AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement" or
"Agreement") dated as of February 9, 1996, by and among MILFORD CO-OPERATIVE
BANK ("Milford"), a New Hampshire state chartered co-operative bank,
CFX CORPORATION ("CFX"), a New Hampshire corporation, and CFX BANK ("Bank"), a
New Hampshire state chartered savings bank ("Bank").
WITNESSETH
WHEREAS, the parties hereto desire that Milford shall be merged with and
into Bank ("Merger") pursuant to an Agreement and Plan of Merger in the form
attached hereto as Annex A ("Plan of Merger"); and
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WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1.
CERTAIN DEFINITIONS
1.1. "CFX Financial Statements" shall mean (i) the consolidated balance
sheets of CFX as of September 30, 1995 and as of December 31, 1994 and 1993 and
the related consolidated statements of income, cash flows and changes in
shareholders' equity (including related notes, if any) for the nine months ended
September 30, 1995 and each of the three years ended December 31, 1994, 1993 and
1992 as filed by CFX in SEC Documents and (ii) the consolidated balance sheets
of CFX and related consolidated statements of income, cash flows and changes in
shareholders' equity (including related notes, if any) as filed by CFX in SEC
Documents with respect to periods ended subsequent to September 30, 1995.
1.2. "Closing Date" shall mean the date specified pursuant to Section 4.8
hereof as the date on which the parties hereto shall close the transactions
contemplated herein.
1.3. "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4. "Commission" or "SEC" shall mean the Securities and Exchange
Commission.
1.5. "Effective Date" shall mean the date specified pursuant to Section 4.8
hereof as the effective date of the Merger.
1.6. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.7. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.8. "FDIA" shall mean the Federal Deposit Insurance Act.
1.9. "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.10. "Intellectual Property" means domestic and foreign letters
patent, patents, patent applications, patent licenses, software licensed or
owned, know-how licenses, trade names, common law and other trademarks, service
marks, licenses of trademarks, trade names and/or service marks, trademark
registrations and applications, service xxxx registrations and applications and
copyright registrations and applications.
1.11. "Investment Company Act" means the Investment Company Act of
1940, as amended.
1.12. "Material Adverse Effect" shall mean, with respect to Milford
or CFX, as the case may be, a material adverse effect on the business, results
of operations or financial condition of such party and, in the case of CFX, its
subsidiaries taken as a whole; provided, however, that the following shall not
constitute or contribute to a Material Adverse Effect: (i) changes in the
financial condition, business, or results of operations of a person resulting
directly or indirectly from (1) changes in interest rates (provided that Milford
is in compliance with its asset/liability management policy as disclosed to CFX
prior to the date of this Agreement, as the same may be revised thereafter with
CFX's concurrence), or (2) changes in state and federal regulations or
legislation affecting New Hampshire banks; or (ii) matters related to changes in
federal, state or local tax laws or changes in federal, state or local tax
status, characteristics, or attributes or the ability to use such attributes.
1.13. "Milford Financial Statements" shall mean (i) the balance
sheets of Milford as of December 31, 1995 and as of June 30, 1995, 1994 and 1993
and the related statements of income, cash flows and changes in shareholders'
equity (including related notes, if any) for the three months ended December 31,
1995 and each of the three years ended June 30, 1995, 1994 and 1993 as filed by
Milford in SEC Documents and (ii) the balance sheets of Milford and related
statements of income, cash flows and changes in shareholders' equity (including
related notes, if any) as filed by Milford in SEC Documents with respect to
periods ended subsequent to December 31, 1995.
1.14. "OTS" shall mean the Office of Thrift Supervision of the Department
of the Treasury.
1.15. "Previously Disclosed" shall mean disclosed prior to the execution
hereof in (i) an SEC Document filed with the SEC or OTS subsequent to January 1,
1995 and prior to the date hereof or (ii) a letter dated of even date herewith
from the party making such disclosure and delivered to the other party prior to
the execution hereof.
1.16. "Proxy Statement" shall mean the proxy statement/prospectus (or
similar documents) together with any supplements thereto sent to the
shareholders of CFX or Milford to solicit their votes in connection with this
Agreement and the Plan of Merger.
1.17. "Registration Statement" shall mean the registration statement with
respect to the CFX Common Stock to be issued in connection with the Merger as
declared effective by the Commission under the Securities Act, if required.
1.18. "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock, and stock appreciation rights,
performance units and other similar stock-based rights whether they obligate the
issuer thereof to issue stock or other securities or to pay cash.
1.19. "SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to the Securities
Laws.
1.20. "Securities Act" shall mean the Securities Act of 1933, as amended.
1.21. "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act; the Investment Advisers Act of 1940, as amended; the
Trust Indenture Act of 1939, as amended; and the rules and regulations of the
Commission and the OTS promulgated thereunder.
1.22. "Stock Option Agreement" shall mean the Stock Option Agreement dated
as of even date herewith by and between Milford and CFX pursuant to which
Milford will grant CFX the right to purchase certain shares of Milford Common
Stock (as defined below).
Other terms used herein are defined in the preamble and the recitals to
this Reorganization Agreement and in Articles II, III and IV hereof.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to CFX and Bank as follows:
2.1. CAPITAL STRUCTURE OF MILFORD
The authorized capital stock of Milford consists of 1,800,000 shares of
common stock, par value $1.00 per share ("Milford Common Stock"), of which
659,917 shares are issued and outstanding and no shares are held in treasury as
of the date hereof. No shares of Milford Common Stock are reserved for issuance
except as Previously Disclosed and except for 360,000 shares of Milford Common
Stock reserved for issuance under the Stock Option Agreement. All outstanding
shares of Milford Common Stock have been duly issued and are validly
outstanding, fully paid and nonassessable. Except as Previously Disclosed and
except for options to acquire shares of Milford Common Stock pursuant to the
Stock Option Agreement, Milford does not have and is not bound by any Rights
which are authorized, issued or outstanding with respect to the capital stock of
Milford. None of the shares of Milford's capital stock has been issued in
violation of the preemptive rights of any person.
2.2. ORGANIZATION, STANDING AND AUTHORITY OF MILFORD
(a) Milford is a duly organized co-operative bank, validly existing and
in good standing under the laws of New Hampshire with full power and authority
to carry on its business as now conducted and is duly licensed or qualified to
do business in the states of the United States and foreign jurisdictions where
its ownership or leasing of property or the conduct of its business requires
such qualification, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on Milford. Milford does not own,
directly or indirectly, five percent or more of the outstanding capital stock or
other voting securities of any corporation, bank or other organization.
(b) Milford (i) qualifies as a domestic building and loan association
under Section 7701(a)(19) of the Code, (ii) qualifies as a qualified thrift
lender as defined in the Home Owners' Loan Act of 1933, and the regulations of
the OTS thereunder, (iii) is a member in good standing of the Federal Home Loan
Bank of Boston and owns the requisite amount of stock therein and (iv) is a
qualified seller and servicer for the Federal Home Loan Mortgage Corporation.
2.3. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Milford has all requisite corporate power and authority to enter
into and perform all its obligations under this Reorganization Agreement, the
Plan of Merger and the Stock Option Agreement. The execution and delivery of
this Reorganization Agreement, the Plan of Merger and the Stock Option Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of Milford, including without limitation the approval of a
majority of the disinterested directors of Milford, except that the affirmative
vote of the holders of two-thirds of the shares of Milford Common Stock is the
only shareholder vote required to approve the Plan of Merger pursuant to
Chapter 388 of the New Hampshire Revised Statutes Annotated and Milford's
Amended Articles of Agreement and Bylaws. The Board of Directors of Milford has
directed that this Agreement and the Plan of Merger be submitted to Milford's
stockholders for approval at an annual or special meeting to be held as soon as
practicable.
(b) Assuming the accuracy of the representation contained in
Section 3.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of Milford, enforceable against
it in accordance with their respective terms, subject as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity.
(c) Neither the execution and delivery of this Reorganization Agreement,
the Plan of Merger or the Stock Option Agreement, nor consummation of the
transactions contemplated hereby or thereby, nor compliance by Milford with any
of the provisions hereof or thereof shall (i) conflict with or result in a
breach of any provision of the Amended Articles of Agreement or Bylaws of
Milford, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of
Milford pursuant to, any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Milford, except for such
violations, rights, conflicts, breaches, creations or defaults which, either
individually or in the aggregate, will not have a Material Adverse Effect on
Milford.
(d) Other than as contemplated by Sections 4.1 and 4.3 hereof and as
expressly referred to in the Reorganization Agreement, no consent, approval or
authorization of, or declaration, notice, filing or registration with, any
governmental or regulatory authority, or any other person, is required to be
made or obtained by Milford on or prior to the Closing Date in connection with
the execution, delivery and performance of this Agreement and the Plan of Merger
or the consummation of the transactions contemplated hereby or thereby other
than the filing of a certificate or articles of merger or similar document with
the appropriate New Hampshire state authorities.
2.4. SEC DOCUMENTS; REGULATORY FILINGS
Milford has filed all SEC Documents required by the Securities Laws and
such SEC Documents complied, as of their respective dates, in all material
respects with the Securities Laws. Milford has filed all reports required by
statute or regulation to be filed with any federal or state bank regulatory
agency, and such reports were prepared in accordance with the applicable
statutes, regulations and instructions in existence as of the date of filing of
such reports in all material respects.
2.5. FINANCIAL STATEMENTS; BOOKS AND RECORDS; MINUTE BOOKS
The Milford Financial Statements fairly present the financial position of
Milford as of the dates indicated and the results of operations, changes in
shareholders' equity and cash flows of Milford for the periods then ended in
conformity with generally accepted accounting principles applicable to financial
institutions applied on a consistent basis except as disclosed therein. The
books and records of Milford fairly reflect in all material respects the
transactions to which it is a party or by which its properties are subject or
bound. Such books and records have been properly kept and maintained and are in
compliance in all material respects with all applicable legal and accounting
requirements. The minute books of Milford contain records which are accurate in
all material respects of all corporate actions of its shareholders and Board of
Directors (including committees of its Board of Directors).
2.6. MATERIAL ADVERSE CHANGE
Milford has not suffered any material adverse change in its financial
condition, results of operations or business since June 30, 1995.
2.7. ABSENCE OF UNDISCLOSED LIABILITIES
Milford has no liability (contingent or otherwise), excluding
contractually assumed contingencies, that is material to Milford, or that, when
combined with all similar liabilities, would be material to Milford, except as
Previously Disclosed, as disclosed in the Milford Financial Statements filed
with the OTS prior to the date hereof and except for liabilities incurred in the
ordinary course of business subsequent to December 31, 1995.
2.8. PROPERTIES
Milford has good and marketable title free and clear of all liens,
encumbrances, charges, defaults or equitable interests to all of the properties
and assets, real and personal, which, individually or in the aggregate, are
material to the business of Milford and which are reflected on the Milford
Financial Statements as of June 30, 1995 or acquired after such date, except
(i) liens for taxes not yet due and payable, (ii) pledges to secure deposits and
other liens incurred in the ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business. All leases pursuant
to which Milford, as lessee, leases real and personal property which,
individually or in the aggregate, are material to the business of Milford are
valid and enforceable in accordance with their respective terms.
2.9. LOANS; ALLOWANCE FOR LOAN LOSSES
(a) Each loan reflected as an asset in the Milford Financial Statements
(i) is in all material respects evidenced by notes, agreements or other
evidences of indebtedness which are true, genuine and what they purport to be,
(ii) to the extent secured, has been secured by valid liens and security
interests which have been perfected, and (iii) is not subject to any known
defenses, set-off or counterclaims except as may be provided under bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity.
(b) Except as Previously Disclosed, as of September 30, 1995, Milford
was not a party to any loan, including any loan guaranty, with any director,
executive officer or 5% shareholder of Milford or any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. All loans and extensions of credit that have been made by Milford
and that are subject either to Section 22(h) of the Federal Reserve Act, as
amended, or to 12 C.F.R. Section 563.43, comply therewith.
2.10. TAX MATTERS
(a) Milford has timely filed federal income tax returns for each year
through June 30, 1995 and has timely filed all other federal, state, local and
foreign tax returns (including, without limitation, estimated tax returns,
returns required under Sections 1441-1446 and 6031-6060 of the Code and the
regulations thereunder and any comparable state, foreign and local laws, any
other information returns, withholding tax returns, FICA and FUTA returns and
back-up withholding returns required under Section 3406 of the Code and any
comparable state, foreign and local laws) required to be filed with respect to
Milford. All taxes due in respect of the periods covered by such tax returns
have been paid or adequate reserves have been established for the payment of
such taxes. As of the Closing Date, all taxes due in respect of any subsequent
periods ending on or prior to the Closing Date (or that portion of any period
that is prior to the Closing Date) will have been paid or adequate reserves will
have been established for the payment thereof. No (i) audit examination,
(ii) deficiency or (iii) refund litigation with respect to any tax is pending.
Milford will not have any material liability for any taxes in excess of amounts
paid or reserves or accruals established.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by Milford are complete and accurate in all material respects.
Milford is not delinquent in the payment of any tax, assessment or governmental
charge, and has not requested any extension of time within which to file any tax
returns in respect of any fiscal year or portion thereof which have not since
been filed. No deficiencies for any tax, assessment or governmental charge have
been proposed, asserted or assessed (tentatively or otherwise) against Milford
which have not been settled and paid. There are currently no agreements in
effect with respect to Milford to extend the period of limitations for the
assessment or collection of any tax.
(c) Neither the transactions contemplated hereby nor the termination of
the employment of any employees of Milford prior to or following consummation of
the transactions contemplated hereby could result in Milford making or being
required to make any "excess parachute payment" as that term is defined in
Section 280G of the Code.
2.11. EMPLOYEE BENEFIT PLANS
(a) Prior to the Closing Date, Milford will make available to CFX true
and complete copies of (i) all qualified pension or profit-sharing plans, any
deferred compensation, consulting, bonus or group insurance contract or any
other incentive, welfare or employee benefit plan or agreement maintained for
the benefit of employees or former employees of Milford, (ii) the most recent
actuarial and financial reports prepared with respect to any qualified plans,
(iii) the most recent annual reports filed with any government agency, and
(iv) all rulings and determination letters and any open requests for rulings or
letters that pertain to any qualified plan.
(b) Neither Milford nor any pension plan maintained by Milford has
incurred or reasonably expects to incur any material liability to the Pension
Benefit Guaranty Corporation or to the Internal Revenue Service with respect to
any pension plan qualified under Section 401 of the Code except liabilities to
the Pension Benefit Guaranty Corporation pursuant to Section 4007 of ERISA, all
of which have been fully paid. No reportable event under Section 4043(b) of
ERISA has occurred with respect to any such pension plan.
(c) Milford does not participate in, and has not incurred any liability
under Section 4201 of ERISA for a complete or partial withdrawal from, a
multiemployer plan as such term is defined in ERISA.
(d) Except as Previously Disclosed, a favorable determination letter has
been issued by the Internal Revenue Service with respect to each "employee
pension plan" (as defined in Section 3(2) of ERISA) of Milford which is intended
to be a qualified plan to the effect that such plan is qualified under
Section 401 of the Code and tax exempt under Section 501 of the Code. No such
letter has been revoked or threatened to be revoked and Milford knows of no
reasonable ground on which such revocation may be based. Such plans have been
operated in all material respects in accordance with their terms and applicable
law.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any "employee benefit plan" (as defined in
Section 3(3) of ERISA) maintained by Milford which would result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of the
Code that would have, individually or in the aggregate, a Material Adverse
Effect on Milford.
(f) The actuarial present value of accrued benefit obligations, whether
or not vested, under each "employee pension plan" maintained by Milford did not
exceed as of the most recent actuarial valuation date the then current fair
market value of the assets of such plan and no material adverse change has
occurred with respect to the funded status of any such plan since such date.
2.12. CERTAIN CONTRACTS
(a) Except as Previously Disclosed, Milford is not a party to, or bound
by, (i) any material contract, arrangement or commitment whether or not made in
the ordinary course of business (other than loans or loan commitments and
funding transactions in the ordinary course of Milford's banking business) or
any agreement restricting the nature or geographic scope of its business
activities in any material respect, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by Milford or the guarantee by
Milford of any such obligation, other than instruments relating to transactions
entered into in the customary course of business, (iii) any written or oral
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election, retention in office or severance of any present or
former director or officer, or (iv) any contract, agreement or understanding
with a labor union.
(b) Milford is not in default in any material respect under any material
agreement, commitment, arrangement, lease, insurance policy or other instrument
whether entered into in the ordinary course of business or otherwise, and there
has not occurred any event that, with the lapse of time or giving of notice or
both, would constitute such a default.
2.13. LEGAL PROCEEDINGS
Except as Previously Disclosed, there are no actions, suits or proceedings
instituted, pending or, to the knowledge of Milford, threatened (or unasserted
but considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Milford or against any
asset, interest or right of Milford that, if determined adversely to Milford,
would, individually or in the aggregate, have a Material Adverse Effect on
Milford. To the knowledge of Milford, there are no actual or threatened
actions, suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or to impose any material liability in
connection therewith. There are no actions, suits or proceedings instituted,
pending or, to the knowledge of Milford, threatened (or unasserted but
considered probable of assertion and which if asserted would be reasonably
expected to have an unfavorable outcome) against any present or former director
or officer of Milford, that might give rise to a claim for indemnification and
that, in the event of an unfavorable outcome, would, individually or in the
aggregate, have a Material Adverse Effect on Milford and, to the knowledge of
Milford, there is no reasonable basis for any such action, suit or proceeding.
2.14. COMPLIANCE WITH LAWS
Milford is in compliance in all material respects with all statutes and
regulations applicable to the conduct of its business except for violations
which, individually or in the aggregate, would not have a Material Adverse
Effect on Milford, and Milford has not received notification from any agency or
department of federal, state or local government (i) asserting a material
violation of any such statute or regulation, (ii) threatening to revoke any
license, franchise, permit or government authorization or (iii) restricting or
in any way limiting its operations. Milford is not subject to any regulatory or
supervisory cease and desist order, agreement, directive, memorandum of
understanding or commitment, and none of them has received any communication
requesting that they enter into any of the foregoing.
2.15. LABOR MATTERS
With respect to its employees, Milford is not a party to any labor
agreement with any labor organization, group or association and has not engaged
in any unfair labor practice as defined under applicable federal law. Since
January 1, 1995, Milford has not experienced any attempt by organized labor or
its representatives to make Milford conform to demands of organized labor
relating to their employees or to enter into a binding agreement with organized
labor that would cover the employees of Milford. There is no unfair labor
practice charge or other complaint by any employee or former employee of Milford
against it pending before any governmental agency arising out of Milford's
activities; there is no labor strike or labor disturbance pending or, to the
knowledge of Milford, threatened against it; and Milford has not experienced a
work stoppage or other labor difficulty since July 1, 1995.
2.16. BROKERS AND FINDERS
Neither Milford nor any of its officers, directors or employees, has
employed any broker, finder or financial advisor or incurred any liability for
any fees or commissions in connection with the transactions contemplated herein
or the Plan of Merger, except that Milford has engaged and will pay a fee or
commission to Xxxxxx Associates, Inc. as Previously Disclosed.
2.17. INSURANCE
Milford currently maintains insurance in amounts reasonably necessary for
its operations. Milford has not received any notice of a premium increase or
cancellation with respect to any of its insurance policies or bonds, and within
the last three years, Milford has not been refused any insurance coverage sought
or applied for, and Milford has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted from
any extraordinary loss experience of Milford. The deposits of Milford are
insured by the Savings Association Insurance Fund of the FDIC in accordance with
the FDIA, and Milford has paid all assessments and filed all reports required by
the FDIA.
2.18. ENVIRONMENTAL LIABILITY
Milford has not received any written notice of any legal, administrative,
arbitral or other proceeding, claim or action and, to the knowledge of Milford,
there is no governmental investigation of any nature ongoing, in each case that
could reasonably be expected to result in the imposition, on Milford of any
liability arising under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
which liability would have a Material Adverse Effect on Milford; there are no
facts or circumstances which could reasonably be expected to form the basis for
any such proceeding, claim, action or governmental investigation that would
impose any such liability; and Milford is not subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such liability.
2.19. ADMINISTRATION OF TRUST ACCOUNTS
Except as Previously Disclosed, Milford does not currently and has not
previously administered any accounts for which it acts as a fiduciary or agent,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian, conservator or investment advisor.
2.20. INTELLECTUAL PROPERTY
Milford owns the entire right, title and interest in and to, or has valid
licenses with respect to, all the Intellectual Property necessary in all
material respects to conduct the business and operations of Milford as presently
conducted, except where the failure to do so would not, individually or in the
aggregate, have a Material Adverse Effect on Milford. None of such Intellectual
Property is subject to any outstanding order, decree, judgment, stipulation,
settlement, lien, charge, encumbrance or attachment, which order, decree,
judgment, stipulation, settlement, lien, charge, encumbrance or attachment would
have a Material Adverse Effect on Milford.
2.21. CERTAIN INFORMATION
At all times subsequent to the effectiveness of the Registration Statement
or any post-effective amendment thereto and up to and including the time of the
Milford shareholders' meeting to vote upon the Merger, and at all times
subsequent to the mailing of any Proxy Statement or any amendment thereto and up
to and including the time of the Milford shareholders' meeting to vote upon the
Merger, such Registration Statement or Proxy Statement and all amendments or
supplements thereto, with respect to all information set forth therein furnished
by Milford relating to Milford shall (i) comply in all material respects with
the applicable provisions of the Securities Laws, and (ii) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading.
2.22. POOLING OF INTERESTS
As of the date of this Agreement, Milford knows of no reason which would
reasonably cause it to believe that the Merger will not qualify as a pooling of
interests for financial accounting purposes.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF
CFX AND BANK
CFX and Bank hereby jointly and severally represent and warrant to Milford
as follows:
3.1. CAPITAL STRUCTURE OF CFX
(a) As of the date hereof, (i) the authorized capital stock of CFX
consists solely of 22,500,000 shares of common stock ("CFX Common Stock") and
3,000,000 shares of preferred stock ("CFX Preferred Stock"), (ii) there are not
more than 7,512,000 shares of CFX Common Stock issued and outstanding, no shares
of CFX Common Stock held in its treasury, and no shares of CFX Preferred Stock
issued and outstanding, (iii) 860,000 shares of CFX Common Stock are reserved
for issuance under employee stock option and incentive plans ("CFX Stock Option
Plans"), and (iv) 3,200,000 shares of CFX Common Stock are reserved for issuance
upon the acquisition of The Safety Fund Corporation ("Safety Fund Acquisition")
pursuant to an Agreement and Plan of Merger dated January 5, 1996 by and between
CFX and The Safety Fund Corporation.
(b) As of the date hereof, except for shares of CFX Common Stock subject
to options under the CFX Stock Option Plans, CFX is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the transfer, purchase or issuance of, or representing the
right to purchase, subscribe for or otherwise receive, any shares of its capital
stock or any securities convertible into or representing the right to receive,
purchase or subscribe for any such shares of CFX. There are no agreements or
understandings to which CFX is a party with respect to the voting of any shares
of CFX Common Stock or which restrict the transfer of such shares.
(c) All outstanding shares of CFX Common Stock have been duly issued and
are validly outstanding, fully paid and nonassessable. None of the shares of
CFX's capital stock has been issued in violation of the preemptive rights of any
person. The shares of CFX Common Stock to be issued in connection with the
Merger have been duly authorized and, when issued in accordance with the terms
of this Reorganization Agreement and the Plan of Merger, will be validly issued,
fully paid, nonassessable and free and clear of any preemptive rights.
3.2. ORGANIZATION, STANDING AND AUTHORITY OF CFX
CFX is a duly organized corporation, validly existing and in good standing
under the laws of New Hampshire, with full corporate power and authority to
carry on its business as now conducted and is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on CFX. CFX is registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended ("BHC Act").
3.3. OWNERSHIP OF CFX SUBSIDIARIES; CAPITAL STRUCTURE OF CFX SUBSIDIARIES
CFX does not own, directly or indirectly, 25 percent or more of the
outstanding capital stock or other voting securities of any corporation, bank or
other organization except as Previously Disclosed (collectively the "CFX
Subsidiaries" and individually a "CFX Subsidiary"). The outstanding shares of
capital stock or other equity interests of the CFX Subsidiaries are validly
issued and outstanding, fully paid and nonassessable and all such shares or
interests are directly or indirectly owned by CFX free and clear of all liens,
claims and encumbrances. No CFX Subsidiary has or is bound by any Rights which
are authorized, issued or outstanding with respect to the capital stock or other
equity interests of any CFX Subsidiary, and there are no agreements,
understandings or commitments relating to the right of CFX to vote or to dispose
of said shares or interests. None of the shares of capital stock or other
equity interests of any CFX Subsidiary has been issued in violation of the
preemptive rights of any person.
3.4. ORGANIZATION, STANDING AND AUTHORITY OF CFX SUBSIDIARIES
Each CFX Subsidiary is a duly organized corporation or banking
association, validly existing and in good standing under applicable laws. Each
CFX Subsidiary (i) has full power and authority to carry on its business as now
conducted, and (ii) is duly licensed or qualified to do business in the states
of the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such licensing or qualification
and where failure to be licensed or qualified would have a Material Adverse
Effect on CFX. Each CFX Subsidiary has all federal, state, local and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except where
the failure to be so authorized would not have a Material Adverse Effect on CFX.
3.5. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Each of CFX and Bank has all requisite corporate power and authority
to enter into and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the Stock Option Agreement. The execution and
delivery of this Reorganization Agreement, the Plan of Merger and the Stock
Option Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of CFX and Bank, except that the
affirmative vote of the holders of a majority of the votes cast by the holders
of CFX Common Stock eligible to vote thereon is required to authorize the
issuance of CFX Common Stock pursuant to this Reorganization Agreement and the
Plan of Merger in accordance with American Stock Exchange ("AMEX") policy. The
Board of Directors of CFX has directed that this Agreement and the Plan of
Merger be submitted to CFX's stockholders for approval at an annual or special
meeting to be held as soon as practicable.
(b) Assuming the accuracy of the representation contained in
Section 2.3(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of CFX and Bank, in each case
enforceable against it in accordance with their respective terms subject, as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity.
(c) Except as Previously Disclosed, neither the execution and delivery
of this Reorganization Agreement, the Plan of Merger or the Stock Option
Agreement, nor consummation of the transactions contemplated hereby or thereby,
nor compliance by CFX or Bank with any of the provisions hereof or thereof shall
(i) conflict with or result in a breach of any provision of the articles or
certificate of incorporation or association, charter or bylaws of CFX or any CFX
Subsidiary, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of CFX or
any CFX Subsidiary pursuant to, any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to CFX or any CFX
Subsidiary, except for such violations, rights, conflicts, breaches, creations
or defaults which, either individually or in the aggregate, will not have a
Material Adverse Effect on CFX.
(d) Except for approvals specified in Sections 4.1 and 4.3 hereof,
except as Previously Disclosed and except as expressly referred to in this
Reorganization Agreement, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any governmental or regulatory
authority, or any other person, is required to be made or obtained by CFX or
Bank on or prior to the Closing Date in connection with the execution, delivery
and performance of this Agreement and the Plan of Merger or the consummation of
the transactions contemplated hereby or thereby.
3.6. SEC DOCUMENTS; REGULATORY FILINGS
CFX has filed all SEC Documents required by the Securities Laws and such
SEC Documents complied, as of their respective dates, in all material respects
with the Securities Laws. CFX and each of the CFX Subsidiaries has filed all
reports required by statute or regulation to be filed with any federal or state
bank regulatory agency, and such reports were prepared in accordance with the
applicable statutes, regulations and instructions in existence as of the date of
filing of such reports in all material respects.
3.7. FINANCIAL STATEMENTS
The CFX Financial Statements fairly present the consolidated financial
position of CFX and the consolidated CFX Subsidiaries as of the dates indicated
and the consolidated results of operations, changes in shareholders' equity and
cash flows of CFX and the consolidated CFX Subsidiaries for the periods then
ended in conformity with generally accepted accounting principles applicable to
financial institutions applied on a consistent basis except as disclosed
therein.
3.8. MATERIAL ADVERSE CHANGE
CFX has not, on a consolidated basis, suffered any material adverse change
in its financial condition, results of operations or business since December 31,
1994.
3.9. ABSENCE OF UNDISCLOSED LIABILITIES
Neither CFX nor any CFX Subsidiary has any liability (contingent or
otherwise), excluding contractually assumed contingencies, that is material to
CFX on a consolidated basis, or that, when combined with all similar
liabilities, would be material to CFX on a consolidated basis, except as
Previously Disclosed, as disclosed in the CFX Financial Statements filed with
the SEC prior to the date hereof and except for liabilities incurred in the
ordinary course of business subsequent to September 30, 1995.
3.10. BROKERS AND FINDERS
Neither CFX nor any CFX Subsidiary, nor any of their respective officers,
directors or employees, has employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions in connection with the
transactions contemplated herein or the Plan of Merger, except that CFX has
engaged and will pay a fee or commission to Alex. Xxxxx & Sons Incorporated.
3.11. CERTAIN INFORMATION
At all times subsequent to the effectiveness of the Registration Statement
or any post-effective amendment thereto and up to and including the time of the
CFX shareholders' meeting to vote upon the Merger, and at all times subsequent
to the mailing of any Proxy Statement or any amendment thereto and up to and
including the time of the CFX shareholders' meeting to vote upon the Merger,
such Registration Statement or Proxy Statement and all amendments or supplements
thereto, with respect to all information set forth therein furnished by CFX
relating to CFX and the CFX Subsidiaries shall (i) comply in all material
respects with the applicable provisions of the Securities Laws, and (ii) not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
3.12. LEGAL PROCEEDINGS
Except for matters which, individually or in the aggregate, would not have
a Material Adverse Effect on CFX and the CFX Subsidiaries, taken as a whole,
neither CFX nor any of the CFX Subsidiaries is a party to any, and there are no
pending or, to the best of CFX's knowledge, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental investigations of
any nature by or against CFX or any of the CFX Subsidiaries; and neither CFX nor
any of the CFX Subsidiaries is a party to or subject to any order, judgment or
decree.
3.13. COMPLIANCE WITH LAWS; REGULATORY EXAMINATIONS.
(a) CFX and each of the CFX Subsidiaries holds, and has at all times
held, all licenses, franchises, permits, approvals, consents, qualifications and
authorizations material for the lawful conduct of its business under and
pursuant to, and has complied with, and is not in default under, any applicable
law, statute, order, rule, regulation, policy, ordinance, reporting or filing
requirement and/or guideline of any federal, state or local governmental
authority relating to CFX or any of the CFX Subsidiaries, except for violations
which, either individually or in the aggregate, do not or would not have a
Material Adverse Effect on CFX and the CFX Subsidiaries taken as a whole, and
neither CFX or any of the CFX Subsidiaries has knowledge of any violation of any
of the above.
(b) Except for normal examinations conducted by a regulatory agency in
the regular course of the business of CFX and the CFX Subsidiaries, no
regulatory agency has initiated any proceeding or, to the best knowledge of CFX,
investigation into the business or operations of CFX or any of the CFX
Subsidiaries since December 31, 1994. CFX has not received any objection from
any regulatory agency to CFX's response to any violation, criticism or exception
with respect to any report or statement relating to any examinations of CFX or
any of the CFX Subsidiaries.
3.14. ENVIRONMENTAL ISSUES.
Except where such violation, liability or noncompliance would not have a
Material Adverse Effect on CFX and the CFX Subsidiaries, taken as a whole: (i)
neither CFX nor any of the CFX Subsidiaries has violated during the last five
years or is in violation of any federal, state or local environmental law; (ii)
none of the properties owned or leased by CFX or any CFX Subsidiary (including,
without limitation, soils and surface and ground waters) are contaminated with
any hazardous substance; (iii) neither CFX nor any of the CFX Subsidiaries is
liable for any off-site contamination; (iv) neither CFX nor any of the CFX
Subsidiaries is liable under any federal, state or local environmental law; and
(v) CFX and each of the CFX Subsidiaries is, and has during the last five years
been, in compliance with, all of their respective permits, licenses and other
authorizations referred to under any environmental laws. For purposes of the
foregoing, all references to "properties" include, without limitation, any owned
real property or leased real property.
3.15. POOLING OF INTERESTS
As of the date of this Agreement, CFX knows of no reason which would
reasonably cause it to believe that the Merger will not qualify as a pooling of
interests for financial accounting purposes.
ARTICLE 4.
COVENANTS
4.1. SHAREHOLDERS' MEETING
CFX and Milford shall submit this Reorganization Agreement and the Plan of
Merger and, in the case of CFX, the issuance of CFX Common Stock thereunder, to
their respective shareholders for approval at annual or special meetings to be
held as soon as practicable. Subject to the fiduciary duties of the respective
boards of directors of Milford and CFX as determined by each after consultation
with such board's counsel, the boards of directors of CFX and Milford shall
recommend at the respective shareholders' meetings that the shareholders vote in
favor of such approval.
4.2. PROXY STATEMENT; REGISTRATION STATEMENT
As promptly as practicable after the date hereof, CFX and Milford shall
cooperate in the preparation of the Proxy Statements to be mailed to the
shareholders of Milford and CFX in connection with the Merger and the
transactions contemplated thereby and, if required, to be filed by CFX as part
of the Registration Statement. In the event the issuance of CFX Common Stock in
connection with the Merger is exempt from registration under Section 3(a)(10) of
the Securities Act and the SEC's regulations and interpretations thereunder, no
Registration Statement will be filed. In any case, it is anticipated that CFX
and Milford will present the Merger to their respective shareholders pursuant to
separate Proxy Statements. CFX will advise Milford, promptly after it receives
notice thereof, of the time when the Registration Statement or any
post-effective amendment thereto has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of qualification of the CFX Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or 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. CFX
shall take all actions necessary to register or qualify the shares of CFX Common
Stock to be issued in the Merger pursuant to all applicable state "blue sky" or
securities laws and shall maintain such registrations or qualifications in
effect for all purposes hereof. CFX shall apply for approval to list the shares
of CFX Common Stock to be issued in the Merger on the AMEX, subject to official
notice of issuance, prior to the Effective Date.
4.3. APPLICATIONS
As promptly as practicable after the date hereof, CFX shall submit any
requisite applications or petitions for prior approval of the transactions
contemplated herein and in the Plan of Merger (i) to the FDIC pursuant to the
Bank Merger Act, and the regulations promulgated thereunder, (ii) to the OTS
pursuant to 12 C.F.R. Section 563.22, and (iii) to the New Hampshire Bank
Commissioner pursuant to Chapter 388 or other applicable section of the New
Hampshire Revised Statutes Annotated, and the regulations promulgated
thereunder. Each of the parties hereto shall, and they shall cause their
respective subsidiaries to, submit any applications, notices or other filings to
any other state or federal government agency, department or body the approval of
which is required for consummation of the Merger. Milford and CFX each
represents and warrants to the other that all information concerning it and its
directors, officers, shareholders and subsidiaries included (or submitted for
inclusion) in any such application and furnished by it shall be true, correct
and complete in all material respects.
4.4. BEST EFFORTS; CERTAIN NOTICES AND INFORMATION
(a) CFX, Bank, and Milford shall each use its best efforts in good
faith, and CFX shall cause its subsidiaries to use their best efforts in good
faith, to (a) furnish such information as may be required in connection with the
preparation of the documents referred to in Sections 4.2 and 4.3 above, and (b)
take or cause to be taken all action necessary or desirable on its part so as to
permit consummation of the Merger at the earliest possible date, including,
without limitation, (i) obtaining the consent or approval of each individual,
partnership, corporation, association or other business or professional entity
whose consent or approval is required for consummation of the transactions
contemplated hereby, provided that Milford shall not agree to make any payments
or modifications to agreements in connection therewith without the prior written
consent of CFX, and (ii) requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent auditors. No party hereto
shall take or fail to take, or cause or permit its subsidiaries to take or fail
to take, or to the best of its ability permit to be taken or omitted to be taken
by any third persons, any action that would substantially impair the prospects
of completing the Merger pursuant to this Reorganization Agreement and the Plan
of Merger, or that would adversely affect the qualification of the Merger for
pooling of interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Code; provided that nothing herein contained
shall preclude CFX from exercising its rights under the Stock Option Agreement.
In the event that any party has taken any action, whether before, on or after
the date hereof, that would adversely affect such qualification, each party
shall take such action as the other party may reasonably request to cure such
effect to the extent curable without a Material Adverse Effect on any of the
parties.
(b) Milford shall give prompt notice to CFX, and CFX shall give prompt
notice to Milford, of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date, and (ii) any
material failure of Milford, CFX or the Bank, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder, and each party shall use all reasonable efforts to remedy such
failure.
(c) Milford shall provide and shall request its auditors to provide CFX
with such historical financial information regarding it (and related audit
reports and consents) as CFX may reasonably request for securities disclosure
purposes.
(d) During the period from the date of this Agreement until the earlier
to occur of the Effective Date or the termination of this Agreement pursuant to
Section 6.1 hereof, CFX shall, from time to time when deemed appropriate by CFX
or when requested by Milford, cause one or more of its representatives to confer
with representatives of Milford and report any relevant information relating to
any material transactions outside of CFX's ordinary course of business. CFX
shall, to the extent practicable, provide Milford with prior notice of any press
release relating specifically to the Safety Fund acquisition.
4.5. INVESTIGATION AND CONFIDENTIALITY
Milford and CFX each will keep the other advised of all material
developments relevant to its business and to consummation of the transactions
contemplated herein and in the Plan of Merger. CFX and Milford each may make or
cause to be made such investigation of the financial and legal condition of the
other as such party reasonably deems necessary or advisable in connection with
the transactions contemplated herein and in the Plan of Merger; provided,
however, that such investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with normal operations. CFX
and Milford agree to furnish the other and the other's advisors with such
financial data and other information with respect to its business and properties
as such other party shall from time to time reasonably request. No
investigation pursuant to this Section 4.5 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations to
consummate the Merger of, any party hereto. Each party hereto shall hold all
information furnished by the other party or any of such party's subsidiaries or
representatives pursuant to Section 4.5 in confidence to the extent required by,
and in accordance with, the provisions of the confidentiality agreement dated
October 23, 1995 by and between Milford and CFX (the "Confidentiality
Agreement").
4.6. PRESS RELEASES
Milford and CFX shall agree with each other as to the form and substance
of any press release related to this Reorganization Agreement, the Plan of
Merger, the Stock Option Agreement, or the transactions contemplated hereby or
thereby, and shall consult each other as to the form and substance of other
public disclosures related thereto; provided, however, that nothing contained
herein shall prohibit any party, following notification to the other parties,
from making any disclosure which its counsel deems necessary.
4.7. COVENANTS OF MILFORD
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement, the Merger Agreement, the Stock Option Agreement,
or consented to or approved by CFX, Milford shall use its best efforts to
preserve its properties, business and relationships with customers, employees
and other persons.
(b) Except with the prior written consent of CFX or except as Previously
Disclosed or except as expressly contemplated or permitted by this Agreement,
the Merger Agreement, or the Stock Option Agreement, Milford shall not:
(1) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted;
(2) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock other than its regular semi-annual
cash dividends on Milford Common Stock in amounts not in excess of $0.50 per
share, in a manner consistent with past practice and in accordance with
applicable law, regulation and contractual and regulatory commitments;
(3) issue any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the Stock Option Agreement
or Rights outstanding at the date hereof;
(4) incur any additional debt obligation or other obligation for
borrowed money other than in the ordinary course of business consistent with
past practice;
(5) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like change
in capitalization, or redeem, repurchase or otherwise acquire any shares of its
capital stock;
(6) amend its articles or certificate of incorporation or
association or bylaws;
(7) merge with any other corporation, savings association or bank
or permit any other corporation, savings association or bank to merge into it or
consolidate with any other corporation, savings association or bank; acquire
control over any other firm, bank, corporation, savings association or
organization or create any subsidiary;
(8) except in the ordinary course of business, waive or release any
material right or cancel or compromise any material debt or claim;
(9) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to the
conduct of its business;
(10)enter into any material swap, hedge or other similar off-
balance sheet transaction;
(11)liquidate or sell or dispose of any material assets or acquire
any material assets; except as Previously Disclosed, make any capital
expenditure in excess of $100,000 in any instance or $250,000 in the aggregate;
or, except as Previously Disclosed, establish new branches or other similar
facilities or enter into or modify any leases or other contracts relating
thereto that involve annual payments that exceed $25,000 in any instance or
$100,000 in the aggregate;
(12)increase the rate of compensation of, pay or agree to pay any
bonus to, or provide any other employee benefit or incentive to, any of its
directors, officers or employees except in a manner consistent with past
practice and except as Previously Disclosed;
(13)enter into, modify or extend any employment or severance
contracts with any of its present or former directors, officers or employees;
(14)enter into or substantially modify (except as may be required
by applicable law) any pension, retirement, stock option, stock purchase, stock
appreciation right, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or welfare contract,
plan or arrangement, or any trust agreement related thereto, in respect of any
of its directors, officers or other employees, except that Milford may terminate
its qualified noncontributory profit sharing plan and distribute the assets
thereof prior to the Closing Date in a manner and pursuant to customary
arrangements that the parties agree would be consistent with all applicable laws
(including without limitation the Code);
(15)change its lending, investment, asset/liability management or
other material banking policies in any material respect except as may be
required by changes in applicable law;
(16)change its methods of accounting in effect at June 30, 1995,
except as required by changes in generally accepted accounting principles
concurred in by its independent certified public accountants, or change any of
its methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its federal income tax returns for the
year ended June 30, 1995, except as required by law;
(17)solicit or initiate inquiries or proposals with respect to any
acquisition or purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, Milford or any business combination with Milford
other than as contemplated by this Reorganization Agreement; or authorize or
permit any officer, director, agent or affiliate of it to do any of the above;
or fail to notify CFX as soon as practicable if any such inquiries or proposals
are received by Milford, or if Milford or any officer, director, agent or
affiliate thereof is requested to or does furnish any confidential information
relating to, or participates in any negotiations or discussions concerning, any
transaction of a type describe in this paragraph; or
(18)agree to do any of the foregoing.
(c) Milford agrees to approve, execute and deliver any amendment to this
Reorganization Agreement and the Merger Agreement and any additional plans and
agreements requested by CFX to modify the structure of, or to substitute parties
to, the transactions contemplated hereby; provided, however, that no such change
shall (i) alter or change the amount or kind of consideration to be delivered to
the shareholders of Milford in connection with the Merger, (ii) adversely affect
the tax treatment to the shareholders of Milford as a result of receiving such
Merger consideration, or (iii) materially impede or delay receipt of any
approval referred to in Section 4.3 hereof or the consummation of the
transactions contemplated by this Reorganization Agreement and the Plan of
Merger.
4.8. CLOSING; ARTICLES OF MERGER
The transactions contemplated by this Reorganization Agreement and the
Plan of Merger shall be consummated at a closing ("Closing") to be held at the
offices of CFX, 000 Xxxx Xxxxxx, Xxxxx, Xxx Xxxxxxxxx, at 10:00 a.m. on the
first business day that is at least 20 calendar days after the date on which the
last of all required approvals for the Merger has been obtained and the last of
all required waiting periods under such approvals has expired, or at such other
place, date or time as CFX and Milford may mutually agree upon, with the Merger
to be consummated after such intermediate steps as CFX may specify. The Merger
shall be effective at the time and on the date specified in the certificate of
merger to be filed with the New Hampshire Bank Commissioner (the "Effective
Date").
4.9. AFFILIATES
(a) Milford and CFX shall cooperate and use their best efforts to
identify those persons who may be deemed to be "affiliates" of Milford within
the meaning of Rule 145 promulgated by the Commission under the Securities Act
and for purposes of qualifying the "Merger" for "pooling of interests"
accounting treatment. Milford shall use its best efforts to cause each person
so identified to deliver to CFX, no later than 30 days prior to the Effective
Date, a written agreement providing that such person will not dispose of any CFX
Common Stock received in the Merger except in compliance with the Securities
Act, the rules and regulations promulgated thereunder and the Commission's rules
relating to pooling of interests accounting treatment. Shares of CFX Common
Stock issued to such affiliates in exchange for Milford Common Stock shall not
be transferable until such time as financial results covering at least 30 days
of combined operations of CFX and Milford have been published within the meaning
of Section 201.01 of the Commission's Codification of Financial Reporting
Policies, regardless of whether each such affiliate has provided the written
agreement referred to in this section.
(b) CFX shall use its best efforts to publish no later than 25 days
after the end of the first calendar quarter in which there are at least 30 days
of post-Merger combined operations (which calendar quarter may be the calendar
quarter in which the Effective Date occurs), combined sales and net income
figures as contemplated by and in accordance with the terms of SEC Accounting
Series Release No. 135.
4.10.MILFORD EMPLOYEES; DIRECTORS AND MANAGEMENT; INDEMNIFICATION
(a) All employees of Milford as of the Effective Date shall become
employees of CFX or a CFX Subsidiary as of the Effective Date. Nothing in this
Agreement shall give any employee of Milford a right to continuing employment
with CFX after the Effective Date. As soon as practicable after the Effective
Date, CFX shall provide or cause to be provided to all employees of Milford who
remain employed by CFX or any CFX Subsidiary after the Effective Date with
employee benefits which, in the aggregate, are no less favorable than those
generally afforded to other employees of CFX or CFX's Subsidiaries holding
similar positions, including without limitation employee benefits provided in
accordance with CFX's severance policy, subject to the terms and conditions
under which those employee benefits are made available to such employees;
provided that, for purposes of determining eligibility for and vesting of such
employee benefits only (and not for pension benefit accrual purposes), service
with Milford prior to the Effective Date shall be treated as service with an
"employer" to the same extent as if such persons had been employees of CFX, and
provided further that this Section 4.10(a) shall not be construed to limit the
ability of CFX and its affiliates to terminate the employment of any employee or
to review employee benefits programs from time to time and to make such changes
as they deem appropriate. In the event the Closing Date is on or before June
30, 1996, CFX agrees to implement, effective as of July 1, 1996, all scheduled
increases in the rates of compensation for Milford employees who are CFX
employees on July 1, 1996.
(b) From and after the Effective Date, Bank shall assume the employment
and severance agreements Previously Disclosed by Milford.
(c) Bank's Board of Directors shall take all requisite action to elect
as directors of Bank, effective as of the Effective Date, two directors to be
designated by Milford, subject to Bank's approval.
(d) From and after the Effective Date, Bank shall indemnify persons who
served as directors and officers of Milford on or before the Effective Date in
accordance with and subject to the provisions of Milford's Amended Articles of
Agreement and Bylaws as delivered to CFX prior to the execution of this
Reorganization Agreement. From and after the Effective Date, CFX will cause the
persons who served as directors or officers of Milford on or before the
Effective Date to be covered by Milford's existing directors' and officers'
liability insurance policy (or policies of at least the same coverage and
amounts and containing terms and conditions which are not less advantageous than
such policy); provided that no such person shall be entitled to insurance
coverage more favorable than that provided to the person in such capacity at the
date hereof with respect to acts or omissions resulting from the person's
service as such on or prior to the Effective Date, and provided further that CFX
shall not be required to expend in any year more than 150 percent of the current
per annum amount expended by Milford to maintain or procure insurance coverage
pursuant hereto. Such insurance coverage shall commence on the Effective Date
and will be provided for a period of no less than six years after the Effective
Date.
ARTICLE 5.
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CFX, BANK AND MILFORD
The respective obligations of the parties to effect the Merger shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Reorganization Agreement and the Plan of Merger and
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken;
(b) The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Reorganization Agreement and the Plan of Merger, all notice
periods and waiting periods required after the granting of any such approvals
shall have passed and all conditions contained in any such approval required to
have been satisfied prior to consummation of such transactions shall have been
satisfied, provided, however, that no such approval shall have imposed any
condition or requirement which, in the reasonable good faith opinion of the
Board of Directors of CFX materially and adversely affects the anticipated
economic and business benefits to CFX of the transactions contemplated by this
Agreement as to render consummation of such transactions inadvisable;
(c) One of the following shall have occurred:
(i) a Registration Statement (including any post-effective
amendment thereto) shall have been filed with the Commission and shall be
effective under the Securities Act, and no proceeding shall be pending or to the
knowledge of CFX threatened by the Commission to suspend the effectiveness of
such Registration Statement;
(ii) CFX and Milford shall have received a "no-action" letter from
the staff of the Commission stating that, by reason of the exemption afforded by
Section 3(a)(10) of the Securities Act, it will not recommend any enforcement
action to the Commission with respect to the issuance of CFX Common Stock in
exchange for Milford Common Stock in connection with the Merger without
registration thereof under the Securities Act; or
(iii) CFX and Milford shall have received an opinion of counsel to
CFX reasonably satisfactory to CFX and Milford to the effect that the issuance
of CFX Common Stock in exchange for Milford Common Stock in connection with the
Merger is exempt from the registration provisions of the Securities Act by
reason of the exemption afforded by Section 3(a)(10) thereof;
(d) CFX shall have received all state securities or "Blue Sky" permits
or other authorizations, or confirmations as to the availability of an exemption
from registration requirements as may be necessary;
(e) To the extent that any lease, license, loan, financing agreement or
other contract or agreement to which Milford is a party requires the consent of
or waiver from the other party thereto as a result of the transactions
contemplated by this Agreement, such consent or waiver shall have been obtained,
unless the failure to obtain such consents or waivers, individually or in the
aggregate, would not have a Material Adverse Effect on Milford;
(f) None of the parties hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the transactions contemplated by this
Reorganization Agreement and the Plan of Merger;
(g) The shares of CFX Common Stock that may be issued in the Merger
shall have been approved for listing on the AMEX, subject to official notice of
issuance; and
(h) Milford and CFX shall have received an opinion of Xxxxxx & Xxxxxx,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing on the Effective Date:
(1) the Merger shall constitute a reorganization for federal
income tax purposes within the meaning of Section 368(a) of the Code;
(2) no gain or loss will be recognized by Milford on the transfer
of its assets to the Bank pursuant to the Merger;
(3) no gain or loss will be recognized by a shareholder of Milford
who exchanges all of the shareholder's Milford Common Stock solely for CFX
Common Stock in the Merger (except with respect to cash received in lieu of a
fractional share interest in CFX Common Stock);
(4) the tax basis of the CFX Common Stock received by a sharehold-
er who exchanges all of the shareholder's Milford Common Stock solely for CFX
Common Stock in the Merger will be the same as the tax basis of the Milford
Common Stock surrendered in exchange therefor (reduced by any amount allocable
to a fractional share interest for which cash is received); and
(5) the holding period of the shares of CFX Common Stock to be
received by a shareholder of Milford will include the period during which such
shareholder held the shares of Milford Common Stock surrendered in exchange
therefor, provided the Milford Common Stock surrendered is held as a capital
asset on the Effective Date.
5.2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF MILFORD
The obligations of Milford to effect the Merger shall be subject to
satisfaction of the following additional conditions at or prior to the Closing
Date unless waived by Milford pursuant to Section 6.4 hereof:
(a) The representations and warranties of CFX and Bank set forth in
Article 3 hereof shall be true and correct in all material respects as of the
date of this Reorganization Agreement and as of the Closing Date as though made
on and as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or consented
to in writing by Milford; provided, however, that (i) in determining whether or
not the condition contained in this paragraph (a) shall be satisfied, no effect
shall be given to any exceptions in such representations and warranties relating
to materiality or Material Adverse Effect and (ii) the condition contained in
this paragraph (a) shall be deemed to be satisfied unless the failure of such
representations and warranties to be so true and correct constitute,
individually or in the aggregate, a Material Adverse Effect on CFX;
(b) CFX and Bank shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger prior to the Effective Date;
(c) CFX and Bank each shall have delivered to Milford a certificate,
dated the Closing Date and signed by its President or Chief Financial Officer to
the effect that the conditions set forth in paragraphs (a) and (b) of this
section have been satisfied; and
(d) Milford shall have received an opinion of Xxxxxx, Millimet & Branch,
counsel to CFX, dated the Closing Date, as to such matters as Milford may
reasonably request with respect to the transactions contemplated hereby.
5.3. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CFX AND BANK
The respective obligations of CFX and Bank to effect the Merger shall be
subject to satisfaction of the following additional conditions at or prior to
the Closing Date unless waived by CFX pursuant to Section 6.4 hereof:
(a) The representations and warranties of Milford set forth in Article 2
hereof shall be true and correct in all material respects as of the date of this
Reorganization Agreement and as of the Closing Date as though made on and as of
the Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Reorganization Agreement or consented to in writing by CFX;
provided, however, that (i) in determining whether or not the condition
contained in this paragraph (a) shall be satisfied, no effect shall be given to
any exceptions in such representations and warranties relating to materiality or
Material Adverse Effect, and (ii) the condition contained in this paragraph
(a) shall be deemed to be satisfied unless the failure of such representations
and warranties to be so true and correct constitute, individually or in the
aggregate, a Material Adverse Effect on Milford;
(b) Milford shall have, in all material respects, performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger;
(c) Milford shall have delivered to CFX and Bank a certificate, dated
the Closing Date and signed by its President and Chief Executive Officer to the
effect that the conditions set forth in this section have been satisfied;
(d) No event shall have occurred that shall preclude the Merger from
being accounted for as a pooling of interests;
(e) CFX shall have received from Xxxxxxxxx, XxxXxxx & Co. a "comfort
letter" dated not more than five days prior to (i) the effective date of the
Registration Statement, if any, and, otherwise, the mailing date of the Proxy
Statement, and (ii) the Closing Date, with respect to certain financial
information regarding Milford, in form and substance which is customary in
transactions of the nature contemplated by this Agreement; and
(f) CFX and Bank shall have received an opinion of Xxxxxxxx & Xxxxxxxx,
counsel to Milford, dated the Closing Date, as to such matters as CFX and Bank
may reasonably request with respect to the transactions contemplated hereby.
ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. TERMINATION
This Reorganization Agreement and the Plan of Merger may be terminated,
either before or after approval by the shareholders of CFX and Milford:
(a) At any time on or prior to the Effective Date, by the mutual consent
in writing of the parties hereto.
(b) At any time on or prior to the Closing Date, by CFX in writing, if
Milford has, or by Milford in writing, if CFX or Bank has, in any material
respect, breached (i) any covenant or agreement contained herein or in the Plan
of Merger, or (ii) any representation or warranty contained herein, and in
either case if such breach has not been cured by the earlier of 30 days after
the date on which written notice of such breach is given to the party committing
such breach or the Closing Date.
(c) At any time, by any party hereto in writing, if the applications for
prior approval or consents referred to in Section 4.3 hereof have been denied,
and the time period for appeals and requests for reconsideration has run, or if
any governmental entity of competent jurisdiction shall have issued a final
non-appealable order enjoining or otherwise prohibiting the Merger.
(d) At any time, by any party hereto in writing, if the shareholders of
CFX or Milford do not approve the transactions contemplated herein at the annual
or special meetings duly called for that purpose.
(e) By any party hereto in writing, if the Closing Date has not occurred
by the close of business on December 31, 1996, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements set
forth herein.
(f) By Milford, if the CFX Price (as that term is defined in the Plan of
Merger) is less than $12.10 and Milford provides written notice to CFX prior to
the third business day immediately preceding the Closing Date of its intent to
terminate this Agreement pursuant to this Section 6.1(f) and CFX does not elect
to increase the Exchange Ratio (as that term is defined in the Plan of Merger)
to $32.67 - CFX Price.
6.2. EFFECT OF TERMINATION
In the event this Reorganization Agreement or the Plan of Merger is
terminated pursuant to Section 6.1 hereof, this Agreement and the Plan of Merger
shall become void and have no effect, except that (i) the provisions relating to
confidentiality and expenses set forth in Sections 4.5, 4.6, 7.1 and 7.7 hereof,
respectively, shall survive any such termination and (ii) a termination pursuant
to Section 6.1(b)(i) shall not relieve the breaching party from liability for an
uncured willful breach of such covenant or agreement giving rise to such
termination.
6.3. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Reorganization
Agreement and the Plan of Merger or in any instrument delivered pursuant hereto
or thereto shall expire on, and be terminated and extinguished at, the Effective
Date other than covenants that by their terms are to survive or be performed
after the Effective Date, provided that no such representations, warranties or
covenants shall be deemed to be terminated or extinguished so as to deprive CFX,
Bank or Milford (or any director, officer or controlling person thereof) of any
defense in law or equity which otherwise would be available against the claims
of any person, including, without limitation, any shareholder or former
shareholder of either CFX or Milford, the aforesaid representations, warranties
and covenants being material inducements to the consummation by CFX, Bank and
Milford of the transactions contemplated herein.
6.4. WAIVER
Except with respect to any required shareholder or regulatory approval,
CFX and Milford, respectively, by written instrument signed by an executive
officer of such party, may at any time (whether before or after approval of this
Reorganization Agreement and the Plan of Merger by the shareholders of CFX and
Milford) extend the time for the performance of any of the obligations or other
acts of Milford, on the one hand, or CFX or Bank, on the other hand, and may
waive (i) any inaccuracies of such parties in the representations or warranties
contained in this Agreement, the Plan of Merger or any document delivered
pursuant hereto or thereto, (ii) compliance with any of the covenants,
undertakings or agreements of such parties, or satisfaction of any of the
conditions precedent to its obligations, contained herein or in the Plan of
Merger, or (iii) the performance by such parties of any of its obligations set
out herein or therein; provided, however, that, after any such approval by the
shareholders of Milford, no such modification shall (i) alter or change the
amount or kind of Merger consideration to be received by holders of Milford
Common Stock as provided in the Plan of Merger, or (ii) adversely affect the tax
treatment to Milford shareholders as a result of the receipt of such Merger
consideration.
6.5. AMENDMENT OR SUPPLEMENT
This Reorganization Agreement and the Plan of Merger may be amended or
supplemented at any time by mutual agreement of the parties hereto or thereto.
Any such amendment or supplement must be in writing and approved by their
respective boards of directors and/or officers authorized thereby and shall be
subject to the proviso in Section 6.4 hereof.
ARTICLE 7.
MISCELLANEOUS
7.1. EXPENSES
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated in this Reorganization
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel, except that CFX and Milford each shall bear and pay 50
percent of all printing and mailing costs and filing fees associated with the
Registration Statement, if required, and the Proxy Statements.
7.2. ENTIRE AGREEMENT
This Reorganization Agreement, the Plan of Merger and the Stock Option
Agreement contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein or therein and the Confidentiality Agreement. The
terms and conditions of this Reorganization Agreement and the Plan of Merger
shall inure to the benefit of and be binding upon the parties hereto and thereto
and their respective successors. Except as specifically set forth herein, or in
the Plan of Merger, nothing in this Reorganization Agreement or the Plan of
Merger, expressed or implied, is intended to confer upon any party, other than
the parties hereto and thereto, and their respective successors, any rights,
remedies, obligations or liabilities.
7.3. NO ASSIGNMENT
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
7.4. NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to Milford:
Milford Co-Operative Bank
00 Xxxxx Xxxxxx
Xxxxxxx, X.X. 00000
Attention: Xxxxxxx X. X'Xxxxx
Facsimile No.: 000-000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
Facsimile No.: 000-000-0000
If to CFX or Bank:
CFX Corporation
000 Xxxx Xxxxxx
Xxxxx, X.X. 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: 000-000-0000
With a copy to:
Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxx, Esquire
Facsimile No.: 000-000-0000
7.5. CAPTIONS
The captions contained in this Reorganization Agreement are for reference
purposes only and are not part of this Reorganization Agreement.
7.6. COUNTERPARTS
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.7. GOVERNING LAW
This Reorganization Agreement shall be governed by and construed in
accordance with the laws of the State of New Hampshire applicable to agreements
made and entirely to be performed within such jurisdiction, except to the extent
federal law may be applicable.
[Remainder of page left intentionally blank; signatures appear on next page.]
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate seal to be hereunto
affixed and attested by their officers thereunto duly authorized, all as of the
day and year first above written.
MILFORD CO-OPERATIVE BANK
By: /s/
-------------------------------------
Xxxxxxx X. X'Xxxxx
President and Chief Executive Officer
CFX CORPORATION
By: /s/
-------------------------------------
Xxxxx X. Xxxxxx,
President and Chief Executive Officer
CFX BANK
By: /s/
-------------------------------------
Xxxxx X. Xxxxxx,
