insured), with respect to current or former employees of KSB, the Bank or
any KSB ERISA Affiliate beyond their retirement or other termination of service,
other than (u) coverage
22
mandated by applicable law, (v) life insurance death benefits payable in the
event of the death of a covered employee, (w) disability benefits payable to
disabled former employees, (x) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA, (y)
deferred compensation benefits accrued as liabilities on the books of KSB, the
Bank or any KSB ERISA Affiliate or (z) benefits the full cost of which is borne
by the current or former employee (or his beneficiary), (v) with respect to each
Plan subject to Title IV of ERISA, no liability under Title IV of ERISA has been
incurred by KSB, the Bank or any KSB ERISA Affiliate that has not been satisfied
in full, no condition exists that presents a material risk to KSB, the Bank or
any KSB ERISA Affiliate of incurring a material liability to or on account of
such Plan, and there has been no "reportable event" (within the meaning of
Section 4043 of ERISA and the regulations thereunder), (vi) neither KSB, the
Bank, nor any KSB ERISA Affiliate has ever maintained or contributed to a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by KSB or the Bank as of the
Effective Time with respect to each Plan in respect of current or prior plan
years have been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither KSB, the Bank nor any KSB ERISA Affiliate has engaged in a
transaction in connection with which KSB, the Bank or any KSB ERISA Affiliate
has any material liability for either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976
of the Code, (ix) consummation of the transactions contemplated hereby will not
cause any amounts payable under any of the Plans to fail to be deductible for
federal income tax purposes under Section 280G of the Code, (x) there are no
pending or, to the knowledge of KSB and the Bank, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto, and (xi) with respect to any Plan
intended to be an "employee stock ownership plan" within the meaning of Section
409 of the Code (the "ESOP"), the outstanding indebtedness of the Plan does not
----
exceed $41,000.00.
(d) With respect to any Plan that is a welfare plan (within the
meaning of Section 3(1) of ERISA) (i) no such Plan is funded through a "welfare
benefit fund," as such term is defined in Section 419(e) of the Code, and (ii)
each such Plan complies in all material respects with the applicable
requirements of Section 4980B(f) of the Code, Part 6 of Subtitle B of Title I of
ERISA and any applicable state continuation coverage requirements ("COBRA").
-----
(e) Except as prohibited by law (including Section 411(d)(6) of the
Code), each Plan may be amended, terminated, modified or otherwise revised by
KSB, the Bank or any KSB ERISA Affiliate as of the Effective Time to eliminate
without material effect, any and all future benefit accruals under any Plan
(except claims incurred under any welfare plan).
5.13 Labor Matters. Neither KSB nor the Bank is a party to any collective
-------------
bargaining or other labor union or guild contract. There is no pending or, to
the knowledge of KSB and the Bank, threatened, labor dispute, strike or work
stoppage against KSB or the Bank which may interfere with the respective
business activities of KSB or the Bank. Neither KSB
23
nor Bank, nor, to the knowledge of KSB and the Bank, their respective
representatives or employees, has committed any unfair labor practices in
connection with the operation of the respective businesses of KSB or the Bank,
and there is no pending or, to the knowledge of KSB and the Bank, threatened,
charge or complaint against KSB or the Bank by the National Labor Relations
Board or any comparable state agency.
5.14 Property and Leases.
-------------------
(a) All of the real property owned or leased by KSB or the Bank
is listed on Section 5.14 of the Disclosure Schedule. Each of KSB and the Bank
has good and marketable title to all the real property referred to in Section
5.14 of the Disclosure Schedule and all other property owned by it and included
in the consolidated balance sheet of KSB and the Bank included in its Annual
Report on Form 10-KSB for the period ended December 31, 1998. Each parcel of
real property, and each item of personal property, owned or leased by KSB or the
Bank (i) is owned or leased free and clear of all mortgages, pledges, liens,
security interests, conditional and installment sale agreements, encumbrances,
charges or other claims of third parties of any kind (collectively, "Liens"),
-----
other than (A) Liens for current taxes and assessments not yet past due or which
are being contested in good faith, (B) inchoate mechanics' and materialmen's
Liens for construction in progress, (C) workmen's, repairmen's, warehousemen's
and carriers' Liens arising in the ordinary course of business of KSB or the
Bank consistent with past practice, (D) all matters of record, Liens and other
imperfections of title and encumbrances which, either individually or in the
aggregate, would not be material, and (E) those items that secure public or
statutory obligations or any discount with, borrowing from, or obligations to
any Federal Reserve Bank or Federal Home Loan Bank, interbank credit facilities,
or any transaction by the Bank acting in a fiduciary capacity (collectively,
"Permitted Liens"), and (ii) is neither subject to any governmental decree or
---------------
order to be sold nor is being condemned, expropriated or otherwise taken by any
public authority with or without payment of compensation therefor, nor, to the
knowledge of KSB or the Bank, has any such condemnation, expropriation or taking
been proposed. Neither KSB nor the Bank has received any notice of violation of
any applicable zoning regulation, ordinance or other law, order, regulation or
requirement relating to its properties.
(b) All leases of real property leased for the use or benefit of
KSB or the Bank to which KSB or the Bank is a party and all amendments and
modifications thereto, are in full force and effect, and there exists no default
under any such lease by KSB or the Bank, nor, to the knowledge of KSB and the
Bank, any event which with notice or lapse of time or both would constitute a
material default thereunder by KSB or the Bank. The consummation of the
transactions contemplated by this Agreement do not require the consent of any
landlord nor do they cause an event of default under any such leases.
5.15 Taxes.
-----
24
(a) Each of KSB and the Bank has duly filed in correct form all
Federal, state, county and local information returns and tax returns required to
be filed by it on or prior to the date hereof (all such returns being true and
complete in all material respects) and has duly paid, discharged or made
provisions for the payment of all material Taxes (as hereinafter defined) and
other governmental charges which have been incurred or are due or claimed to be
due from it by Federal, state, county or local taxing authorities on or prior to
the date hereof (including without limitation, if and to the extent applicable,
those due in respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls, and any net worth tax),
other than Taxes or other charges that are not yet delinquent or are being
contested in good faith and have not been finally determined. The amounts set up
as reserves for Taxes on the consolidated balance sheet of KSB and the Bank
included in its Annual Report on Form 10-KSB for the period ended December 31,
1998 are sufficient in the aggregate for the payment of all material unpaid
Federal, state, county and local Taxes (including any interest or penalties
thereon), whether or not disputed, accrued or applicable, for the period ended
December 31, 1998 and all prior periods covered by such returns, and for which
KSB or the Bank is liable in its own right or as transferee of the assets of, or
successor to, any corporation, person, association, partnership, joint venture
or other entity. The federal income tax returns of KSB or the Bank have been
examined by the Internal Revenue Service ("IRS") for all years through 1995 and
---
any liability with respect thereto has been satisfied, and no deficiencies were
asserted as a result of such examination or all such deficiencies were
satisfied. The State of Maine tax returns of KSB and the Bank have not, in the
ten years prior to the date of this Agreement, been examined or audited by the
State of Maine. There are no material disputes pending or claims asserted for
Taxes or assessments upon KSB or the Bank, nor has KSB or the Bank has been
requested to give any currently effective waivers extending the statutory period
of limitation applicable to any Federal, state, county or local income tax
return for any period. In addition, (a) proper and accurate amounts have been
withheld by KSB or the Bank from their employees for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable Federal, state, county and local laws; (b) Federal, state, county and
local returns which are accurate and complete in all material respects have been
filed by KSB and the Bank for all periods for which returns were due with
respect to income tax withholding, Social Security and unemployment taxes; and
(c) the amounts shown on such returns to be due and payable have been paid in
full or adequate provision therefor has been included by KSB in its consolidated
financial statements included in its Annual Report on Form 10-KSB for the period
ended December 31, 1998.
(b) No property of KSB or the Bank is property that is or will
be required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code (as in effect prior
to its amendment by the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Section 168(h) of the Internal Revenue Code of 1986, as
amended (the "Code"). Neither KSB nor the Bank has been required to include in
----
income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by KSB or the Bank, and the IRS
has not initiated or
25
proposed any such adjustment or change in accounting method. Neither KSB nor the
Bank is a party to any agreement, contract or arrangement that would,
individually or in the aggregate, result in the payment of an "excess parachute
payment" within the meaning of Section 280G of the Code or that would result in
payments that would be nondeductible pursuant to Section 162(m) of the Code.
(c) As used in this Agreement, the term "Taxes" means all
-----
Federal, state, county, local and foreign income, excise, gross receipts, ad
valorem, profits, gains, property, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangibles, franchise and other taxes, charges,
levies or like assessments, including any net worth tax, together with all
penalties and additions to tax and interest thereon.
5.16 Certain Contracts.
-----------------
(a) Except as set forth in Section 5.16 of the Disclosure
Schedule and in the SEC Reports filed prior to the date of this Agreement,
neither KSB nor the Bank is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral): (i) with respect to the
employment of any director, officer, employee or consultant, (ii) which, upon
the consummation of the transactions contemplated by this Agreement or the Bank
Merger Agreements, will result in any payment (whether of severance pay or
otherwise) becoming due from KSB or the Bank to any officer or employee thereof,
(iii) which is a material contract (as defined in Item 601(b)(10) of Regulation
S-K of the SEC) to be performed after the date of this Agreement that has not
been filed or incorporated by reference in the SEC Reports, (iv) which is a
consulting or other agreement (including agreements entered into in the ordinary
course and data processing, software programming and licensing contracts) not
terminable on 60 days or less notice involving the payment of more than $50,000
per annum, (v) which materially restricts the conduct of any line of business by
KSB or the Bank, (vi) with or to a labor union or guild (including any
collective bargaining agreement), or (vii) (including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan)
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement. KSB has previously delivered to Camden true and complete copies of
all employment, consulting and deferred compensation agreements which are in
writing and to which KSB or the Bank is a party. Each contract, arrangement,
commitment or understanding of the type described in this Section, whether or
not set forth in Section 5.16 of the Disclosure Schedule, is referred to herein
as a "KSB Contract".
------------
(b) (i) To the knowledge of KSB and the Bank, each KSB Contract
listed on such Disclosure Schedule is legal, valid and binding upon KSB or the
Bank, as the case may be, and in full force and effect, (ii) KSB and the Bank
have in all material respects performed all obligations required to be performed
by it to date under each such KSB Contract, and
26
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a material default on the part of KSB or the
Bank under any such KSB Contract.
5.17 Loan Portfolio. Except as set forth in Section 5.17 of the
--------------
Disclosure Schedule, neither KSB nor the Bank is a party to any written or oral
(a) loan agreement, note or borrowing arrangement (including, without
limitation, leases and credit enhancements) (collectively, "Loans") the unpaid
-----
principal balance of which exceeds $75,000 and as to which the obligor is, as of
the date of this Agreement, over 90 days delinquent in payment of principal or
interest, or (b) Loan with any director, executive officer or, to the knowledge
of KSB and the Bank, five percent stockholder of KSB or the Bank, or to the
knowledge of KSB and the Bank, any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing. To
the knowledge of KSB and the Bank, all of the Loans originated and held
currently and at the Effective Time by KSB or the Bank, and any other Loans
purchased and held currently and at the Effective Time by KSB or the Bank, were
solicited, originated and exist, and will exist at the Effective Time, in
material compliance with all applicable loan policies and procedures of KSB and
the Bank. Section 5.17 of the Disclosure Schedule sets forth as of June 30,
1999, (i) all of the Loans in original principal amount in excess of $75,000 of
KSB or the Bank that as of the date of this Agreement are classified by the Bank
as "Other Loans Specially Mentioned", "Special Mention", "Substandard",
"Doubtful", "Loss", "Classified", "Criticized", "Watch list" or words of similar
import, together with the principal amount of and accrued and unpaid interest on
each such Loan and the identity of the obligor thereunder, and (ii) by category
of Loan (i.e., commercial, consumer, etc.), all of the other Loans of KSB and
the Bank that as of the date of this Agreement are classified as such, together
with the aggregate principal amount of such Loans by category, it being
understood that no representation is being made that the FDIC or the Maine
Superintendent would agree with the loan classifications contained in Section
5.17 of the Disclosure Schedule. KSB shall promptly inform Camden in writing of
any Loan the original principal balance of which exceeds $75,000 that becomes
classified in the manner described in this Section 5.17, or any Loan the
classification of which is materially and adversely changed at any time after
the date of this Agreement. The information (including electronic information
and information contained on tapes and computer disks) with respect to the Loans
furnished to Camden by KSB and the Bank is true and complete in all material
respects.
5.18 Investment Securities. Section 5.18(a) of the Disclosure Schedule
---------------------
sets forth the book and market value as of June 30, 1999 of the investment
securities, mortgage backed securities, bank-owned life insurance policies and
securities held by KSB and the Bank. Section 5.18(b) of the Disclosure Schedule
sets forth the names of all the joint ventures in which KSB or the Bank has an
investment (whether or not such joint ventures remain active). Except for
pledges to secure public and trust deposits, FRB and Federal Home Loan Bank of
Boston borrowings, repurchase agreements and reverse repurchase agreements
entered into in
27
arms'-length transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in the
consolidated balance sheet of KSB and the Bank included in its Annual Report on
Form 10-KSB for the period ended December 31, 1998, and none of the material
investments made by KSB or the Bank since December 31, 1998, is subject to any
restriction (contractual, statutory or otherwise) that would materially impair
the ability of the entity holding such investment freely to dispose of such
investment at any time. KSB has (i) properly reported as such any investment
securities which are required under GAAP to be classified as "available for
sale" at the lower of cost or market, and (ii) accounted for any decline in the
market value of its marketable equity securities portfolio in accordance with
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 12 and Staff Accounting Bulletin No. 59, including without limitation the
recognition through KSB's consolidated statement of operations of any unrealized
loss with respect to any individual marketable equity security as a realized
loss in the accounting period in which a decline in the market value of such
security is determined to be "other than temporary."
5.19 Derivative Transactions. Except pursuant to those agreements
-----------------------
referenced in Section 5.19 of the Disclosure Schedule, neither KSB nor the Bank
is engaged in transactions in or involving forwards, futures, options on
futures, swaps or other derivative instruments except as agent on the order and
for the account of others other than Federal Home Loan Bank advances or in
connection with mortgage loan secondary market activities in the ordinary course
of business consistent with the Bank's past practices. To the extent that KSB or
the Bank is engaged in such transactions, to the knowledge of KSB and the Bank,
none of the counterparties to any contract or agreement with respect to any such
instrument is in default with respect to such contract or agreement and no such
contract or agreement, were it to be a Loan held by KSB or the Bank, would be
classified as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans," "Watch List", "Impaired", "Non-accrual Status" or
words of similar import. The financial position of KSB and the Bank on a
consolidated basis under or with respect to each such instrument has been
reflected in the books and records of KSB and the Bank in accordance with GAAP
consistently applied, and no open exposure of KSB or the Bank with respect to
any such instrument (or with respect to multiple instruments with any single
counterparty) exceeds $50,000.
5.20 Insurance. KSB and the Bank each has made available to Camden
---------
true and complete copies of all material policies of insurance of KSB and the
Bank currently in effect. All of the policies relating to insurance maintained
by KSB or the Bank with respect to its material properties and the conduct of
its business in any material respect (or any comparable policies entered into as
a replacement therefor) are in full force and effect and neither KSB nor the
Bank has received any notice of cancellation with respect thereto. All life
insurance policies on the lives of any of the current and former officers and
directors of KSB and the Bank which are maintained by KSB and the Bank or which
are otherwise included as assets on
28
the books of KSB or the Bank (i) are, or will at the Effective Time be, owned by
KSB or the Bank, as the case may be, free and clear of any claims thereon by the
officers or members of their families, except with respect to the death benefits
thereunder, as to which KSB and the Bank agree that there will not be an
amendment prior to the Effective Time without the consent of Camden, and (ii)
are accounted for properly as assets on the books of the Bank in accordance with
GAAP in all material respects. Neither KSB nor the Bank has any material
liability for unpaid premiums or premium adjustments not properly reflected on
KSB's consolidated financial statements contained in the SEC Reports.
5.21 Environmental Matters.
---------------------
(a) Each of KSB and the Bank and, to the knowledge of KSB and
the Bank, any property in which it participates or has participated in the
management and, where required by the context, said term means the owner or
operator of such property (the "Participation Facilities") and any property in
------------------------
which KSB or the Bank holds a security interest, and where required by the
context, said term means the owner or operator of such property (the "Loan
----
Properties"), are, and have been, in material compliance with all applicable
----------
environmental laws and with all rules, regulations, standards and requirements
of the United States Environmental Protection Agency (the "EPA") and of state
---
and local agencies with jurisdiction over pollution or protection of the
environment.
(b) There is no suit, claim, action or proceeding pending or, to
the knowledge of KSB or the Bank, threatened, before any Governmental Entity or
other forum in which KSB or the Bank or any Participation Facility has been or,
with respect to threatened proceedings, may be, named as a defendant,
responsible party or potentially responsible party (i) for alleged noncompliance
(including by any predecessor), with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
soil, surface waters, groundwaters, stream sediments, surface or subsurface
strata, and ambient air, and any other environmental medium (the "Environment")
-----------
of any pollutant, contaminant, or hazardous substance or hazardous material as
defined in or pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S)9601 et seq., or any other
federal, state, or local environmental law, regulation, or requirement
("Hazardous Materials") or petroleum of any kind or origin or in any form, as
-------------------
defined in or pursuant to the Federal Clean Water Act, 33 U.S.C. (S) 1251 et
seq., or any other federal, state, or local environmental law, regulation, or
requirement ("Oil") whether or not occurring at or on a site owned, leased or
---
operated by KSB or the Bank or any Participation Facility, except as have not
been or would not be material.
(c) There is no suit, claim, action or proceeding pending or, to
the knowledge of KSB or the Bank, threatened, before any Governmental Entity or
other forum in which any Loan Property has been or, with respect to threatened
proceedings, may be, named as a defendant, responsible party or potentially
responsible party (i) for alleged noncompliance
29
(including by any predecessor) with any environmental law, rule, regulation,
standard or requirement or (ii) relating to the release into or presence in the
Environment of any Hazardous Material or Oil whether or not occurring at or on a
site owned, leased or operated by a Loan Property, except as have not been or
would not be material.
(d) Neither KSB, the Bank, nor to their knowledge any
Participation Facility or any Loan Property, has received any notice regarding a
matter on which a suit, claim, action or proceeding as described in subsection
(b) or (c) of this Section 5.21 could reasonably be based. No facts or
circumstances have come to KSB's or the Bank's attention which have caused it to
believe that a material suit, claim, action or proceeding as described in
subsection (b) or (c) of this Section 5.21 could reasonably be expected to
occur.
(e) During the period of (i) KSB's or the Bank's ownership or
operation of any of their respective current properties, (ii) KSB's or the
Bank's participation in the management of any Participation Facility, or (iii)
KSB's or the Bank's holding of a security interest in a Loan Property, there has
been no release or presence of Hazardous Material or Oil in, on, under or
affecting such property or, to the knowledge of KSB or the Bank, such
Participation Facility or Loan Property, except where such release or presence
is not or would not, either individually or in the aggregate, be material. To
the knowledge of KSB and the Bank, prior to the period of (x) KSB's or the
Bank's ownership or operation of any of their respective current properties or
any previously owned or operated properties, (y) KSB's or the Bank's
participation in the management of any Participation Facility, or (z) KSB's or
the Bank's holding of a security interest in a Loan Property, there was no
release or presence of Hazardous Material or Oil in, on, under or affecting any
such property, Participation Facility or Loan Property, except where such
release or presence is not or would not, either individually or in the
aggregate, be material.
5.22 Intellectual Property. Each of KSB and the Bank owns or possesses
---------------------
valid and binding licenses and other rights to use without payment of any
material amount all material patents, copyrights, trade secrets, trade names,
service marks and trademarks used in its businesses, and neither KSB nor the
Bank has received any notice of conflict with respect thereto that asserts the
right of others. Each of KSB and the Bank has performed in all material respects
all the obligations required to be performed by them and are not in material
default under any contract, agreement, arrangement or commitment relating to any
of the foregoing.
5.23 Administration of Fiduciary Accounts. Each of KSB and the Bank
------------------------------------
has properly administered in all material respects all accounts for which it
acts as a fiduciary, including, but not limited to, accounts for which it serves
as a trustee, agent, custodian, personal representative, guardian, conservator
or investment advisor, in accordance with the terms of the governing documents
and applicable law. Neither KSB nor the Bank nor their respective officers,
directors or employees has committed any breach of trust with respect to any
30
fiduciary account. The accountings for each such fiduciary account are true and
correct in all material respects and accurately reflects the assets of such
fiduciary account.
5.24 Agreements with Bank Regulators. Except as disclosed on Section
-------------------------------
5.24 of the Disclosure Schedule, neither KSB nor the Bank is a party to any
written agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
any Bank Regulator which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its loan loss allowances or
reserves, its credit policies or its management, nor has KSB or the Bank been
informed by any Bank Regulator that it is contemplating issuing or requesting
any such order, directive, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission. Neither KSB nor the
Bank is a party to any agreement or arrangement entered into in connection with
the consummation of a federally assisted acquisition of a depository institution
pursuant to which KSB or the Bank is entitled to receive financial assistance or
indemnification from any governmental agency.
5.25 Material Interests of Certain Persons. No officer or director of
-------------------------------------
KSB or the Bank or any "associate" (as such term is defined in Rule 14a-1 under
the Exchange Act) of any such officer or director, has any material interest in
any material contract or property (real or personal), tangible or intangible,
used in or pertaining to the business of KSB or the Bank that would be required
to be disclosed in a proxy statement to stockholders under Regulation 14A of the
Exchange Act.
5.26 Brokers' Fees; Opinions. No broker, finder or investment banker,
-----------------------
other than Xxxxx, Xxxxxxxx & Xxxxx, is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement, the Bank Merger Agreements or the KSB Option Agreement based upon
arrangements made by or on behalf of KSB or the Bank. The fee payable to Xxxxx,
Xxxxxxxx & Xxxxx in connection with the transactions contemplated by this
Agreement is as described in an engagement letter between KSB and Xxxxx,
Xxxxxxxx & Xxxxx, a true and complete copy of which has heretofore been
furnished to Camden. On or prior to the execution of this Agreement, KSB has
received the opinion of Xxxxx, Xxxxxxxx & Xxxxx to the effect that, as of the
date of such opinion, the Merger Consideration to be received by the
stockholders of KSB pursuant to the Merger is fair to such stockholders, and
such opinion has not been amended or rescinded as of the date of this Agreement.
5.27 Joint Proxy Statement. The information contained in the Joint
---------------------
Proxy Statement to be sent to the stockholders of KSB in connection with the KSB
Meeting will not, on the date the Joint Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of KSB or at the time of the
KSB Meeting, contain any statement which, at such time and in the light of the
circumstances under which it is made, is false or misleading with
31
respect to any material fact, or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the KSB Meeting which shall have
become false or misleading. The Joint Proxy Statement will comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
5.28 State Takeover Laws. The Board of Directors of KSB has taken all
-------------------
necessary action prior to the date of this Agreement in connection with the
approval of the execution, delivery and performance of this Agreement, the Bank
Merger Agreements and the KSB Option Agreement, any purchase or other
transaction respecting KSB Common Stock provided for herein or therein, and the
other transactions contemplated hereby and thereby, including without limitation
approval by the affirmative vote of at least a majority of the members of KSB
Board and a majority of the non-employee directors of KSB Board, to exempt
Camden and CASI from the requirements of any "moratorium," "business
combination," "control share," "fair price" or other takeover defense laws and
regulations (collectively, "Takeover Laws"), if any, of the State of Delaware
-------------
and the State of Maine.
5.29 Year 2000.
---------
(a) Each of KSB and the Bank has adopted a plan (in each case, a
"Year 2000 Plan") requiring testing, information-gathering and other procedures
--------------
to conform to the deadlines and material requirements and guidelines applicable
to it as a provider of services using Information Technology and imposed by any
Bank Regulator or the FFIEC, to cause such Information Technology to be Year
2000 Compliant (such deadlines, material requirements and guidelines, as they
may be in effect from time to time, being referred to in this Agreement as the
"Year 2000 Regulatory Requirements").
---------------------------------
(b) Each of KSB and the Bank has taken appropriate actions and
has committed the resources reasonably necessary or otherwise appropriate to
comply with its Year 2000 Plan in a timely manner. Such actions (including the
testing and information-gathering procedures) have not produced any preliminary
findings or other results which would indicate that the Information Technology
will not be Year 2000 Compliant or that it will not be in compliance with the
Year 2000 Regulatory Requirements; and it has not received any written notice or
preliminary oral notice from a Governmental Entity to one of its officers or
senior executive employees with respect to any adverse action against it
relating to Year 2000 Compliance.
(c) Each of KSB and the Bank has taken appropriate actions to
assure that the Bank has, and will continue to have at all relevant points in
time, adequate funds to meet loan and deposit customer demand in connection with
the Year 2000 date change and related circumstances.
32
5.30 Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any Schedule, certificate, list or
other writing furnished to Camden pursuant to the provisions hereof, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances in which they are made, not
misleading. No information believed by KSB or the Bank to be material to the
Merger or the Bank Merger and which is necessary to make the representations and
warranties herein contained, taken as a whole, not misleading, to the knowledge
of KSB and the Bank, has been withheld from, or has not been delivered in
writing to, Camden.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF CAMDEN AND CASI
Camden, and as applicable CASI, hereby represents and warrants to KSB that:
6.1 Corporate Organization. Camden is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of Maine. CASI
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and all of the outstanding shares of capital
stock of CASI are owned, directly or indirectly, by Camden. Since the date of
its incorporation, CASI has not engaged in any activities other than in
connection with or as contemplated by this Agreement. United Bank is a banking
organization, duly organized, validly existing and in good standing under the
laws of the State of Maine, and all of the outstanding shares of capital stock
of United Bank are owned, directly or indirectly, by Camden. Each of Camden,
CASI and United Bank has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, either individually or in the aggregate, have
a material adverse effect on the business, assets, liabilities, financial
condition or results of operations of Camden and its subsidiaries taken as a
whole.
6.2 Authority. Each of Camden and CASI has full corporate power and
---------
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. Each of Camden
and United Bank has full corporate power and authority to execute and deliver
the Bank Merger Agreements, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution and delivery of
this Agreement and the Bank Merger Agreements, the performance by Camden and
CASI of its obligations hereunder, the performance by Camden and United Bank of
its obligations thereunder, the consummation by Camden and CASI of the
transactions contemplated hereby, and the consummation by Camden and United Bank
of the transactions contemplated thereby have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Camden and CASI are necessary to authorize
33
this Agreement, or on the part of Camden and United Bank are necessary to
execute the Bank Merger Agreements, or the performance of any of their
respective obligations hereunder or thereunder, as applicable, or to consummate
the transactions contemplated hereby or thereby, other than the approval of each
of their respective stockholders, if required. This Agreement has been duly and
validly executed and delivered by each of Camden and CASI and constitutes a
legal, valid and binding obligation of Camden and CASI, enforceable against each
such party in accordance with its terms. On the date executed and delivered by
Camden and United Bank, the Bank Merger Agreements will be duly and validly
executed and delivered by Camden and United Bank and will constitute a legal,
valid and binding obligation of Camden and United Bank, enforceable against each
such party in accordance with its terms.
6.3 No Conflict. Neither the execution, delivery and performance of this
-----------
Agreement by Camden or CASI, or the Bank Merger Agreements by Camden and United
Bank, nor the consummation by Camden and CASI of the transactions contemplated
hereby, nor the consummation by Camden and United Bank of the transactions
contemplated thereby, will (i) conflict with, violate or result in a breach of
the Certificate of Incorporation or By-Laws or equivalent organizational
documents of Camden, CASI or United Bank, as applicable, (ii) conflict with,
violate or result in a breach of any material provision of any statute, code,
ordinance, law, rule, regulation, order, writ, judgment, injunction or decree
applicable to Camden, CASI or United Bank, as applicable or by which any
property or asset of Camden, CASI or United Bank, as applicable, is bound or
affected, or (iii) conflict with, violate or result in a breach of any
provisions of or the loss of any benefit under, constitute a default (or an
event which with notice or lapse of time or both would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, pledge, security interest,
charge or other encumbrance on any property or asset of Camden, CASI or United
Bank, as applicable, pursuant to, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Camden,
CASI or United Bank, as applicable is a party or by which Camden, CASI or United
Bank, as applicable, or any property or asset of such party is bound or
affected, except, in the case of clause (iii) above, for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities, financial condition or results of operations of
Camden and its subsidiaries taken as a whole.
6.4 Capitalization. As of the date hereof, the authorized stock of Camden
--------------
consists solely of 10,000,000 shares of Camden Common Stock, of which, as of the
date hereof, 6,557,650 shares were outstanding; 570,590 shares of Camden Common
Stock are directly or indirectly held by Camden as treasury stock; and there are
no shares of preferred stock outstanding as of the date hereof. As of the date
hereof, the authorized stock of CASI consists solely of 1,000 shares of CASI
Common Stock, par value $0.01 per share, of which, as of the date hereof, 1,000
shares were outstanding. The outstanding shares of Camden and CASI's
34
capital stock are validly issued, fully paid and nonassessable, and subject to
no preemptive rights (and were not issued in violation of any preemptive
rights). As of the date hereof, there are no shares of Camden or CASI capital
stock authorized and reserved for issuance, Camden and CASI do not have any
Rights issued and outstanding, and Camden and CASI do not have any commitment to
authorize, issue or sell any such shares or Rights, except pursuant to this
Agreement or Compensation and Benefit Plans. Since March 31, 1999, neither
Camden nor CASI has issued any shares of its stock or Rights in respect thereof
or reserved any shares for such purposes, other than pursuant to Compensation
and Benefit Plans.
6.5 Consents and Approvals. The execution, delivery and performance of
----------------------
this Agreement by Camden and CASI, and the Bank Merger Agreements by Camden and
United Bank, does not require any consent, approval, authorization or permit of,
or filing with or notification to any Governmental Entity, (i) except for those
referred to in Section 5.6 hereof, and (ii) except for any consent, approval,
authorization, permit of, or filing with, or notification to, any Governmental
Entity where failure to obtain any such consent, approval, authorization or
permit, or to make any such filing or notification, would not prevent or
significantly delay consummation of the Merger, or otherwise prevent Camden or
CASI from performing the obligations contemplated under this Agreement to be
performed by them or Camden or United Bank from performing its obligations under
the Bank Merger Agreements, or which, either individually or in the aggregate,
would not, in the reasonable judgment of the parties hereto, have a material
adverse effect on the business, assets, liabilities, financial condition or
results of operation of Camden and its subsidiaries taken as a whole.
6.6 Joint Proxy Statement. The information supplied by Camden and CASI
---------------------
for inclusion in the Joint Proxy Statement will not, on the date the Joint Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of KSB or at the time of the KSB Meeting, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
KSB Meeting which shall have become false or misleading.
6.7 SEC Reports and Bank Reports.
----------------------------
(a) Camden has filed, and made available to KSB, true and complete
copies of all forms, reports and documents required to be filed by it with the
SEC since January 1, 1996, and has heretofore delivered to KSB, in the form
filed with the SEC, true and complete copies of (i) its Annual Reports on Form
10-K for the fiscal years ended December 31, 1996, December 31, 1997 and
December 31, 1998, respectively, (ii) its Quarterly Report on Form 10-Q since
January 1, 1996, (iii) all proxy statements relating to Camden's meetings of
stockholders (whether annual or special) held since January 1, 1996, (iv) all
other forms,
35
reports and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above) filed by Camden with the SEC since
January 1, 1996, and (v) all communications mailed by Camden to its stockholders
since January 1, 1996 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii), (iv) and (v) above being referred to herein,
collectively, as the "Camden SEC Reports"). As of their respective dates, the
------------------
Camden SEC Reports (A) complied in all material respects as to form with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder and (B) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. Camden
has timely filed all SEC Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act. Neither the Camden nor any of its
subsidiaries is required to file any form, report or other document with the
SEC. Camden has made available to KSB true and complete copies of all amendments
and modifications that have not been filed by Camden with the SEC to all
agreements, documents and other instruments that previously had been filed by
Camden with the SEC and are currently in effect.
(b) Camden and its subsidiaries each have timely filed and made
available to KSB true and complete copies of all forms, reports and documents
required to be filed by each of them with all appropriate Bank Regulators since
January 1, 1996, and has paid all fees and assessments due and payable in
connection therewith. Such reports as of their respective date of filing
complied in all material respects with the requirements of all laws, rules and
regulations enforced or promulgated by such Bank Regulators. Except for Bank
Examinations no Bank Regulator has initiated any proceeding or, to the knowledge
of Camden, investigation into the business or operations of Camden, Camden
National Bank or United Bank since December 31, 1995. Camden has resolved all
violations, criticisms or exceptions by any Bank Regulator with respect to any
Bank Examination.
6.8 Financial Statements. Each of the consolidated financial statements of
--------------------
Camden and its subsidiaries, including, in each case, the notes thereto,
contained in the Camden SEC Reports was prepared in accordance with GAAP (except
as may be indicated in the notes thereto) and each fairly presents the
consolidated financial position, results of operations and changes in financial
position of Camden and its subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, subject, in the case of unaudited
statements, to normal and recurring year-end adjustments normal in nature and
not material in amount.
6.9 Compliance. Each of Camden, CASI, Camden National Bank and United
----------
Bank hold, and at all relevant times have held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and are
not in conflict with, or in default or violation of, (a) any statute, code,
ordinance, law, rule, regulation, order, writ, judgment, injunction or decree,
published policies and guidelines of any Governmental Entity, applicable to it
or by
36
which any of its properties or assets is bound or affected, or (b) any note,
bond, mortgage, indenture, deed of trust, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which it is a party or by
which any of its properties or assets is bound or affected, except, in each
case, for the failure to obtain or maintain any required license, permit or
authorization or any such non-compliance, conflict, default or violation that
would not, individually or in the aggregate, prevent or significantly delay
consummation of the Merger. Camden has made available to KSB a true and correct
copy of the most recent CRA report pertaining to Camden.
6.10 Absence of Certain Changes or Events. Since December 31, 1998, except
------------------------------------
as contemplated by this Agreement or as disclosed in any Camden SEC Report filed
since December 31, 1998 and prior to the date of this Agreement, Camden and its
subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since December 31, 1998, there has
not been either individually or in the aggregate, any Material Adverse Effect,
and to the knowledge of Camden and its subsidiaries, no fact or condition exists
which is reasonably likely to cause such a Material Adverse Effect in the
future.
6.11 Employee Benefit Plans.
----------------------
(a) The term "Camden Plans" means all employee benefit plans,
------------
arrangements or agreements that are maintained or contributed to, or that were
maintained or contributed to at any time during the six years preceding the date
of this Agreement, by Camden or by any trade or business, whether or not
incorporated (a "Camden ERISA Affiliate"), all of which together with Camden
would be deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) (i) Each of the Camden Plans has been operated and administered
in all material respects in accordance with applicable laws, including but not
limited to ERISA and the Code, (ii) each of the Camden Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code has been maintained
so as to qualify from the effective date of such Camden Plan to the Effective
Time, (iii) with respect to each Camden Plan which is subject to Title IV of
ERISA, there has been no "accumulated funding deficiency" (whether or not
waived), (iv) with respect to each Camden Plan subject to Title IV of ERISA, no
liability under Title IV of ERISA has been incurred by Camden or any Camden
ERISA Affiliate that has not been satisfied in full, no condition exists that
presents a material risk to Camden or any Camden ERISA Affiliate of incurring a
material liability to or on account of such Camden Plan, and there has been no
"reportable event" (within the meaning of Section 4043 of ERISA and the
regulations thereunder) other than those events as to which the 30 day notice
requirement is waived under Pension Benefit Guaranty Corporation Regulations
Section 4043, (v) neither Camden, nor any Camden ERISA Affiliate has ever
maintained or contributed to a "multiemployer pension plan," as such term is
defined in Section 3(37) of ERISA, (vi) all
37
contributions or other amounts payable by Camden as of the Effective Time with
respect to each Camden Plan in respect of current or prior plan years have been
paid or accrued in accordance with GAAP and Section 412 of the Code, (vii)
neither Camden nor any Camden ERISA Affiliate has engaged in a transaction in
connection with which Camden or any Camden ERISA Affiliate has any material
liability for either a civil penalty assessed pursuant to Section 409 or 502(i)
of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, and
(viii) there are no pending or, to the knowledge of Camden, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Camden Plans or any trusts related thereto.
(c) With respect to any Camden Plan that is a welfare plan (within
the meaning of Section 3(1) of ERISA) (i) no such Camden Plan is funded through
a "welfare benefit fund," as such term is defined in Section 419(e) of the Code,
and (ii) each such Camden Plan complies in all material respects with the
applicable requirements of COBRA.
6.12 Environmental. Except as disclosed in any Camden SEC Report, any
-------------
Phase I Environmental Site Assessment prepared by or for the benefit of Camden,
or in Section 6.12 of the Disclosure Schedule:
(a) To the knowledge of Camden, each of Camden and its
subsidiaries, any Participation Facilities and any property in which Camden or
any of its subsidiaries holds a security interest, and where required by the
context, the Loan Properties, are, and have been, in material compliance with
all applicable environmental laws and with all rules, regulations, standards and
requirements of the EPA and of state and local agencies with jurisdiction over
pollution or protection of the environment.
(b) There is no suit, claim, action or proceeding pending or, to
the knowledge of Camden and its subsidiaries, threatened, before any
Governmental Entity or other forum in which Camden or any of its subsidiaries
or, to the knowledge of Camden, any Participation Facility has been or, with
respect to threatened proceedings, may be, named as a defendant, responsible
party or potentially responsible party (i) for alleged noncompliance (including
by any predecessor), with any environmental law, rule, regulation, standard or
requirement or (ii) relating to the release into or presence in the Environment
of any Hazardous Materials or Oil whether or not occurring at or on a site
owned, leased or operated by Camden or any of its subsidiaries or any
Participation Facility, except as have not been or would not be material.
(c) To the knowledge of Camden, there is no suit, claim, action or
proceeding pending or threatened, before any Governmental Entity or other forum
in which any Loan Property has been or, with respect to threatened proceedings,
may be, named as a defendant, responsible party or potentially responsible party
(i) for alleged noncompliance (including by any predecessor) with any
environmental law, rule, regulation, standard or
38
requirement or (ii) relating to the release into or presence in the Environment
of any Hazardous Material or Oil whether or not occurring at or on a site owned,
leased or operated by a Loan Property, except as have not been or would not be
material.
(d) Neither Camden nor any of its subsidiaries, nor to their
knowledge any Participation Facility or any Loan Property, has received any
notice regarding a matter on which a suit, claim, action or proceeding as
described in subsection (b) or (c) of this Section 6.12 could reasonably be
based. No facts or circumstances have come to Camden's nor any of its
subsidiaries' attention which have caused it to believe that a material suit,
claim, action or proceeding as described in subsection (b) or (c) of this
Section 6.12 could reasonably be expected to occur.
(e) To the knowledge of Camden, during the period of (i) Camden's
and its subsidiaries' ownership or operation of any of their respective current
properties, (ii) Camden's and its subsidiaries' participation in the management
of any Participation Facility, or (iii) Camden's and its subsidiaries' holding
of a security interest in a Loan Property, there has been no release or presence
of Hazardous Material or Oil in, on, under or affecting such property of Camden
or such Participation Facility or Loan Property, except where such release or
presence is not or would not, either individually or in the aggregate, be
material. To the knowledge of Camden and its subsidiaries, prior to the period
of (Camden's and its subsidiaries' ownership or operation of any of their
respective current properties or any previously owned or operated properties,
(y) Camden's and its subsidiaries' participation in the management of any
Participation Facility, or (z) Camden's and its subsidiaries' holding of a
security interest in a Loan Property, there was no release or presence of
Hazardous Material or Oil in, on, under or affecting any such property,
Participation Facility or Loan Property, except where such release or presence
is not or would not, either individually or in the aggregate, be material.
6.13 Agreements with Bank Regulators. Neither Camden nor any of its
-------------------------------
subsidiaries is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter from, any Bank Regulator which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy, its
loan loss allowances or reserves, its credit policies or its management, nor has
Camden or any of its subsidiaries been informed by any Bank Regulator that it is
contemplating issuing or requesting any such order, directive, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither Camden nor any of its subsidiaries is a party to
any agreement or arrangement entered into in connection with the consummation of
a federally assisted acquisition of a depository institution pursuant to which
Camden or any of its subsidiaries is entitled to receive financial assistance or
indemnification from any governmental agency.
39
6.14 Year 2000.
---------
(a) Each of Camden and its subsidiaries (other than CASI) has
adopted a Year 2000 Plan requiring testing, information-gathering and other
procedures to conform to the Year 2000 Regulatory Requirements.
(b) Each of Camden and its subsidiaries (other than CASI) has
taken appropriate actions and has committed the resources reasonably necessary
or otherwise appropriate to comply with its Year 2000 Plan in a timely manner.
Such actions (including the testing and information-gathering procedures) have
not produced any preliminary findings or other results which would indicate that
the Information Technology will not be Year 2000 Compliant or that it will not
be in compliance with the Year 2000 Regulatory Requirements; and it has not
received any written notice or preliminary oral notice from a Governmental
Entity to one of its officers or senior executive employees with respect to any
adverse action against it relating to Year 2000 Compliance.
(c) Each of Camden and its subsidiaries (other than CASI) has
taken appropriate actions to assure that each of United Bank and Camden National
Bank has, and will continue to have at all relevant points in time, adequate
funds to meet loan and deposit customer demand in connection with the Year 2000
date change and related circumstances.
6.15 Brokers' Fees. Except for the fees payable to Xxxx, Xxxx & Co., no
-------------
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Camden or CASI.
6.16 Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any Schedule, certificate, list or
other writing furnished to KSB pursuant to the provisions hereof, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein or
therein, in the light of the circumstances in which they are made, not
misleading. No information believed by Camden or its subsidiaries to be material
to the Merger or the Bank Merger and which is necessary to make the
representations and warranties herein contained, taken as a whole, not
misleading, to the knowledge of Camden and its subsidiaries, has been withheld
from, or has not been delivered in writing to, KSB.
ARTICLE VII - CONDUCT OF BUSINESS PENDING
THE MERGER
40
7.1 Covenants of KSB and the Bank.
-----------------------------
(a) KSB and the Bank each covenants and agrees that, between the date
of this Agreement and the Effective Time, unless Camden shall otherwise agree in
writing, the business of KSB and the Bank shall be conducted only in, and KSB
and the Bank shall not take any action except in, the usual, regular and
ordinary course of business and in a manner consistent with prudent banking
practice and generally to conduct their business in substantially the same way
as heretofore conducted, and without limiting the foregoing, to continue to
operate in the same geographic markets serving the same market segments and
without significant increase in the rate of growth of the Bank's loan portfolio.
KSB and the Bank shall use their reasonable best efforts to preserve
substantially intact the business organization of KSB and the Bank, to keep
available the present services of the officers, employees and consultants of KSB
and the Bank and to preserve the current relationships and goodwill of KSB and
the Bank with customers, suppliers and other persons with which KSB or the Bank
have business relationships, including without limitation, implementing a
deposit retention program in furtherance thereof.
(b) By way of amplification and not limitation of clause (a) above,
except as contemplated by this Agreement, the Bank Merger Agreements and the KSB
Option Agreement, KSB and the Bank shall not, between the date of this Agreement
and the Effective Time, directly or indirectly to do, or publicly announce an
intention to do, any of the following without the prior written consent of
Camden:
(i) amend or otherwise change its Certificate of Incorporation
or By-laws or equivalent organizational documents;
(ii) issue, deliver, sell, pledge, dispose of, grant, encumber,
or authorize the issuance, delivery, sale, pledge, disposition, grant or
encumbrance of, any shares of capital stock of any class of KSB or the Bank
(other than the issuance of shares of KSB Common Stock upon the exercise of
KSB Stock Options issued in accordance with the provisions of the KSB Stock
Option Plan and outstanding prior to the date of this Agreement), or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest,
of KSB or the Bank, or enter into any agreement with respect to any of the
foregoing;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for (A) the declaration and payment by
KSB of a regular quarterly cash dividend, in a per share amount not to
exceed $0.04, and (B) the declaration and payment of a regular quarterly
cash dividend by the Bank to KSB provided that after the
41
declaration and payment of such dividend, the Bank will remain "well
capitalized" under the applicable capital adequacy regulations of the FDIC;
(iv) split, combine or reclassify any shares of its capital
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock, except upon the exercise or fulfillment of rights or options issued
or existing pursuant to employee benefit plans, programs or arrangements,
all to the extent outstanding and in existence on the date of this
Agreement;
(v) repurchase, redeem or otherwise acquire any shares of the
capital stock of KSB or the Bank, or any securities convertible into or
exercisable for any shares of the capital stock of KSB or the Bank;
(vi) enter into any new line of business or materially expand
the business currently conducted by KSB and the Bank or file any
application to relocate or terminate the operations of any banking office
of KSB or the Bank;
(vii) acquire or agree to acquire, by merging or consolidating
with, or by purchasing an equity interest in or a portion of the assets of,
or by any other manner, any business or any corporation, partnership, other
business organization or any division thereof or any material amount of
assets, other than subject to Section 7.5 hereof;
(viii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any individual,
corporation or other entity, or make any loan or advance, other than in the
ordinary course of business consistent with past practice;
(ix) enter into any contract or agreement other than in the
ordinary course of business consistent with past practice and, in any
event, regardless of whether consistent with past practice, undertake or
enter into (i) any contract or other commitment (other than contracts or
commitments related to Loans) involving an aggregate payment by or to KSB
or the Bank under any such contract or commitment of more than $50,000 or
having a term of one year or more from the time of execution, (ii) any
contract or commitment, or related contracts or commitments, for Loans
having an original principal amount of $400,000;
(x) authorize any single capital expenditure which is in
excess of $25,000 or capital expenditures which are, in the aggregate, in
excess of $50,000 for
42
KSB and the Bank taken as a whole, except for written contractual
commitments entered into prior to the date of this Agreement as disclosed
in the Disclosure Schedule;
(xi) (i) except as required by applicable law or as specified
in Section 7.1(b)(xi) of the Disclosure Schedule, (x) adopt, amend, renew
or terminate any Plan or any agreement, arrangement, plan or policy between
KSB or the Bank and one or more of its current or former directors,
officers or employees, or (y) increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares pursuant to the KSB Stock Option Plans or
otherwise); provided, however, that KSB and the Bank may, in consultation
-------- -------
with Camden, grant salary increases to its employees (other than those
employees who are officers) at the regular review date of such employees in
an aggregate amount for all employees not to exceed four percent (4%) of
the aggregate current annualized base salaries of such employees or
constitute more than a 10% increase with respect to any one employee; or
(ii) enter into, modify or renew any employment, severance or other
agreement with any director, officer or employee of KSB or the Bank, or
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement
providing for any benefit to any director, officer or employee;
(xii) take any action with respect to changes in accounting
methods, principles or practices, other than changes required by applicable
law or GAAP or regulatory accounting as concurred in by KSB's independent
accountants;
(xiii) make any tax election or settle or compromise any Federal,
state, local or foreign tax liability;
(xiv) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the consolidated balance sheet
of KSB and the Bank included in Annual Report on Form 10-KSB for the period
ended December 31, 1998, or subsequently incurred in the ordinary course of
business and consistent with past practice or in connection with this
Agreement;
(xv) enter into any investment in real estate or in any real
estate development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings
which, in each case, do not require
43
the advance of any new funds and are in the ordinary course of business
consistent with past practice;
(xvi) sell any securities in its investment portfolio, except
in the ordinary course of business, or engage in transactions in or
involving forwards, futures, options on futures, swaps or similar
derivative instruments;
(xvii) sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise dispose of, any of its
material assets, properties or other rights or agreements or purchase or
sell any loans in bulk;
(xviii) take any action that is intended or reasonably can be
expected to result in any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect, or any
of the conditions to the consummation of the Merger, the Bank Merger and
the other transactions contemplated by this Agreement set forth in Article
IX not being satisfied in any material respect, or in any material
violation of any provision of this Agreement, the Bank Merger Agreements or
the KSB Option Agreement, except, in every case, as may be required by
applicable law;
(xix) commit any act or omission which constitutes a material
breach or default by KSB or the Bank under any agreement or understanding
with Bank Regulators or under any material contract or material license to
which any of them is a party or by which any of them or their respective
properties is bound;
(xx) foreclose upon or take a deed or title to any commercial
real estate without first conducting a Phase I environmental assessment of
the property or foreclose upon any commercial real estate if such
environmental assessment indicates the presence of Hazardous Material in
amounts which, if such foreclosure were to occur, would be material;
(xxi) enter into or renew, amend or terminate, or give notice
of a proposed renewal, amendment or termination of or make any commitment
with respect to, (i) any contract, agreement or lease for office space,
operations space or branch space to which KSB or the Bank is a party or by
which KSB or the Bank or their respective properties is bound; (ii) any
lease, contract or agreement other than in the ordinary course of business
consistent with past practice including renewals of leases to existing
tenants of KSB or the Bank; (iii) regardless of whether consistent with
past practices, any lease, contract, agreement or commitment involving an
aggregate payment by or to KSB or the Bank of more than $50,000 or having a
term of one year or more from the time of execution;
44
(xxii) change in any material respect its loan policies or
procedures, except as required by regulatory authorities; or
(xxiii) agree to do any of the foregoing.
(c) To the extent that KSB or the Bank is at any time prior to
Closing subject to any memorandum of understanding, cease and desist order,
injunction, order, judgment, decree or other regulatory restriction, KSB and the
Bank shall comply with all requirements of such regulatory restriction and take
all steps that are necessary to satisfy and discharge all of their respective
obligations thereunder.
7.2 Camden Products and Services. From and after the date hereof, Camden,
----------------------------
KSB and the Bank shall consult with each other on the introduction of products
and services not currently offered by KSB or the Bank which Camden would expect
to make available to customers following the Merger and the Bank Merger, and KSB
and the Bank shall consider offering such products and services to its customers
prior to the Effective Date, on terms and conditions mutually acceptable to
Camden, KSB and the Bank; provided, however, that nothing herein shall obligate
-------- -------
KSB or the Bank to offer any such products or services prior to the Effective
Time.
7.3 System Conversions. From and after the date hereof, Camden and the
------------------
Bank shall meet on a regular basis to discuss and plan for the conversion of the
Bank's data processing and related electronic informational systems to those
used by Camden and its Subsidiaries, which planning shall include, but not be
limited to, discussion of the possible termination by the Bank of third-party
service provider arrangements effective at the Effective Time or at a date
thereafter, non-renewal of personal property leases and software licenses used
by the Bank in connection with its systems operations and outsourcing, as
appropriate, of proprietary or self-provided system services, it being
understood that the Bank shall not be obligated to take any such action prior to
the Effective Time and, unless the Bank otherwise agrees, no conversion shall
take place prior to the Effective Time. In the event that the Bank takes, at
the request of Camden, any action relative to third parties to facilitate the
conversion that results in the imposition of any termination fees or charges,
Camden shall indemnify the Bank on terms reasonably satisfactory to the Bank for
any such fees and expenses, and the costs of reversing the conversion process,
if either Camden or CASI has failed to fulfill any material obligation under
this Agreement and such failure has been the cause of, or resulted in, the
termination or this Agreement pursuant to Section 10.1.
7.4 Certain Changes and Adjustments. Prior to the Closing, Camden, KSB
-------------------------------
and the Bank shall consult and cooperate with each other concerning the Bank's
loan, litigation and real estate valuation policies and practices (including
loan classifications and levels of reserves) to reflect Camden's plans with
respect to the conduct of the Surviving Corporation
45
following the Bank Merger; provided, however, that neither KSB nor the Bank
-------- -------
shall be obligated to take any action pursuant to this Section which is
inconsistent with GAAP and unless and until Camden acknowledges, and KSB and the
Bank are satisfied, that all conditions to its obligation to consummate the
Merger have been satisfied; and provided further, that neither KSB nor the Bank
-------- -------
shall be obligated to take any action pursuant to this Section 7.4 earlier than
five (5) business days prior to the Effective Date. No action taken by KSB or
the Bank pursuant to this Section or the consequences resulting therefrom shall
be deemed to be a breach of any representation, warranty, agreement or covenant
herein or constitute a Material Adverse Effect.
7.5 ALCO Management. KSB and the Bank agree that during the period from
---------------
the date of this Agreement through the Effective Time, they will consult with
Camden in the development of a reasonable program to manage the Bank's interest
sensitive assets and liabilities (including its fixed-rate mortgage portfolio
and its investment portfolio), which program will include a policy not to
acquire securities for the investment portfolio of the Bank other than
securities which were issued by the United States of America and have a maturity
date that is not more than two years after the date of acquisition thereof,
unless otherwise agreed by the parties. KSB, the Bank and Camden agree to
consult on investment programs to be administered by the Bank.
7.6 Covenants of Camden. During the period from the date of this
-------------------
Agreement and continuing until the Effective Time, Camden shall not, and shall
not permit any of its subsidiaries to, take any action that is intended or which
reasonably can be expected to result in any of its representations and
warranties set forth in this Agreement being untrue in any material respect, or
in any of the conditions to the Merger, the Bank Merger or other transactions
contemplated in this Agreement as set forth in Article IX not being satisfied in
any material respect, or in a material violation of any provision of this
Agreement, the Bank Merger Agreements or the KSB Option Agreement, except, in
every case, as may be required by applicable law.
7.7 Affiliate Agreements.
--------------------
(a) Not later than the 15th day prior to the mailing of the Joint
Proxy Statement, each party shall deliver to the other, a schedule of each
person that, to its knowledge, is or is reasonably likely to be, as of the date
of the relevant Meeting, deemed to be an "affiliate" of it (each, an
"Affiliate") as that term is used in SEC Accounting Series Releases 130 and 135
---------
and, in the case of KSB only, in Rule 145 under the Securities Act.
(b) Each party shall use its reasonable best efforts to cause each
person who may be deemed to be an Affiliate of it to execute and deliver to the
other party on or before the date of mailing of the Joint Proxy Statement an
agreement to comply with SEC Accounting Releases 130 and 135 and, in the case of
KSB only, with Rule 145 under the Securities Act, in
46
the forms attached hereto as Exhibits A-1 ("Camden Affiliates Agreement") and
------------ ---------------------------
A-2 ("KSB Affiliates Agreement"), respectively.
--- ------------------------
(c) Within thirty (30) days after the end of the first complete
calendar month ending at least thirty (30) days after the Closing Date, Camden
will publish results including at least thirty (30) days of combined operations
of Camden and KSB as referred to in the KSB Affiliates Agreement and as
contemplated by and in accordance with SEC Accounting Release No. 135.
7.8 Takeover Laws. No party shall take any action that would cause the
-------------
transactions contemplated by this Agreement and the KSB Option Agreement (in the
case of KSB) to be subject to requirements imposed by any Takeover Law and each
party shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement and the
KSB Option Agreement (in the case of KSB) from, or if necessary challenge the
validity or applicability of, any applicable Takeover Law, as now or hereafter
in effect, that purports to apply to this Agreement, the KSB Option Agreement
(in the case of KSB) or the transactions contemplated hereby or thereby.
7.9 No Rights Triggered. Each of Camden, CASI and KSB shall take all
-------------------
steps necessary to ensure that the entering into of this Agreement and the
consummation of the transactions contemplated hereby and any other action or
combination of actions, or any other transactions contemplated hereby, do not
and will not result in the grant of any rights to any person (i) under its
charter or bylaws, or (ii) under any material agreement to which it or any of
its Subsidiaries is a party.
7.10 Shares Listed. In the case of Camden, Camden shall use its reasonable
-------------
best efforts to list, prior to the Effective Date, on the AMEX, upon official
notice of issuance, the shares of Camden Common Stock to be issued to the
holders of KSB Common Stock in the Merger.
ARTICLE VIII - ADDITIONAL AGREEMENTS
8.1 Stockholder Approvals. Each of Camden, CASI, KSB and the Bank shall
---------------------
take, in accordance with applicable law, applicable stock exchange or NASDAQ
Stock Market rules and its charter and bylaws, all action necessary to convene,
respectively: an appropriate meeting of the stockholders of Camden to consider
and vote upon any matters required to be approved by Camden stockholders for
consummation of the Mergers (including any adjournment or postponement, the
"Camden Meeting"); an appropriate meeting of the sole stockholder of CASI to
--------------
consider and vote upon the approval of this Agreement and any other matters
required to be approved by CASI's stockholder for consummation of the Mergers
(including any adjournment or postponement, the "CASI Meeting"); an appropriate
------------
meeting of the stockholders of KSB to consider and vote upon the approval of
this Agreement and any
47
other matters required to be approved by KSB's stockholders for consummation of
the Mergers (including any adjournment or postponement, the "KSB Meeting;"); an
-----------
appropriate meeting of the sole stockholder of the Bank to consider and vote
upon the approval of this Agreement and any other matters required to be
approved by the Bank's stockholder for consummation of the Mergers (including
any adjournment or postponement, the "Bank Meeting;" and each of the Camden
---- -------
Meeting, the CASI Meeting, the KSB Meeting and the Bank Meeting, a "Meeting"),
-------
as promptly as practicable after the date hereof. The Board of Directors of each
of Camden, CASI, KSB and the Bank shall (subject to compliance with its
fiduciary duties as advised by its regular outside counsel, subsequently
confirmed in writing) recommend such approval by its respective stockholders,
and each of Camden, CASI, KSB and the Bank shall use its reasonable best efforts
to solicit such approval from its stockholders.
8.2 Registration Statement.
----------------------
(a) Camden and KSB agree to cooperate in the preparation of a
registration statement on Form S-4 (the "Registration Statement") to be filed by
----------------------
Camden with the SEC in connection with the issuance of Camden Common Stock in
the Merger (including the joint proxy statement and prospectus and other proxy
solicitation materials of Camden and KSB constituting a part thereof (the "Joint
-----
Proxy Statement") and all related documents). Camden and KSB agree to file a
---------------
draft of the Joint Proxy Statement with the SEC as promptly as practicable.
Each of Camden and KSB agrees to use all reasonable efforts to cause the
Registration Statement to be filed and declared effective under the Securities
Act as promptly as reasonably practicable after the SEC has cleared the Joint
Proxy Statement. Camden also agrees to use all reasonable efforts to obtain all
necessary state securities law or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement.
(b) Each of Camden and KSB agrees, upon request, to furnish promptly
the other party with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Registration Statement, the Joint
Proxy Statement or any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any regulatory authority in
connection with the transactions contemplated hereby. Each of Camden and KSB
agrees, as to itself and its Subsidiaries, that none of the information supplied
or to be supplied by it for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement and each
amendment or supplement thereto, if any, becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and (ii) the Joint Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to stockholders and at the times
of the Camden Meeting and the KSB Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading or any statement
which, in the light of the circumstances under which such statement is made,
will be
48
false or misleading with respect to any material fact, or which will omit to
state any material fact necessary in order to make the statements therein not
false or misleading or necessary to correct any statement in any earlier
statement in the Joint Proxy Statement or any amendment or supplement thereto.
Each of Camden and KSB further agrees that if it shall become aware prior to the
Effective Date of any information that would cause any of the statements in the
Joint Proxy Statement to be false or misleading with respect to any material
fact, or to omit to state any material fact necessary to make the statements
therein not false or misleading, it shall promptly inform the other party
thereof and shall take the necessary steps to correct the Joint Proxy Statement.
(c) In the case of Camden, Camden will advise KSB, promptly after
Camden receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order or the suspension of the qualification of the Camden Common
Stock for offering or sale in any jurisdiction, of the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
8.3 Regulatory Matters.
------------------
(a) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement and the Bank Merger Agreements (including without limitation the
Merger and the Bank Merger). Camden, KSB and the Bank shall have the right to
review in advance, and to the extent practicable, each will consult the other
on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to either of them, as the case may be,
and any of their respective subsidiaries, which appear in any filing made with,
or written materials submitted to, any third party or any Governmental Entity in
connection with the Merger, the Bank Merger and the other transactions
contemplated by this Agreement and by the Bank Merger Agreements. In exercising
the foregoing right, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the Merger, the Bank Merger and other transactions
contemplated by this Agreement and the Bank Merger Agreements and each party
will keep the other apprised of the status of matters relating to the completion
of all of the transactions contemplated hereby.
(b) Camden, KSB, CASI and the Bank shall, upon request, furnish each
other with all information concerning themselves, their respective subsidiaries,
directors,
49
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of Camden, KSB, CASI, the Bank or any of their respective
subsidiaries to any Governmental Entity in connection with the Merger, the Bank
Merger or the other transactions contemplated by this Agreement and the Bank
Merger Agreements.
(c) Camden, KSB, CASI and the Bank shall promptly furnish each other
with copies of written communications received by Camden or KSB, as the case may
be, or any of their respective subsidiaries, affiliates or associates (as such
terms are defined in Rule 12b-2 under the Exchange Act as in effect on the date
of this Agreement) from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the Merger, the Bank Merger and the other
transactions contemplated by this Agreement and the Bank Merger Agreement.
8.4 Access to Information.
---------------------
(a) Upon reasonable notice and subject to applicable laws relating to
the disclosure or exchange of information, KSB and the Bank shall afford to the
officers, employees, accountants, counsel and other representatives of Camden,
access, during normal business hours during the period prior to the Effective
Time, to all its officers, employees, agents, properties, books, loan
documentation and files, contracts, commitments and records and, during such
period, KSB and the Bank shall make available to Camden (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
or federal or state banking laws (other than reports or documents which KSB or
the Bank is not permitted to disclose under applicable law), (ii) copies of all
periodic reports to senior management, including, without limitation, reports on
non-performing loans and other asset quality matters and all materials furnished
to the KSB Board or the Bank Board relating to asset quality generally, and
(iii) all other information concerning the business, properties, assets and
personnel of KSB and the Bank as Camden may reasonably request. Neither KSB nor
the Bank shall be required to provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights of customers,
jeopardize the attorney-client privilege of the institution in possession or
control of such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement or, in the event of any litigation or threatened
litigation between KSB, the Bank and Camden over the terms of this Agreement
where access to information will be adverse to the interests of KSB and the
Bank. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. Camden will hold all such information in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreements, dated _____,1999, among Camden, KSB and the Bank
(the "Confidentiality Agreement").
-------------------------
50
(b) Upon reasonable notice and subject to applicable laws relating to
the disclosure or exchange of information, Camden shall afford to the officers,
employees, accountants, counsel and other representatives of KSB, reasonable
access, during normal business hours during the period prior to the Effective
Time, to the senior executive officers of Camden and all other available
documentation reasonably requested by KSB pertaining to the transactions
contemplated hereby. It is understood, however, that Camden shall not be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of customers, jeopardize the
attorney-client privilege of the institution in possession or control of such
information or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement or, in the event of any litigation or threatened litigation between
Camden, KSB and/or the Bank over the terms of this Agreement where access to
information will be adverse to the interests of Camden. The parties hereto will
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply. KSB will hold all such
information in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
(c) All information furnished by Camden to KSB, the Bank or its
representatives pursuant hereto shall be treated as the sole property of Camden
and, if the Merger shall not occur, KSB, the Bank and its representatives shall
return to Camden all of such written information and all documents, notes,
summaries or other materials containing, reflecting or referring to, or derived
from, such information. KSB and the Bank shall, and shall use their reasonable
best efforts to cause their representatives to, keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purpose. The obligation to keep such
information confidential shall continue for five years from the date the
proposed Merger is abandoned and shall not apply to (i) any information which
(x) was already in KSB's or the Bank's possession prior to the disclosure
thereof by Camden; (y) was then generally known to the public; or (z) was
disclosed to KSB or the Bank by a third party not bound by an obligation of
confidentiality, or (ii) disclosures made as required by law.
(d) No investigation by any of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein or any condition to the obligations of the parties hereto.
8.5 No Solicitation. Neither KSB nor the Bank shall, directly or
---------------
indirectly, through any officer, director, agent or otherwise, solicit or
initiate the submission of any proposal or offer from any person relating to any
acquisition or purchase of all or (other than in the ordinary course of
business) any material portion of the assets of, or any equity interest in, KSB
or the Bank or any business combination with KSB or the Bank or, except to the
extent determined by the KSB Board, upon the written opinion of its regular
outside counsel, to be required by fiduciary obligations under applicable law,
participate in any negotiations
51
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate,
any effort or attempt by any other person to do or seek any of the foregoing.
KSB and the Bank immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. KSB and the Bank shall notify Camden promptly if any
such proposal or offer, or any inquiry or contact with any person with respect
thereto, is made and shall, in any such notice to Camden, indicate in reasonable
detail the identity of the person making such proposal, offer, inquiry or
contact and the terms and conditions of such proposal, offer, inquiry or
contact. KSB and the Bank agree not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which KSB or
the Bank is a party.
8.6 Employee Benefits Matters.
-------------------------
(a) Provision of Benefits. At the Effective Time, until December 31,
2000, and subject to applicable law, Camden shall either (i) maintain the
existing KSB Compensation and Benefit Plans (other than long-term care benefits,
the ESOP and other stock-based benefits), or (ii) provide the employees of KSB
and the Bank ("KSB Employees") with substantially equivalent health, life
-------------
insurance, disability, retirement and other benefits (other than long-term care
benefits, the ESOP and other stock-based benefits), if any, as presently
provided by KSB to its own employees. After December 31, 2000, and subject to
applicable law, Camden shall provide the KSB Employees with the same health,
dental, pension, life insurance, disability, 401(k) plan and other benefits, if
any, as Camden then provides generally to its similarly situated employees.
With respect to the provision of such benefits to KSB Employees pursuant hereto,
to the extent KSB Employees participate after the Effective Time in employee
benefit plans other than KSB Compensation and Benefit Plans, all prior service
of such employees with KSB or the Bank shall be recognized under such plans for
all benefit plan for purposes of eligibility and vesting, but excluding benefit
accrual under any qualified defined benefit pension plan. Camden shall not
treat any KSB Employee as a "new" employee for purposes of any exclusion under
any health plan or dental plan of Camden or any of its affiliates for a
preexisting medical condition. Nothing herein is intended or should be
construed to provide a commitment for continued employment or to confer any
rights on any officer or employee of the Bank except as herein expressly
provided.
(b) Parachute Payments. Notwithstanding anything to the contrary
contained in this Agreement, in no event shall KSB or the Bank take any action
or make any payments that would result, either individually or in the aggregate,
in the payment of an "excess parachute payment" within the meaning of Section
280G of the Code or that would result, either individually or in the aggregate,
in payments that would be nondeductible pursuant to Section 162(m) of the Code.
52
(c) Employment Agreement. The Chief Executive Officer of KSB shall
enter into an employment agreement with Camden or a Camden Affiliate on terms
mutually agreeable to both parties, with such employment agreement to take
effect at the Effective Time. The employment agreement to which the Chief
Executive Officer of KSB is a party as of the date hereof will terminate upon
the earlier of (i) execution of the employment agreement with Camden or a Camden
Affiliate, and (ii) the Effective Time.
8.7 Directors' and Officers' Insurance. Camden shall use its reasonable
----------------------------------
best efforts to maintain in effect for three years from the Effective Time, if
available, the current directors' and officers' liability insurance policy
maintained by KSB (provided that Camden may substitute therefor policies of at
--------
least the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall Camden be required to expend pursuant
-------- -------
to this Section 8.7 more than the amount equal to 125% of the current annual
amount expended by KSB to maintain or procure insurance coverage pursuant
hereto. In connection with the foregoing, KSB and the Bank each agrees to
provide such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
In addition, Camden acknowledges that the obligations of KSB to indemnify
its directors and officers (who are made a party or threatened to be made a
party or otherwise involved with respect to any action, suit, or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she was a director of KSB at or prior to the Effective Date) under
its Certificate of Incorporation and Bylaws, as they exist as of the date of
this Agreement, including the obligation to advance expenses, shall be assumed
by Camden by reason of the Merger.
8.8 Financial and Other Statements. Notwithstanding anything to the
------------------------------
contrary in Section 8.4, during the term of this Agreement, KSB, and when
required by subsection (f) hereof, Camden, shall provide to each other, in the
manner provided herein, the following documents and information:
(a) As soon as reasonably available, but in no event more than 45
days after the end of each fiscal quarter ending after the date of this
Agreement, KSB will deliver to Camden its Quarterly Report on Form 10-QSB
as filed under the Exchange Act and the Bank's Quarterly Call Report as
filed with the FDIC. As soon as reasonably available, but in no event more
than 90 days after the end of each fiscal year ending after the date of
this Agreement, KSB will deliver to Camden its Annual Report on Form 10-
KSB, as filed under the Exchange Act. KSB will also deliver to Camden,
contemporaneously with its being filed with the SEC, a copy of all Current
Reports on Form 8-KSB.
53
(b) Promptly upon receipt thereof, KSB will furnish to Camden copies
of all internal control reports submitted to KSB or the Bank by independent
auditors in connection with each annual, interim or special audit of the
books of KSB or the Bank made by such auditors.
(c) As soon as practicable, KSB and the Bank will furnish to Camden
copies of all such financial statements and reports as they shall send to
its stockholders, the SEC or any other Governmental Entity, to the extent
any such reports furnished to any such Governmental Entity are not
confidential and except as legally prohibited thereby.
(d) Promptly upon receipt thereof KSB will notify Camden promptly
after its receipt of each examination report of any federal or state
regulatory or examination authority with respect to the condition or
activities of KSB or the Bank.
(e) With reasonable promptness, KSB and the Bank will furnish to
Camden such additional financial data as Camden may reasonably request.
(f) As soon as reasonably available, but in no event more than 45
days after the end of each fiscal quarter ending after the date of this
Agreement, Camden will deliver to KSB its Quarterly Report on Form 10-Q as
filed under the Exchange Act and United Bank's Quarterly Call Report as
filed with the FDIC. As soon as reasonably available, but in no event more
than 90 days after the end of each fiscal year ending after the date of
this Agreement, Camden will deliver to KSB its Annual Report on Form 10-K,
as filed under the Exchange Act. Camden will also deliver to KSB,
contemporaneously with its being filed with the SEC, a copy of all Current
Reports on Form 8-K.
8.9 Further Action. Camden, KSB, CASI and the Bank each shall, and shall
--------------
cause its subsidiaries to, use its reasonable best efforts (a) to take, or cause
to be taken, all actions necessary, proper or advisable to comply promptly with
all legal requirements which may be imposed on such party or its subsidiaries
with respect to the Merger or the Bank Merger and, subject to the conditions set
forth in Article IX hereof, to consummate the transactions contemplated by this
Agreement and the Bank Merger Agreements and (b) to obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity and any other third party which
is required to be obtained by KSB, the Bank, Camden or CASI or any of their
respective subsidiaries in connection with the Merger or the Bank Merger and any
of the other transactions contemplated by this Agreement.
8.10 Public Announcements. Camden, KSB, CASI and the Bank shall consult
--------------------
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement, the Bank Merger Agreements or any
transaction contemplated
54
hereby or thereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
any listing agreement with a national or regional securities exchange to which
Camden or KSB is a party or any requirement of agreement with any automated
interdealer quotation system.
8.11 Additional Agreements. In case at any time after the Effective Time
---------------------
any further action is necessary or desirable to carry out the purposes of this
Agreement or the Bank Merger Agreement, or to vest the Surviving Corporation or
the Bank, as applicable, with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger or the
Bank Merger, the proper officers and directors of each party to this Agreement
and their respective subsidiaries shall take all such necessary action as may be
reasonably requested by Camden.
8.12 Update of Disclosure Schedules. From time to time prior to the
------------------------------
Effective Time, KSB and Camden will promptly supplement or amend the Disclosure
Schedules to reflect any matter which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedules or which is necessary to correct any information in the
Disclosure Schedules which has been rendered inaccurate thereby. No supplement
or amendment to the Disclosure Schedules shall have any effect for the purpose
of determining satisfaction of the conditions set forth in Sections 9.1(a),
9.2(a) or 9.3(a) hereof, as the case may be, or the compliance by KSB or the
Bank with the covenants set forth in Article VII hereof, or Camden or CASI with
the covenants set forth in Section 7.6 and Section 8.8 hereof.
8.13 Current Information.
-------------------
(a) During the period from the date of this Agreement to the
Effective Time, KSB and the Bank will cause one or more of its designated
representatives (i) to confer on a regular and frequent basis (not less than
monthly) with representatives of Camden to report on (x) the general status of
the ongoing operations of KSB and the Bank, (y) the status of, and the action
proposed to be taken with respect to, those Loans held by KSB, the Bank or any
of their subsidiaries which, either individually or in combination with one or
more other Loans to the same borrower thereunder, have an aggregate original
principal amount of $75,000 or more and are classified or non-performing assets,
and (z) the status of, and the action proposed to be taken with respect to,
foreclosed property and other real estate owned, and (ii) to cooperate and
communicate with respect to the manner in which the business of KSB and the Bank
are conducted and the disposition of certain assets after the Effective Time,
the type and mix of products and services, personnel matters, branch alignment,
the granting of credit, and problem loan management, reserve adequacy and
accounting. In addition, KSB and the Bank will promptly make available to Camden
the reports of any independent or third-party loan review consultant received by
either KSB or the Bank. In order to facilitate the foregoing, KSB, the Bank and
Camden shall promptly establish a liaison committee (the "Liaison
-------
55
Committee") which will be chaired by an officer designated by Camden and which
---------
will meet on a regular basis to discuss these matters and may establish sub-
committees from time-to-time to pursue various issues. During the period from
the date of this Agreement to the Effective Time, KSB and the Bank shall provide
Camden prior to such extensions with sufficient information to review new
extensions of credit and renewals having an original principal amount of more
than $400,000 and restructurings of loans having an original principal amount of
more than $75,000 and information detailing overall asset quality. The Bank
shall also allow Camden to designate one of its officers to attend the Bank's
credit committee meetings and be a non-voting attendee thereof.
(b) KSB and the Bank will promptly notify Camden of any material
change in the normal course of business or in the operation of the properties of
KSB or the Bank and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated), or the
institution or the threat of material litigation involving KSB or the Bank, and
will keep Camden reasonably informed of such events.
(c) To the extent not covered by paragraphs (a) and (b) above, KSB
and the Bank shall give prompt notice to Camden, and Camden shall give prompt
notice to KSB, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of KSB, the Bank, Camden
or CASI, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement or the
Bank Merger Agreements; provided, however, that the delivery of any notice
-------- -------
pursuant to this paragraph (c) shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
8.14 Bank Merger.
-----------
(a) Camden and KSB shall take all actions necessary and appropriate,
including causing the entering into of appropriate merger agreements (the "Bank
----
Merger Agreements"), to cause United Bank to merge with and into the Bank
-----------------
(individually, a "Bank Merger" and collectively, the "Bank Mergers"), as Camden
----------- ------------
deems advisable, in each case in accordance with applicable laws and regulations
and the terms of the applicable Bank Merger Agreement at the Effective Time or
as soon as practicable after consummation of the Mergers.
(b) Unless otherwise determined by Camden prior to the Closing, at
the effective time of the Bank Merger the Articles of Organization and By-laws
of the Bank, as amended prior to the consummation of the Bank Merger, shall be
the Articles of Organization and By-laws of the surviving corporation until
thereafter amended as provided by law and such Articles of Organization and By-
laws;
56
(c) KSB shall be entitled to appoint the individuals listed on Section
8.14 of the Disclosure Schedule as directors and officers of the Bank after the
effective time, each to hold office in accordance with the Articles of
Organization and By-Laws of the Bank and until their respective successors are
duly elected or appointed and qualified. The remainder of the directors and
officers of the Bank shall be appointed by Camden.
8.15 Post-Closing Governance. Camden shall take all necessary actions to
-----------------------
cause the size of its Board of Directors to be increased by two members,
effective as of the Subsequent Effective Time, and to cause the two members of
KSB's current Board of Directors listed on Section 8.15 of the Disclosure
Schedule to be elected to Camden's Board of Directors, such election to be
effective as of the Subsequent Effective Time.
ARTICLE - CONDITIONS TO THE MERGER
9.1 Conditions to Each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative
vote of the stockholders of KSB, the Bank, Camden and CASI, as required;
(b) Regulatory Approvals. All necessary approvals, authorizations
and consents of all Governmental Entities required to consummate the
Mergers and the Bank Merger shall have been obtained and remain in full
force and effect, and all waiting periods relating to such approvals,
authorizations and consents shall have expired or been terminated (all such
approvals and the expiration of all such waiting periods being referred to
herein as the "Requisite Regulatory Approvals").
------------------------------
(c) No Orders, Injunctions or Restraints; Illegality. No order,
injunction or decree (whether temporary, preliminary or permanent) issued
by federal or state governmental authority or other agency or commission or
federal or state court of competent jurisdiction or other legal restraint
or prohibition (an "Injunction") preventing the consummation of the Merger,
----------
the Bank Merger or any of the other transactions contemplated by this
Agreement or the Bank Merger Agreements shall be in effect and no
proceeding initiated by any governmental entity seeking an Injunction shall
be pending. No statute, rule, regulation, order, injunction or decree
(whether temporary, preliminary or permanent) shall have been enacted,
entered, promulgated or enforced by any Governmental Authority or other
agency or commission or federal or state court of competent jurisdiction,
which prohibits, restricts or makes illegal the
57
consummation of the Merger, the Bank Merger or any of the other
transactions contemplated by this Agreement or the Bank Merger Agreements.
(d) Effective Registration Statement. The Registration Statement
shall have become effective and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the SEC or any
other Governmental Entity.
(e) Tax Opinion Relating to the Merger. Camden shall have received
an opinion from Berry, Dunn, XxXxxx & Xxxxxx, and KSB shall have received
an opinion from Luse, Lehman, Xxxxxx, Xxxxxxxx & Xxxxxx, dated in each case
as of the Closing Date, substantially to the effect that, on the basis of
the facts, representations and assumptions set forth in such opinions which
are consistent with the state of facts existing at the Closing Date, the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
In rendering such opinions, such counsel may require and rely upon
representations and covenants including those contained in certificates of
officers of Camden, KSB and others, reasonably satisfactory in form and
substance to such counsel.
(f) AMEX Listing. The shares of Camden Common Stock issuable
pursuant to this Agreement shall have been approved for listing on the
AMEX, subject to official notice of issuance.
(g) Accounting Treatment. Camden shall have received from Berry,
Dunn, XxXxxx & Xxxxxx, independent public accountants for Camden, a letter,
dated as of or shortly before the Effective Date, stating its opinion that
the Merger shall qualify for "pooling of interests" accounting treatment.
KSB shall have received from Berry, Dunn, XxXxxx & Xxxxxx, independent
public accountants for KSB, a letter, dated as of or shortly before the
Effective Date, stating its opinion that KSB is a "poolable entity."
9.2 Conditions to Obligations of Camden and CASI. The obligations of
--------------------------------------------
Camden and CASI to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of KSB and the Bank in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or
warranty that is not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement, as applicable, and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Effective Time, and Camden shall have received a
certificate to such effect signed by the Chief Executive Officer and the
Chief Financial Officer of KSB and the Bank dated as of the Effective Date.
58
(b) Agreements and Covenants. KSB and the Bank shall have performed
in all material respects all obligations and complied in all material
respects with all agreements or covenants of KSB and the Bank to be
performed or complied with by it at or prior to the Effective Date under
the this Agreement and the Bank Merger Agreements, and Camden shall have
received a certificate to such effect signed by the Chief Executive Officer
and Chief Financial Officer of KSB and the Bank dated as of the Effective
Date.
(c) Consents Under Agreements. The consent, approval or waiver of
each person (other than Requisite Regulatory Approvals contemplated in
Section 9.1(b)) whose consent or approval shall be required in order to
permit the lawful succession by the Surviving Corporation pursuant to the
Merger or the Bank as survivor to the Bank Merger, as the case may be, to
any material obligation, right or interest of KSB or the Bank under
agreement or instrument shall have been obtained, and none of such permits,
consents, waivers, clearances, approvals and authorizations shall contain
any term or condition which would materially impair the value of KSB and
the Bank to Camden.
(d) No Burdensome Condition. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon Camden, KSB,
the Surviving Corporation or the Bank or any of their respective
subsidiaries that Camden reasonably determines would materially and
adversely affect the business, operations, financial condition, property or
assets of the Surviving Corporation or the Bank as survivor to the Bank
Merger or otherwise materially impair the value of KSB or the Bank to
Camden (a "Burdensome Condition").
--------------------
(e) Agreements with Officers. Agreements, substantially in the form
attached as Exhibit D hereto, shall have been executed and delivered by all
---------
directors and officers of KSB or the Bank who own, or for purposes of Rule
13d-3 under the Exchange Act would be deemed to beneficially own, as of the
date of this Agreement, shares of KSB Common Stock.
(f) Legal Opinion. Camden shall have received the opinion of counsel
to KSB and the Bank, dated the Closing Date, in customary form and mutually
agreeable to the parties.
9.3 Conditions to Obligations of KSB and the Bank. The obligations of KSB
---------------------------------------------
and the Bank to effect the Merger are also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Camden and CASI in this Agreement which is qualified as to
materiality shall be true and correct and each such representation or
warranty that is not so
59
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Effective Date and KSB shall have received a certificate signed by the
Chief Executive or Chief Financial Officer of Camden to such effect dated
as of the Effective Date.
(b) Agreements and Covenants. Camden and CASI shall have performed
in all material respects all obligations and complied in all material
respects with all of the respective agreements or covenants to be performed
or complied by such party under this Agreement and KSB shall have received
a certificate signed by the Chief Executive or Chief Financial Officer of
Camden to such effect dated as of the Effective Date.
(c) Legal Opinion. KSB shall have received the opinion of counsel to
Camden and CASI, dated the Closing Date, in customary form and mutually
agreeable to the parties.
ARTICLE X - TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated and the Merger, the
-----------
Bank Merger and the other transactions contemplated by this Agreement or the
Bank Merger Agreements may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated in this Agreement by the stockholders of KSB:
(a) by mutual written consent duly authorized by the Boards of
Directors of Camden, CASI, KSB and the Bank;
(b) by either Camden and CASI or KSB and the Bank if (i) the
Effective Time shall not have occurred on or before July 1, 2000; provided,
--------
however, that the right to terminate this Agreement under this Section
-------
10.1(b) shall not be available to any party whose failure to fulfill any
material obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date;
(c) by either Camden and CASI or KSB and the Bank (i) forty-five days
after the date on which any request or application for a regulatory
approval required to consummate the Merger or the Bank Merger shall have
been denied or withdrawn at the request or recommendation of the
Governmental Entity which must grant such requisite regulatory approval,
unless within the forty-five day period following such denial or withdrawal
a petition for rehearing or an amended application has been filed with such
Governmental Entity; provided, however, that no party shall have the right
-------- -------
to terminate
60
this Agreement pursuant to this Section 10.1(c) (i) if such denial or
request or recommendation for withdrawal shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein or (ii) if any
court of competent jurisdiction or other Governmental Entity shall have
issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger or the Bank Merger and such
order, decree, ruling or other action shall have become final and
nonappealable;
(d) by either Camden and CASI or KSB and the Bank (provided that the
--------
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach by its
nature cannot be cured prior to the Effective Time or within thirty
business days following receipt by the breaching party of written notice of
such breach from the other party hereto;
(e) by either Camden and CASI or KSB and the Bank (provided that the
--------
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the other party, which breach shall not have
been cured within thirty business days following receipt by the breaching
party of written notice of such breach from the other party hereto;
(f) by Camden and CASI or KSB and the Bank (provided, that if the
--------
terminating party is KSB or the Bank, KSB and the Bank shall not be in
material breach of any of their obligations under Section 8.1) if any
approval of the stockholders of KSB required for the consummation of the
Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of stockholders or at any adjournment
or postponement thereof;
(g) by Camden, if KSB Board shall not have publicly recommended to
the stockholders of KSB that such stockholders vote in favor of the
approval of this Agreement, the Merger and the other transactions
contemplated hereby or shall have withdrawn, modified or amended such
recommendation in a manner adverse to Camden;
(h) by KSB, if the Board of Directors of Camden shall not have
publicly recommended to the stockholders of Camden that such stockholders
vote in favor of the approval of this Agreement, the Merger and the other
transactions contemplated hereby
61
or shall have withdrawn, modified or amended such recommendation in a
manner adverse to KSB;
(i) by the Board of Directors of KSB, upon written notice to Camden,
at any time during the five day period commencing two days after the
Determination Date (as defined below), if both the following conditions are
satisfied:
(i) the Average Closing Price of Camden Common Stock on the
Determination Date is less than $15.75 (such amount is referred to herein,
as the "Camden Floor Price"); and
------------------
(ii) (A) the quotient obtained by dividing the Average Closing
Price of Camden Common Stock on the Determination Date by Camden's Starting
Date Closing Price (the "Camden Ratio") is less than (B) the quotient
------------
obtained by dividing the Index Price as of the Determination Date by the
Index Price as of the Starting Date and subtracting 0.15 from the quotient
in this clause (ii)(B) (such number being referred to herein as the "Camden
------
Index Ratio").
-----------
Notwithstanding the foregoing provisions of this Section 10.1(i), if KSB
elects to exercise its termination right pursuant to this Section 10.1(i) it
shall give prompt written notice to Camden; provided, however, that such notice
of election to terminate may be withdrawn by KSB at any time within the above-
referenced five-day period. In the event that KSB gives notice of its intention
to exercise the termination provisions of this Section 10.1(i), Camden shall
have the option, exercisable within five (5) business days receipt thereof, to
increase the Exchange Ratio to equal the lesser of (i) a number (rounded to four
decimals) equal to a quotient, the numerator of which the Camden Floor Price
multiplied by the Exchange Ratio (as then in effect) and the denominator of
which is the Average Closing Price of Camden Common Stock, and (ii) a number
(rounded to four decimals) equal to a quotient, the numerator of which is the
Camden Index Ratio multiplied by the Exchange Ratio (as then in effect) and the
denominator of which is the Camden Ratio. If Camden elects to exercise its
option to increase the consideration in accordance with the terms of the
previous sentence within the aforementioned five business day period, it shall
give prompt written notice to KSB of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this Section
10.1(i), and this Agreement shall remain in effect in accordance with its terms
(except the Exchange Ratio shall have been modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as so adjusted.
For purposes of this Section 10.1, the following terms shall have the
meanings indicated:
62
"Average Closing Price" means the average of the daily last sale prices of
---------------------
Camden Common Stock as reported on the AMEX (as reported in The Wall Street
Journal or, if not reported therein, in another mutually agreed upon
authoritative source) for the fifteen consecutive full trading days in which
such shares are traded on the AMEX ending at the close of trading on the
Determination Date.
"Determination Date" means the date on which the last Requisite Regulatory
------------------
Approval required for consummation of the Merger shall be received.
"Index Group" means the bank holding companies listed below, the common
-----------
stock of all of which shall be publicly traded as to which there shall not have
been, since the Starting Date and before the Determination Date, an announcement
of a proposal for such company to be merged with another unaffiliated company,
acquired by an unaffiliated company or for such company to acquire another
unaffiliated company or companies in transactions with an aggregate value
exceeding 10% of the acquiror's market capitalization as of the Starting Date.
In the event that the common stock of any such company ceases to be publicly
traded or any such announcement is made with respect to any such company, such
company will be removed from the Index Group, and the weights (which have been
determined based on the number of outstanding shares of common stock)
redistributed proportionately for purposes of determining the Index Price. The
bank holding companies and the weights attributed to them are set forth on
Exhibit B hereto.
---------
"Index Price" on a given date means the weighted average (weighted in
-----------
accordance with the factors listed above) of the closing prices on such date of
the companies comprising the Index Group.
"Starting Date" means the last full day on which the AMEX was open for
-------------
trading prior to the execution of this Agreement.
If Camden or any company belonging to the Index Group declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company shall be
appropriately adjusted for the purposes of applying this Section 10.1(i).
10.2 Effect of Termination; Expenses.
-------------------------------
(a) In the event of the termination of this Agreement pursuant to
Section 10.1, this Agreement shall forthwith become void, and there shall be no
liability on the part of any party hereto, except (i) as set forth in Section
7.3, this Section 10.2 or Section 11.2 and (ii) nothing herein shall relieve any
party from any liabilities or damages arising out of its gross negligence or
willful breach of any provision of this Agreement.
63
(b) If this Agreement is terminated as a result of any breach of a
representation, warranty, covenant or other agreement which is caused by the
gross negligence or willful breach of a party hereto, such party shall be liable
to the other party for all out-of-pocket costs and expenses, including, without
limitation, the reasonable fees and expenses of lawyers, accountants and
investment bankers, incurred by such other party in connection with the entering
into of this Agreement and the carrying out of any and all acts contemplated
hereunder ("Expenses"). The payment of Expenses is not an exclusive remedy, but
--------
is in addition to any other rights or remedies available to the parties hereto
at law or in equity.
(c) As a condition of Camden's willingness, and in order to induce
Camden, to enter into this Agreement and to reimburse Camden for incurring the
costs and expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, the Bank will make a cash payment
to Camden of $1,000,000 (the "Expense Fee"), which shall be subject to reduction
-----------
at the election of Camden (as described below), if (i) Camden has terminated
this Agreement pursuant to Section 10.1(g), (ii) Camden has terminated this
Agreement pursuant to Section 10.1(d) or Section 10.1(e), and the breach of the
representation, warranty, covenant or other agreement was caused by the gross
negligence or willful misconduct of KSB or the Bank, or (iii) KSB or the Bank
has breached any of the provisions of Section 8.5; provided, however, that
-------- -------
Camden shall not be entitled to receive the Expense Fee if either Camden or CASI
has failed to fulfill any material obligation under this Agreement and such
failure has been the cause of, or resulted in, the termination of this Agreement
pursuant to Section 10.1. Notwithstanding anything herein or in the KSB Option
Agreement to the contrary, in no event shall the aggregate amount of the Expense
Fee actually paid to Camden and the Total Profit (as defined in the KSB Option
Agreement) actually received by Camden upon exercise or waiver of any of its
rights under the KSB Option Agreement exceed $1,400,000 (the "Maximum Fee"). In
-----------
the event that Camden would be entitled to receive, pursuant to the terms of the
preceding sentence and/or the KSB Option Agreement, an aggregate amount that
exceeds the Maximum Fee, Camden may elect, in its sole discretion, to (y) reduce
the Expense Fee payable by KSB to Camden, or (z) relinquish a portion of the
Option or Option Shares (as such terms are defined in the KSB Option Agreement),
or elect to effect any combination of clause y or clause z above, such that the
-------- --------
aggregate of the Expense Fee payable to Camden and the Total Profit receivable
by Camden would not exceed the Maximum Fee.
Any payment required under this Section 10.2(c) will be (i) payable by KSB
and the Bank to Camden (by wire transfer of immediately available funds to an
account designated by Camden) within five business days after demand by Camden
and (ii) net of any other payments made by KSB and the Bank to Camden pursuant
to the provisions of Section 10.2(b).
(d) Except as otherwise provided in this Section 10.2, all costs and
expenses incurred in connection with this Agreement, the Bank Merger Agreements
and the transactions
64
contemplated hereby and thereby shall be paid by the party incurring such
expenses, whether or not any of the transactions contemplated by this Agreement
is consummated.
10.3 Amendment. This Agreement may be amended by the parties hereto by
---------
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after the approval and
-------- -------
adoption of this Agreement and the transactions contemplated hereby, no
amendment may be made which would reduce the amount or change the type of
consideration into which each share of KSB Common Stock shall be converted upon
consummation of the Merger. This Agreement, including the provisions of this
Section 10.3, may not be amended except by an instrument in writing signed by
the parties hereto.
10.4 Waiver. At any time prior to the Effective Time, any party hereto
------
may (i) extend the time for the performance of any obligation or other act of
any other party hereto, (ii) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein; provided, however, that after the approval and adoption of this
-------- -------
Agreement and the approval of the transactions contemplated hereby by the
stockholders of KSB there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which would reduce the amount or change the form of the consideration into
which each share of KSB Common Stock shall be converted upon consummation of the
Merger delivered to KSB's stockholders hereunder other than as contemplated by
this Agreement. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby, but
such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE XI GENERAL PROVISIONS
11.1 Alternative Structure. Notwithstanding anything to the contrary
---------------------
contained in this Agreement, prior to the Effective Time, Camden shall be
entitled to revise the structure of the Merger, the Bank Merger and the other
transactions contemplated hereby and thereby, provided, that (i) there are no
--------
material adverse federal or state income tax consequences to KSB, the Bank and
its stockholders as a result of the modification; (ii) the consideration to be
paid to the holders of the shares of KSB Common Stock under this Agreement is
not thereby changed in kind or reduced in amount; (iii) there are no material
adverse changes to the benefits and other arrangements provided to or on behalf
of KSB's and the Bank's directors, officers and other employees; and (iv) such
modification will not be likely to delay materially or jeopardize receipt of any
required regulatory approvals or other consents and approvals relating to the
consummation of the Merger and the Bank Merger. This Agreement and any
65
related documents shall be appropriately amended in order to reflect any such
revised structure.
11.2 Non-Survival of Representations, Warranties and Agreements. The
----------------------------------------------------------
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
10.1, as the case may be, except that the agreements set forth in Articles II
and III and Sections 8.6, 8.7, 8.14(c) and 8.15 shall survive the Effective Time
indefinitely and those set forth in the last sentence of Section 8.4(a) and in
Sections 8.4(b), Article X and Article XI hereof shall survive termination
indefinitely.
11.3 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 11.3):
if to Camden or CASI:
Camden National Corporation
0 Xxx Xxxxxx
Xxxxxx, XX 00000
Facsimile:
Attention: Xxxxxx X. Xxxxxx
66
with a copy to:
Xxxxxxx, Procter & Xxxx LLP
Xxx Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
if to KSB or the Bank:
KSB Bancorp, Inc.
Xxxx Xxxxxx
Xxxxxxxxx, Xxxxx 00000
Facsimile:
Attention: Xxxx X. Xxxxxxxxxxx
with a copy to:
Xxxx X. Xxxxxx, Esq.
Luse, Lehman, Xxxxxx, Xxxxxxxx & Xxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
11.4 Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated by this Agreement is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
11.5 Entire Agreement. This Agreement (including the Disclosure
----------------
Schedule and the Exhibits) and the KSB Option Agreement constitute, and the Bank
Merger Agreements when the same are executed by Camden and the Bank will
constitute, the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements
67
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof except for the Confidentiality Agreement.
11.6 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
11.7 Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person (other
than the directors and director nominees referenced in Sections 8.7, 8.14(c) and
8.15) any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
11.8 Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that the provisions contained in this Agreement
were not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
11.9 Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Maine applicable to contracts
executed in and to be performed in that State. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined in
any state or federal court sitting in Augusta, Maine.
11.10 Headings. The table of contents and descriptive headings contained
--------
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
11.11 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits, Annexes or Schedules, such reference shall be to a Section
of or Exhibit, Annex or Schedule to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to be July 27, 1999.
68
11.12 Counterparts. This Agreement may be executed (including by
------------
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
69
IN WITNESS WHEREOF, Camden, CASI, KSB and the Bank have caused this
Agreement to be executed as a sealed instrument as of the date first written
above by their respective officers thereunto duly authorized.
Attest: CAMDEN NATIONAL CORPORATION
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxx
_________________________________________ By:_______________________________
Secretary Title: President
Attest: CAMDEN ACQUISITION SUBSIDIARY, INC.
/s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxx
_________________________________________ By:_______________________________
Secretary Title: President
Attest: KSB BANCORP, INC.
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxxxxxxxx
_________________________________________ By:_______________________________
Chief Financial Officer Title: President
Attest: KINGFIELD SAVINGS BANK
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxxxxxxxx
_________________________________________ By:_______________________________
Chief Financial Officer Title: President
70
Exhibit A-1
-----------
Form of Affiliate Letter to Camden
----------------------------------
Camden National Corporation
0 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of KSB Bancorp, Inc., a Delaware corporation ("KSB"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c) and (d) of Rule 145 of
the Rules and Regulations (the "Rules and Regulations") promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission. I have
been further advised that pursuant to the terms of the Agreement and Plan of
Merger dated as of July 27, 1999 (the "Merger Agreement"), between Camden
National Corporation, ("Camden"), Camden Acquisition Subsidiary, Inc. ("CASI"),
KSB and Kingfield Savings Bank (the "Bank"), KSB will be merged with and into
Camden (the "Merger") and, that as a result of the Merger, I may receive shares
of Camden Common Stock (as defined in the Merger Agreement) in exchange for
shares of KSB Common Stock (as defined in the Merger Agreement) owned by me.
Accordingly, I hereby represent, warrant and covenant to Camden that in the
event I receive any Camden Common Stock as a result of the Merger:
a. I shall not make any sale, transfer or other disposition of the Camden
Common Stock in violation of the Act or the Rules and Regulations.
b. I have carefully read this letter and the Merger Agreement and
discussed its requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Camden Common Stock
to the extent I believed necessary with my counsel or counsel for KSB.
c. I have been advised that the issuance of Camden Common Stock to me
pursuant to the Merger will be registered with the Commission under
the Act pursuant to a Registration Statement on Form S-4. However, I
have also been advised that, since at the time the Merger will be
submitted for a vote of the stockholders of KSB, I may be deemed to
have been an affiliate of KSB and the distribution by me of the Camden
Common Stock has not been registered under the Act, I may not sell,
transfer or otherwise dispose of Camden Common Stock issued to me in
the Merger unless (i) such sale, transfer or other disposition has
been registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act,
or (iii) in the opinion of counsel reasonably acceptable to Camden and
its counsel, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
d. I understand that Camden is under no obligation to register the sale,
transfer or other disposition of the Camden Common Stock by me or on
my behalf under the Act or to take any other action necessary in order
to make compliance with an exemption from such registration available.
e. I also understand that stop transfer instructions will be given to
Camden's transfer agent(s) with respect to the Camden Common Stock and
that there will be placed on the certificates for the Camden Common
Stock issued to me, or any substitutions therefor, a legend in
substantially the following form:
"The securities represented by this certificate have
been issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies
and may only be sold or otherwise transferred in
compliance with the requirements of Rule 145 or
pursuant to a registration statement under said act or
an exemption from such registration."
f. I also understand that unless the transfer by me of my Camden Common
Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Camden reserves the right
to place a legend on the certificates issued to my transferee in
substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and
were acquired from a person who received such shares in
a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have been
acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof
within the meaning of Securities Act of 1933 and may
not be sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that this letter agreement shall terminate and
be of no further force or effect and the legends set forth in paragraphs (e) and
(f) above shall be removed by delivery of substitute certificates without such
legend and the related stop transfer restrictions shall be lifted forthwith, if
(i) any such shares of Camden Common Stock shall have been registered under the
Act for sale, transfer or other disposition by me or on my behalf and are sold,
transferred or otherwise disposed of, or (ii) any such shares of Camden Common
Stock are sold in accordance with the provisions of paragraphs (c), (e), (f) and
(g) of Rule 144 promulgated under the Act, or (iii) I am not at the time an
affiliate of Camden and have been the beneficial owner of the Camden Common
Stock for at least one year (or such other period as may be prescribed by the
Act and the rules and regulations promulgated thereunder), and Camden has filed
with the Commission all of the reports it is required to file under the
Securities Exchange Act of 1934, as amended, during the preceding twelve months,
or (iv) I am not and have not been for at least three months an affiliate of
Camden and have been the beneficial owner of Camden Common Stock for at least
two years (or such period as may be prescribed by the Act and the rules and
regulations promulgated thereunder), or (v) Camden shall have received a letter
from
2
the staff of the Commission, or an opinion of counsel reasonably acceptable to
Camden, to the effect that the stock transfer restrictions and the legend are
not required.
I further represent to and covenant with Camden that from the date that is
thirty (30) days prior to the Effective Time (as defined in the Merger
Agreement) I will not sell, transfer or otherwise dispose of, or reduce the risk
of ownership with respect to, shares of KSB Common Stock or Camden Common Stock
held by me and that I will not sell, transfer or otherwise dispose of, or reduce
the risk of ownership with respect to, any shares of Camden Common Stock
received by me in the Merger or other shares of Camden Common Stock until after
such time as financial results covering at least thirty (30) days of combined
operations of Camden and KSB have been published by Camden, in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other
public filing or announcement which includes the financial results of at least
thirty (30) days of combined operations; provided, however, that excluded from
-------- -------
the foregoing undertaking shall be such sales, pledges, transfers or other
dispositions of shares of KSB Common Stock or shares of Camden Common Stock
which are individually and in the aggregate de minimis within the meaning of
-- -------
Topic 2-E of the Commission's Staff Accounting Bulletin Series.
In addition, I represent to and covenant with Camden that from and after
the date hereof until such time as financial results covering at least thirty
(30) days of combined operations of Camden and KSB have been published by Camden
as provided above, I shall not purchase or otherwise acquire, nor sell, transfer
or otherwise dispose of, any shares of Camden Common Stock or KSB Common Stock
without the prior written consent of Xxxxxx X. Xxxxxx, of Camden, which consent
shall only be withheld to preserve "pooling of interests" accounting treatment
of the Merger or in accordance with applicable laws.
Very truly yours,
____________________________________
Name:
Accepted this ___ day of
____________, 1999 by
CAMDEN NATIONAL CORPORATION
By:_________________________________
Name:
Title:
3
Exhibit A-2
-----------
Form of Affiliate Letter to KSB
-------------------------------
KSB Bancorp, Inc.
Xxxx Xxxxxx
Xxxxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Camden National Corporation, a Maine corporation ("Camden"), as
the term "affiliate" is used in and for purposes of Accounting Series Releases
130 and 135, as amended, of the Securities and Exchange Commission (the
"Commission"). I have been further advised that pursuant to the terms of the
Agreement and Plan of Merger dated as of July 27, 1999 (the "Merger Agreement"),
by and among Camden, Camden Acquisition Subsidiary, Inc., a Delaware corporation
and wholly owned subsidiary of Camden ("CASI"), KSB Bancorp., a Delaware
corporation ("KSB") and Kingfield Savings Bank (the "Bank"), KSB will be,
through a series of transactions, merged with and into Camden (the "Merger").
I represent to and covenant with KSB that from the date that is thirty (30)
days prior to the Effective Time (as defined in the Merger Agreement) until such
time as financial results covering at least thirty (30) days of combined
operations of Camden and KSB have been published by Camden, in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or any other
public filing or announcement which includes the financial results of at least
thirty (30) days of combined operations, I will not sell, transfer or otherwise
dispose of, or reduce the risk of ownership with respect to, shares of Camden
Common Stock (as defined in the Merger Agreement) or KSB Common Stock (as
defined in the Merger Agreement) held by me; provided, however, that excluded
-------- -------
from the foregoing undertaking shall be such sales, pledges, transfers or other
dispositions of shares of Camden Common Stock or shares of KSB Common Stock
which are individually and in the aggregate de minimis within the meaning of
-- -------
Topic 2-E of the Commission's Staff Accounting Bulletin Series.
In addition, I represent to and covenant with KSB that from and after the
date hereof until such time as financial results covering at least thirty (30)
days of combined operations of Camden and KSB have been published by Camden as
provided above, I shall not purchase or otherwise acquire, nor sell, transfer or
otherwise dispose of, any shares of Camden Common Stock or KSB Common Stock
without the prior written consent of Xxxxxx X. Xxxxxx, of Camden, which consent
shall only be withheld to preserve "pooling of interests" accounting treatment
of the Merger or in accordance with applicable laws.
Very truly yours,
____________________________________
Name:
Accepted this ___ day of
____________, 199_ by
KSB BANCORP, INC.
By:_________________________________
Name:
Title:
EXHIBIT C
BANK MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER, dated as of February _____, 2000 (the
"Agreement"), pursuant to Section 352 of Title 9-B of the Maine Revised Statutes
---------
by and between UNITED BANK, a banking corporation duly organized under the laws
of the State of Maine ("United Bank"), and KINGFIELD SAVINGS BANK, a Maine-
-----------
chartered stock savings bank (the "Bank").
----
WHEREAS, Camden National Corporation ("Camden"), Camden Acquisition
------
Subsidiary, Inc., KSB Bancorp, Inc. ("KSB") and the Bank are parties to an
---
Agreement and Plan of Merger, dated as of July ____, 1999, as such agreement may
be subsequently amended or modified (the "Acquisition Agreement"), providing
---------------------
for, among other things, the merger of KSB with and into Camden (the "Merger")
------
and the subsequent merger of United Bank with and into the Bank (the "Bank
----
Merger");
------
WHEREAS, United Bank and the Bank desire that as promptly as practicable
following the consummation of the Merger, United Bank be merged with and into
the Bank upon the terms and conditions contained in this Agreement so that, upon
consummation of the Bank Merger, the separate corporate existence of United Bank
shall cease and the Bank shall continue as the surviving bank of the Bank
Merger;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, United Bank and the Bank hereby
agree as follows:
ARTICLE I
The Bank Merger
1.01 The Bank Merger. The constituent corporations to the Bank Merger
shall be United Bank and the Bank. As promptly as practicable following
consummation of the Merger, receipt of the required approval of the
Superintendent of the Maine Bureau of Banking (the "Maine Superintendent"),
--------------------
approval of the stockholders' of each of United Bank and the Bank, receipt of
all of the required regulatory approvals and the expiration of all waiting
periods related to such approvals, the Bank Merger shall be effected pursuant to
which United Bank shall merge with and into the Bank. As a result of the Bank
Merger, the separate corporate existence of United Bank shall cease and the Bank
shall continue as the surviving bank of the Bank Merger (the "Surviving Bank").
--------------
At the Effective Time (as defined in Section 1.04), all of the rights,
privileges, powers, franchises, properties and assets of United Bank and the
Bank shall be vested in the Surviving Bank, and all debts, liabilities,
obligations,
restrictions, disabilities and duties of United Bank and the Bank shall become
the debts, liabilities, obligations, restrictions and duties of the Surviving
Bank.
1.02 Name Of Surviving Bank. The name of the Surviving Bank shall be
"[_______________]."
1.03 Capital Stock. Unless otherwise determined by Camden prior to the
Effective Time by delivery to the Bank of an addendum to this Agreement, from
and after the Effective Time, the total number of shares of all classes of
capital stock that the Surviving Bank is authorized to issue is [_______]
million shares of common stock, par value $0.01 per share (the "Common Stock").
------------
The outstanding capital stock of the Surviving Bank shall be $[_______]
represented by [_______] shares of Common Stock.
1.04 Effective Time. The Bank Merger shall be effected by (i) the filing
of this executed Agreement, together with the certified resolutions of the
constituent stockholders approving it, with the Maine Superintendent, and (ii)
the granting of approval of the Agreement and Bank Merger by the Maine
Superintendent. The term "Effective Time" shall mean 11:59 p.m. on
--------------
February ____, 2000, and shall be evidenced by the Maine Superintendent's
issuance of a certificate to the Surviving Bank reflecting the Bank Merger.
1.05 Articles. The articles of incorporation of the Bank, as amended in
the manner set forth in Section 1.05 of Annex A hereto, shall be the articles of
-------
incorporation of the Surviving Bank (the "Articles") until further amended as
--------
provided therein and by applicable law.
1.06 By-laws. The by-laws of the Bank, as amended in the manner set forth
in Section 1.06 of Annex A hereto, shall be the by-laws of the Surviving Bank
-------
until thereafter amended as provided therein or in the Articles of the Surviving
Bank, as amended from time to time, or by applicable law.
1.07 Locations. The main office and established and authorized branches of
United Bank shall become the established and authorized branches of the
Surviving Bank and the main office and established and authorized branches of
the Bank shall become the main office and established and authorized branches of
the Surviving Bank, all as set forth in Section 1.07 of Annex A hereto.
-------
1.08 Directors And Officers.
(a) At the Effective Time, the initial directors of the Surviving
Bank shall be those persons whose respective names, addresses and occupations
are set forth in Section 1.08(a) of Annex A hereto, each to hold office in
-------
accordance with, and the service of such director shall be subject to the
provisions of, the Articles and by-laws of the Surviving Bank, as amended from
time to time.
2
(b) At the Effective Time, the initial officers of the Surviving Bank
shall be those persons whose respective names and addresses are set forth in
Section 1.08(b) of Annex A hereto, each to hold office in accordance with, and
-------
the service of such officer shall be subject to the provisions of, the Articles
and by-laws of the Surviving Bank, as amended from time to time.
1.09 Committees Of Board Of Directors Of Surviving Bank. The Committees of
the Board of Directors of the Surviving Bank and the persons who shall serve on
such committees shall be determined by the Board of Directors of the Surviving
Bank in accordance with its by-laws.
1.10 Additional Actions. If, at any time after the Effective Time, the
Surviving Bank shall consider or be advised that any further assignments or
assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Surviving Bank, title to and
possession of any property or right of United Bank acquired or to be acquired by
reason of, or as a result of, the Bank Merger, or (b) otherwise to carry out the
purposes of this Agreement, United Bank and its proper officers and directors
shall be deemed to have granted to the Surviving Bank an irrevocable power of
attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and possession of such property or rights in the Surviving Bank
and otherwise to carry out the purposes of this Agreement; and the proper
officers and directors of the Surviving Bank are fully authorized in the name of
United Bank or otherwise to take any and all such action.
ARTICLE II
Cancellation Of Shares
Each share of common stock, par value $0.01 per share, of United Bank
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Bank Merger and without any action on the part of the holder thereof be
canceled without receipt of any consideration thereof by United Bank.
ARTICLE III
Representations
Each of United Bank and the Bank represents that this Agreement has been
duly authorized, executed and delivered by such party and constitutes a legal,
valid and binding obligation of such party, enforceable against it in accordance
with the terms hereof.
3
ARTICLE IV
TERMINATION
Consummation of the Bank Merger contemplated hereunder is conditioned upon
the consummation of the Merger as provided in the Merger Agreement. This
Agreement shall terminate and forthwith become void automatically and without
any action on the part of United Bank or the Bank immediately upon the
termination of the Merger Agreement in accordance with Article X thereof, and
there shall be no further liability on the part of United Bank or the Bank upon
such termination.
IN WITNESS WHEREOF, United Bank and the Bank have each caused this
Agreement to be executed by their duly authorized officers, as under seal, as of
the day and year first above written.
Attest: UNITED BANK
___________________________________ By: _______________________________
Name:
Title:
By: _______________________________
Name:
Title:
Attest: KINGFIELD SAVINGS BANK
___________________________________ By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
4
EXHIBIT D
VOTING AGREEMENT
Date: July 27, 1999
Camden National Corporation
Camden Acquisition Subsidiary, Inc.
0 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
The undersigned (the "Stockholder") beneficially owns and has sole or
shared voting power with respect to the number of shares of the common stock,
par value $.01 per share (the "Shares"), of KSB Bancorp, Inc., a Delaware
corporation (the "Company"), indicated opposite the Stockholder's name on
Schedule 1 attached hereto.
----------
Simultaneously with the execution of this letter agreement, Camden
Acquisition Subsidiary, Inc. ("Purchaser"), Camden National Corporation, a Maine
corporation ("Parent"), the Company and Kingfield Savings Bank, a Maine
chartered savings bank and a wholly-owned subsidiary of the Company (the
"Bank"), are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing, among other things, for the merger (the "Merger") of the
Company with and into Parent, which, as of a date immediately preceding the
Merger, will own all of the issued and outstanding stock of Purchaser. The
undersigned understands that Purchaser and Parent have undertaken and will
continue to undertake substantial expenses in connection with the negotiation
and execution of the Merger Agreement and the subsequent actions necessary to
consummate the Merger and the other transactions contemplated by the Merger
Agreement.
In consideration of, and as a condition to, Purchaser's and Parent's
entering into the Merger Agreement, and in consideration of the expenses
incurred and to be incurred by Purchaser and Parent in connection therewith, the
Stockholder, Purchaser and Parent agree as follows:
1. Agreement to Vote in Favor of Merger. The Stockholder (a) shall vote
or cause to be voted all of the Shares that such Stockholder shall be entitled
to so vote, whether such Shares are beneficially owned by such Stockholder on
the date of this letter agreement or are subsequently acquired, at the special
or any other meeting of the Company's stockholders to be called and held
following the date hereof, in favor of the approval of the Merger Agreement and
the Merger and (b) shall vote or cause to be voted all such Shares, at such
special meeting or any other meeting of the Company's stockholders following the
date hereof,
against the approval of any other agreement providing for a merger, acquisition,
consolidation, sale of a material amount of assets or other business combination
of the Company or the Bank with any person or entity other than Purchaser,
Parent or their respective affiliates; except, in the case of either (a) or (b),
to the extent required by applicable law relating to fiduciary obligations of
directors upon the advice of its regular outside counsel, subsequently confirmed
in writing.
2. Restrictions on Sale or Other Disposition of Shares. The Stockholder
will not sell, assign, transfer or otherwise dispose of (including, without
limitation, by the creation of a Lien (as defined in paragraph 3 below)), or
permit to be sold, assigned, transferred or otherwise disposed of, any Shares
owned by the Stockholder, whether such Shares are held by the Stockholder on the
date of this letter agreement or are subsequently acquired, except (a) transfers
by will or by operation of law, in which case this letter agreement shall bind
the transferee, (b) transfers pursuant to any pledge agreement, subject to the
pledgee agreeing in writing to be bound by the terms of this letter agreement,
(c) transfers in connection with estate planning purposes, including transfers
to relatives, trusts and charitable organizations, subject to the transferee
agreeing in writing to be bound by the terms of this letter agreement, and (d)
transfers to any other stockholder of the Company who has executed a copy of
this letter agreement on the date hereof with respect to some or all of the
Shares held by such stockholder.
The Stockholder shall cause the Company to cause its transfer agent to note
on its records for the Company (in whatever form maintained) that such Shares
are subject to the restrictions on voting and transfer set forth herein, and at
Parent's reasonable request, the Stockholder shall have any existing
certificates subject to this Agreement canceled and reissued bearing the
following legend:
"THIS CERTIFICATE, AND THE SHARES REPRESENTED HEREBY, ARE SUBJECT TO
CERTAIN VOTING AND TRANSFER RESTRICTIONS CONTAINED IN A VOTING AGREEMENT BY
AND AMONG KSB BANCORP, INC., CAMDEN NATIONAL CORPORATION AND CAMDEN
ACQUISITION SUBSIDIARY, INC. AND THE BENEFICIAL OWNER OF THESE SHARES AND
MAY BE TRANSFERRED ONLY IN COMPLIANCE THEREWITH. COPIES OF THE ABOVE-
REFERENCED AGREEMENT ARE ON FILE AT THE OFFICES OF KSB BANCORP, INC."
3. Representations. The Stockholder represents that the Stockholder has
the complete and unrestricted power and the unqualified right to enter into and
perform the terms of this letter agreement. The Stockholder further represents
that this letter agreement constitutes a valid and binding agreement with
respect to the Stockholder, enforceable against the Stockholder in accordance
with its terms. Except as set forth on Schedule 1, the Stockholder represents
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that the Stockholder beneficially owns the number of Shares indicated opposite
such Stockholder's name on said Schedule 1, free and clear of any liens, claims,
----------
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charges or other encumbrances or restrictions of any kind whatsoever ("Liens"),
and has sole or shared, and otherwise unrestricted, voting power with respect to
such Shares.
4. Term. Notwithstanding anything herein to the contrary, the agreements
contained herein shall remain in full force and effect until the earlier of (i)
the consummation of the Merger or (ii) the termination of the Merger Agreement
in accordance with Article X thereof.
5. Equitable Remedies. The Stockholder has signed this letter agreement
intending to be bound thereby. The Stockholder expressly agrees that this
letter agreement shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against the Stockholder. All of the
covenants and agreements contained in this letter agreement shall be binding
upon, and inure to the benefit of, the respective parties and their permitted
successors, assigns, heirs, executors, administrators and other legal
representatives, as the case may be.
6. Miscellaneous. This letter agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same instrument. No waivers of any breach of this
letter agreement extended by Purchaser and Parent to the Stockholder shall be
construed as a waiver of any rights or remedies of Purchaser and Parent with
respect to any other stockholder of the Company who has executed a copy of this
letter agreement with respect to Shares held by such stockholder or with respect
to any subsequent breach of the Stockholder or any other such stockholder of the
Company. This letter agreement is deemed to be signed as a sealed instrument
and is to be governed by the laws of the State of Maine, without giving effect
to the principles of conflicts of laws thereof. If any provision hereof is
deemed unenforceable, the enforceability of the other provisions hereof shall
not be affected.
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Please confirm our agreement by signing a copy of this letter.
Very truly yours,
__________________________
Name:
AGREED TO AND ACCEPTED
AS OF JULY ___, 1999
CAMDEN NATIONAL CORPORATION
CAMDEN ACQUISITION SUBSIDIARY, INC.
By:_______________________
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Schedule 1
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Name of Number of Shares Shares
Stockholder Beneficially Owned Subject to Pledge
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Exhibit B
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Camden National Corp
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Comparable Institutions
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Market Value
as of 7/21 Shares
Holding Company Ticket or most recent Outstanding
prior close (#roil)
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1 ACNB Corporation ACNB $18.500 5.783
2 Arrow Financial Corporation AROW $25.875 6.149
3 Atlantic Bank & Trust Company ATLB $16.500 4.139
4 Bar Harbor Bankshares BHB $20.375 3.444
5 Boston Private Financial Holdings, Inc. BPFH $ 8.000 10.813
6 CCBT Finncorp, Inc. CCBT $18.250 8.971
7 Century Bancorp, Inc. CNBKA $18.750 5.822
8 Citizens & Northern Corporation CZNC $30.875 5.272
9 Community Banks, Inc. CTY $21.250 6.846
10 Drovers Bancshares Corporation DROV $22.875 4.696
11 First National Lincoln Corp FNLC $20.500 2.470
12 First of Long Island Corporation (The) FLIC $36.875 3.093
13 Granite State Bankshares, Inc. GSBI $24.000 5.870
14 Interchange Financial Services Corporation ISB $19.375 7.214
15 Merchants Bancshares, Inc. MBVT $23.500 4.239
16 PennRock Financial Services Corp. PRFS $22.250 5.998
17 Washington Trust Bancorp, Inc. WASH $17.375 10.119
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INDEX Weighted Average $20.149
Camden National Corporation CAC $20.000
Information obtained from Bloomberg 7/22/99
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